– Would you tell about the Fuel Company’s international activity strategy. What is a ratio of proceeds in the international and domestic markets?
– Our international activities are of greatest importance, since the matter is the brand and reputation of ROSATOM as a NFC participant. The company’s strategy has been devised until 2030. We continuously analyze how the markets develop and respond to emerging challenges. Yes, today TVEL is one of the leaders of nuclear fuel fabrication. We cover 17% of the world market and supply fuel to 15 countries. We have a large portfolio of long-term contracts and broad prospects in new markets. One of the examples is the Uranium Enrichment Center in Russia set up in the cooperation with Kazakhstan; another example is the joint venture for building a nuclear fuel fabrication plant in Ukraine. I would also highlight our joint venture Alvel in the Czech Republic. We plan to set up a number of large alliances as well. But the strategy can be adjusted. The main thing is we must be competitive in every minute.
As to figures, the export is about 45% of our total proceeds from nuclear product sales. The strategy foresees a growth of proceeds from sales from RUB 122 billion in 2012 up to RUB 665 billion in 2030. Whether this goal is achieved depends on how we will work in external markets. A number of projects will be very handy in this area. There are zones where we clearly understand where to move, but there are zones where we have to adjust the strategy.
– Today, developing countries have a large potential in terms of nuclear power. How will TVEL expand its footprint there?
– In fact, the center of gravity in energy consumption now moves towards the developing countries, especially, China, India and Middle East countries. This is the place where we see promising consumers of our products and services. But in spite of that, Western Europe still remains an important direction for us.
– How does the work on TVS-kvadrat project go? What is your assessment of the company’s prospects in terms of nuclear fuel supplies for the western-design reactors?
– Over recent years TVEL has won all open tenders in Europe. Today, the ROSATOM’s portfolio of orders for building plants with VVER reactors has growth significantly. Therefore, there will be a growth of orders for nuclear fuel for Russian-design reactors. But the pace of development of the western-design reactor fleet is higher, because a number of vendors of such reactors is greater. To be in demand not only in the market of the Russian reactors, to have a sound brand, we have to develop this direction. To this end we have launched the project on development and promotion of TVS-kvadrat fuel.
The project has been consistently developed for several years already and soon the first TVS-kvadrat fuel assemblies will be loaded in one of foreign commercial PWR reactors. In terms of the market perspectives of TVS-kvadrat, we are interested in all countries where PWRs are operated. For us TVS-kvadrat is a driver in achieving one of the strategic goals, i.e. winning 30% of the world nuclear fuel market by 2030.
– To what extend does the TVS-kvadrat fuel is competitive in price as compared to fuel of the western producers?
– Our fuel is very competitive. Moreover, we set a target for the fuel manufacturers are moving to certain price indicators in terms of the self-cost. This is done for us to be competitive not only today, but retain this quality at the time of bidding.
– TVEL’s geography of supplies embraces many European countries. Does the situation in Ukraine affect the company’s activities?
– In spite of the political turbulence, TVEL unconditionally and securely carries out uninterruptible nuclear fuel supplies to all foreign consumers without exclusion. We fulfill all contracts timely and in full scope. We have never failed to supply. For us the issue of nuclear fuel supply is the issue of safety, trust and reputation. Not long ago I conversed with the Finnish partners. They are confident in our fuel and don’t want to change the vendor. They even are ready to order a secured fuel inventory and run extra current expenditures. The Czech colleagues who operate NPPs with our fuel also don’t think of any diversification.
– Would you comment on the NAEC Energoatom’s decision to sign a contract with Westinghouse for nuclear fuel supply to load three reactors in Ukraine.
– I think that the issue of diversification of nuclear fuel supplies should be solved through the Russia-Ukraine fuel fabrication plant. When there was the former management of the regulatory authority, there was a prohibition to load Westinghouse’s fuel into the reactors. As the new chairman came, the approval was granted right at once; this is pure politics. For many times we said that TVEL was not against the competition in the nuclear fuel market. This is absolutely normal and beneficial for both fuel producers and customers. But it is important that in nuclear power the decisions aren’t made by political considerations. Safety and performance reliability should be the priorities; and decisions should always be only professional and responsible.
As to the contract with Westinghouse, we don’t know any details. It is important that the arrangements of NAEC Energoatom with the U.S. company do not contradict our contracts. Commencing 2016 all plants in Ukraine must be supplied with fuel made to the Russian technology. This is stipulated in the documents signed by TVEL and Energoatom. Add here the fact that when we won the tender, in the agreement we specified due time of commissioning of the phase one of the fuel fabrication plant, i.e. during three years after approval of the project documents. And if another producer comes into view, we run into the plant’s smaller workload and worse economics. Therefore, the contractual obligations are not fulfilled.
The U.S. fuel now is operated with the Russian fuel assemblies in the same reactor cores, but so far we don’t know anything about characteristics of this fuel and its impact on our fuel assemblies. We are not ready to pay our reputation for experiments.
– Did you request for such information?
– Yes, we did. But the Ukrainian party refused to provide such information referring to confidentiality and advised us to turn to Westinghouse. As a result, we don’t have data to make a conclusion on reliable and safe performance of this fuel.
– What is the fate of nuclear fuel plant construction project in Ukraine?
– Many things have been already made. The Russian-Ukrainian joint venture has been established; the feasibility study and project documents have been written; the state expert review authority granted its positive statement. We also have a site in Kirovograd Region where pre-construction work has been carried out since last October. But regretfully, we are behind the initially approved schedule. The reason is difficulties of the Ukrainian party to finance its share. The first additional issue of the JV shares happened only at the second time, and the second additional share issue failed at all last year. Today, the JV suffers a catastrophic shortage of resources; all works have been frozen and shortly there may be difficulties with ensuring operations of the joint venture. We cannot start active construction on the site because of that, and cannot start transferring technologies and supplying the equipment. By the way, we have already made equipment for phase one of the plant and it has been preliminary accepted. That was done at the expense of the Russian shareholder. We are ready to fulfill all our obligations. It is important that Ukraine urgently takes measures to unfreeze the project. It must develop, because in addition to the diversification this will strengthen the country’s energy security. One should not forget about export prospects of the plant in the third country markets.
– What about other relations of TVEL and NAEC Energoatom apart from that?
– They are positive on the whole. I flew to Ukraine to a meeting with NAEC President Yuri Nedashkovsky in April. He confirmed that the company would follow all contracts in full scope. On our part we have supplied and are supplying fuel to Ukraine’s NPPs. There have been no claims in terms of supplies. We are tied by a many-year history and we have sound production ties. We use Ukrainian uranium an fuel assembly components which are made in Ukraine to Russian technologies in fabricating the fuel. In the nearest time we plan, jointly with NAEC Energoatom, to introduce a new fuel with advanced characteristics and consumer properties in Ukraine’s plants. I am certain that prospects of our cooperation go as far as decades ahead, to the end of operation of the fuel plant and existing power units for sure. Therefore, our long-term and strategic relations are stronger and more powerful than any political environment.
– Quite recently a memorandum of cooperation in construction of a NPP was signed between Russia and Kazakhstan. In particular, it speaks of a possibility of making fuel or components for the future plant in Kazakhstan. How would you comment on that?
– The cooperation with Kazakhstan dates back to the USSR time. In Kazakhstan there is Ulba [mining and metallurgical] plant, which can fabricate fuel pellets. After commissioning of the first reactor of the plant we will actively engage Ulba plant’s capacities in the process chain. If the number of reactors growths in Kazakhstan, the percent of localization of the fuel fabrication will grow.
– TVEL also makes non-nuclear products and sells it both in the domestic market and abroad. Would you tell about the situation in this sector now?
– This is the second core business for us, and ROSATOM management has set a clear task of developing it. We have a powerful scientific and production base, which allows launching entirely new general industry products. These are superconductors, titanium alloy tubes, calcium injection wire to treat metallurgical melts, energy accumulators and many other. It is very important today that the projects you invest into bring revenues as soon as possible. We have many of such projects. But since ROSATOM’s financial resource is limited, we must select those that are most efficient. For example, we implement a very important project in Angarsk together with Germans. On the AECC site we set up a production process to make quartz crystals for the industry. This is a very promising area. The main thing is that the Germans also contribute their investment resource. We already have consumers among German companies.
