Annual Report 2017
Efficiency improvement
and sustainable development
Annual Report 2017
Strategy
Development strategy and business plan of TVEL Fuel Company for the years 2015-2019 were adopted by the Strategic Board of ROSATOM in December, 2014. The strategy of TVEL Fuel Company sets core performance indicators for mid-term and long-term outlook till 2030

Priority Operation Areas

TVEL Fuel Company faces the challenge to strength its presence in the world market of NFC fabrication and enrichment by 2030. Leadership of TVEL Fuel Company in the front end NFC market will be ensured by a series of projects being accomplished. First of all, such projects include promotion of the Russian design TVS-K fuel on the foreign market (for reactors designed abroad).

One of the innovative areas for NFC market is the Proryv project ("Breakthrough") at the facilities of SGChE JSC (Seversk, Tomsk region), with the construction of the Experimental Demonstration Energy Complex (EDEC), the main goal of which is to demonstrate stable operation of the full range of facilities ensuring the closure of the fuel cycle using fast natural-safety reactors.

Furthermore, TVEL Fuel Company carries out the following tasks with the view of FE NFC growth:

  • accomplishment of the Nuclear Fuel Zero Failure project, within the framework of which the Company together with its partners conduct regular audits of nuclear fuel producers and NPPs, offering a reference fuel qualified at Russian NPPs;
  • accomplishment of a series of projects on improvement of nuclear fuel consumer properties for operating NPPs;
  • development of cooperation with European partners, China and India.

The key conditions for the development of the second core business is the presence in TVEL Fuel Company of the necessary infrastructure and production capacity, as well as the required equipment, licenses and qualified staff. Financial stability of TVEL Fuel Company is achieved through the development of non-nuclear business in conditions of challenges and changing market environment in FE NFC markets, additional workplaces are created. The growth in revenue from the "second core" must be facilitated by consolidation of scientific and design organizations of TVEL Fuel Company in a scientific-production association SPA Centrotech, as well as by entrance to adjacent markets.

Figure 1
Strategic targets of TVEL Fuel Company

Increased
efficiency
Growth on the
markets of Front
End of NFC
Second
Business Core
Development
Social and
ecological
acceptability

Table 5

Goals correlation of ROSATOM and TVEL Fuel Company

Strategic goals of TVEL Fuel Company

1.
Increase of the international market share

2.
Reduction of the cost of products and the lead time

3.
New products for Russian and international markets

Operational environment
Prevention of adverse environment impact

Growth on NFC Markets

Second Business Core Development

Effciency Improvement

Social and Ecological Acceptability

Following the achievement the strategic goal "Efficiency Improvement", the priority is given to solving the tasks of compacting the production areas and managing the performance.

One of the striking examples of the concentration of production areas is the concentration of conversion cycle in Siberian Group of Chemical Enterprises (at the sublimate and radiochemical plants), which started in 2016. Under unfavourable global economic conditions with the price for natural uranium conversion service dropped and continuing to decrease, TVEL Fuel Company decided to withdraw the uranium conversion from Angarsk Electrolysis Chemical Complexand Chepetsky Mechanical Plantand concentrate this production at Siberian Group of Chemical Enterprises. A series of investment projects was accomplished in order to secure a stable operation of the branch conversion center. In particular, the modernization of fluorine production was carried out. As a result of this the conversion capacity was increased by 1.5 times.

One of the key projects is the transition of mechanical production from the facilities of Tochmash VPA JSC (Vladimir) to the site of KMZ PJSC (Kovrov, Vladimir region). At the end of January 2017, the Strategic Board of ROSATOM approved the concept of concentrating the production of Tochmash VPA JSC and KMZ PJSC. This solution will increase the production efficiency of these enterprises.

Performance management objectives include increasing productivity, reducing costs and optimizing resources.

The main priorities are still careful attitude to the environment, transfer of "clean" areas after nuclear production to future generations, introduction of non-waste technologies and reduction of the "nuclear legacy".

In terms of ensuring social acceptability, TVEL Fuel Company’s activity is one of the successful examples of the implementation of the concept of creating territories of the advanced social and economic development (TASED), social and charitable programs (support and development of small and medium-sized business in cities, creation of new jobs, improvement of cities, etc.) in the territories of ROSATOM presence.

Following the achievement the strategic goal "Efficiency Improvement", the priority is given to solving the tasks of compacting the production areas and managing the performance

The strategy of TVEL Fuel Company is oriented at achievement of the following indicators by the year 2030:

  • Strengthening the presence in the global market of uranium enrichment and nuclear fuel fabrication services owing to manufacture of traditional products having good consumer properties and entry to new nuclear markets.
  • Twofold growth of the revenue in comparable terms of 2014.
  • Tenfold growth of revenue in non-nuclear businesses (including established businesses) in comparable terms of 2014.
  • Threefold growth of labor efficiency in comparable terms of 2014 .

Drivers of growth and achievement of objectives in NFC markets:

  • supplies of nuclear fuel for new VVER units in the Russian Federation and abroad;
  • global commercialization of TVS-K fuel;
  • use of feed material RRM and RF;
  • supplies of nuclear fuel and components for research reactors of western and Russian design;
  • expansion of supplies of zirconium components.

Table 6

SWOT analysis

Strengths

Weaknesses

  • High quality and reliability of products verified by its consumers
  • Reference of the products due to cooperation with Russian NPPs within the operation of new types of fuel, possibility to pass fuel qualification in RF
  • Product management on all FE NFC cycles, control over production at all stages Strong technical and scientific cluster that allows continuous improvement of nuclear fuel characteristics
  • Financial stability due to efficient resource management on all FE NFC cycles
  • Load following and increased fuel cycles due to fuel characteristics
  • Flexible technological and commercial conditions of cooperation
  • Price competitiveness of the products due to cost optimization
  • Support on the part of ROSATOM and the state
  • Recognizable brand
  • Need to address the problem of "nuclear legacy" and provision of nuclear and radiation safety
  • Social and environmental commitments in the regions of presence, rehabilitation of sites
  • Insufficient business diversification

Opportunities

Threats

  • Supply of nuclear fuel for new VVER units in the Russian Federation and abroad
  • Expansion of PWR markets presence
  • Expansion of cooperation with the South-East Asian countries
  • Supply of nuclear fuel and components for research reactors
  • Development of new modifications of nuclear fuel, improvement of fuel cycles and campaigns
  • Development of scientific and technological cooperation with foreign partners
  • Application of different types of raw material
  • Expansion of zirconium components supplies
  • Scientific and technological support of the customer at the fuel operation
  • Development on the markets of general industrial activities and future-oriented products
  • Reduction of prices for the products and services of FE NFC
  • Low rate of NPP capacities commissioning on the traditional markets
  • Competition with conventional and alternative power sources
  • Growing tension on external markets, including VVER segment
  • Quantitative restrictions on Russian products on separate markets
  • Efforts made by the market players to improve the efficiency
  • Need for additional efforts to preserve prime cost benefits in conditions of inflation and volatility in currency exchange rates

Table 7

Contribution of the results 2017 in achievement of the strategic goals of TVEL Fuel Company

Target

Project

Results

Effect

Growth on NFC markets

Fuel supply to NPPs of Russian design

  • Conclusion of contractual documents for supply of fuel, components and engineering services for NPPs abroad.
  • Market development

Fuel supply for fast neutron reactors, creation of the facilities ONFC and RU BREST (the Proryv project)

  • Successful completion of preliminary tests of a complex of carbothermic synthesis of nitrides that has no analogues in the world, made at the request of SGChE JSC for the Proryv project.
  • SGChE JSC completed successfully acceptance testing of 3 experimental fuel assemblies with mixed uranium-plutonium nitride fuel, the products were delivered to Beloyarsk NPP and loaded into BN-600 nuclear reactor core.
  • Development prospects

Promotion of fuel components produced using Russian and foreign technologies to world markets

  • A number of contracts were signed with the foreign partners for qualification of zirconium fuel components, as well as supply of fuel components for research reactors of foreign design.
  • Market development

Promotion of TVS-K to foreign markets

  • Continuation of works on promotion of TVS-K fuel for power reactors PWR 17x17 of foreign design.
  • Market development

Design and improvement of nuclear fuel and reactor cores for nuclear power units

  • Successful completion of licensing the modified fuel type TVSA-12 for unit No. 5 Kozloduy NPP (Bulgaria).
  • Market retention

Second business core development

Creation and development of new businesses

  • Integrator companies on new areas such as Additive Technology and Energy Storage Devices were created within TVEL Fuel Company's framework.
  • ChMP JSC and Severstal JSC signed the contract for calcium wire supplies.
  • The Company signed a 5-year contract with Hermit GmbH (Germany) for supply of a large batch of titanium mill products of ChMP JSC.
  • Creation in cooperation with QSIL GmbH (Germany) of a joint venture for the production of highly pure quartz concentrate.
  • Completion of works on the pilot model of second generation metal powder 3D printer.
  • Significant increase of the revenue from sales of automotive catalysts and neutralizers produced by Ecoalliance LLC.
  • Entering new markets

Concentration of production facilities of VPA Tochmash JSC and KMZ PJSC

  • Start-up of the investment project "Concentration of Production Facilities of VPA Tochmash JSC and KMZ PJSC" (Vladimir region).
  • Entering new markets

Efficiency improvement

Increasing the efficiency of industrial sites areas use

  • In 2017, within the framework of the industry project "Branch Topology Concept" and with the aim of solving problems on the concentration of industries, TVEL Fuel Company initiated a separate program "Increasing the efficiency of areas use in TVEL Fuel Company".
  • The Company established the list of objects unclaimed for the implementation of the Company's strategy with their subsequent inventory made and the costs for their maintenance determined.
  • The concept of production concentration and further use of unclaimed objects is prepared.
  • Efficiency improvement

Development of new Gas Centrifuges

  • KMZ PJSC and SPA Centrotech LLC started serial production of the modernized gas centrifuge GC-9+. In terms of productivity, modernized GC significantly outperforms the previous GCs, while production cost is lower.

Infrastructure cost management

  • The Company started the project on transformation of corporate functions.

Social and environmental acceptability

Rehabilitation of contaminated areas

  • VNIINM JSC developed new technologies and mobile facilities for the decontamination of radiation hazardous objects that are being decommissioned.
  • Successful progress of the works on liquidation of the nuclear "heritage" facilities within the Federal target program "Nuclear Radiation Safety 2" ( FTP NRS-2): preservation of B-1 and B-25 basins, ground storage areas of solid radioactive waste at the facility 16 KhMZ JSC, SGChE JSC, decommissioning of the unit Y-5, facility 53 at VNIINM JSC (completed in 2017), decommissioning of the facility 804 at Angarsk Electrolysis Chemical Complex (AECC JSC), decommission of FA production for IUGR at NCCP JSC.
  • Maintenance of environmental security and social awareness in the cities of TVEL Fuel Company presence

Program for regional work and social projects

  • Organizationals works on TASED creation in Novouralsk and Seversk before signing the RF Government Regulation about their establishment.
  • Opening of School Technoparks in the cities of TVEL Fuel Company operations - Zelenogorsk, Novouralsk, Seversk and Glazov.
  • Maintenance of environmental security and social awareness in the cities of TVEL Fuel Company operations

Table 8

Factors of long-term business sustainability and cooperation with the customers

Factors

Description

Safety and reliability of fuel

  • Fuel safety is the strategic priority of TVEL Fuel Company.
  • The Company makes considerable investments in safety of fuel.
  • Implementation of the zero failure program.

Creation of zero-waste technologies, and rehabilitation of sites

  • SGChE JSC completed the five-year work on improving the technology of preparation of liquid radioactive wastes for deep burial.
  • Bochvar Institute (VNIINM JSC) developed new technologies and mobile facilities for the decontamination of radiation hazardous objects that are being decommissioned.
  • Works on liquidation of the nuclear "legacy" facilities within FTP NRS-2: preservation of B-1 and B-25 basins at SGChE, decommissioning of the facility 53 at VNIINM JSC, decommissioning of the facility 804 at AECC.

High quality

  • Production automation, minimization of the human errors.
  • Technological improvement of instrumentation operations.
  • Compliance with the requirements of international quality management.

Development of the 2nd business core

  • Increase of the Company’s stability in conditions of the nuclear business cyclicality.
  • Expansion of the Company's financial stability base.