Revenue of palladium in semi-products decreased 60% to USD 22 million in 1H2021 primarily due to lower sales volume of semi-products resulting from the processing of all semi-products produced by NN Harjavalta at the Polar division refinery in 1H2021.

In 1H2021, revenue from the resale of palladium purchased from third parties amounted to USD 253 million (vs USD 367 million in 1H2020).

Platinum

In 1H2021, platinum sales increased 32% (or +USD 88 million) to USD 366 million. The share in the Group's total metal revenue remained unchanged and accounted for 4%. Increase in the realized platinum price (+USD 101 million) was partly compensated by the decline in sales volume (-USD 13 million).

In 1H2021, physical volume of refined platinum sales from the Company's own Russian feed decreased 3% (or -10 thousand troy ounces) to 312 thousand troy ounces. The decline in production volume associated with the negative impact of the accidents at the mines Oktyabrsky and Taimyrsky and the Norilsk Concentrator was almost offset by the ramp-up of a new precious metals production line using chlorine leaching at Kola MMC.

Revenue of platinum in semi-products in 1H2021 decreased 33% to USD 4 million.

Rhodium

In 1H2021, revenue from rhodium increased 3 times (or +USD 428 million) due to the favorable price environment.

Gold

In 1H2021, revenue from gold increased 6% (or +USD 16 million) primarily due to higher market price.

Other metals

In 1H2021, revenue from other metals doubled (or +USD 180 million) to USD 335 million primarily driven by higher revenue from iron ore concentrate on the back of favorable price environment and the ramp up of Bystrinsky project.

OTHER SALES

In 1H2021, other sales increased 30% (or +USD 80 million) to USD 346 million primarily due to an increase of air transportation services following the lift of travel restrictions related to the COVID-19 pandemic and higher oil products sales.

COST OF SALES

Cost of metal sales

In 1H2021, the cost of metal sales increased 13% (or +USD 277 million) to USD 2,461 million, driven by the following factors: -- Increase in cash operating costs by 18% (or +USD 337 million); -- Decrease in depreciation and amortisation by 8% (or -USD 37 million); -- Comparative effect of change in metal inventories y-o-y leading to cost of metal sales decrease of USD 23 million.

Cash operating costs

In 1H2021, total cash operating costs increased 18% (or +USD 337 million) to USD 2,224 million mainly owing to higher purchases of refined metals for resale (+USD 275 million) and increase in mineral extraction tax and other levies in real terms (+USD 180 million).

The positive effect of Russian rouble depreciation (-USD 96 million) was partly compensated by inflationary growth of cash operating costs (+USD 59 million).

USD million 1H2021 1H2020 Change,%

Labour 651 696 (6%)

Purchases of refined metals for resale 572 297 93%

Mineral extraction tax and other levies 286 114 3x

Materials and supplies 256 315 (19%)

Third party services 127 104 22%

Purchases of raw materials and semi-products 72 101 (29%)

Fuel 56 59 (5%)

Electricity and heat energy 55 74 (26%)

Transportation expenses 52 35 49%

Sundry costs 97 92 5%

Total cash operating costs 2,224 1,887 18%

Depreciation and amortisation 400 437 (8%)

Increase in metal inventories (163) (140) 16%

Total 2,461 2,184 13%

Labour

In 1H2021, labour costs decreased 6% (or USD -45 million) to USD 651 million amounting to 29% of the Group's total cash operating costs driven by the following factors: -- -USD 45 million - positive effect of the Russian rouble depreciation against US dollar; -- +USD 39 million - indexation of salaries and wages in line with the terms of collective bargaining agreement; -- -USD 31 million - decrease of hardship payments to employees, related to the pandemic, due to higher base effect in

1H2020; -- -USD 8 million - primarily decrease in headcount driven by the shutdown of smelting and metallurgical workshops at

Kola MMC and termination of Nkomati's operations.

Purchases of refined metals for resale

In 1H2021, purchases of refined metals for resale increased 93% (or USD 275 million) to USD 572 million owing to the purchases of copper in order to cover production losses caused by the suspension of two mines and the Norilsk Concentrator, which was partly compensated by lower purchases of palladium.

Mineral extraction tax and other levies

In 1H2021, mineral extraction tax and other levies increased 3 times (or USD 172 million) to USD 286 million driven by the following factors: -- -USD 8 million - positive effect of the Russian rouble depreciation against US dollar; -- +USD 180 million - primarily due to mineral extraction tax rate increase.

Materials and supplies

In 1H2021, expenses for materials and supplies decreased 19% (or USD 59 million) to USD 256 million driven by the following factors: -- -USD 18 million - positive effect of the Russian rouble depreciation against US dollar; -- -USD 43 million - lower consumption of materials primarily related to suspension of Oktyabrsky and Taimyrsky

underground mines caused by the inflow of groundwater and an accident at Norilsk Concentrator; -- +USD 5 million - inflationary growth of materials and supplies expenses.

Third-party services

In 1H2021, cost of third party services increased 22% (or USD 23 million) to USD 127 million mainly driven by: -- -USD 6 million - positive effect of the Russian rouble depreciation against US dollar; -- +USD 20 million - increase in repair services; -- +USD 3 million - inflationary growth of third-party services.

Purchases of raw materials and semi-products

In 1H2021, purchases of raw materials and semi-products decreased 29% (or USD 29 million) to USD 72 million driven by the following factors: -- -USD 55 million - lower processed volumes of Rostec copper concentrate; -- +USD 28 million - higher volumes of purchased semi-products for processing at NN Harjavalta.

Fuel

In 1H2021, fuel expenses decreased 5% (or USD 3 million) to USD 56 million driven by the following factors: -- -USD 4 million - positive effect of the Russian rouble depreciation against US dollar; -- -USD 4 million - lower fuel expenses in Norilsk industrial region mainly due to the temporary suspension of two

mines and an accident at Norilsk Concentrator. -- +USD 5 million - inflationary growth of fuel expenses.

Electricity and heat energy

In 1H2021, electricity and heat energy expenses decreased by USD 19 million to USD 55 million driven by the following: -- -USD 3 million - positive effect of the Russian rouble depreciation against US dollar; -- -USD 15 million - cost decrease primarily related to the shutdown of smelting and metallurgical workshops at Kola

MMC and termination of Nkomati's operations.

Transportation expenses

In 1H2021, transportation expenses increased 49% (or +USD 17 million) to USD 52 million driven by the following factors: -- -USD 2 million - positive effect of the Russian rouble depreciation against US dollar; -- +USD 2 million - inflationary growth of expenses; -- +USD 17 million - primarily increase in transportation expenses in Norilsk industrial region related to higher

volumes of services within the program of production facilities' safety improvement.

Sundry costs

In 1H2021, sundry costs increased 5% (or +USD 5 million) to USD 97 million.

Depreciation and amortisation

In 1H2021, depreciation and amortisation expenses decreased 8% (or -USD 37 million) to USD 400 million, mainly driven by positive effect of the Russian rouble depreciation (-USD 29 million).

Increase in metal inventories

?omparative effect of change in metal inventory amounted to -USD 23 million resulting in a respective decrease of cost of metal sales.

COST OF OTHER SALES

In 1H2021, other sales increased 16% to USD 345 million primarily due to an increase of air transportation services following the lift of restrictions related to the COVID-19 pandemic and higher oil products sales.

SELLING AND DISTRIBUTION EXPENSES

USD million 1H2021 1H2020 Change,%

Transportation expenses 41 31 32%

Marketing expenses 23 22 5%

Staff costs 7 7 0%

Other 16 12 33%

Total 87 72 21%

In 1H2021, selling and distribution expenses increased 21% (or +USD 15 million) to USD 87 million primarily due to increase in transportation expenses (+USD 10 million).

GENERAL AND ADMINISTRATIVE EXPENSES

USD million 1H2021 1H2020 Change,%

Staff costs 266 280 (5%)

Third party services 77 54 43%

Depreciation and amortisation 40 33 21%

Taxes other than mineral extraction tax and income tax 35 36 (3%)

Transportation expenses 10 10 0%

Other 19 21 (10%)

Total 447 434 3%

(MORE TO FOLLOW) Dow Jones Newswires

August 05, 2021 07:30 ET (11:30 GMT)