2021 sustainability report

STATEMENT OF THE PRESIDENT AND CHAIRMAN OF THE MANAGEMENT BOARD

GRI 102–14

Dear shareholders, investors, consumers, and colleagues,

I present to you Nornickel’s 2021 Sustainability Report.

The facts it contains clearly demonstrate our Company’s commitment to principles and goals of sustainable development, including the UN Global Compact, which Nornickel signed in 2016.

Last year, our Board of Directors adopted the Environmental and Climate Change Strategy. It follows a close collaboration with stakeholders and a benchmarking audit based on core environmental objectives. The Strategy covers six key areas of environmental impact: air, water, tailings and waste, land, biodiversity, and climate change.

Nornickel updated its corporate governance structure responsible for the environment so as to improve risk management processes and make sure the Strategy is successfully implemented. To that end, the Company put in place corporate functions responsible for sustainable development, with long-term targets approved for all focus areas of the environmental strategy and annual and long-term KPIs now updated.

We continue to prioritise occupational health and safety. Zero workplace fatalities are our key goal in this area. The Company has analysed all incidents that took place in 2021, including the incident at Norilsk Concentrator. At facilities deemed to be exposed to safety risks, repairs have started. Expenses on capitalised overhauls, industrial safety and fixed assets upgrade at the Group companies grew by more than 40% and surpassed USD 800 mln. Nornickel engages all of its employees into the transformation process and creation of a safety culture.

The Sulphur Programme is now in its active stage as Nornickel’s largest and crucial environmental initiative that will see sulphur dioxide emissions in Norilsk reduced by 90% in five years. In 2021, emissions at Norilsk Division went down by 250 kt of SO2, with total sulphur dioxide emissions at Kola Division declining by 90% (vs the 2015 base).

«Nornickel is also involved in a pilot project introducing an automatic air quality monitoring system in Russia. The initiative will be part of the Environment national project and will expand nationwide going forward. Based on the data obtained as part of the project, appropriate regulations will be drafted and approved.

Last year, the Company ran a comprehensive programme to eliminate the damage caused by the environmental incident at HPP-3 in Norilsk. Extensive work was carried out to rehabilitate disturbed and contaminated land and restore biodiversity in the territory. All the efforts involve strong engagement of the scientific community, with yet another stage of the Great Norilsk Expedition completed in 2021. Comprehensive research undertaken by the Siberian Branch of the Russian Academy of Sciences will help forecast and plan further clean-up activities while also serving as a basis to develop recommendations for sustainable business practices in the Russian Arctic.

Also in Norilsk, the Company launched a large-scale programme to clean up areas contaminated with industrial and construction waste. Nornickel’s total investment in the programme over the next ten years stands at RUB 40 bn. The clean-up programme will cover the entire Norilsk and will include demolition of old abandoned buildings and structures, pipelines, networks and grids, as well as removal of scrap metal accumulated near industrial facilities.

The climate change agenda calls for controls to be put in place to monitor relevant risks, above all rising temperatures in the Arctic. Nornickel is deploying a system in Norilsk to monitor permafrost under buildings, structures, and facilities of both the Company and the city, which will make it possible to forecast climatic and geocryological risks and develop measures to mitigate them.

The Company continues to take an active part in the social, cultural, and economic development of its regions of operation through the World of New Opportunities programme, as well as development agencies in Norilsk, Monchegorsk, and Pechengsky District. These agencies promote, among other things, the development of local small and mediumsized businesses, tourism, modern sports infrastructure, transportation systems, and telecommunications infrastructure, and encourage public initiatives in the region.

Sustainable development is becoming increasingly ingrained in the Company’s corporate culture. This is evidenced by the active participation of over 3,500 Nornickel employees in the Plant of Goodness corporate volunteer programme.

Responsible production is Nornickel’s major commitment as one of the world’s largest industrial groups. One of our top priorities is to keep our greenhouse gas emissions at the lowest level in the metals and mining industry while at the same time increasing the output of metals that are essential for the global transition to a green economy.

In 2021, Nornickel made the first batch of 5 kt of carbon-neutral nickel. This was enabled by carbon offsets aimed at reducing greenhouse gas (CO2) emissions across the value chain, from ore mining to concentration and refining.

Development of the territories where we operate is among our priority focus areas. By its decree, the Russian Government approved the Comprehensive Plan for Social and Economic Development of Norilsk, which is part of an agreement on cooperation among the Ministry for the Development of the Russian Far East and Arctic, Krasnoyarsk Territory, the city of Norilsk, and Nornickel. The plan contains a variety of initiatives aimed at improving the well-being of the city’s community. In line with the document, RUB 120 bn will be disbursed until 2035, with RUB 81.3 bn of that amount to be provided by Nornickel.

Nornickel is working closely with organisations representing the indigenous peoples of the North who live in territories of operation. We make sure that any decisions we take are fully transparent and joint projects are as effective as possible. Nornickel was the first company to launch the Free, Prior and Informed Consent (FPIC) process in the Russian Arctic, enabling indigenous peoples of Taimyr to choose a relocation option for Tukhard residents. This procedure helps guarantee the protection of rights of indigenous minorities to independently define their political, social, economic, and cultural priorities.

In 2021, Nornickel increased its support for indigenous peoples of Taimyr by RUB 100 mln, in addition to the financing approved for a five-year programme focusing on the support of traditional indigenous activities and protection of native habitats. Under the programme, a total of RUB 2 bn are to be allocated.

Nornickel continues to set high standards of social guarantees and salaries and wages in the industry. Last year, MMC Norilsk Nickel signed an updated collective bargaining agreement for 2022–2024. As a responsible employer, we provide our people with support that is considerably above the statutory minimum. To enhance social protection of our employees, we stepped up targeted support for certain categories.

A major milestone was the launch of the first corporate healthcare centre in Norilsk, with four more to open their doors in the Norilsk Industrial District and Dudinka over the next few years.

As part of our long-term sustainability strategy, we are committed to green production and support for a global energy transition and shift to green transport. The strategy involves the modernisation of production assets using best available technologies and clean tech solutions, maintaining a low carbon footprint among global diversified metals and mining players, and improving energy efficiency and long-term resilience to climate risks. By delivering against these ambitious targets, we will be able to perform strongly across all our areas of operation while taking leadership in sustainable development.

Nornickel’s strategic goals are inseparable from the sustainability agenda. This topic becomes even more relevant for our Company. Our key priorities are as follows: resource and energy efficiency, circular economy; social and labour matters; quality of corporate governance; environmental and social programmes in the regions of operations.

For us, ESG is a business philosophy, a mindset of management teams, a corporate culture and a long-term value platform.

Vladimir Potanin

President and Chairman of MMC Norilsk
Nickel’s Management Board