KazAtomProm transformation on track

15 September 2017

KazAtomProm is making progress in its transition to become a market-led, flexible supplier, the company's Chief Commercial Officer Riaz Rizvi said today at the World Nuclear Association's Symposium. The company is transforming its approaches to both production and marketing.

Uranium is not alone among extractive industries that are currently experiencing difficult market conditions, Rizvi said. Most commodity industries continue to rely on cost cutting and production reductions to address tough market circumstances. The uranium industry is doing so too, but structural issues - such as the large amounts of capital required for uranium projects and long-term contracts sustaining more expensive production - have meant that as prices have fallen to low levels, supply has not been quick to respond.

NAC KazAtomProm is Kazakhstan's national operator for the import and export of uranium, rare metals and nuclear fuel, and the country has been the world leader in extraction of natural uranium since 2009. Its announcement in January of plans to cut its production by 10% was a fundamental shift in the company's approach to business, as it decided to become market-led, rather than production-led, Rizvi said. "Up until last year, we were very much a production-driven company and our goal was to increase production year-on-year … with no real regard for what the price or the economics of producing those volumes were," he said. "That was a fundamental change in the way that KazAtomProm approaches the market and will continue to approach the market."

The January 2016 announcement followed the launch by KazAtomProm of a number of strategic initiatives under its ten-year transformation program. The program, which began in 2015, aims to transform KazAtomProm's essentially national companies to become global competitors. These initiatives consider best practices for building business processes; automation; effective planning; innovative production decisions and prompt and effective management decisions. Together, they are expected to bring benefits including greater flexibility, efficiency, transparency and profitability.

The transformation program has seen a "massive push" to digitisation in KazAtomProm's production, Rizvi said, with sensors placed to provide real-time monitoring of activities at each stage from the wellhead through processing to transportation of product. Information gathered from the sensors enables real-time decisions and adjustments to be made to the processes involved, and with data from some 20 mines, learning experiences can be applied across operations leading to further efficiencies. All of KazAtomProm's uranium production is by in situ leach methods.

KazAtomProm has also made progress in transforming its customer orientation, Rizvi said. With a relatively new marketing team established over the past two to three years, the company has implemented a new approach to the way it sells its product. Recent years have seen a strong emphasis on diversification, and the company has an equity stake in an enrichment facility, and is constructing a fabrication facility in Kazakhstan.

"KazAtomProm is now not only the largest producer of U3O8 in the world, but also can offer the full range of the front-end of the fuel cycle - it's not just U3O8 and UF6," he said.

Historically, KazAtomProm has been limited in its ability to sell other than in ways prescribed by the government due to being a national company, but is now developing the capability in-house to start to price deals and to structure them in a way that is more relevant to customers, Rizvi said. The company wants to leverage its portfolio to give more flexibility to customers - "being able to deliver anywhere, anytime, at short notice to solve operational issues of users," he said.

KazAtomProm's THK trading house, established in Zug, Switzerland is now operational, Rizvi said. This has enabled the company to tailor its products in a more market-friendly way. The physical presence of THK in Switzerland is also important, Rizvi said, to enable the company to be "very responsive to customers within very short time frames" dictated by supply and demand situations.

KazAtomProm is also looking at how marketing and sales need to be supported by every element in the company in order to deliver, Rizvi said. It is doing this by streamlining processes, putting in performance indicators more focused on "customer-centricity" and working to move away from a bureaucratic culture through a review of systems, processes and people.

The three areas defining KazAtomProm's customer offering are supplier reliability, technical excellence and customer focus, Rizvi said.

"Customers see us as a reliable - but not always a flexible - supplier. That's the area we've focused on improving," he said.

Researched and written
by World Nuclear News