KazAtomProm and Areva sign strategic agreement

11 June 2008

Kazakhstan's state-owned nuclear energy company, KazAtomProm, has signed a strategic agreement in the front end of the nuclear fuel cycle with France's state-owned Areva.

Under the terms of the agreement, Katco - a 51%-49% joint venture between Areva and KazAtomProm - should produce 4000 tonnes of uranium per year until 2039, sales of which will be made entirely by Areva.

Areva will also provide engineering assistance to construct fuel fabrication lines with an annual capacity of 1200 tonnes in KazAtomProm's metallurgy plant in Ulba. In the framework of a company jointly owned by KazAtomProm (51%) and Areva (49%), the installation will include a dedicated 400-tonne line specifically for fuel for French-designed reactors. Fuel pellets for this dedicated line will be supplied by KazAtomProm. Its production will be sold via a company owned jointly by Areva (51%) and KazAtomProm (49%). The remaining 800 tonnes of capacity will provide fuel for reactors of other designs.

The agreement was signed by Moukhtar Dzhakishev, president of KazAtomProm, and Areva CEO Anne Lauvergeon in Paris today. A final version of the agreements is expected to be signed in September.

Lauvergeon said: "With this deal, both our companies become privileged partners. It helps diversify our fuel reserves and secure supplies for our customers."

Dzhakishev said that "the signing came as a result of a constructive long term relationship with between KazAtomProm and Areva and is, for us, a milestone in establishing a vertically integrated company, producing a value-added product - fuel assemblies."

The Katco joint venture was originally formed by Cogema and the Kazakhstan State Corporation for Atomic Power and Industry (KATEP) in 1996 to work on the development of uranium resources in Kazakhstan. In 1999, the company received a licence to explore and mine the Muyunkum site located in the south of the country.

After three years of successful operation of a pilot production plant at Muyunkum, Areva and KazAtomProm signed an agreement in April 2004 to start the industrial phase of a joint production project. Katco completed construction of the first processing plant at the end of 2005. Commercial operations at the Katco joint venture - which includes the Moynkum in-situ leach (ISL) uranium mine - in June 2006. The target annual production capacity of the joint venture is 1500 tU (1770 tonnes U3O8). The project has geological reserves totalling 28 661 tU (33 800 tonnes U3O8).

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