About Norilsk Nickel

Position
of the Company in the Industry

Norilsk Nickel Group of Companies in this Report implies OJSC MMC Norilsk Nickel and an integrity of organizations included in corporate structure incorporated in Norilsk Nickel Group of Companies .

OJSC MMC Norilsk Nickel includes Polar branch, Kransoyarsk transport branch, Murmansk transport branch, Arkhangelsk transport branch, Norilskenergy – Company Branch, Polar transport branch, Krasnoyarsk representation and Head Company’s office.

Unless specified otherwise, when terms Company, Group, Norilsk Nickel, Companies of the Group are used, it means that data is provided for the Norilsk Nickel Group of Companies. Quantitative data in specific areas of sustainable development is related to Group subdivisions in accordance with Attachment 2.

81.8
thousan
people
average headcount of the Group of companies in 2014
including
2
thousan
people
at foreign sites

1.1. Assets

The production units of the Group are located on three continents in five countries of the world: Russia, Australia, Botswana, South Africa, and Finland.

The key units of the Group are located in Russia and represent a vertically integrated business. Two main production sites in the RF include:

  • Polar Division of MMC Norilsk Nickel (hereinafter referred to as the «Polar Division» or «PD»);
  • Kola Mining and Metallurgical Company (hereinafter referred to as «Kola MMC» or «KMMC»).

The Polar Division of the Company is located on the Taymyr Peninsula (Krasnoyarsk Krai), to the north of the Polar Circle. The division is linked with the country’s other regions by the Yenisey River and the Northern Sea Route as well as with the air transport.

Kola MMC located on the Kola Peninsula is the leading production company in Murmansk Region and is completely integrated into the transport infrastructure of the Northwestern Federal District.

The Norilsk Nickel Harjavalta Plant, which is a part of the Group, operates in Finland. This is the only nickel refining plant in the country.

The Australian assets of Norilsk Nickel include:

  • Black Swan и Silver Swan (production of nickel and processing of sulphide-nickel ores) ;
  • License for development of Honeymoon Well field (production of sulphide-nickel ores).

Tati Nickel Mining Company, the enterprise for production of nickel and processing of sulphide-nickel ores, is located in Botswana. Norilsk Nickel holds 85 percent of shares. In South Africa, Norilsk Nickel holds 50 percent of shares of the enterprise for production of nickel and processing of sulphide-nickel ores Nkomati. . The African Rainbow Minerals company is a partner for the project.

MMC Norilsk Nickel has its own global network of representation and sales offices in Russia, Great Britain, China, the USA, and Switzerland.

The Group includes the Gipronickel Institute, a research and development facility located in Saint Petersburg with branches in the cities of Norilsk and Monchegorsk as well as geological enterprises, commodity transport logistics enterprises, and support units comprising over 80 companies in total.

MMC Norilsk Nickel is a major mining and metallurgical company in Russia. The average number of employees of the Group amounted to 81,800 persons in 2014, including 2 thousand employees in the foreign subsidiaries.

The shares of MMC Norilsk Nickel are listed on the First Level at the Moscow Exchange as well as being included on the list of securities admitted to trading at Saint Petersburg Exchange. The ADRs of the Company’s shares are admitted to trading over-the-counter (OTC) in the United States, on the electronic International Order Book Unlisted section of the London Stock Exchange, and on the Freiverkehr (OTC-section) of the Berlin-Bremen Stock Exchange.

Polar Division:  Production Chain

* Refining of precious metals produced by Polar Division and Kola MMC is carried out by tolling to the third-party enterprise JSC Krastsvetmet.

** Closing of obsolete Nickel Plant is planned for 2016.

Kola MMC: Production Chain

* Refining of precious metals produced by Polar Division and Kola MMC is carried out by tolling to the third-party enterprise JSC Krastsvetmet.

1.2. Awards
and Achievements

Production and Economic Efficiency

  • MMC Norilsk Nickel won the Excellent Foreign Surface Finishing Supplier prize at the SF EXPO CHINA Chongqing 2014.
  • Norilsk Nickel won the contest of EMEA Finance international financial journal in the category of “Best Corporate Borrower in CEEMEA region (Central and Eastern Europe, Middle East, and Africa)” following the results of 2013.
  • MMC Norilsk Nickel won a prize at the ISF 2014 exhibition organized by the Metal Finishers’ Association of India. The Association unites the research and development organizations of India specializing in application of electroplating. The Company presented the products designed for electroplating sector at the exhibition: H-1 and H-1у grade cathode nickel manufactured by Kola MMC, cathode nickel and nickel salts manufactured by Norilsk Nickel Harjavalta.
  • Kola MMC became the winner of the Best Russian Exporter 2013 contest in the category “Best Exporter of the Industry Nonferrous Metallurgy (Non-ferrous Metals).” The contest is held by the Ministry of Industry and Trade of the Russian Federation. Deciding on the winner involves a special scoring method based on financial and physical indicators of export reports of the applicants and with regard to the range of manufactured products, demand for them in various sectors of world economy.

Social and Environmental Responsibility

  • MMC Norilsk Nickel was among the winners of All-Russian Contest «Leaders of the Russian Business: Dynamics and Responsibility 2013» held by the Russian Union of Industrialists and Entrepreneurs. It won a special prize «For Transparency».
  • MMC Norilsk Nickel was awarded with the medals and certificates of merit of the 12th Moscow International Energy Forum.
  • Kola MMC became the winner of the regional stage of All-Russian Contest for implemented projects in energy saving and improvement of energy efficiency ENES 2014. The project for reconstruction of the cooling system of turbo compressors for hot water supply to the chemical plant at the concentration plant was nominated the best in the Efficient System of Energy Management.
  • Two social projects of MMC Norilsk Nickel –Add Colours to the City and Leader Movement of Young Specialists–received awards in the 1st All-Russian Contest for the best practices of employers for relations with children, youth and personnel reserve «Creating the Future» held by the Ministry of Education and Science of the RF and International Association of Corporate Education.

Corporate Governance and Transparency

  • The annual report of MMC Norilsk Nickel for 2013 is recognized as the best report of Metallurgy sector at the 17th Annual Contest of Annual Reports of Moscow Exchange and Securities Market magazine. The report was rated among the TOP-10 annual reports of the public companies with the capitalization of over RUB 100 billion.
  • The annual report of MMC Norilsk Nickel won prizes at the 11th Open Contest of Annual Reports of the Joint-Stock Companies in Krasnodar Krai 2014. The prizes were taken for the first place in the category Best Annual Report of the Sector «Industry» and third place in the category «Best Level of Information Disclosure in the Annual Report» by the results of 2013.
  • The Legal Department of MMC Norilsk Nickel became the winner of the contest «The Best Legal Departments of Russia» in the industry nomination «Processing and Sales of Ferrous and Non-ferrous Metals». The victory was announced within the scope of the business program of the Saint Petersburg International Legal Forum, which was held on June 18–21, 2014.
  • The presentation video about MMC Norilsk Nickel won the gold medal at New York Festivals. The video «Norilsk Nickel – the Russian Company» was presented within the scope of the competitive program «Film and Video – Industrial Production».

Personnel Testimonials

  • The General Director of MMC Norilsk Nickel Vladimir Potanin was awarded with the Order of Alexander Nevsky for his participation in the organization, preparation, and holding of the 22nd Winter Olympic Games in Sochi.
  • The General Director of MMC Norilsk Nickel Vladimir Potanin was pronounced the winner of the national campaign «Arts Patron of the Year» of the Ministry of Culture of the RF. The prize is awarded for support to the projects having significant impact on development of culture and arts in the regions of the Russian Federation.
  • Valery Gubarevich (Norilsknickelremont LLC), Anatoly Deyev (Zapolyarnaya Stroitelnaya Kompaniya LLC), Anatoly Dolgoarshinny (Enterprise of engineering railway transport of Polar Division), and Sergey Sukharev (TsATK Transport Association of Polar Division) were awarded with the Order of Friendship.
  • Roman Grabovetsky (OJSC Norilsk Support Complex), Aleksandr Chernykh (Polar Transport Division), Vladimir Kalinin, Andrey Tikhonov, and Anatoly Cherepanov (Norilsknickelremont LLC) were commended with the medal of the Order of Merit for the Motherland 2nd Class.
  • Aleksandr Asanov (Nadezhdinsky Metallurgical Plant of Polar Division), Vera Malyarevich (Norilsk Concentration Plant of Production Association of Concentration Plant of Polar Division), Yury Otsus and Sergey Tseller (Nickel Plant of Polar Division), Oleg Zeybold, Yury Zemtsov and Zirak Fartkhutdinov (Copper Plant of Polar Division), Danil Imayev and Vladimir Yurkin (Nadezhdinsky Metallurgical Plant of Polar Division) were given the title of the Merited Metallurgist of the Russian Federation.
  • Sergey Gorbunov (Zapolyarny mine of Polar Division), Vasily Gusev (Kayerkansky mine of Polar Division), Yury Ivanov, Viktor Kucheruk, and Vladimir Litovchenko (Oktyabrsky mine of Polar Division), Aleksandr Panteleyev (Taymyrsky mine of Polar Division), Sergey Tolkunov (Norilskgeologia LLC), Sergey Gerasimov, Mikhail Magomedov, and Fikrat Samedov (Komsomolsky mine of Polar Division) were commended with the title of the Merited Miner of the Russian Federation.
KEY EVENTS FOR 2014 IN CORPORATE SOCIAL RESPONSIBILITY
  • MMC Norilsk Nickel joined the Anticorruption Charter of the Russian Business
  • The Investment Committee of MMC Norilsk Nickel approved financing for the project “Disposal of salt effluents of nickel refining” based on Kola MMC for 2014-2016 and its completion in the second quarter of 2016. The project is intended to mitigate the adverse effect on water ecosystems of Monchegorsk.
  • Implementation of new standards of industrial safety is started in Polar Division of MMC Norilsk Nickel.
  • Agreement for cooperation for social and economic development of Transbaikal Territory is signed with MMC Norilsk Nickel and Rosatom State Corporation.
  • JSC MMC Norilsk Nokel HR and Remuneration Committee approved Human Capital Assets Development Program.
  • Agreement for target investment program of accelerated closing of Nickel Plant is signed.
  • The results are summarized for the Contest of social projects of the charity program “World of New Opportunities.” MMC Norilsk Nickel selected 91 winners, the total grant funding is RUB 100 million.
  • During the 10th Corporate Forum of MMC Norilsk Nickel, which was held in Norilsk, the employees of the Company provided an updated Development Strategy of MMC Norilsk Nickel.
  • The first building for the employees of MMC Norilsk Nickel participating in the social programs of the Company «Our House» and «My House» is built in Zavidovo settlement of Tver Region.
  • An updated Program for Development of Human Capital Assets of MMC Norilsk Nickel is presented at the conference of the employees of HR unit of MMC Norilsk Nickel.
  • Kola MMC implemented a large-scale project for landscaping of Monchegorsk, Zapolyarny towns, and Nickel settlement.
  • The first cross audit of health and safety is performed in Polar Division of MMC Norilsk Nickel with involvement of the employees of various enterprises of the group into the examination.
  • The overhaul is completed in the section for production of sulphuric acid of the smelter shop of Kola MMC.
  • The overhaul of the line for production of elemental sulphur from purified sulphur dioxide gases of Vanyukov furnaces is started at Copper Plant in Norilsk.
  • The Code of Corporate Conduct and Business Ethics of the members of the Board of Directors of MMC Norilsk Nickel is adopted.
  • The world's northernmost ice rink «Taymyr», which was constructed with participation of MMC Norilsk Nickel, is opened in Dudinka.
  • The commercial tests of the facilities for treatment of exhaust gases from the smelt furnaces are started at the refining shops of Kola MMC.
  • MMC Norilsk Nickel has successfully passed recertification of corporate integrated system of quality and environment management (CIMS) for compliance with the International Standard ISO 9001:2008 and ISO 14001:2004.
  • Kola MMC implemented remote testing of the employees for awareness of industrial safety rules.
  • The Board of Directors of MMC Norilsk Nickel approved the Company policy in anticorruption activity.
  • Forum on social technologies «Partnership. Innovations. Development» organized by Norilsk Nickel was held in Norilsk.
  • Forum of social technologies «Partnership. Innovations. Development» organized by MMC Norilsk Nickel took place in Monchegorsk.
  • MMC Norilsk Nickel delivered to the Administration of Konakovo district of Tver region a package of documents related to organization of a multifunctional recreation and health complex in the territory of the district, which will become an element to the special economic zone for tourism and recreation being created.
  • The Board of Directors of MMC Norilsk Nickel approved the Program for Development of Human Capital Assets.
  • The Board of Directors of MMC Norilsk Nickel approved the Policy for Advanced Training for the Members of the Company Board of Directors

1.3. Key Indicators

PRODUCTION AND ECONOMIC INDICATORS

CREATED AND DISTRIBUTED DIRECT ECONOMIC VALUE

ENVIRONMENTAL INDICATORS

Indicator Unit 2012 2013 2014
Area of disturbed lands in arrears ha 12,205.6 12,389.1 12,475.6
Energy consumption inside the Norilsk Nickel Group of companies
TJ 173,742 169,307
Total amount of water used million m3 1,319.5 1,348.0 1,417.8
Ratio of reused and multiuse water in the total amount of water used % 85.7 92.2 92.3
Total volume of waste water discharge million m3 146.5 146.2 145.6

SOCIAL INDICATORS

Indicator 2012 2013 2014
Average number, persons 84,082 84,998 81,855
Average number in the regions, persons
RF 81,973 83,005 79,897
Europe 315 297 290
Asia 19 15 12
Northern America 9 10 10
Australia 106 73 15
Africa 1,660 1,598 1,631
   South Africa 862 842 833
   Botswana 798 756 748
Indicator 2012 2013 2014
Expenses for social program for the employees, including, 1 RUB million 8,124 7,885 7,502
Expenses for social program
Health resort treatment and recreation of the employees and their family members 1,501 1,468 1,607
Reimbursement to the employees and their family members for return fare and luggage transportation to the recreation location 2,700 3,025 2,960
Pension plans 1,125 1,128 855
Housing program 2,174 1,568 1,506
Assistance in employment at a new place of residence for newly hired employees as well as various incentives and safeguards 291 324 238
Social focus projects (development of target groups, sports, and festive events) 333 372 336
Indicator Unit 2012 2013 2014
Staff turnover % 11.8 12.1 11.3
Labour protection expenses per one employee per year RUB thsd/person 77 51 47
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