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MINING AND METALLURGICAL COMPANY NORILSK NICKEL

(GMKN)
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Mining and Metallurgical Norilsk Nickel : Nornickel Scenarios for Climate-Related Risk Assessment

11/21/2022 | 08:30am EST

Nornickel Scenarios for Climate-Related Risk Assessment

November 2022

Nornickel Scenarios for Climate-Related Risk Assessment

Executive Summary

  • Earth's climate will continue to change, driving the urgency of physical risks, while global decarbonisation pace and targets may change, with the impact of transition risks on the Company changing accordingly
  • Despite geopolitical factors, climate-relatedrisks remain relevant to international and Russian regulators and key stakeholders, as well as the industrial and strategic safety of the entire Company and its individual assets
  • TCFD (Task Force on Climate-Related Financial Disclosures) is a generally accepted international framework that establishes the principles and approaches for businesses to build climate risk management systems
  • The Company is implementing a TCFD roadmap to support one of the goals under its Environmental and Climate Change Strategy
  • The Company has developed scenarios to assess the two key categories of climate risks - physical and transition risks, which will help design respective mitigation and adaptation measures

Source: Company data

2

Nornickel Scenarios for Climate-Related Risk Assessment

How Relevant is Climate Change for Nornickel?

Internal demand and objectives

  • Prevention and adaptation to climate-related physical risks to ensure safety and continuity of operations (prevent accidents similar to the diesel spill at HPP-31)
  • Mitigation of the transition risks related to the decarbonisation of the global economy (a risk of demand reduction for the Company's metals in the long run as Europe, for instance, is planning to phase out ICE vehicles by 2035)
  • Monitoring of the changes in the global ambitions regarding the pace of energy transition and decarbonisation timeline and goals

External demand

  • Customers (consumers of metals) and ESG ratings (EcoVadis, Sustainalytics and MSCI ESG) keep climate risk management on their radar screens
  • Investors, banks and other international stakeholders remain a relevant option, but now in a longer-term

TCFD offers a framework on how to meet

these objectives…

…and provides guidelines for a climate-

related risk management system

(Nornickel is currently implementing a

roadmap to comply with TCFD)

Source: Company data

3

Notes: 1. Heat and power plant №3

Nornickel Scenarios for Climate-Related Risk Assessment

Global Decarbonisation Ambitions Are Put to a Stress-test

  • Coal consumption: record consumption levels in most countries…
    • In 2022, an increase of 0.7% is expected globally, followed by a further increase in 20231
    • India - increase of 7% in 20221
    • China - decrease of 3% (largely due to COVID-19 restrictions)1
    • EU - increase of 7% by 20221
  • …but so is the growth of renewable energy
    • China - increase of 92%2
    • USA - increase of 81%2
    • India - increase of 23%2
  • Rule of thumb: sustainable economic growth is conditioned upon energy costs NOT exceeding 10% of GDP
    • Energy costs expected to reach 13% of GDP globally in 20223 and at 15% of GDP in Europe in 20234

Meeting the targets set by the Paris Agreement has become even more challenging

More uncertainty around transition risks emerged, while physical risks are likely to increase further

Source: 1. IEA data; 2. Ember think tank; 3. Bloomberg; 4. Goldman Sachs research

4

Nornickel Scenarios for Climate-Related Risk Assessment

Transition Risks & Opportunities: Phased-out Internal Combustion Engines to be Replaced with Electric Vehicles

Global Production Forecast for ICEs (including HEVs) and Electric Vehicles

Announced Ambitions to Ban ICE Vehicles in Selected Key Markets

[million units]

100

60

95

90

50

85

40

80

75

30

70

65

20

60

10

55

50

0

2016

2020

2024

2028

2032

2036

2040

ICE vehicles (LHS)

ICE vehicles forecast (LHS)

EVs (RHS)

EVs forecast (RHS)

Country

(vehicle sales

in 2021)

China (25.6 million)

USA (14.9 million)

Japan (4.4 million)

Germany (2.6 million)

France (1.7 million)

Canada

(1.7 million)

UK (1.6 million)

Target

year

2035

2030-

2035

2035

2035

2030-

2040

2035

2030-

2035

Comment

Partial ban: electric vehicles (including hydrogen vehicles) are to make up 50% of vehicle sales, with HEVs making up the other half

Ban in individual states: Washington, D.C. - sales ban on new ICE vehicles from 2030; California, Massachusetts, New York, New Jersey from 2035

Sales ban on new ICE vehicles

Sales ban on new ICE vehicles, except for synthetic fuel vehicles

Sales ban on new ICE vehicles from 2040 (Paris from 2030)

Sales ban on new ICE vehicles

Sales ban on new ICE vehicles, except for plug-in hybrids; sales ban on new HEVs from 2035

Source: Company data, public sources

5

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

OJSC MMC Norilsk Nickel published this content on 21 November 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 November 2022 13:29:02 UTC.


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Financials (USD)
Sales 2021 17 852 M - -
Net income 2021 6 512 M - -
Net Debt 2021 4 952 M - -
P/E ratio 2021 7,30x
Yield 2021 13,0%
Capitalization 40 553 M 35 750 M -
EV / Sales 2020 3,55x
EV / Sales 2021 2,90x
Nbr of Employees -
Free-Float 34,3%
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Managers and Directors
Vladimir Olegovich Potanin President & Chairman-Management Board
Sergey Gennadyevich Malyshev Chief Financial Officer & Senior Vice President
Andrey Evgenyevich Bugrov Chairman
Sergey Stanislavovich Stepanov Operational Director & Senior Vice President
Evgeny Arkadievich Shvarts Independent Director