MINEX

Moscow, Russia – Oct 5, 2011

Atomredmetzoloto:

Responding to New Challenges

Marina Liborakina, Deputy CEO, Strategy

Overview of Rosatom and

Atomredmetzoloto Role

Within Rosatom

3 3

Rosatom — a history of most reliable supplier

and nuclear technologies development

4

Towards the global leadership in in

technologies and markets

• Industry deregulation

• Development of reliability, safety,

environment management

• Use of nuclear technologies in

military and civil purposes

• Entering the global markets

• Formation of Russian nuclear

industry and its research &

technology base

1940 1950

1960

1970

1980

1990

2000

2010

2030

2020

• ARMZ becomes one of the world leaders in uranium production

• Uranium One is viewed as ARMZ’s global growth platform

2009-10 ARMZ: Acquisition of 19,9%, and then 51% of Uranium One

2011 ARMZ: Acquisition of 100% of Mantra Resources

1992 ARMZ: Formation of ARMZ

1959 World’s first nuclear powered icebreaker launched

2007 The Ministry transformed into ROSATOM State Corporation

Start of BN-800 project (the largest commercial reactor on fast neutrons)

2001 The first post-Soviet power unit brought into operation

1945 Russian nuclear industry creation

1954 World’s first NPP put into operation in USSR

1973 Start of EUP export sales

1973 World’s first NPP with fast neutron reactor

1964 First PWR in the world with 210 MWt capacity

1954–55 Soviet Nuclear Power Program established

1993 US and Russia signed Megatons to Megawatts Deal

1989 Start of EUP supply to the US market

• No disruption in supply since exports began in 1968

• 316 M lbs U3O8 equivalent delivered to the USA to date under HEU-LEU contract since 1995

• As of 1995 10% of US electricity is generated using fuel supplied by Rosatom

Performance data

Rosatom — a new vision of global leadership

5

Rosatom Positioning:

• Retaining foreground development of nuclear technologies

• Using synergies with nuclear electricity generation

• Development of non-electricity generating nuclear technologies

Rosatom Development:

• Increase the scale in the energy sector

• Commercialization of innovative nuclear technologies

Share

of nucle

ar

industr

y in r

evenue (%

)

Share of electricity sales (%)

Rosatom market

positions, 2010

45% of world’s uranium enrichment

services’ market

10% of world’s uranium mining

17% of world’s nuclear fuel market (supplies

NPPs in Russia and 76 other NPPs across 14

countries )

16% of NPP construction worldwide

World’s №2 in installed capacity

(23.2GW)

-50

0

50

100

150

-50 0 50 100 150

URENCO

USEC

Westinghouse

Areva

EDF

Exelon

EON

KEPCO

Alstom

Hitachi

GE

Rosatom (2010)

Rosatom (2030)

Nuclear technologies

Diversified technologies

Electricity generation

Our mission is resourcing innovation - intensive industries, including provision of raw materials for low carbon energy Our strategic goal is to maximize value to shareholders though capturing market growth potential and becoming a supplier of choice to the world's nuclear industry

ARMZ Uranium Holding role within Rosatom

Enrichment

Fuel Fabrication Conversion

Milling

Mining Recycling

MOX Fuel Fabrication

For Natural Uranium Fuels

Electricity

Power Plant

Spent Fuel Storage

Spent Fuel Disposal

HLW

Reprocessing

6

Exploration

ARMZ Uranium Holding global presence

7

Key Market Challenges

after the Fukushima

8 8

Impact of Fukushima on future demand

9

Three Mile Island, 1979

Chernobyl, 1986

Fukushima, 2011

New

NP

Ps,

GW

e

Dem

and for

ura

niu

m, M

lbs U

3O

8

NPPs newbuilds and demand for uranium

• The number of newbuilds decreased significantly in the USA and some European countries. However, the general

trend for nuclear industry development kept steady, though moderate, and supported demand growth for uranium

(one additional GWe ≈ 65-70 additional lbs U3O8 annually)

The impact of

previous

accidents

?

Source: BMO Capital Markets, McKinsey, WNA, UxC

Current

situation

• Supply-demand fundamentals are different today compared to Three Mile Island and Chernobyl

• The need to address climate change favors nuclear power

Global Average

The majority of world population faces the electricity

shortage

10

Energy sufficient countries, more 5000 kWh per capita

3 046

5 599

1 112

7 515 8 577

9 786

2 460

2 275

513

2 055

2 604

78

4 084

6 394

12 301*

*electricity consumption,

kWh per capita, 2010,

Average by region/country, 2010

3 107

Countries with average energy sufficiency (2500 -5000 kWh)

Countries with inadequate energy supply (less than 2500 kWh)

Approximately 70% of world population face permanent energy deficit

The Fukushima has challenged the nuclear renaissance but

not the fundamentals of industry development

11

The need for a reliable supply of affordable

electricity is growing

Source: U.S. EIA/International Energy Outlook 2010

Nuclear power is the only affordable

baseload electricity solution for the low

carbon economy

Costs

($/MWh) Base load

Nuclear

Gas: CCGT

CO2 costs

($/MWh)

Coal:

w/90%CC(S)

59

Coal: SC/USC 65

86

>100 Renewables

62

partly

-

24

11

-

13

Source: Projected costs of generating electricity 2010 by IEA, NEA,

OECD

1 2

In the short to medium term: change in nuclear politics, refocusing on safety and reduction of the

economic risks of accidents; new regulations will lead to higher costs of newbuilds and NPP

modernization, etc.

In the longer-term: minimal impact on industry development. Nuclear remains to be the solution both for

developing and developed countries, which provides energy security

The impact of

Fukushima

406

495 543

590 639

687 739

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

200

400

600

800

2000 2007 2015 2020 2025 2030 2035

CAGR +1,5% p.a. CAGR +2% p.a.

quadri

llio

n B

tu

Share of nuclear energy in total world energy supply

Source: U.S. EIA/International Energy Outlook 2010 Source: Projected costs of generating electricity 2010 by IEA, NEA, OECD

12

$40,0

$45,0

$50,0

$55,0

$60,0

$65,0

$70,0

$75,0

U3O8 price, USD/pound

Fukushima

accident

-30%

Fukushima accident led to significant decrease in prices. U3O8 spot price fell by 30% from 70

USD/pound to 49 USD/pound and currently is still quite low – just near 53 USD/pound of U3O8

Fukushima accident led to significant decrease in

prices

13

Uranium Supply-Demand Balance

Source: WNA

Atomredmetzoloto:

Diversification Challenges

REE as ―Critical Metals‖

Люминофоры

• европий, иттрий, церий

Сенсорные датчики

• иттрий

Генераторы

• неодим,

празеодим,

диспрозий, тербий

Оптика

• неодим, лантан,

церий

Электроприводы

• неодим

Гидролокаторы

• тербий, ниобий

Электроприводы

управления оперением

ракет

• самарий

Контроль гравитации в

стабилизаторах «умных»

бомб

• неодим

The REE Market Challenges

0

20

40

60

80

100

120

140

160

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010Е

• China– is almost a monopoly

controlling close to 97 % of the

worlds production

• China has introduced a strict

quota system and steadily reduces

amount of rare earths available for

export

• China said in July 2010 that it

would begin cutting exports and

consolidating the industry,

ostensibly for environmental

reasons.

• Prices for REO has spiked

tremendously in 2010-2011, but set

to fall on lower short term demand

forecast

• Current trend for increasing

internal consumption and by as

early as 2015 China may become a

net importer of REO

World Rare earth production 1990-2010

Pro

du

cti

on

vo

lum

e, th

s t

on

ns

China

Others

Sources: Metal Pages, Asian Metals, Lynas Corporation, TMR, Rosatom

Currently a non Chinese production is being formed and will alternate the balance

substantially. Up to 40% REE to be produced outside China in 2020

Diversification has both economical and political reasons

Economical

• Uranium market is relatively

small and consolidated

Diversification allows to

overcome these limitations

• Gains from diversification:

single product risk reduction

and therefore value increase

• Additional revenue and

margin growth

Political

• Insure availability and

readiness for innovation

economic growth

• Develop mineral

resource base

• Geopolitical aspects

Sustainable leadership

18

Min

ing

bu

sin

ess v

alu

e m

axim

izati

on

• Russian strategic deposits + • Quality assets and high margin

production in countries with better mining conditions

Producer with least possible production costs and NPP lifetime supply guarantee

Growth rate surpressing growth rate of the market

Being among top 3 players in the key markets

Atomredmetzoloto:

Next MINEX Conference