Kazatomprom sustainability governance structure

The Company's sustainability management model facilitates the incorporation of sustainability considerations in Kazatomprom's governance structures. The Board of Directors has primary responsibility for managing sustainable development.

The Board of Directors and its committees play a central role in setting and shaping the Company’s sustainability agenda and in identifying priority areas, assessing risks, and conducting sustainability performance reviews. At the Corporate centre level, the Management Board is responsible for overseeing all decisions and processes related to managing environmental, social, and economic sustainability issues; identifying and assessing sustainability risks; and monitoring progress on sustainability performance.

Sustainability-related responsibilities are distributed among corporate functions, which are ultimately accountable for developing and implementing the sustainability agenda, and monitoring target attainments in their respective functions. The Sustainable Development Department coordinates implementation and provides methodological support for sustainability initiatives and activities, and also ensures sustainability information transparency and disclosure.

At the subsidiary level, structural divisions that oversee various sustainability-related areas (including operations, health and safety, environmental protection, human resources, and economic stability) are responsible for putting the sustainability agenda into operational action, as well as monitoring and reporting on progress in their respective areas.

Kazatomprom supports the UN’s 2030 agenda for Sustainable Development and achievement of the 17 Sustainable Development Goals (SDGs). The Company also recognises the importance of the joint efforts that governments, business, and society must make to address mankind’s fundamental social, environmental, and economic challenges and opportunities to drive progress in sustainable development.

The Company seeks to contribute to attaining global sustainable development goals by implementing sustainable development principles and values and applying good business practices, adopting economically feasible measures to mitigate impacts from operating activities on the environment and local communities, and increasing value for all stakeholders.

While recognising the importance of all 17 SDGs, Kazatomprom focuses its efforts on six goals that are of particular significance to its business and the uranium mining industry and in relation to which it can make meaningful progress. In the table below the Company discloses how its activities and sustainability initiatives contribute to achieving SDGs. Going forward, Kazatomprom will be reviewing its sustainability targets and initiatives to ensure that they reflect the priorities of the most pertinent SDGs.

Kazatomprom stakeholder map

The extent of stakeholder influence on the Company

The extent of Company influence on the stakeholder

An effective stakeholder communications system plays an important role in attaining the Company’s strategic goals and in fostering a positive reputation on global markets. When determining the list of key stakeholder groups, Kazatomprom takes into account aspects such as the extent of mutual influence and areas of mutual interest.

The key stakeholder groups of the Company consist of employees and labour unions, shareholders, partners, creditors, suppliers and customers, subsidiaries, management and staff, public and local authorities, the media, local communities, investment analysts, business communities, and international organisations.

The Company has developed a Stakeholder Map that takes into account the interests and needs of all stakeholders. The Company, aware of the consequences of its activities, interacts with stakeholders on the basis of materiality principles when assessing the issues that they face and when providing appropriate response to their requests.

The Company’s Stakeholder Map (which assesses the mutual influence of Kazatomprom and its stakeholders) and communications plan are updated annually. As a result of the Company’s expanding global presence, three new stakeholder groups emerged in the reporting period: business communities, international organisations, and investment analysts.

Also, during the reporting period the extent of stakeholders’ mutual influence was reassessed, information was consolidated on the mechanisms and measures to be implemented in 2020 regarding interaction with the Company’s stakeholders, and the list of mechanisms and the plan for communicating with stakeholders were updated.

The charitable activities of Kazatomprom as a Corporate centre are currently being implemented by the Samruk-Kazyna Trust Social Development Foundation, which implements socially significant projects that are selected on a competitive basis.

The Samruk-Kazyna Trust is the only charity operated by SamrukKazyna, and it implements projects and programmes to resolve socially significant issues.

To support local communities, subsidiaries and affiliates can implement charity initiatives independently.

In 2019 Kazatomprom and its subsidiaries and affiliates concluded 109 R&D agreements, having a total value of KZT 3.2 billion. The Group filed 28 applications for patents for inventions, receiving 20.

The Group regularly evaluates and updates its activities in accordance with the Strategy and policy for innovative and technological development. For example, in 2019 one meeting of the Scientific and Technical Council of Kazatomprom was held, in addition to 12 meetings of specialised scientific and technical councils on priority areas of the Group’s scientific and technological activities.

In order to commercialise the results of scientific and technological activities in 2019, the Company continued to focus on signing licence agreements between Kazatomprom and various subsidiaries and affiliates (Karatau LLP, JV South Mining Chemical Company LLP, JV Inkai LLP, and Appak LLP) to grant the right to use the invention “Method for obtaining natural uranium concentrate from uranium solutions”. The patent holder is Kazatomprom.

Also, work began on an audit of the fair use and commercialisation of the intellectual property of Kazatomprom and its subsidiaries and affiliates.

Practically all the R&D of the Group is geared towards improving and modernising production.

In 2019 a number of large R&D projects were implemented:

The complete transition of all stages of the procurement process to the E-procurement information system 2.0 portal was an important step in the optimisation and automation of the procurement process in 2019. The Electronic Procurement Plan and Automated Reporting System, which had been previously used for certain procurement procedures, were discontinued.

In 2019 testing also began on the SAP ERP system deployed at eight subsidiaries and affiliates, with a view to automating procurement planning. The deployment of this system within the procurement process will facilitate the following changes: procurement plans will be created, then adjusted and approved in the SAP ERP system, then automatically integrated into the E-procurement information system 2.0, where all subsequent procurement processes will take place.

The automation of the procurement process can allow significant time and cost savings, thereby facilitating a consolidation of all necessary information, as well as rapid access to it.

In compliance with state policy, the Company assists in concluding contracts for the procurement of products, work, and services between its subsidiaries and affiliates and local suppliers in order to support domestic suppliers in the regions.

In 2019, in order to support domestic producers, and drawing on import substitution groups of experts, the Company created a Central Project Office (including subsidiaries and affiliates) at the site of Samruk-Kazyna Contract LLP. Here off-take contracts (stipulating that a certain quantity of goods should be purchased) are concluded with producers; for example, in 2019, 14 off-take contracts were concluded, for KZT 102.3 million.

The uranium mining technology used by the Group has a lower impact on the earth and the environment than other known mining methods. Nevertheless, conditions at production sites and the functioning of infrastructure and mining processes are constantly monitored.

A mandatory stage in the lifecycle management of deposits is the implementation of measures to decommission facilities and to rehabilitate land after a decision has been taken to close a production site.

Once a field’s reserves are depleted, the closure of the field's production facilities (site) at the end of its operational life must be carefully planned.

For each field (site), the subsidiaries and affiliates of the Company develop a liquidation and restoration project to mitigate the consequences of subsoil use, which stipulates the liquidation of wells, capital structures and other infrastructure, and environmental field (site) remediation, in accordance with Kazakh law requirements. An internal standard related to performing restoration work has been developed and applies to the Company and its subsidiaries and affiliates. Under the terms and conditions of subsoil use contracts, the Company annually transfers funds to a special deposit account (liquidation fund) in any bank of the Republic of Kazakhstan.

Developed projects are coordinated inside the Company with structural divisions, and then sent for approval to the Committee for Sanitary and Epidemiological Control of the Ministry of Health of the Republic of Kazakhstan and the Committee for Environmental Regulation and Control of the Ministry of Ecology, Geology, and Natural Resources of the Republic of Kazakhstan.

During project development and approval, the Group communicates with various stakeholders, participates in public hearings, and publishes the closure project in regional media.

The process of closing fields (sites) begins after the full depletion of in-place uranium reserves prescribed in subsoil use contracts. Initially, measures are taken to reallocate and employ discharged employees. Subsequently, in accordance with the project developed to eliminate the consequences of subsoil use, a package of measures related directly to the closed site is implemented.

Kazakh law stipulates requires the restoration of a field to its initial condition prior to development.

After completing the full scope of work stipulated in the liquidation project, a system is installed to monitor the condition of groundwater. For this purpose, a network of observation wells is created at a site. Checking background radiation is also carried out as part of this monitoring system.

In 2019 the development of reserves was completed at two fields (sites), where the subsoil user is Kazatomprom-SaUran LLP: Site No. 1 of the Moinkum field, and the Uvanas mine – the first uranium deposit in Kazakhstan to be fully depleted using the in-situ leaching method.

All contractual obligations to the state related to these sites have been fulfilled, measures have been taken to reallocate and employ the discharged employees, and work has begun to eliminate the consequences of subsoil use.

The IT Service Management (ITSM) project is being implemented within the digital transformation programme. This is a service approach to IT management, which recommends focusing on business requirements and services delivered via information technology to users. The project covers the implementation of 12 automated IT management processes that are aimed at improving the quality and speed of IT services. At the same time, service level agreements (SLA) enable IT providers to offer quality services and the IT departments of the Company to measure, monitor, and improve quality.

Since May 2019 an IT management system has been in operation at the central office, KAP-Technology LLP, and RU-6 LLP. In December the ITSM system was launched for commercial operation at Semizbai-U LLP, Trade and Transport Company LLP, Baiken-U LLP, Kazatomprom-SaUran LLP, Appak LLP, and Ortalyk LLP.

ITSM allows users to register service/access requests and incidents through a self-service portal and to track the status of their request. The system includes a feedback function to evaluate results and improve the quality of services. The system reduced the execution time of access requests from five-to-seven to one-to two business days.

Use of the system at subsidiaries and affiliates will be monitored until the end of May 2020.

Employees play a key role in production processes and they are the main driver of success at Kazatomprom. The Company strives to maintain comfortable working conditions and provide career advancement opportunities for all employees, and to build open and transparent internal relationships.

The Company’s guiding document in HR management is the Kazatomprom HR policy for 2018–2028 (HR policy), whose purpose is to facilitate the attainment of the Company’s strategic goals by fostering effective individual and team work among qualified and motivated employees that share the Company’s values. The HR policy complies with the adopted Development Strategy of Kazatomprom for 2018–2028.

The most ambitious human resources management goals reflected in the Company's Development Strategy until 2028 are to develop a corporate culture and to bolster the role of HR as a strategic business partner.

During staff recruitment and development, and when supporting the corporate culture, the Company adheres to the provisions of the collective bargaining agreement, the Code of Ethics and Compliance, and Corporate Social Responsibility principles. The Company is also governed by international initiatives on employee interaction.

When interacting with employees, Kazatomprom pays close attention to employee interests and rights.

The Company categorically rejects discrimination based on gender, age, nationality, religion, or physical characteristics, as well as forced and child labour. In this regard Kazatomprom complies with respective international human rights standards as well as the provisions of the Code of Ethics and Compliance of the Company.

The safeguarding of employee interests and rights is monitored by the Ombudsman, compliance services, and trade unions. The Ombudsman regularly holds meetings with the workforces of subsidiaries and affiliates in order to clarify the norms of the Code of Ethics and Compliance, and also holds individual meetings with the employees of entities on personal issues.

In the reporting period no cases of discrimination or other human rights violations were recorded.

In addition to bachelor’s and master’s educational programmes, the Company pays significant attention to the continuing education of employees. Further education programmes are implemented both in professional areas, including compulsory training in accordance with the legislation of the Republic of Kazakhstan, and target areas, such as leadership development, lean manufacturing, corporate culture, and safety culture.

2019 also saw the launch of the School of Internal Trainers at Kazatomprom, whose purpose is to share within the Group the professional knowledge and skills required to resolve production and management tasks. The school will allow the Company to facilitate the direct transfer of knowledge and experience, thereby maintaining succession principles and complying with the modern standards of a self-learning organisation.

Furthermore, Kazatomprom creates all the necessary conditions for the selftraining of employees. The Company has an electronic corporate library that can be accessed by all employees through an app on a computer or phone/tablet. Also, in 2020 there are plans to open a special reading room, which will create a learning and development space in which, employees can access a wide range of books on current topics and modern business issues.

Kazatomprom supports the freedom of trade unions and workforces. Around 73% of the Group’s employees are members of the Sectoral Union of Nuclear Industry Workers public association. Employment relations between Kazatomprom and its employees are regulated by a collective bargaining agreement. In the reporting period, 98% of employees were party to collective bargaining agreements, the same level as in 2018.

Currently the collective bargaining agreements of the Group are valid on average for three years and subject to regular renewal. In addition, collective bargaining agreements require the Company to notify employees in advance about any significant changes in the activities of the Group. The minimum notification period for employees at most entities is at least four weeks and, in some cases, two weeks.

A number of Kazatomprom entities provide additional benefits to those required under Kazakh law.

Additional social benefits are prescribed for certain categories of employees. For example, the Company provides additional paid leave to single parents and mothers with three-or-more children under the age of 12. Material assistance is furnished to large families and families with disabled children under the age of 18. At the same time, Group entities apply the same approach to full-and part-time employees.

Kazatomprom also provides social benefits to retired employees upon the termination of their employment contract due to age or disability.

In order to provide social guarantees and benefits to employees, the collective bargaining agreements stipulate annual payments to the trade union, equivalent to at least 2.5% of the annual payroll of Kazatomprom. In the reporting period the trade union was allocated KZT 230 million, a rise of KZT 30 million on 2018.

The Company also annually allocates funds for employee medical insurance. In 2019, over KZT 852 million was allocated for these purposes, a rise of KZT 30 million on the previous reporting period.

As the Group is a group of manufacturing enterprises, the Company has obligations towards employees during the liquidation/restructuring of subsidiaries and affiliates. Employees are helped to find employment at other Group entities or at the Company’s service providers, and are invited to attend professional retraining programmes or receive compensation packages.

Kazatomprom makes significant investments in developing sports and cultural events at the Group, thereby contributing to an increase in employee motivation and engagement.

The main sports event in 2019 was the XIX Spartakiad among employees of the nuclear industry, which was held for the first time in Shymkent.

In the reporting year a number of creative contests were held at the Group; in particular, a video contest on the topic Our Best Scientific Work, a poetry contest, and the Sparkle of Talent competition. In 2019 a gala event was held at Kazatomprom, in honour of the Day of Nuclear Workers, with awards presented to the best employees of the Group.

Another exciting event was a two-day visit by the families of employees to JV Katco LLP.

Internal communication channels are the main tool for exchanging information among the management, employees, and divisions of the Group. The unified system is designed to not only provide timely information to employees about current Group events, but also to promote a cordial atmosphere within the workforce and to bolster the Company’s image as a successful and socially responsible organisation.

Since March 2019 a weekly news bulletin has been published at the Group. The Company also publishes the QazAtomNews corporate magazine, which has a circulation of 2,000.

Internal communication channels are also used to notify employees, such as town halls, meetings, management meetings with the workforce, events aimed at strengthening the corporate culture, and newsletters/appeals on behalf of management.

Kazatomprom has created a feedback system on the Company’s website, which enables external stakeholders to leave a written request or complaint or to call a hotline. The monitoring and analysis of requests is carried out by the Group’s entities, which submit quarterly reports to the Kazatomprom’s central office. Based on the results of the analysis, each request is monitored to eliminate violations, and respective recommendations are issued.

In 2019 the Group received 40 requests from the employees of enterprises. Most of these requests were personal in nature (requests for financial assistance, finding employment for relatives, etc.). Eight requests related to remuneration, the termination of employment, and relations with management. In the reporting period all requests were dealt with by the deadlines prescribed under Kazakh law.

In 2020 Kazatomprom will continue to implement projects as part of the business transformation programme, including the automation of HR management processes.

The development of the corporate culture will be another significant area of work in the coming year. There are plans to improve the succession programme, introduce a culture of personal responsibility at all management levels, and foster a culture of mentoring and social partnership.

It is expected that the large-scale work carried out in 2019 and the planned initiatives will bring about a high level of employee satisfaction and commitment to the Kazatomprom’s values, which will in turn contribute to attaining a high level of production efficiency at the Group.

Kazatomprom prioritises occupational health and safety and industrial, nuclear, and radiation safety at production facilities.

The Group strives to comply with international best practices, adhere strictly to national and international requirements, and continuously enhance the health, safety, and environment (HSE) management system.

The key HSE risk management process forms an integral part of both the corporate risk management system and the Group’s occupational health and safety management system.

The Company’s Risk Register identifies work-related injuries as being a major risk. The Group has drafted a list of actions to prevent risks and to mitigate their consequences, including:

Production activities at Group entities are carried out in compliance with occupational health and safety requirements. A wide range of measures are carried out on an ongoing basis to prevent accidents and injuries. The Group carries out systematic work to align the safety culture with international best practices and to increase the level of conscious compliance with production safety requirements by employees and managers at all levels. In 2019 the occupational health and safety management system covered 100% of the Group’s employees.

Supporting an International Social Security Association (ISSA) initiative to improve safety, health, and wellbeing at work, the Company is registered as a member of the Vision Zero international programme. This membership is testament to the Company's belief that a well-developed culture of prevention can reduce the number of accidents and occupational diseases.

In order to preserve the lives and health of employees, and as part of implementing the Vision Zero concept, the Company has determined and adopted the Golden Safety Rules, which are binding on all Group employees and contractors.

In 2019, KZT 7.23 billion was spent on HSE actions. The main investments were in special power supplies (42%), purchasing personal protective equipment (15%), and improving working conditions (14%).

Kazatomprom annually drafts a range of measures to improve the HSE management system. On 20 February 2019 a corporate meeting was held entitled “Results of the work of Kazatomprom enterprises in 2018 and tasks for 2019 related to occupational health and safety, environmental protection, and industrial, radiation, and nuclear safety”. Based on the results of the meeting, a protocol was adopted, containing 30 instructions on how to improve production safety.

Scheduled inspections of subsidiaries and affiliates for compliance with HSE regulations are carried out on an ongoing basis.

In 2019 the Lock out/Tag out system (the locking of hazardous energy sources, with warning tags posted) was installed at all subsidiaries and affiliates, together with a procedure for recording hazardous actions, hazardous conditions, and potentially dangerous near-miss accidents.

At Group entities special attention is paid to the health of employees. For example, the employee benefits package includes full medical insurance, and employee health improvement and health resort treatment programmes are also available. The terms of these programmes are set out in collective bargaining agreements. Additional health improvement and health resort treatment programmes are organised for employees through the trade union for nuclear industry employees. Employees of subsidiaries and affiliates are given three healthy and nutritional meals a day. In 2019 the Company allocated KZT 3.2 billion for these purposes.

Medical facilities are organised at all subsidiaries and affiliates. In 2019, over 12,500 employees applied for medical care. The main causes of treatment were coughs, headaches, and high blood pressure.

Preliminary, periodic, and extraordinary medical examinations of employees are regularly conducted at the Group’s production facilities. Based on the results, employees are sent if necessary for in-depth preventative examinations. In 2019, KZT 637 million was spent in the area of disease prevention.

Mandatory pre-shift physical examinations are frequently conducted at Group subsidiaries and affiliates. Employees that have not undergone a medical examination are not allowed to work.

Kazatomprom actively involves its employees in health and safety management. In accordance with the Kazakh Labour Code, Group entities have established production safety councils, which include on a parity basis representatives of the employer and employees, including technical inspectors. Production councils do not replace occupational safety services, but instead supplement their occupational health and safety activities, work-related injuries, and occupational diseases. In addition, production councils organise occupational health and safety inspections at workplaces by technical labour inspectors. Decisions of the production council related to occupational health and safety are binding on the employer and employees.

In 2019, as part of the implementation of continuous improvements to the HSE system, the Company assessed the HSE system of Kazatomprom in accordance with the protocol order of the Production Safety Committee of Samruk-Kazyna. As part of this event, ways to question the employees of subsidiaries and affiliates about production safety issues were tested. An analysis of likely systemic noncompliance with HSE requirements and SWOT-analysis were conducted during the HSE system assessment.

In order to reach the goal of zero work-related injuries and to ensure production safety, a safety culture is successfully being implemented at Group entities, based on the Golden Safety Rules of the Vision Zero international concept. In 2019 cascading communications were held in subsidiaries and affiliates, with the participation of senior management, to explain the Golden Safety Rules.

The Company has developed and successfully implements the training programme “Development of occupational health and safety culture skills and competences”. In the reporting period CEOs and other employee categories in subsidiaries and affiliates were trained on how to enhance the safety culture, including through holding behavioural safety audits and identifying potentially dangerous near-miss accidents, hazardous actions, and hazardous conditions. Trainings and HSE knowledge testing was delivered to the Group’s employees, as well as a master class on the topic “Developing a safety culture at Kazatomprom”.

Kazatomprom is constantly improving its HSE system, including through adopting international best practices. From 9-13 September 2019 in Almaty the IAEA conducted a training course for Company employees on protecting employees in mining and processing enterprises of the uranium industry from radiation exposure. And from 9-16 June 2019 the Company took part in the IAEA technical meeting on the topic “Annual Meeting on the Regulation of the Safety of Uranium Production and Natural Radioactive Material (REGSUN)” in Vienna in Austria.