China General Nuclear (CGN) is expected to acquire a 49% stake in Ortalyk LLP, a wholly-owned subsidiary of Kazakh uranium producer Kazatomprom, by mid-2021. The transfer of the stake was part of cooperation agreements signed between CGN and Kazatomprom in 2014, 2015 and 2016.
In 2014, CGN and Kazatomprom signed a cooperation agreement in the field of nuclear energy, which considers the creation of a joint venture for the production of fuel assemblies in Kazakhstan for Chinese nuclear power plants. The agreement provided for CGN's undertaking to ensure the sale of 200 tonnes of nuclear fuel assemblies per year for 20 years in China. In exchange for this, the agreement also provided for the establishment of a joint venture to develop a uranium deposit in Kazakhstan with reserves of 40,000 tonnes of uranium, which was expected to be implemented on the basis of Ortalyk LLP.
In 2015, an agreement was signed between Kazatomprom and CGN on commercial terms for the design and construction of the fuel assembly production plant in Kazakhstan and for the joint development of uranium deposits in Kazakhstan.
Subsequent fuel principles agreements and a mining principles agreement were signed in 2016 between Kazatomprom and CGN. In accordance with these, CGN subsidiary CGNPC Uranium Resources Company Limited (CGNPC-URC) committed to buy 200 tonnes of fuel assemblies annually from the Ulba-FA plant within 20 years. Kazatomprom and CGN agreed that subject to Ulba-FA receiving the first fuel assembly contract from CGNPC-URC, Kazatomprom would sell to CGN or its affiliates an up to 49% interest in Ortalyk LLP.
Kazatomprom has now announced that commissioning and licensing of the Ulba-FA plant was completed last year. The first production from the plant is expected towards the end of 2021, with first delivery of finished, certified fuel assemblies to the customer in 2022. The first five-year contract for the procurement of fuel assemblies from the plant was signed between Ulba-FA LLP and CGNPC-URC last month, it added.
"The subsequent transfer of a 49% interest in Ortalyk LLP to CGNPC is expected to be completed by 30 June 2021 (subject to corporate and governmental approvals)," Kazatomprom said. "Upon completing the sale of an interest in Ortalyk LLP, Kazatomprom will retain a 51% interest and CGNPC or its affiliates will acquire a 49% interest, with each partner purchasing a proportionate share of uranium production from the operation according to interest."
Ortalyk LLP owns a 100% interest in the Central Mynkuduk Deposit and fulfilled exploration and trial production at the Zhalpak Deposit, which contain JORC-compliant aggregate mineral resources of approximately 40,413 tonnes of uranium (at 31 December 2019). The Mynkuduk Deposit has a design capacity and subsoil use agreement in place to produce 2000 tonnes of uranium per year (currently operating 20% below permitted capacity, as per Kazatomprom's market-centric strategy). The production capacity of the Zhalpak Deposit will be determined through subsoil use contract negotiations with the Kazakh government.
