Development
the Territories of Operation

6.1. Contribution to the Economy of the Regions of Operation

The city-forming status of its enterprises is due to the participation of MMC Norilsk Nickel in the development of the principal territories. The Company makes a significant contribution to the social and economic development of the region, first and foremost, as the major taxpayer and employer.

The Company's key economic impacts in the territory of its operations are connected with the following principal fields of activities:

1) Effecting tax payments to budgets;

2) Providing employment to the population;

3) Developing cooperation ties with the local enterprises;

4) Charity programs implementation;

5) The development of social infrastructure.

Budget Payments

During the reporting year, tax payments effected by Norilsk Nickel to budgets of all levels as well as to nonbudgetary funds amounted to RUB 79.2 billion, 9.5% higher than in 2013.

The total increase of tax and non-tax payments in 2014 is due to the increase in proceeds from metal products marketing as a result of international metals prices surge. The decrease of federal budget payments was due to legislation amendments.

The volume of tax and non-tax payments to budgets of various levels and nonbudgetary funds for 2015 is foreseen to amount to more than RUB 100 billion. The increase is due to appreciation of foreign currencies exchange rate and legislation amendments in regard to the increase of the maximum amount of the base for insurance premiums accrual and the increase of the Federal Compulsory Medical Insurance Fund insurance premium rate.

Tax and Non-Tax Payments1 TO BUDGET OF VARIOUS LEVELS (BILLION RUBLES)
Budget 2012 2013 2014
Total tax and non-tax payments
Including:
78.6
72.3
79.2
Federal budget 23.5 16.7 13.5
Consolidated budget of the Krasnoyarsk Krai 32.2 28.8 37.1
The budget of the city of Norilsk 4.0 3.7 4.1
Murmansk Region budget 5.7 5.7 7.0

Providing Employment to the Population

In view of the city-forming status that MMC Norilsk Nickel enterprises have, the Company is especially responsible for providing employment to the population of the regions of its operations. The Company undertakes certain obligations to provide employment to the population within the framework of agreements with local authorities.

UNEMPLOYMENT RATE , %

Region 2012 2013 2014
Norilsk 1.0 0.9 0,8
Taymyr Dolgano-Nenets Municipal District 2.0 2.2 1.7
Krasnoyarsk Krai 1.6 1.4 1.2

For the purposes of assisting in employment of the unemployed and staffing the Polar Branch of the OJSC MMC Norilsk Nickel, OJSC MMC Norilsk Nickel, and the Employment Centre of the city of Norilsk, there was concluded an agreement on joint activity aimed at the organization of professional training of the unemployed in sought-after blue-collar professions.

Within the framework of the agreement implementation, in 2014:

  • 731 persons were given employment at the enterprises of the Polar Branch of the OJSC MMC Norilsk Nickel (17% more than in 2013);
  • 352 minors were given employment at the enterprises of Polar Branch of the OJSC MMC Norilsk Nickel during summer holidays.

In 2014, more than 25,500 persons took part in occupational guidance events organized within the framework of the «Club Profnavigator» project being a part of the Company prospective staffing chain. .

Cooperation Ties Development

The Company actively develops cooperation ties with the Krasnoyarsk Krai enterprises since 2011. This work is carried out within the framework of implementation of the Socioeconomic Cooperation Agreement concluded between the Krasnoyarsk Krai and OJSC MMC Norilsk Nickel in 2009.

In 2014, the Company invited 1,110 tenders that resulted in about RUB 12.3 billion that was spent for the purchase of the products manufactured and services rendered by the enterprises and organizations of the Krasnoyarsk Krai.

Indicator 2012 2013 2014
Open tenders 634 538 1 110
Number of tenders won by enterprises from the Krasnoyarsk Krai 429 359 578
Share of tenders won by enterprises from the Krasnoyarsk Krai, % 67.7 66.7 52.1
Total amount of products and services purchase costs (RUB million),
including:
15,700 11,700 12,300
the purchase of material resources, RUB million 5,700 2,500 2,200
the purchase of foodstuffs, RUB million 382.3 531.3 798.8
service fees, RUB million 9,600 8,700 9,300

6.2. Charity Programs

Company charity programs are focused on the development of local communities, the creation and maintenance of a favorable living environment, and the improvement of socioeconomic situation in the regions of operations as a whole.

The new strategy of Norilsk Nickel in the sphere of charity provides three principal mechanisms:

1. System charity: — the Company changes over from traditional “pinpoint” donations to the practice of social investments with the utilization of the mechanism of funds distribution through grants, social infrastructure development, and partnership building with local communities via implementation of cooperation agreements and joint projects.

2. Targeted aid and donation upon applications of people and organizations, aid in disaster and accident control.

3. Socially oriented business — is rendering support to the functioning of social activists within the Group and to the operation of social infrastructure facilities.

The total volume of funds allocated for charity programs and social infrastructure development projects in 2014 amounted to 2,726 million rubles.

World of New Opportunities Charity Program

The World of New Opportunities charity program was started in 2014. It includes three priority areas: Partnership, Innovations, and Development.

1) Partnership is the key Program area implemented for the support of volunteer initiatives of activists from local communities, teaching new knowledge to the program participants and shaping expert community in the regions. The Company held a tender of social projects within the framework of the area (91 projects won the tender, the tender grant funding amounted to RUB 100 million). 300 applications were received from noncommercial organizations and associations, state and municipal institutions carrying out their activities in the territory of the Norilsk Industrial District, the city of Monchegorsk, and the Pechenga District of the Murmansk Region. Workshops were held for the contestants.

2) Innovations is a series of projects aimed at the development of scientific and technological potential and engineering creativity in the territories of operations.

  • The FabLab project is aimed at the creation of a scientific and technological creativity laboratory. In 2014, the Company held tenders that defined sites for the creation of such laboratories in the cities of Norilsk and Monchegorsk and organized project teams training in the existing FabLab Polytech laboratory of the Saint Petersburg State Polytechnic University. Future plans include the delivery and installation of a set of equipment in the laboratory, provision of computer software for its functioning, its provision with expendable materials, extra training, and providing a grant for organizing the laboratory's activities.
  • More than 450 schoolchildren took part in an online quiz of the ArcticPRO scientific and technological marathons. 20 top quiz participants underwent training in the Winter Scientific and Technological School in Saint Petersburg.

  • A career guidance marathon familiarizes students with the professions that are sought after at the Norilsk Nickel Company enterprises. One of the spheres of the Company activities becomes the theme of the annual marathon. In the academic year 2013/2014, the marathon was dedicated to the Company transportation and logistics complex. There were 4.5 thousand students from towns and villages of the Krasnoyarsk Krai and the Murmansk Region who took part in it.

3) The aim of the Development area is to engage interested and socially responsible businesspeople in solving the region's problems through implementation of business projects. Three foresight sessions «Socially Responsible Business in the Polar Regions» were held in September and October 2014. The Company discussed the prospects of socially responsible business development in Norilsk and the Taymyr Dolgano-Nenets District of the Krasnoyarsk Krai, Monchegorsk and the Pechenga District of the Murmansk Region.

A social technology forum «Partnership. Innovations. Development» was held in Norilsk and Monchegorsk in November and December 2014. This forum was dedicated to building a constructive dialog among business, authorities, and the population of the region. The forum's attention was focused on the theme of local communities. 15 discussion platforms were organized, so were the master classes and a social technologies fair.

15 hundred people took part in the forum in Norilsk.

More than 40 invited experts lectured on efficient social technologies and held master classes providing their participants with opportunities not only to develop and present their social projects but also to get funding for their implementation. The forum participants were familiarized with the culture and arts of the natives of the North, topic sections worked, folklore groups performed, a folk costumes photo session was held.

About 700 people attended the Monchegorsk forum. Special attention was devoted to the issues of career guidance and scientific and technical creativity of youth: the innovation section of the event was opened by the School of Urban Competences project presentation. This project was devoted to training programs in the sphere of housing and financial education implemented by volunteers. ArcticPRO competitions were held.

The presentation of the 2013 Norilsk Nickel corporate social responsibility report was one of the highlights of the the forum. The report was presented to the participants, and the themes of the region's economic, ecological, and social development were discussed within the framework of the panel «Dialogs with Interested Persons». The forum participants' activity and interest demonstrated that the OJSC MMC Norilsk Nickel succeeded in organizing efficient dialog with the local communities. The Company received requests for the development of further charity initiatives and recommendations for the corporate social responsibility reporting. The opinions received were or will be taken into account during the next reporting periods.

79.2
billion RUB
tax payments to budgets of all levels and nonbudgetary funds in 2014
which is
9.5
%
more than in 2013
The Company Expenses Allocated for Assistance in the Development of Material and Technical Base of Ed ucational Institutions in the Norilsk Urban Municipality, RUB MILLION

NSII

VS No. 105

NTCITaS

Assistance to Vocational Training Institutions

Assistance to vocational training institutions in the territory of the Norilsk urban municipality in developing their material resources and training facilities was rendered within the framework of training young workers for staffing the Norilsk Nickel Group enterprises. The principal aim of the projects is to improve the quality of teaching and training of secondary and tertiary school students in the professions and specialties sought after at the Norilsk Nickel Group enterprises, popularization of technical professions and specialties.

The costs allocated for that purpose in 2014 amounted to RUB 17.1 million. The following actions were carried out, in particular:

1) For Norilsk State Industrial Institute:

  • Purchase of licensed computer software and supplementary licenses for the organization and support of academic activity;
  • purchase of personal computers, teaching aids, interactive whiteboards, video projectors for lecture halls;

  • carrying out repair work.

2) For Norilsk Technical College of Industrial Technologies and Service::

  • purchase of training equipment for laboratories and workshops;
  • provision of library and data resources.

3) For Norilsk Vocational School No. 105:

  • purchase of equipment for laboratories and workshops.

Development of Social Infrastructure

The Company takes an active part in the construction and reconstruction of social infrastructure facilities and solving social problems with the purpose of creating an accessible and comfortable environment for work and living of its employees and the population of the territories of operations.

2.7
billion RUB
was the amount of expenditures on charity and social infrastructure development projects in 2014
Region, Amount of
Expenses  in 2014
Key Actions Carried out with the Company Support
Krasnoyarsk
Krai:
RUB 84.9 million
  • continued construction of the second stage (the water park and fitness centre zones) of the Arena-Norilsk leisure centre;
  • continued motorway bridges reconstruction work;
  • the start of a residential building construction in Norilsk;
  • commissioning of a new sports and health centre in Dudinka (an indoor ice rink for 250 persons).
Murmansk
Region:
RUB 57.5 million
  • continued construction of a modern tourist information centre in the Pasvik state wildlife preservation area in the territory of Pechenga District, Murmansk Region;
  • continued funding of the children's playgrounds installation project in Monchegorsk and Pechenga District;
  • the completion of design work for the reconstruction of the obstetrics and gynecology department building of the Pechenga Central District Hospital.
Zabaykalsky
Krai:
RUB 103.0 million
  • an airplane was purchased for the organization of flight connection to remote and difficult access areas of the region; a part of the funds was provided by the OJSC MMC Norilsk Nickel within the framework of implementation of the Cooperation Agreement concluded with the Government of Zabaykalsky Krai.
Yamal-Nenets Autonomous District: — RUB 5.0 million
  • financial assistance was rendered to the repairs of housing stock at trading stations of Tazovsky District, Yamal-Nenets Autonomous District.

6.3. Dialog with Authorities and Population

MMC Norilsk Nickel cooperates with federal legislative and executive authorities, ensuring the presence of its executives in committees, commissions, expert and action groups, and social councils. The managers of foreign enterprises also maintain contact with state authorities of their respective countries.

Cooperation via advisory and working bodies is carried out at the level of regional and local authorities. For example, the OJSC Kola MMC executives took part in the development of the draft Strategy of Socioeconomic Development of the Murmansk Region up to 2020, the executives of the Polar Division of the OJSC MMC Norilsk Nickel, in the development of the draft Investment Strategy of the Norilsk Urban Municipality up to 2030.

Cooperation Agreements

The Framework Cooperation Agreement between the OJSC MMC Norilsk Nickel and the Government of Krasnoyarsk Krai is in effect since 2009. Under this Agreement, the Company develops cooperation ties with the region's enterprises. In October 2014, a working group established for the development of proposals for further development of intra-Krasnoyarsk Krai cooperation ties held a meeting with the participation of representatives of the Polar Division,

and the Krasnoyarsk Krai Ministry of Industry and Commerce.

The agreement concluded between the Federal Service for Supervision of Natural Resources of the RF and the MMC Norilsk Nickel is in effect since 2010. This agreement provides information exchange in the process of Company's taking measures to mitigate negative environmental impact.

Other previously signed agreements that continues to be in effect in 2014 are as follows:

  • Interaction and Cooperation Agreement between the Ministry of Regional Development of the Russian Federation, the Krasnoyarsk Krai, the Norilsk Urban Municipality, and the OJSC MMC Norilsk Nickel regarding Resettlement of Citizens Residing in the Cities of Norilsk and Dudinka to Areas with Favorable Natural and Socioeconomic Conditions in the Territory of the Russian Federation dated August 31, 2010.
  • Interaction and Cooperation Agreement between the Ministry of Regional Development of the Russian Federation, the Krasnoyarsk Krai, the Norilsk Urban Municipality, and the OJSC MMC Norilsk Nickel regarding Modernization and Development of Social and Utility Infrastructure and Residential Stock of the City of Norilsk dated August 31, 2010.
  • Socioeconomic Cooperation Agreement concluded between the Government of Zabaykalsky Krai and the OJSC MMC Norilsk Nickel on August 13, 2013.

A Pro-Bono Cooperation Agreement was concluded by the OJSC MMC Norilsk Nickel and the Federal Service for Drug Control of the RF (FSDC). This agreement is focused on shaping a safe living environment for the Company employees and the population of the territories of its operation. This document provides for the development of joint measures aimed at the prevention of illegal drug trafficking and spread of drug usage, information exchange, holding research and practice conferences, seminars, as well as the implementation of other joint programs in this sphere. In furtherance of the cooperation principles inherent in the Agreement, the ROKS signed respective documents with territorial administration of the FSDC of Russia in Krasnoyarsk and Zabaykalsky Krais and Murmansk Region.

In April 2014, the OJSC MMC Norilsk Nickel and Rosatom State Corporation signed an Agreement on Cooperation in Socioeconomic Development of Zabaykalsky Krai..

In May 2014, the Company concluded Cooperation Agreements with the Labor and Employment Agency of the Krasnoyarsk Krai and the Krasnoyarsk City Employment Centre.

In May 2014, the Company held a session of the International Platinum Group Metals Association Security Committee in Saint Petersburg under the auspices of the Gipronickel Institute.

That event was attended by the heads of security departments of the world's leading platinum mining and processing companies. Russian federal authorities were represented by spokesmen of the Ministry of Foreign Affairs, the Ministry of Internal Affairs, the Federal Security Service and the Federal Customs Service of the RF, and the Saint Petersburg city administration. The director of the United Nations Interregional Crime and Justice Research Institute (UNICRI) spoke at the event. The meeting participants discussed themes connected with countering illicit trade in precious metals and improving the security of product supply chains.

A meeting of representatives of security departments of the world's leading companies producing platinum group metals (PGM) took place in November 2014 in the office of Norilsk Nickel Africa (Johannesburg, Republic of South Africa). It considered urgent matters connected with the activity of the UNCRI that will perform under an UN resolution adopted upon an initiative of the RSA and Russia on a special survey of the struggle against transnational organized crime and its possible connections with illicit trade in precious metals. The Company's proposal on the introduction of PGM identification criteria within the framework of struggling against illicit trade in precious metals received favorable responses at the meeting.

3,875
families
received apartments and moved to mainland over the period of 2011–2014
3,210
665
families
from Norilsk
families
from Dudinka

Implementation of Joint Projects and Programs

Resettlement Program

In 2014, the Company continued its participation in the long-term program targeted on the resettlement of citizens residing in the cities of Norilsk and Dudinka (Krasnoyarsk Krai) to areas with favorable natural and climatic conditions in the territory of the Russian Federation. The program provides resettlement of 11,265 families (1,126 families annually) residing in Norilsk and Dudinka entitled to resettlement under state program and registered at municipalities. During 2011–2014, 3,875 families purchased apartments and moved to the «mainland», including 3,210 families from Norilsk and 665 families from Dudinka. The total number of housing purchase vouchers issued in 2014 within the limit allocated by the Ministry of Construction, Housing, and Utilities of the Krasnoyarsk Krai was 1,124.

Nickel Plant Shutdown Project

On May 23, 2014, at the Saint Petersburg International Economic Forum, an agreement on cooperation within the framework of the implementation of a target comprehensive program of shutting down an obsolete nickel production facility and solving the environmental and social problems connected with it was signed by the OJSC MMC Norilsk Nickel,

the Ministry of Economic Development of Russia, the Ministry of Industry and Trade of the Russian Federation, the Ministry of Natural Resources and Environment of Russia, the Government of the Krasnoyarsk Krai, and Norilsk City Administration. Within the framework of implementation of the Agreement, export duties on unalloyed nickel and copper cathodes were prematurely cancelled in 2014.

The Company will use the financial resources obtained thereby to take measures provided by the target comprehensive program of shutting down an obsolete nickel production facility in Norilsk.

The Agreement implementation will be instrumental in the environmental improvement in Norilsk. It will also affect the socioeconomic situation in the region favorably. The target comprehensive program of shutting down the Nickel Plant will be implemented simultaneously with the start of a program of technical upgrade of the Norilsk industrial complex. The total volume of costs allocated for the target comprehensive program of the Nickel Plant shutdown is RUB 11.5 billion.

One of the primary tasks in the process of the project realization is to retain the staff and to ensure the observance of each employee's rights. There is RUB 4.5 billion allocated for retraining of employees, resettlement grants, and other social payments connected with the Nickel Plant shutdown (including RUB 1.1 billion in 2015). A poll carried out in mid-2014 showed that the majority of the Nickel Plant employees wished to continue working at the enterprises of the Norilsk Nickel Group. They will be offered jobs at the expanding production facilities of the Nadezhdinsky Metallurgical Plant or the Copper Plant, as well as at the Kola MMC. The employees whose specialties are only in demand at the Nickel Plant will undergo retraining at other enterprises. The Company will strive to retain the wage/salary level of each employee transferred from the industrial facility being shut down. It is planned to develop a special program for workers aged over 55. That program will, among other things, provide resettlement aid.

4.5
billion RUB
budgeted for repeated training of employees, raise money for movement to mainland, and other social projects associated with closure of Nickel Plant
including
1.1
billion RUB
in 2015

Observance of Indigenous Minorities' Rights

The Company carries out its business in compliance with generally accepted principles and norms of international law, the International Labour Organization standards, as well as the national legislation of the countries where it carries out its business.

The Company recognizes the rights of indigenous minorities residing in the territories of the Company's operations to originality and supports the initiatives aimed at the preservation and development of the peoples of the Far North.

More than 90 % of the inhabitants of the settlement of Tukhard situated 40 km away from the confluence of the Bolshaya Kheta and Yenisey Rivers and 76 km away from Dudinka are aborigines engaged in reindeer breeding and fishing. The following industrial estates of the Group enterprise are located in the settlement and on the Bolshaya Kheta River:

  • a fuel and lubricants depot tank farm;
  • a methanol depot tank farm;
  • Tukhard Power Plant with PAES 2,500 generating units;
  • Tukhard Industrial Heating Plant;
  • an unloading terminal;
  • cargo depots.

Furthermore, there is the Pelyatka-Severo-Soleninskoye-Yuzhno-Soleninskoye, Messoyakha-Tukhard-Dudinka system of gathering and main gas pipelines, condensate pipelines, and product pipelines.

Collegiate boards on the matters of land use and local residents' rights including the Company representatives were not created. No disputes or discussions on those subjects were recorded in 2014.

The Company has not committed any violations of indigenous minorities' rights in the process of doing its business in 2014.

Participation in International, All-Russian, and Regional Events

The OJSC MMC Norilsk Nickel acted as a Partner of the following large-scale events in 2014:

  • The 11th Krasnoyarsk Economic Forum (February, a Title Partner);
  • Saint Petersburg International Economic Forum (May, an International Partner);
  • Sochi International Investment Forum (September, a Partner).

The Company acted as a partner of the «Open Arctic» international scientific conference held within the framework of the «Arctic Days in Moscow» festival (November, Moscow).

A panel discussion, «Sociocultural Aspects of the Preservation and Development of Indigenous Minorities of the North in the Context of Development of the Arctic Region. Legal Regulation», was held in December 2014 at the State Duma of the RF under the auspices of the OJSC MMC Norilsk Nickel.

The Kola MMC joined efforts with the Administration of Pechenga District, Murmansk Region in the organization and hosting of the 4th Days of Russian-Norwegian Cross-Border Cooperation in Nickel, Zapolyarny (Russia), and Kirkenes (Norway) in November.

Within the framework of the 11th Krasnoyarsk Economic Forum, A.Ye. Bugrov, Deputy CEO of the OJSC MMC Norilsk Nickel, put forward proposals to create a priority development area in the territory of the Taymyr Peninsula.

A meeting of the expanded Research and Engineering Council of the Federal Service for Supervision of Natural Resources took place in October 2014 at the Moscow office of the MMC Norilsk Nickel. The theme of the meeting was «Problems of Waste Hazard Rating for Large Industrial Enterprises». A decision on forming legislative initiatives taking into account the proposals and comments received from the business representatives, research and public organizations was adopted on the basis of the meeting results.

The Company takes part in the activities of the working group of the Ministry of Natural Resources and Environment for the removal of administrative barriers in the sphere of subsurface resources management on a permanent basis.

In 2014, the Company representatives took part in the activities of:

  • the 3rd Murmansk International Business Week (November, Murmansk);
  • the 6th international Congress and exhibition «Non-ferrous Metals and Minerals» (September, Krasnoyarsk);
  • the 2nd International Arctic Legal Forum «Preservation and Sustainable Development of the Arctic Region: Legal Aspects» (November, Saint Petersburg);
  • Conference «Corporate Social Responsibility in the Sphere of Work with Indigenous Minorities of the North» (December, Moscow);
  • International Conference «Countering Radicalization of Public Mood Fueling Terrorism» under the aegis of the Ministry of Foreign Affairs of Russia and Russian G8 chairmanship.

In 2014, the Company took part in the organization and hosting of the following events:

  • City/town Days (Krasnoyarsk, Norilsk, Monchegorsk, Zapolyarny, Nickel);
  • Celebration of the 80th anniversary of the Krasnoyarsk Krai;
  • Russian ski race championship;
    in Monchegorsk;
  • Holding the games of the Barentz Hockey League.

Dialogs within the Framework of Public Reporting Preparation

In the process of preparing the 2014 Corporate Social Responsibility Report, the Company continued holding dialogs with interested parties in the territories of operation. Two dialogs were held, on November 29 and December 6, 2014, in the cities of Norilsk and Monchegorsk, respectively. The dialogs were attended by representatives of legislative and executive state authorities, local authorities, educational institutions, noncommercial organizations, etc., – more than 70 persons in total.

The meetings with the representatives of interested parties were organized with the purpose of obtaining feedback about the events and facts that occurred in 2014 and were considered by the participants of the dialogs as substantial, as well as recommendations for the content of the 2014 Corporate Social Responsibility Report.

Concerned parties took part in a survey in the process of drawing up a chart of material subjects that would be published in the Report, more than 60 feedback forms were received from them.

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