Finance
and tax
management

Economic efficiency

Economic efficiency is essential for us to meet our strategic goals and finance ESG transformation.

Economic efficiency is essential for us to meet our strategic goals and finance ESG transformation.

In 2021, our consolidated revenue increased by 15% to USD 17.9 bn mainly due to higher exchange metals prices and stronger sales of palladium stocks accumulated in 2020. This helped offset the production decline caused by 1H 2021 incidents.

EBITDA rose by 37% to USD 10.5 bn on the back of revenue growth, with Bystrinsky GOK EBITDA reaching USD 1.1 bn. EBITDA margin totalled 59%.

Our CAPEX for the year increased by 57% to a record USD 2.8 bn due to the strategic CAPEX growth for key projects. Expenses under the Sulphur Programme, which has entered the active phase, exceeded USD 500 mln, while investment in the South Cluster project and expansion of Talnakh Concentrator saw a three- and four-fold increase, respectively. Expenses on capitalised overhauls, industrial safety and fixed assets upgrade at the Group companies grew by more than 40% and surpassed USD 800 mln.

Our net debt remained almost flat at USD 4.9 bn, with the net debt/ EBITDA ratio amounting to 0.5x as at 31 December 2021.

Tax strategy

GRI 207-1

Timely payment of taxes and compliance with tax laws are vital for achieving Nornickel’s strategic goals in sustainable development.

Nornickel is Russia’s major taxpayer in the metals and mining industry.

The key document governing the Company’s tax matters is its Tax Strategy Policy, which sets general operating principles for the tax functions of MMC Norilsk Nickel and its subsidiaries and improves the efficiency of their financial and economic operations by managing the tax burden and tax risks.

The Head of the Tax Department, who reports to Nornickel’s Senior Vice President and CFO, is in charge of the tax strategy development. The tax strategy and any substantial amendments thereto are subject to approval by MMC Norilsk Nickel’s Management Board. Updates and significant changes are introduced as needed, but at least once every three years.

Approach to taxation

The Group is committed to openness and transparency in managing its tax compliance, including by:

• disclosing relevant information for stakeholders on its corporate portal to the maximum practicable extent;
• taking a zero-tolerance approach to non-transparent corporate structures used for tax avoidance.

The Company has in place the Tax Department, which prepares internal regulations (guidelines, explanations, information letters) based on the current legislation, arbitration practice, regulatory clarifications and other circumstances, and communicates them to the Group’s business units If necessary, the Tax Department requests specific clarifications from competent authorities or a reasoned opinion of the tax authority required for the companies participating in tax monitoring.

Nornickel takes a conservative approach to all controversial tax issues arising in all jurisdictions across the Group’s footprint. The Group considers unacceptable any use of aggressive tax planning schemes.

All intra-group transactions between the Group’s companies are made using market prices. In terms of transfer pricing, the Group complies with the basic principles set out in the Organisation for Economic Cooperation and Development (OECD) Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations and follows the laws and regulations of Russia and other countries of operation.

The Group’s foreign entities interpret applicable tax legislation and resolve controversial tax issues independently.

Cooperation with tax authorities

GRI 207-3

Just like other stakeholders, our relations with tax authorities are governed by openness, partnership, timeliness of response handling, and completeness of disclosure. The Group’s companies interact with tax authorities as part of tax control, when obtaining clarifications on the current legislation, and when signing pricing agreements.

Nornickel participates in the tax monitoring system, which provides tax authorities with real-time access to the Company’s tax and accounting data and eliminates the need for inspections. By giving tax authorities direct access to its corporate accounting system, the Group clearly demonstrates its highly professional and ethical approach to tax matters.