Novolipetsk Steel : NLMK Annual Report for 2022

Sustainability report

2022

ENVIRONMENTAL PROTECTION	7
SOCIAL ASPECT	38
CORPORATE GOVERNANCE	65

About the Report

APPROACH TO REPORTING

This Report on the Sustainable Development of Public Joint Stock Company Novolipetsk Steel and its subsidiaries (hereinafter collectively referred to as "NLMK Group", "NLMK" or the "Company") discloses data on achievements in the field of sustainable development for the period from 1

January 2022 to 31 December 2022. [GRI 2-1][GRI 2-3] NLMK prepares the Report on an annual basis

and includes in its relevant topical sections information about the Company's activities in the field of sustainable development. The Company's previous Report was published in June 2022.

REPORTING BOUNDARIES AND STANDARDS

Information on the Company's sustainable development is reported within the boundaries indicated in the table "Reporting boundaries" in the appendices to the Report, unless otherwise indicated. [GRI 2-2]

Since 2018, the Company has been using

the recommendations of The Global Reporting Initiative's Sustainability Reporting Guidelines (The Global Reporting Initiative, hereinafter referred to as GRI Standards).

The Company publishes this Report in accordance with the GRI 2021 Standards. The GRI index with the disclosed indicators is given in the appendices to the Report.

Since 2020, the Company has been publishing the Climate Change section, which is compiled taking into account

the recommendations of Taskforce on Climate-related Financial Disclosure (TCFD).

The indicators are also provided in accordance with the Sustainability Accounting Standards Board (SASB) accounting standards.

The Report also reflects the Company's contribution to achieving the Sustainable Development Goals adopted by the UN in 2015 as part of Transforming our World: the 2030 Agenda for Sustainable Development publication.

Process to determine material topics [GRI 3-1]

To determine the content of the Report, material environmental and social topics that are most significant for the Company and its stakeholders were identified. The assessment approach was developed based

on the requirements of GRI Standards.

The process of determining material topics consists of four stages: understanding the context of the Company, determining current and potential impacts, assessing

the significance of such impacts, ranking significant impacts by degree of significance. Based on the list of significant impacts, a list of significant topics is compiled. The final list of material topics is approved by the Company's CEO. This approach allows us to identify the needs and expectations of the Company's stakeholders, compare them with

the priorities of the Company's development strategy and identify growth points and areas for improvement.

The significant themes and impacts that have been identified during this process serve as the basis for the Company's sustainability reporting.

To prepare the 2022 Report, at the first stage, the heads of NLMK's functional areas analyzed public information about the Company and the mining and metallurgical industry as a whole, analyzed the Company's activities

in the current conditions, interaction with business partners in the context of sustainable development, and updated the list of stakeholders.

At the second stage, the participants of the working group determined the impact of the Company's activities have and on the economy, the environment and the population, including in the field of human rights. The same was done for the Company's business partners. This analysis took into account not only the actual, but also the potential impact. To assess the impact, the Company used its own data, including messages received during the year via

an independent hotline, the results of internal satisfaction surveys, as well as external assessments by third parties, including rating agencies. Due to the broad global

and industrial diversification of the Company's business model, a scoping exercise was carried out for some areas of activity. In this case, the Company focused on expert assessments of the impact of its assets on the economy, the environment and the population, including in the field of human rights. The Company has also identified a positive impact in the field of sustainable development.

At the third stage, the significance of all identified impacts of the Company was assessed, including quantitative and qualitative analysis. For this purpose, the Company took into account the results of the annual risk analysis. Assessing the likelihood and impact of risks is one of the most important factors for understanding the Company's impacts.

At the fourth stage, all the Company's impacts were ranked according to the degree of significance and a list of significant topics was compiled on their basis. The final list includes nine of the most significant topics that formed the basis of this Report.

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List of material topics [GRI 3-2]

	Material topic		Page
	Occupational health and safety:		p. 53, 55
	$ Reduction of occupational injuries
	$ Promotion of a healthy lifestyle among employees
	HR policy and ensuring decent working conditions:		p. 47, 51, 76
	$	Training and development
	$	Social policy
	$ Respect for labour and human rights
	Climate change and greenhouse gas (GHG) emissions:		p. 8
	$ Achievement of GHG reduction goals, measures, system of accounting
		and reporting on GHG emissions
	$ In-depth assessment of physical risks for the Group's main mining asset
	$ Improving the energy efficiency of production and increasing the production of captive electricity
	Other significant emissions into the atmosphere and minimization of its impact		p. 26
	Reducing the impact on water resources, including metrics		p. 28
	on water consumption and discharge
	Reducing the impact on the soil and recycling of secondary raw materials		p. 31
	Compliance and corporate ethics, including anti-corruption		p. 76
	Improving sustainability in the supply chain		p. 40
	Development and support of local communities		p. 61

CHANGES TO THE LIST OF MATERIAL TOPICS [GRI 3-2] In the previous reporting period, the Company adhered to the principle of double materiality and presented significant topics in the form of a matrix, where the vertical axis assessed the significance of environmental, economic and social impacts, and the horizontal axis − the impact on the assessment and decisions of stakeholders.

With the transition to the new GRI 2021 standards,

the Company switched to a new format for presenting a list of material topics.

Compared to 2021, the list of topics has not undergone drastic changes. The Company's sustainability priorities still include ensuring safety and well-being of employees and reducting impact on the environment to preserve it for the residents of the regions where the Company operates and future generations.

NLMK Group's values

Sustainability Management

[GRI 2-23] As one of the largest international producers of steel and steel products, NLMK Group is aware

of its responsibility towards society, nature, and future generations. Our team is united by corporate values that shape NLMK's approach to responsible leadership.

SUSTAINABLE DEVELOPMENT POLICY

In 2019, NLMK's Board of Directors approved

the Сompany'sSustainable Development Policy. The Policy defines the Group's principles, goals, and objectives

in matters concerning sustainable development as well as the mechanism for managing the relevant agenda at the level of the Board of Director (see the Corporate Governance section for more details).

Value

Description

Continuous improvement of processes	Continuous improvement of processes and technologies to ensure the sustainable production
	of steel products that help improve the quality of life
Client-oriented approach	Production of unique premium quality steel products and development of engineering solutions
	that help our customers be on the cutting edge of innovation and be leaders in their markets
Absolute priority of the health and safety of our employees	Unwavering commitment to protecting the health and safety of our employees and contractors and ensuring favourable
	working conditions that allow our employeesto fulfil their potential for professional and personal growth
Ensuring equal opportunities for employee development	Ensuring equal opportunities for the professional and personal growth of our
	employees and motivating our employees to be proactive and innovation-driven
Sustainable use of resources	Sustainable use of resources and the pursuit of the best available environmental
	and energy efficiency standards, which we also expect our partners to comply with
Active approach to social responsibility	Active approach to smart social responsibility and care for cultural legacy in the regions where we operate

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Leadership in sustainability and safety is one of the four main goals of NLMK Group's Strategy 2022, and the changes that have been implemented will contribute to the successful achievement of this goal. The changes are in line with best international practices and stakeholder requirements,

and confirm NLMK Group's commitment to the principles and objectives of the UN Global Compact, to which

the Company is a party.

INTEGRATED MANAGEMENT SYSTEM

In 2020 NLMK Group approved itsIntegrated Management System Policy (IMS Policy). This Group-wide document lays out the Company's intentions in the areas of quality (ISO 9001), environmental protection (ISO 14001), energy efficiency (ISO 50001), and occupational health and safety (ISO 45001). The Policy, approved as part of integrated management system development, complies with international standards and reflects best global practices of sustainable development.

Integrated Management System objectives:

• To be a global leader for the quality of our steel products and raw materials by continuously upgrading and expanding our product mix with the aim of increasing our customers' competitiveness

• To comply with industry best practice concerning the rational use of material and technical resources
  and the safety of our production processes for both human health and the environment
• To be a global leader in adopting best practices to make our operations more energy-efficient, and to reduce energy consumption and cost of production as far
  as is technologically and economically feasible
• To ensure efficient production with zero accidents, incidents, and near misses through global excellence in occupational health and safety and continuous development and promotion of a safety culture among NLMK Group's employees and contractors
• To ensure our operations do no harm to the environment or the climate, and to respond to changing environmental and climate conditions by balancing them with social and economic needs

Integrated Management System objectives

and management liabilities are published on NLMK Group's web site.

Recognition of NLMK Group as the leader of the sustainability agenda

Agency

Category

RUIE	The highest score in the "Responsibility and openness" and "Vector of sustainable development" indices
	Award for "High quality of reporting in the field of sustainable development/ESG"
RAEX	Since October 2022, NLMK Group has been the leader of the ESG corporate ranking of Russian companies
Expert RA	NLMK Group ranks first in the ESG Transparency rating
NKR х RBC	The highest category in the ESG index of Russian business
National Rating Agency	First place in the ESG ranking of industrial companies
Expert magazine	First place in the sustainable development ranking
Yes Strategy	Leader of Corporate ESG Practice

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Contribution to the achievement of the Sustainable Development Goals adopted by the UN General Assembly

[GRI 2-24] NLMK Group supports the Sustainable Development Goals adopted by the UN General Assembly in 2015, which aim to address significant economic, social, and environmental issues faced by the global community. We believe that

the Group makes a valuable contribution to the achievement of global sustainability goals by engaging in responsible business and targeted activities that aim to reduce its environmental footprint, supporting local communities, and ensuring safe

and decent working conditions.

Field of activity Environment

UN Goal and targets

NLMK Group's contribution

Key metrics

Water resources		• Use of the closed-loop water supply system	Pollutants discharge into
		• Use of water purification and treatment technologies	water bodies reduced by
Emission into		• Reducing the volume of withdrawn water	56%
the atmosphere			compared to 2018 baseline
Rational use of natural	Target 6.3 By 2030 improve water quality		97%
resources	by reducing pollution		of water recycled and reused
Biodiversity	Target 6.4 By 2030, substantially increase
water-use efficiency
		• Reuse of ferrous scrap	100%
		• Implementation of a set of measures aimed at improving
		of secondary iron-containing raw
		energy efficiency, resource efficiency and reducing
		materials are reused
		environmental impact
		5,000
	Target 12.4 Achieve the environmentally
		trees were saved by recycling
	sound management of chemicals and all		paper and cardboard
	wastes throughout their life cycle
	Target 12.5 By 2030, substantially reduce
	waste generation through prevention,
	reduction, recycling and reuse
		• Monitoring the state of biodiversity and developing	31 ha
		programmes to prevent and reduce negative impacts
		disturbed lands reclaimed
	Target 15.9 Integrate ecosystem
	and biodiversity values into national and local
	planning, development processes
Ensuring the health and well-being of employees and communities
Occupational health		• Implementation of programmes aimed at preserving health,	Close to 2,500
and safety		improving the availability and quality of medical services	persons took advantage of the employee
		for employees
		assistance programme
Our employees		• Informing employees of the Group and contractors about
	Over 800,000
		the rules of industrial safety
Developing local	Target 3.4 By 2030, reduce by one third	• Implementation of educational OHS programmes
person-hours of OHS training
communities	• Modernization of equipment and improvement
premature mortality from non-communicable
	of technologies in order to minimize their negative impact
	diseases through prevention and treatment
	on human health and the environment
	and promote mental health and well-being
Fighting climate change
Climate change		• Improving energy efficiency and switching to captive	Captive electricity generation from
		energy production	secondary fuel gases accounts for
Energy efficiency		• Energy consumption from secondary resources	80.6%
		• Implementation of a set of measures aimed at reducing	of total energy mix
		specific GHG emissions
		-1.8 m t
	Target 7.2 By 2030, increase substantially
	the share of renewable energy		of CO2 in 2022, due to implemented
	in the energy mix		projects (Scope 1 + Scope 2) and
	Target 7.3 By 2030, double the global rate		low-carbon energy supplies
	of improvement in energy efficiency
		• Sales of products that contribute to reducing GHG	560 m t
		emissions on the consumer side
		of СО2 emissions prevented
			on consumer side

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Field of activity

UN Goal and targets

Development of employees and regions where the Company operates

NLMK Group's contribution

Key metrics

Our employees		• Implementation of training and development	Close to 3 m
		programmes for employees	man-hours of training
Human rights		• Implementation of external social programmes aimed
	14
		at supporting education in the regions of presence
Development of local		• Interaction with educational institutions in order	priority universities, 4 partner colleges,
communities	Target 4.4. By 2030, substantially increase	to improve the quality of educational programmes
38 supported schools
Interaction with suppliers	the number of youth and adults who		4,500
have relevant skills, including technical
and contractors
and vocational skills, for employment,		students are trained in NLMK's profile
	decent jobs and entrepreneurship		specialties at partner universities
		• New jobs in the regions of presence	Over 1,500
		• Ensuring equal opportunities for high-performance work,	jobs created in 2022
		professional growth and disclosure of the creative potential
		103 audits
		of each employee of the Group
		• Partner's Code of Business Conduct mandatory	of suppliers and contractors in 2022
	Target 8.8 Protect labour rights and promote	for all counterparties to comply with
	100%
	• Assessment of suppliers' and contractors' compliance with
	safe and secure working environments
	for all workers, including migrant workers,	applicable standards in the field of occupational health	counterparties sign the Partner's
	and safety during audits and qualifications
	in particular women migrants, and those	Code of Business Conduct
	in precarious employment
		• Providing a favourable environment for employees	RUB 1.5 bn
		of the companies and local population	invested in external
		• Improving the effectiveness of interaction tools
		social programmes
		and the engagement of the population and staff for
		74 projects
	Target 11. А Support positive economic,	the development of a culture of everyday charity
		received support in the "Steel Tree"
	social and environmental links between urban,		grant competition
	peri-urban and rural areas by strengthening
	national and regional development planning
Partnership and ethical business conduct
Interaction with suppliers		• Countering corruption and fraud, preventing conflicts	Over 5,000
and contractors		of interest	employees exposed to the risk
		• Familiarization of NLMK employees with the Code
		of corruption have completed the corporate
Compliance		of Corporate Ethics and Anti-Corruption Policy
	anti-corruptione-course
and corporate ethics		• Creation and continuous improvement of effective
	256
	Target 16.5 Substantially reduce corruption	corporate governance practices
	• Open interaction with stakeholders and informing
	and bribery in all their forms	representatives of 183 counterparties
	stakeholders about the Company's impacts
	Target 16.6 Develop effective, accountable	from almost 30 regions were trained
	• Promotion of sustainable practices in the framework
	and transparent institutions at all levels	on the corporate anticorruption
	of interaction with stakeholders
		requirements
		• Strengthening cooperation with other companies
		in the industry
Contacts		Contact persons
The Company is ready to answer	DMITRY KOLOMYTSYN, CFA,
additional questions regarding this	Director, Corporate Finance and Investor Relations
Report, and will also be glad to receive	Email: [e-mail]
feedback from interested parties
on the development and improvement	NLMK Representative Office in Moscow
of the content of future public reports.
		40-3, Bolshaya Ordynka St., Moscow, 119017

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SUSTAINABILITY

REPORT

2022

Environmental protection

CLIMATE CHANGE	8
ENERGY EFFICIENCY	16
ENVIRONMENTAL PROTECTION	22

ENVIRONMENTAL PROTECTION

CLIMATE

CHANGE

KEY FIGURES FOR 2022	MATERIAL TOPICS
1.78 t	$	Climate change
$	Air emissions
of CO2-equivalent per tonne of Fe (Scope 1 + Scope 2,	KEY EVENTS IN 2022
market-based method)
-1.8 m t
$	In-depth assessment was carried out for climate change-
	related risks at Stoilensky
of CO2 through implemented projects (Scope 1 + Scope 2)	$	Low-carbon energy procurement enabled a 5% reduction
and purchase of low carbon energy		of Scope 1+2 emissions for the Russian sites
-50 kg	$ Evaluation of CO2 sequestration potential was done
	in cooperation with the Institute of Global Climate
	and Ecology for forest ecosystems of the Lipetsk Region
of coal/t of hot metal through activities undertaken since 2010
-560 m t
of CO2 of avoided emissions for consumers
of NLMK Group products1

NLMK Group is fully committed to climate change action and takes meaningful steps towards decreasing greenhouse gas emissions, progressively reducing the carbon footprint of its products. Moreover, the Company's products (such

as steel for wind energy and energy-efficient electrical steels) enable a broad range of consumer industries to reduce their climate impact substantially. Emissions avoided with NLMK's products are comparable to emission volumes from the entire steelmaking operations of the Group.

On average steel produced by NLMK Group consists of 30-35% of recycled resources such as ferrous scrap and other materials that are climate neutral and can significantly reduce the Company's carbon footprint. Specific CO2 emissions from scrap steelmaking are approximately four times lower than when using primary raw materials.

In 2023, NLMK Group published its third report in line with the revised recommendations of the Task Force

on Climate-related Financial Disclosures (TCFD)2 from 2021.

Our approach to managing climate change-related issues

The Company's leadership devotes continued attention to climate-related issues, which are embedded into its corporate governance system.

[TCFD Governance a)] [GRI 2-12]The agenda of the BoD meetings includes such issues as the decarbonization strategy, climate projects, climate risks, methodology

and benchmarking, progress towards achieving the goals. The Board of Directors Strategic Planning Committee determines climate impact reduction goals.

[TCFD Governance b)] Goals related to climate impact reduction are assigned by the CEO (Chairman of the Management Board) to the functional divisional managers of the Group, as well as the heads of production divisions at NLMK Group companies. The Company evaluates progress towards achieving the goals annually.

NLMK Group's management devotes particular attention to climate aspects when considering the Company's strategy, risk management, annual budget, and business plans, as well as when setting the Company's business goals and monitoring the implementation and efficiency of major investments.

• Avoided emission is calculated for the entire product lifecycle based on the estimated sales volume over the 2018-2023 strategic cycle.

• The Task Force on Climate-related Financial Disclosures (TCFD) was established in December 2015 by the Financial Stability Board (FSB), an international body established by the G20 states. In October 2021, the TCFD published its revised recommendations, which set out the basic principles of climate-related disclosures for companies and organizations.

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ENVIRONMENTAL PROTECTION

For more information on climate-related issues, please visit the Company website.

Adaptation to climate change

The CO2 reduction potential for BF-BOF steelmaking, given the existing technology and possible advancements, is limited to 5-15% of the current levels (excluding carbon capture, utilization, and storage3). More significant reductions can be achieved through transition from coal to "green" hydrogen and switch to the HBI+EAF process (hot-briquetted iron + electric arc furnace).

In 2021, NLMK Group adopted its Climate Programme that envisages a phased transition to the electric arc method of steel production based on DRI/HBI as feedstock (coke-free iron ore with a high iron content). Even with the current energy consumption structure, the above route allows for a twofold reduction of CO2 emissions compared to the BF-BOF route. Going forward, when sufficient volumes of "green" hydrogen and industrialized technologies of hydrogen-based reduction become available, the decarbonization potential of the process should exceed 90% (vs. the current levels). In light of the current restrictions on access to HBI technologies, the timeline

of the programme will be determined at a later date.

In 2022, the Company continued to pursue research in alternative steelmaking techniques, carbon capture, utilization and storage, use of hydrogen and syngas, biofuel, wind and solar power generation, CO2 sequestration in forests.

Stoilensky has completed its key projects aimed at increasing iron content in concentrate, which will enable an annual reduction of CO2 emissions by 800,000 tonnes. Further investment projects and operational improvements implemented within the current strategic cycle are contributing to the reduction of specific CO2 emissions as well.

In 2022, NLMK Lipetsk carried out the following operational activities: partial replacement of lime with recycled BOF slag and more intensive usage of purchased scrap in sinter production. These measures that leverage recycled materials reduce direct CO2 emissions by 30,000 tonnes per year. Furthermore, the Company pursues other projects in its sintering, melting, rolling and energy operations, including the construction of a power plant for recovery of secondary fuel gases. Commissioning of the recovery co-generation plant will reduce CO2 emissions by 650,000 tonnes per year (or by 35 kg of CO2 per tonne of steel).

Also in 2022, an in-depth assessment of physical risks was performed for Stoilensky. It translated into an action plan to adapt the site to adverse climate conditions and weather events.

• Though CO2 capturing technologies are available, none of them is commercially viable for large volumes of greenhouse gases. Such projects require significant CAPEX and OPEX.

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ENVIRONMENTAL PROTECTION

In 2022, the Group began the development of a climate strategy for the companies in its NBH joint venture companies. Considerations include ways to improve efficiency of natural gas use in reheating furnaces, switch to induction heating, use of renewable electricity, etc.

NLMK DanSteel (Denmark) completed the construction of a new and efficient reheating furnace for slabs

in 2022. Performance tests have shown that the reduction of CO2 emissions relative to the old furnaces is 18%.

The average annual effect, including a calculation in absolute terms, will be determined after the 2023 run.

NLMK Pennsylvania continued to build its new reheating furnace for slabs in 2022. The new furnace should deliver natural gas savings of up to 30%.

LONG-TERM CO2 REDUCTION GOALS

NLMK Group's long-term decarbonization strategy assumes the replacement of the Blast Furnace-Basic Oxygen Furnace steel production process with low-carbon technologies

by 2050. A phase-in process will be timed to blast furnace overhaul schedules and other technology constraints.

NLMK Group has set long-term goals to reduce specific emissions (Scope 1+2) by 2050 to 1.2 t CO2/t of steel (- 40% of the current intensity) with a full transition to HBI+EAF using the Group's captive iron ore, as well as procurement of natural gas and electricity at current levels of carbon intensity.

When the industrialized hydrogen-based iron reduction technologies come along and sufficient amounts of low- carbon electricity become available, the new process chain will reduce the Group's carbon intensity to 0.2 t CO2 / t

of steel (90% reduction vs. 2023). The remaining emissions can be reduced to zero through CO2 capture projects or offset by absorption projects.

Thus, when the necessary external conditions allow it, NLMK Group aims to achieve carbon neutrality.

NLMK Group continues to advance its low-carbon energy consumption

Increasing the share of low-carbon energy sources is one of NLMK Group's priority initiatives aimed at reducing its carbon footprint. Nuclear energy is one of the main decarbonization tools, currently accounting for a third of global low-carbon electricity production.

In 2022, NPPs supplied 4.5 billion kWh to NLMK Group sites enabling the Company to cut 1.6 million tonnes

of CO2 Scope 2 emissions.

Metrics and targets

During this reporting period, the Company has prepared its Russian sites to submit statutory reports on greenhouse gases for 2022. The submission becomes mandatory starting from 2023. The Group's NBH companies (under EU ETS) and American companies have been submitting mandatory annual reports on GHG for many years. Mandatory reporting has certain limitations and differs from the voluntary GHG disclosures published in this report.

CO2 emission per tonne of hot metal under the EU ETS methodology

CO2 emission per tonne of hot metal at NLMK Lipetsk over 2022, calculated under the EU methodology for emission allowance allocation, was 1.41 t CO2/t. This

is significantly better than the average level of emission by European steelmakers at 1.49 t CO2/t (cf. the emission level of Europe's top 10% low emitters among the steel companies is 1.36 t CO2/t).4

Direct and indirect energy GHG emissions of NLMK Group, '000 t of CO2-equivalent[GRI 305-1][GRI 305-2][TCFD Metrics and targets b)]

Indicator	2018*	2019	2020	2021	2022
Direct GHG emissions (Scope 1)	31,232	28,601	30,036	30,436	29,288
Carbon dioxide (CO2)	31,158	28,531	29,964	30,365	29,220
including from stationary sources	30,956	28,311	29,753	30,151	29,013
Methane (CH4)	46	42	44	44	42
Nitrogen oxide (N2O)	28	28	28	28	27
Indirect energy emissions (Scope 2)5, location-based	2,832	2,546	2,458	2,698	2,485
Indirect energy emissions (Scope 2)6, market-based	2,871	2,586	2,502	1,711	970
Total (Scope 1 + Scope 2), location-based	34,064	31,147	32,494	33,134	31,773
including CO2 for stationary sources (location-based)	33,785	30,854	32,210	32,847	31,496
Total (Scope 1 + Scope 2), market-based	34,103	31,187	32,537	32,147	30,258
including CO2 for stationary sources (market-based)	33,824	30,893	32,253	31,860	29,981
CO2 emission from biomass combustion (Scope 1, for reference)	17	25	25	26	29

* The baseline year for all Scopes is the year when Strategy 2022 was launched. [GRI 305-1][GRI 305-2]

1. According to Eurofer data.
2. Emissions from fuel combustion in the production of electricity received from the external grid for the needs of the Group's sites. The calculation was made using the location-based method: by the average weighted rates of greenhouse gas emissions produced at a certain territory (country, region, state). For the Group's sites in the United States, CH4 and N2O emissions are taken into account in addition to CO2. [GRI 305-2]
3. Emissions related to supplies of external electricity, based on free contracts of electricity sales and purchase. For the Group's sites in the United States, CH4 and N2O emissions are taken into account in addition to CO2 (no contract instruments used). [GRI 305-2]

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ENVIRONMENTAL PROTECTION

NLMK Group GHG emission trends (Scope 1 + Scope 2, market-based), m t of CO2-equivalent

34.1
2.9		32.5	32.1
	31.2	2.5	1.7	30.3
31.2
2.6
	30.0	1.0
		30.0
			29.3
	28.6
2018	2019	2020	2021	2022

Indirect energy GHG emission (Scope 2), market-based

Direct GHG emission (Scope 1)

Blast furnace operations (51%), energy production (14%) and iron ore production (10%) are the largest contributors to direct greenhouse gas emissions (Scope 1). The overall contribution of additionally calculated emissions from mobile units and emission of СН4 and N2O into NLMK Group's total direct GHG emissions is less than 1% in СО2-equivalent.

NLMK Group regularly estimates СО2 emissions from biomass combustion (wood chips and charcoal), which is used at NLMK Lipetsk for ferroalloy production. These emissions are climate-neutral, provided for reference only, and not included in the overall emissions volume. The rates of biomass use went up in 2022. The Company is currently considering the prospects of using sustainable biomass in its key steelmaking processes. The charcoal supplied to the Company is FSC certified7.

Direct GHG emissions structure (Scope 1) of NLMK group, by type of source, 20228, %

10.4	7.0	5.6
14.4		5.3
29.3 m t	4.4
СО2-eq.
50.5

1.0

0.8

0.3

0.3

Blast furnace operations

Energy production

Production of iron ore raw materials BOF operations

Coke production Lime production Rolling operations EAF operations Mobile sources Ferroalloy production Other stationary sources

Total direct and indirect energy emissions by country in 2022 (Scope 1 + Scope 2, market-based), '000 t CO2-equivalent.

				122	19	1	30,259
			141
		199
	476
29,301
Russia	USA	Belgium	Italy	Denmark	France	India	Total

7 Forest Stewardship Council.

• СО2 emissions from combustion of process gases (blast furnace and coke gas) outside the sources where these gases are formed, but within Group sites are taken as equal
  to emissions from combustion of an energy-equivalent amount of natural gas, adjusted for combustion efficiency. The corresponding CO2 deduction is made for process gas sources. The "Energy resources production" category includes emissions generated by production of heat, electricity, and technical gases.

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ENVIRONMENTAL PROTECTION

The Company continues to assess other indirect greenhouse gas emissions associated with the production of the main types of external resources used by NLMK Group companies (upstream emissions) and their delivery to the companies' gates, as well as the transportation

of raw materials and semi-finished products between Group companies9. Estimated coverage is at least 95%. For purchased electricity, Scope 3 includes emissions related to fuel production, processing, and delivery, as well as losses in networks during electricity transmission. Scope 3 includes emissions of methane and nitrous oxide as well as carbon dioxide.

The Company works with suppliers to obtain information about the carbon footprint associated with the purchased products. The calculations rely on specific CO2 emission data for rail cargo transportation within Russia, provided by the largest rail operator. The assessment of specific emissions from natural gas production and transportation within Russia relies on data provided by the largest gas market players.

Upstream GHG emissions (Scope 3), m t of CO2-equivalent[GRI 305-3]

[TCFD Metrics and targets b)]

7.9	8.8		8.4
	7.6	7.6
2018	2019	2020	2021	2022

Coal accounts for the largest part of other indirect emissions at 33% of the total. The category consists mostly of methane emissions in coal mining.

Other indirect GHG emissions (Scope 3) upstream along the value chain by major category, 2022, % [GRI 305-3]

	7	6	5
	9
			4
12			4	2
7.6 m t of	3
	CO2-eq.
14
		33

0.9

0.7

0.6

0.3

0.3

	Hard coal		Pellets and HBI
	Electric energy		Sea transportation
	Ferrous metals		Liquid fuel
	Ferroalloys		Truck transportation
	Natural gas		Carbon-containing materials
	R/w transportation		Coal coke
	Non-ferrous metals		Ore and concentrate
	Technical gases
	Petroleum coke
	Fluxes and minerals

0.1

Specific CO2 emission from stationary sources10, t CO2 equivalent / t [GRI 305-4]

Indicator	2018	2019	2020	2021	2022
Specific direct emissions (Scope 1):

per tonne of Fe

per tonne of steel

1.72	1.77	1.74	1.69	1.72
1.77	1.80	1.88	1.73	1.77

Specific indirect energy emissions (Scope 2, location-based):

per tonne of Fe

per tonne of steel

0.16	0.16	0.14	0.15	0.15
0.16	0.16	0.16	0.15	0.15

Specific indirect energy emissions (Scope 2, market-based):

per tonne of Fe

per tonne of steel

0.16	0.16	0.15	0.10	0.06
0.16	0.16	0.16	0.10	0.06

Specific total emissions (Scope 1 + Scope 2, location-based):

per tonne of Fe

per tonne of steel

1.87	1.92 (1.87)*	1.89 (1.86)*	1.84	1.87
1.93	1.97 (1.93)*	2.03 (1.91)*	1.89	1.92

Specific total emissions (Scope 1 + Scope 2, market-based):
per tonne of Fe	1.88	1.93 (1.88)*	1.89 (1.86)*	1.78	1.78
per tonne of steel	1.93	1.97 (1.93)*	2.04 (1.91)*	1.83	1.83

* Specific emissions excluding the transient impacts due to decreased production.

1. Emissions from production of semi-products manufactured within the Group are not taken into account in this category, since they are already accounted for in Scopes 1 and 2. This category excludes also the transport emissions during delivery to customers.
2. In line with the corporate approach to determining CO2 emission targets: СО2 only, stationary sources only.

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ENVIRONMENTAL PROTECTION

In addition to the commonly applied industry indicator - specific emissions per tonne of steel - calculations were carried out per tonne of end-product iron output (Fe), which is generally taken as the sum total of iron contained in the output of steel and commercial pig iron11 (and, looking forward, in commercial HBI).

According to the Scope 2 location-based calculation, specific emissions in 2022 vs. 2021 went up by 2% and remained flat vs. the baseline of 2018. The increase relative to 2021 came from the increased share of BOF steel

in total output of the Group, from 77% to 79%. According to the Scope 2 market-based calculation, specific emissions in 2022 vs. 2021 remained flat and went down 5% relative to the baseline of 2018, driven by procurement of carbon-free energy by Russian sites.

Specific CO2 emission trends (Scope 1 + Scope 2, market-based) from stationary sources, t/t of Fe [GRI 305-4]

1.94

1.93

Consistent efforts are undertaken to reduce the Company's environmental footprint. From 2010 to 2022, emissions

of СО2 per tonne of end-product iron output went down by 13% across the Group and by 9% at NLMK's flagship production site in Lipetsk. The two main contributing factors in this outcome were higher operational efficiency of production and higher share of electric arc furnace output.

[TCFD Metrics and targets c)] The 2023 target for specific СО2 emission per tonne of steel (Scope 1 + Scope

2) is 1.91 t/t, down from 2.00 t/t in the baseline year of 2018

(a 5% decrease); the target per tonne of Fe is 1.87 t/t vs.

1.94 t/t in 2018 (a 4% decrease); the target per tonne of steel

and commercial pig iron is 1.84 t/t vs. 1.92 t/t in 2018.

NLMK Group continues to develop and implement

projects aimed at GHG emission reduction. These rely

on proven current techniques to improve energy efficiency

and reduce fuel consumption, as well as on some innovative

solutions. The latter include recycling of carbon resources

and use of biofuels in blast furnace operations and innovative

CCUS technologies.

Key CO2 reductions were achieved by the projects

implemented in 2019−2021. The Company carried out

a number of additional projects in 2022 that enabled

1.91

1.88

1.89

a significant reduction of CO2 emissions (Scope

1 and Scope 2). These included projects to increase iron

content in concentrate and to expand recycling. In this

1.88*

1.86*

1.78 1.78

2016

2017

2018

2019

2020

2021

2022

*Specific emission without the impact of temporary factors, which have to do with lower production.

NLMK Group reduces climate footprint through use of hydrogen-containing secondary resources

Steelmaking processes of NLMK Group generate by-product gases that are recycled as fuel for power generation or directly as energy supply for core process equipment. This arrangement reduces the consumption of fossil fuels and the emission of GHG by 3.4 million tonnes CO2 per year.

Some of the blast furnace gas is fed into top recovery turbines that generate additional power without any fuel combustion. The total captive power generation covers 2/3 of demand at NLMK Lipetsk.

By-product gases also contain pure hydrogen: from

7% in blast furnace gas to 60% in coke oven gas. Hydrogen utilization further reduces the consumption of carbon- based fossil fuels. In 2022, NLMK Group consumed 19 billion m3 of blast furnace and coke oven gas (annual), which contains approximately 2.5 billion m3 of hydrogen.

reporting period, the Company began calculating Scope

3 emissions for its projects. In addition to CO2 emissions, this

accounts for CH4 from coal and natural gas.

[GRI 305-5] The evaluation of project effects over the time

period in question compared technical effects against

a business-as-usual scenario (baseline). A custom model

was applied to projects that affect sintering and ironmaking

operations. The model uses an end-to-end calculation

of resource consumption per tonne of iron along the entire

value chain and accounts for the interdependencies among

the projects. Separate calculations were carried out for

projects in steelmaking and rolling operations and power

generation.

11 Specific emissions per tonne of steel are disclosed in any case.

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ENVIRONMENTAL PROTECTION

Reduction of СО2 emissions by projects contributing to NLMK Group strategic target through 2023 [GRI 305-5]

Reduction of GHG emissions:

• abs. terms, '000 t CO2 eq.
• specific, kg CO2 eq./t of steel

Scope 1	Scope 2	Scope 3	Scope 1+2	Scope 1+2+3
-100	-104	-97	-205	-301
-6.1	-6.4	-5.9	-12.5	-18.3

NLMK Group target for reduction of specific

СО2 emissions from stationary sources (Scope 1 + Scope 2) within the current strategic cycle through to 2023, w/o the change of indirect emission factor,

• of СО2/t of Fe

1.94	0.01
		-0.03			1.87
		-0.04
			-0.01
2019*	Increase	Increase	Increase of Fe	Other	2023 target
	of steel output	of captive	in concentrate	projects
		power
		generation

* Specific emissions excluding the transient impacts due to decreased production.

Specific direct emissions of CO2 per tonne of steel at NLMK Lipetsk in 2022, calculated in line with the guidance12 for European Union Emissions Trading System (EU

ETS), was 1.71 t СО2 / t of steel. The gap with the EU ETS benchmark13 - as stricter requirements were imposed in 2021 for the period of 2021−2025 - currently stands at 16%.

NLMK Lipetsk СО2 emissions according to EU ETS (Scope 1), t of СО2 / t of steel

1.71	1.59
NLMK	EU ETS
Lipetsk 2022	benchmark*

* Assuming unchanged consumption rates for coke and ore materials in 2022.

Climate cooperation

NLMK Group took part in consultations regarding the bill on Greenhouse Gas Emissions,14 which was adopted in July 2021, and a number of implementing regulations adopted in 2021−2022.

NLMK Group products advance low-carbon economy

In 2022, the Company refined the calculation of output for products that promote consumer-side CO2 reduction and of emission reduction effects. NLMK Group estimates show that, if the planned volume of such products

is successfully sold in 2018−2023, the volume of averted consumer-side emissions will reach the total of about

25 million tonnes per year (on par with the Group's total annual emissions), and about 560 million tonnes throughout the entire product lifecycle (20-50 years).

The energy outputs (heat and electrical energy) supplied by Altai-Koks' Coke and Chemical Plant are also driving lower СО2 emissions from coal burning in the town

of Zarinsk. Company analysis puts the reduction at 0.7 million tonnes CO2 per year.

Plans for 2023 and the medium term

In 2023, NLMK Group plans to continue developing

and executing projects that help reduce СО2 emissions from existing processes and conducting operational activities that reduce CO2 emissions. The Group intends to engage with suppliers and clients to share information on carbon footprint reductions and setting of decarbonization targets, to continue carbon footprint assessment for different types of products, to verify its carbon footprint estimation for certain products, and to participate in the CDP programme.

1. COMMISSION DELEGATED REGULATION (EU) 2019/331 of 19 December 2018 determining transitional Union-wide rules for harmonised free allocation of emission allowances pursuant to Article 10a of Directive 2003/87/EC of the European Parliament and of the Council.
2. ETS does not set a separate indicator for BOF steel, but there are established benchmarks for coke, sinter, pig iron, lime and dolomite. The given data per tonne of steel

are calculated at the specified consumption coefficients.

14 Federal Law No. 296-FZ "On Limitation of Greenhouse Gas Emissions" dated July 2, 2021.

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NLMK

ENVIRONMENTAL PROTECTION

Reduction of consumer-side CO2 emissions due to NLMK Group products

Product	Sales, m t	CO2 emission reduction, CO2 m t
		Annual	Product lifecycle
	2018−2023	2018−2023	2018−2023
Plate for wind power	1.0	18.1	361
NGO steel	1.4	6.2	187
GO steel	1.7	0.2	5
Flat steel	1.5	0.1	1
Wear-resistant and high-strength steel (Q&T & Q&P)	0.8	0.4	4
TOTAL	6.4	25.0	559

Assessment of climate risks and their impact on strategy

RISK MANAGEMENT

[TCFD Risk management a), c)] Climate risk management is an integral part of NLMK Group's overarching risk management system (see the Operational Control and Risk Management section for more details). Climate risks are identified and assessed by qualitative and quantitative methods, including scenario analysis and modelling of risk materiality, probability, and velocity. Aggregate information about the climate risk profile and related changes is disclosed in the NLMK Group Risk Radar.

For every external driver, the time horizon of potential materialization is assessed. Three time horizons were identified: short-term (up to 2025), mid-term (2025−2030) and long-term (beyond 2030). It is expected that transition risks will be relevant at all time horizons, and most risks will materialize in the long term, since the process transition

in steelmaking will become more prominent by the late 2020s. In addition, chronic and acute physical risks will be manifesting more in the long term. The same can be said for the most significant opportunities materializing in the future, since by that time a more significant increase in low-carbon steel production will occur.

In-depth analysis of physical risks at Stoilensky, the Group's main mining asset

The assessment included:

1. Analysis of existing global climate models (CMIP615) and development of an ensemble model.
2. Scenario modelling of anticipated changes
   in the weather and climate of the Belgorod Region for the years 2020−2040, 2040-2060, and 2080−2100.
3. Identification of Stoilensky's exposure to weather and climate risks.
4. Analysis of historical relevancy and vulnerability of the site's infrastructure to the identified risks.
5. Determination of climate impact thresholds that, if exceeded, will negatively affect the operation of Stoilensky facilities.
6. Assessment of risk materialization probability and infrastructure vulnerability.
7. Recommendations on risk management (including adaptation).

The assessment has determined that the number

of days where extreme weather events occur will increase on the medium- and long-term horizons (heatwaves, tropical nights, torrential rainfall and abnormal precipitation, blizzards, abnormally high atmospheric pressure, strong thunderstorms).

However, should the proposed adaptation recommendations be followed, both for the employees and the equipment, the potential damage from materialization of such risks will be negligible or non-existent.

Internal carbon pricing

The Company uses internal carbon pricing in order to support assessment and prioritization of climate projects, forecasting of costs related to the upcoming introduction of CBAM, and management of climate risks. The base for the internal carbon price is the projected allowance price under EU ETS adjusted for the Company's share of exports to Europe.

15 Coupled Model Intercomparison Project - launched under the World Climate Research Programme in 1995.

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ENVIRONMENTAL PROTECTION

ENERGY EFFICIENCY

KEY FIGURES FOR 2022	MATERIAL TOPICS
382.2 PJ	KEY EVENTS IN 2022
	$	Energy
(-5.3% yoy)
$	Power generation by the CGPP and RCGP at NLMK Lipetsk
NLMK Group's total energy consumption in 2022		has reached historical peaks.
5.452 Gcal/t	$	Installation of core and auxiliary equipment continues at
	the Recovery Co-Generation Plant.
(+0.9% yoy)	$	Gas-powered equipment of the Sintering Plant at NLMK
	Lipetsk has completed transition to natural gas. Nitrogen
		compressor KTK-12.5/35 No. 3 at the Oxygen Shop in Lipetsk
specific energy intensity of steel production at NLMK Lipetsk		has been revamped and put into operation.
$	A medium-term programme was launched for reliability
		improvement of the core equipment at Altai-Koks' CGP.
	$	The Lighting Upgrade Programme at Group sites continued
		its phased implementation: in 2022, around 50,000 light
		fixtures were replaced with energy-efficient LED alternatives.
	$	The Company continues the energy-efficiency project
		of revamping BF-4 air stoves.

Approach to energy management

NLMK Group continues its systematic efforts to increase the energy efficiency of its production activities, seeking and introducing comprehensive solutions to improve supply reliability and energy efficiency in order to reduce costs and minimize its environmental footprint.

The Company has adopted a group-wideIntegrated Management System Policy (IMS Policy). This policy sets forth, among other things, the vision, goals, principles, and management commitments related to the improvement of energy efficiency.

The Group's commitments under the IMS Policy go beyond introducing advanced energy-efficient technologies and solutions that reduce the consumption of energy resources. The Group is additionally committed to developing captive power generation capabilities that utilize metallurgical gases and other secondary energy resources, and to supporting the use of renewable energy where applicable and reasonable. The purchased equipment and services are evaluated in terms of compliance with corporate energy efficiency requirements.

The Unified Technical Policy on Energy Complex Managementhas been in effect at NLMK Group's Russian companies since 2014. The objective of this policy

is to introduce the most advanced technical solutions, machinery, and technologies that bolster the reliability, efficiency, and safety of the Group's energy complex.

The policy sets out priorities and rules for applying technical solutions related to the utilization of energy facilities,

the implementation of investment programmes for new

construction, the re-tooling of core equipment, overhauls of energy assets that belong to NLMK Group companies.

A key performance indicator for improving energy efficiency of production activities is the specific energy intensity of the products (Gcal/t of output). The targets for these key performance indicators are determined in reference to earlier maximum results, taking into account the potential of optimizing the process to the best technologically achievable level, as well as the results of benchmarking

of similar machinery against global best practices.

Certification

The Company's energy management system is in compliance with the international ISO 50001 standard, as confirmed by an international certificate. One of the main requirements under this international standard is continuous improvement of energy performance.

The system encompasses all core production sites in the Group:

• NLMK Lipetsk,
• VIZ-Steel,
• Altai-Koks,
• Dolomit,
• NLMK Kaluga,
• NLMK Metalware,
• NLMK Ural,
• Stagdok,
• Stoilensky.
  NLMK DanSteel has also been certified to ISO 50001.

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ENVIRONMENTAL PROTECTION

In 2022, the Group completed the integration of all existing management systems at its sites into

a single Integrated Management System (IMS). All core production sites have implemented integration projects on the enterprise level.

Energy resource consumption in 2022

In 2022 total energy consumption within the Company stood at 382.2 PJ, which is 21.5 PJ lower year-on-year. The reduction was driven by the decrease in output at NLMK USA sites and at NLMK Lipetsk. Non-renewable energy consumption totalled 380.5 PJ. NLMK Group uses a variety of non- renewable fuels in its production activities: coal and coke products account for 57.7% of the total balance, natural gas accounts for 26.4%, and pulverized coal accounts for 15.2%.

On top of that, renewables are used as well, in particular - electrical power from renewable sources. In 2022 the share of renewable power increased from 5.14% to 5.39% of the total electricity consumption. The share of renewable energy

in the total volume of electricity consumption is shown without transit flows. NLMK Group did not make any direct purchases from renewable energy suppliers. The share

of renewable electric energy in all NLMK Group energy consumption is 0.43%.

Increasing the share of low-carbon energy is one of the priority areas of NLMK Group's efforts aimed at reducing carbon intensity of production and greenhouse gas emissions. This includes nuclear energy. In 2022 the share of power supplied to Group sites by NPPs grew 1.5 times year- on-year and stood at approximately 4.5 billion kWh, or 87% of the total electricity consumption.

Renewable electric energy consumption across NLMK Group [GRI 302-1]

Year	2018	2019	2020	2021	2022
Share of renewable electric energy in purchased energy, %	4.86	5.10	5.14	5.14	5.39
Total share of renewable electric energy in total energy consumed, %	0.37	0.37	0.42	0.44	0.43
Total renewable electric energy consumed, PJ	1.51	1.43	1.68	1.79	1.64

Note: The calculation assumes a conversion factor of 1 MWh = 3.6 GJ.

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NLMK

ENVIRONMENTAL PROTECTION

Share of renewable electric energy in total purchased electricity by region, without transit flows, %

Country	Share of renewable energy16	Source	Companies
Russia	2.31	Hydro, wind, solar	NLMK Lipetsk, Stoilensky, Stagdok, Dolomit, NLMK Kaluga, NLMK Ural, NLMK Metalware, VIZ-Steel
USA	19.84	Hydro, wind, solar, biofuel	NLMK Indiana, NLMK Pennsylvania, Sharon Coating
Belgium	21.5	Wind, solar, biofuel	NLMK La Louvière, NLMK Clabecq
France	20.4	Hydro, wind, solar, biofuel	NLMK Strasbourg
Italy	39.0	Hydro, wind, solar, biofuel	NLMK Verona
Denmark	92.1	Wind, solar, biofuel	NLMK DanSteel

Total energy consumption by NLMK Group17, PJ [GRI 302-1]

413.6	382.7	396.4	403.6	382.2
2018	2019	2020	2021	2022

Consumption from non-renewable energy, NLMK Group18, PJ [GRI 302-1]

412.1	381.3	294.8	401.9	380.5
2018	2019	2020	2021	2022

Breakdown of non-renewable fuel consumption by NLMK Group in 2022, % [GRI 302-1]

26.4
	15.2
	0.9
57.5	0.1

Coal and coke products	Motor fuel
Natural gas	Fuel oil
Pulverized coal

Consumption of non-renewable fuels by NLMK Group, PJ [GRI 302-1]

Fuel type	2018	2019	2020	2021	2022
Coal and coke products	208.64	185.24	197.64	195.70	178.40
Natural gas	87.75	91.26	85.86	91.01	81.79
Pulverized coal	43.30	36.15	43.36	44.13	47.05
Motor fuel (petrol, diesel, liquefied gas)	2.79	2.91	2.90	3.10	2.73
Fuel oil	0.04	0.21	0.29	0.25	0.36
Total	342.53	315.77	330.05	334.19	310.33

1. The share of renewables in national generation for Russia in 2022 is taken fromhttp://www.finmarket.ru/news/5888978; https://tass.ru/ekonomika/16939991; for Europe from bp Statistical Review of World Energy 2022 | 71st https://www.connaissancedesenergies.org/sites/default/files/pdf-actualites/bp-stats-review-2022-full-report.pdf, pp. 8, 42, 43].
   The national share for the US in 2021 is taken from Monthly Energy Review US Energy Information Administration https://www.eia.gov/totalenergy/data/monthly/pdf/mer.pdf, p. 131].
2. The methodology for calculating the energy consumption by Group companies: purchased energy minus sold energy (sales, shipment, transfer) at each production site. Since 2021, the Company's energy balance includes energy expenditure on production of purchased oxygen; since 2022 - nitrogen and hydrogen, too, as outsourcing supply contracts were signed.
3. Methodology for calculating non-renewable types of energy: total energy consumption minus renewable energy.

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ENVIRONMENTAL PROTECTION

Consumption, generation, and sale of electricity and thermal energy by NLMK Group, PJ [GRI 302-1]

Indicator	2018	2019	2020	2021	2022
Electricity and thermal energy purchased for consumption
Electrical energy obtained	87.30	78.47	77.72	83.45	79.97
Thermal energy obtained as steam	0.50	0.48	0.48	0.51	0.55
Thermal energy obtained as hot water	1.59	1.33	1.03	1.09	1.10
Total	89.39	80.29	79.24	85.05	81.61
Captive electrical and thermal energy generation
Electrical power generation	49.36	50.01	49.93	51.34	51.11
Thermal energy as steam	21.90	21.75	22.26	22.00	20.49
Thermal energy as hot water	9.78	7.41	7.68	7.95	7.58
Total	81.03	79.17	79.87	81.29	79.18
Electricity and thermal energy sold to external consumers
Electricity sold and transmitted	10.70	8.99	8.63	9.23	11.66
Heat energy sold and transmitted as steam	0.35	0.37	0.40	0.44	0.42
Heat energy sold and transmitted as hot water	2.76	2.35	1.92	1.96	1.99
Total	13.81	11.71	10.94	11.6	14.07

Specific energy intensity19 of NLMK Lipetsk, Gcal/t [GRI 302-3]

Indicator

Specific energy intensity

2018	2019	2020	2021	2022
5.469	5.641	5.546	5.402	5.452

The year-on-year increase of specific energy intensity in 2022 was driven mainly by the reduction of steel output and by commissioning of additional equipment.

Captive electricity generation

The Company pursues reduction of costs by implementing investment projects and optimization initiatives aimed at increasing captive generation of electricity and thermal energy.

Electricity is generated at the Company's captive power plants, which are chiefly powered by off-gases from steel production. More than 80% of the electricity generated at NLMK Lipetsk (and used for its production needs only) and 100% of the electricity generated at Altai- Koks is produced using NLMK Group's captive recyclable resources (steelmaking gases).

The maximum possible utilization of the available recyclable energy is one of the main challenges faced by NLMK Group; overcoming this challenge will make it possible to not only minimize expenditure, but also

to reduce our environmental impacts by reducing emissions of greenhouse gas emissions and other substances.

In this reporting period, the total installed in-house generation capacity remained unchanged at 733 MW: 522 MW at the Lipetsk site, 200 MW at Altai-Koks; the installed capacity of gas-piston units at NLMK Ural is 11 MW.

Captive electricity generation at NLMK Group sites

Captive electricity generation at NLMK Group sites

NLMK Lipetsk: 522 MW

Co-generationplant: fuel - coke oven gas, blast furnace gas, natural gas

Recovery co-generationplant: fuel - blast furnace gas, natural gas

Top pressure recovery turbine station: no fuel is used; instead, electricity is generated from excess blast furnace gas pressure

Altai-Koks: 200MW

Co-generation plant: fuel - coke oven gas

NLMK Ural: 11MW

Mini gas-pistonco-generation plant: fuel - natural gas

19 Specific energy intensity = (energy consumption during steel production / extraction and processing of raw materials, Gcal) / (steel production / extraction and processing of raw materials, t) The following types of energy resources were used in the calculation: purchased - coking coal and additives, pitch coke, lump coke, coke breeze, pulverized coal, natural gas, fuel oil, thermal energy as hot water, steam, electricity, oxygen (NLMK Lipetsk and NLMK Kaluga), nitrogen and hydrogen (NLMK Lipetsk), and heat from chemically treated water (VIZ-Steel); sold - coke breeze, coke nut, chemical products, blast furnace gas, steam, thermal energy as hot water, oxygen, nitrogen, compressed air, industrial water, and commercial pig iron.

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SUSTAINABILITY REPORTI  2022

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ENVIRONMENTAL PROTECTION

Share of captive electricity in total electricity consumption at NLMK Lipetsk20 %

	65.0			66.4
	63.7	63.4
58.0
2018	2019	2020	2021	2022

Captive electricity generation at NLMK Lipetsk21

84.0%			489.2	486.8
478.3	480.2
	82.0%			80.6%
450.2			77.2%
	72.2%
2018	2019	2020	2021	2022

Captive power generation, MW

Share of captive generation from secondary fuel gas

In 2022 the generating capacities of NLMK Lipetsk achieved an all-time high in hourly output: CGP - 349 MW, RCGP - 165 MW).

Ongoing project to build Recovery

Co-Generation Plant No. 2

In 2019 NLMK Group launched a project to construct a new recovery co-generation plant at NLMK Lipetsk. The new plant will be fuelled by recyclable gasses from steel production: BOF and BF. This is going to become the first project in Russia to use BOF gas for power generation. The installed capacity of the new recovery co-generation plant will be 300 MW. The total investment in the project is estimated at RUB 40 billion.

In 2022 the site received deliveries of core process equipment, including two turbine generators of 150 MW installed capacity each. Civil construction continued

in parallel with the installation of auxiliary equipment at all future plant units.

Plans for 2023 include energizing the equipment of the plant's power distribution system, completing the installation of core equipment, and starting the commissioning procedures.

Optimization initiatives undertaken by NLMK Group in 2022

Over the reporting period, NLMK Group sites have implemented a series of optimization projects aimed at improving the efficiency of fuel gas use, improving

the efficiency of compressors, pumps and cooling equipment, optimizing of process maps in energy production, loptimizing the load and layout of energy resource networks, and optimizing energy equipment operation parameters.

In 2022 optimization projects at the generating capacities of the CGP and RCGP at NLMK Lipetsk and CGP at Altai-Koks were aimed at changing the operating modes and control algorithms for boilers and turbines, using

new combustion air preheating technology, implementing of cleaning systems at turbine generator capacitors.

The energy-efficiency activities at CGP in Lipetsk enabled the achievement of the maximum hourly consumption

rate for blast furnace gas of 1,225 k m3/h. This advances the goal of maximum utilization of secondary steelmaking gases and reduction of natural gas procurement in power generation.

Energy-efficiency optimization projects in 2022 delivered an effect of RUB 1.2 billion.

Replacement of lighting systems at NLMK Lipetsk

In 2022 NLMK Lipetsk replaced 47,000 lighting fixtures as part of the energy-efficiency programme to upgrade office lights. The effects also include the elimination of class 1 hazardous waste generated by obsolete lights. The savings in Lipetsk in 2022 totalled RUB 19.5 million, with full-year effect expected at RUB 48 million.

Moreover, 13 shops at NLMK Lipetsk received 4,900 LED lights as part of the targeted programme to upgrade ceiling lights. Its economic effect at year-end exceeded RUB 5.6 million.

The implementation of the targeted programme continues at other NLMK Group sites as well.

Transition of core steelmaking equipment at the Sinter Plant of NLMK Lipetsk to natural gas

In 2022 the Company completed the project to switch Sinter Plant equipment at NLMK Lipetsk from blast- furnace to natural gas. The unused blast furnace gas is redirected into power generation.

1. The share of captive generation increased year-on-year in 2022 following a reduction in electricity consumption.
2. The share of captive electricity generation from secondary fuel gases went up in 2022 as blast furnace operation parameters were stabilised after the completion of repairs.

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SUSTAINABILITY REPORTI  2022

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ENVIRONMENTAL PROTECTION

Savings through optimization activities

Indicator	2018	2019	2020	2021	2022
Effect from energy-efficiency activities, RUB m	509	1,151	668	1,569	1,229

Reduction in energy consumption22 as a result of energy-saving initiatives (programmes)

at NLMK Lipetsk, 2014-2018[GRI 302-4]

	1851.0	1939.4
		1520.9
	1374.3
			1115.4
753.0			735.8
664.0				550.0
		379.5
	329.4	372.3	338.2
				211.6
31.7
2018	2019	2020	2021	2022

Total power savings, TJ

Total fuel savings, TJ

Total reduction of energy consumption, TJ

Motor fuel consumption

The Company has determined technically feasible levels of specific fuel consumption for each category of transport and separately for most common vehicle models (motor fuel is covered by the Company's energy management system).

NLMK continuously pursues its goals: motor fuel consumption by rail transport at NLMK Lipetsk was reduced in 2022 by 6% (125,000 litres) and by road transport at Stagdok by 3% (288,000 litres).

In 2023 and going forward, the efforts to cut motor fuel consumption will continue with a focus on process optimization, implementation of Best Available Techniques and improvement of safe driving culture. The total reduction is planned to reach up to 45%.

Consumer-side reduction of energy consumption

[GRI 302-5] NLMK produces high-strength and wear- resistant steels. These steels deliver metal structures

of lower weight, which, in turn, leads to lower fuel and steel consumption and, ultimately, drives the transition to low- carbon economy. The Company also produces steel plates that are used in construction of wind power installations, as well as premium grain-oriented steels that allow consumers to reduce specific magnetic losses in transformers by 5−15%.

Plans for 2023 and the medium term

Improving the energy efficiency of production is a key goal in the Company's development plans. The main lines of action to boost energy efficiency in 2023 and the medium term include:

• Reducing specific energy consumption at production units; in the medium term - reaching the minimum technically feasible level of consumption,
• Optimizing process charts for the production of energy resources,
• Driving efficiency of various types of equipment (energy, compressors, pumps, lighting),
• Reducing the amount of purchased thermal energy,
• Developing and introducing innovative digital energy solutions,
• Implementing investment projects for infrastructure development, technical upgrades/construction of facilities with improved energy efficiency performance.

The Company is working on a portfolio of technological development projects in the energy sector. The focus areas in 2023 will be the development of projects for application of industrial energy storage technologies and analysis

of alternative hydrogen production technologies.

22 Effects of energy-efficiency programmes are evaluated by conversion in terms of equivalent units of purchased energy (natural gas and electricity) used to produce a given energy resource. Project effects are monitored for 12 months; actual savings are annualized vs. a similar baseline period before implementation.

21

SUSTAINABILITY REPORTI  2022

NLMK

ENVIRONMENTAL PROTECTION

ENVIRONMENTAL

PROTECTION

KEY 2022 FIGURES

MATERIAL TOPICS

56%	$	Air emissions
	$ Water consumption and discharge
Pollutants discharge into water bodies reduced	$	Biodiversity
	Secondary raw materials and waste
compared to 2018 baseline	$
12%
KEY EVENTS IN 2022
Specific emission of dust reduced compared
$	NLMK Ural fully eliminated effluent discharge into water
to 2018 baseline
	bodies.
97%
$	NLMK Lipetsk completed a revamp of the dedusting system
		at Blast Furnace No. 3. The newly achieved effectiveness
of water recycled and reused100% of secondary		of dust capture is 99.9%.
	NLMK Kaluga replaced over 1,500 filters in its air treatment
iron waste recycled	$
	systems to ensure residual dust content in line with the EU
$2.2 billion	$
Stoilensky built a large-scaleon-site storm sewerage system.
		Best Available Techniques.
allocated to investment projects with an environmental	$	Altai-Koks implemented steam injection at Coking Battery
impact since 2000
	No. 5 to reduce fugitive emissions.
$317 million
$	Projects under the new Environmental Programme were
		kicked off, including construction of a waterless cooling
allocated to operational and investment projects		system for slag at Blast Furnace Shop No. 2, recycling
	of water downstream of local treatment facilities to be
with an environmental impact in 2022
	reused at NLMK Lipetsk, revamp of dedusting facilities at
29
	Coke Dry Quenching Plant No. 1.
$	Real-time monitoring tools implemented: machine
projects under the Environmental Programme planned		vision, small-sized air monitoring stations deployed along
through to 2024 have been completed successfully
	the boundary of the sanitary protection zones of NLMK
5,000
	Lipetsk and Stoilensky, mobile environmental lab introduced
		at Stoilensky.
trees saved due to recycling of paper and cardboard	$	Ecology IT System implemented to automate environmental
	reporting.
	$ Corporate regulations adopted for assessment
		of environmental risks and for monitoring and conservation
		of biodiversity.
AWARDS AND COMPETITIONS

$ NLMK Group received a silver medal from the 28th Metal-Expo in 2022, an international industrial trade fair, for its revamp

of the fugitive emission capture system at the BOF Shop and for development of an energy-saving green technology to manufacture briquettes from captured dust.

$ Stoilensky won the Leaders of Russian Business competition, held by the Russian Union of Industrialists and Entrepreneurs, in the Environmental Responsibility category.

$ NLMK won the IV national competition Reliable Partner - Environment in the Best Recycling Project category.

$ NLMK Lipetsk received an honorary certificate for its active participation in the Green Spring 2022, the VIII Russian national community clean-up. The Company was commended for its proactive position and significant contribution to environmental protection.

$ Stoilensky won first place in the regional ECOcompany Competition in the Waste Management category.

22

SUSTAINABILITY REPORTI  2022

NLMK

ENVIRONMENTAL PROTECTION

Environmental policy commitments

[GRI 2-24] Environmental stewardship is a top priority for NLMK Group's activities - both on the part of the Board of Directors and the CEO (Chairman of the Management Board) of the Company. The Group's CEO and Board

of Directors review its environmental performance

on an annual basis. The Strategic Planning Committee under the Board of Directors studies risks related to sustainable development, including those related to the environment, and approves the Environmental Programme, which

is updated regularly if new risks are identified,

and investments in environmental protection projects. NLMK takes a comprehensive approach to environmental

management by focusing on reducing air emissions, maximum possible reuse and processing of waste, conservation of water resources and biodiversity, and rehabilitation of contaminated land.

Recognizing the right of future generations to enjoy a healthy environment, the Group objectively assesses environmental risks and is committed to minimizing them. It allocates significant resources to various environmental programmes and the implementation of innovative technologies.

For more information on environmental issues, please visit the Company website.

TARGETS FOR 2023 AND KEY PERFORMANCE INDICATORS

As part of its current Environmental Programme, NLMK Group has established the following targets:

• Reduction of specific atmospheric emissions down to the level of EU Best Available Techniques.
• Increase of the share of secondary raw materials utilization to 92%, including of iron-containing recyclables up
  to 101% (taking into account accumulated volumes).
• Reduction of impacts on water resources - decrease of pollutant discharge into water bodies by 25%.

Reduction of specific emissions, NLMK Group, 2023 target

20.2

18.918.8

18.1 18.1* 18.0

2018	2019	2020	2021	2022	2023
(baseline)					(target)

• Calculated indicator that takes into account the reduction in NOx emissions actually achieved by NLMK due to the implementation of a number of measures to improve
  the fuel efficiency of the diesel locomotive fleet implemented in 2018−2022. The results of this reduction will be taken into account by the regulator at the end of 2023 after
  the formal procedure is completed. Without taking into account the specified adjustment, the emission is - 18.5 kg/t of steel.

Reduction of specific air emissions by substance, NLMK Lipetsk

16.3	17.7	16.8
	15.7	15.6
		14.8
1.7	1.7	1.7
1.4	1.4		1.5	1.5	1.6
1.3
				1.2
					1.1	1.1
			1.3
1.2						1.1
		1.1	0.9*
2018	2019	2020	2021	2022	2023
(baseline)							(target)
		СО, kg/t of steel				NOx, kg/t of steel
		SOx, kg/t of steel				Dust, kg/t of steel

• Calculated indicator that takes into account the reduction in NOx emissions actually achieved by NLMK due to the implementation of a number of measures to improve
  the fuel efficiency of the diesel locomotive fleet implemented in 2018−2022. The results of this reduction will be taken into account by the regulator at the end of 2023 after
  the formal procedure is completed. Without taking into account the specified adjustment, the emission is - 1.3 kg/t of steel.

An additional target was set for the Group's Russian companies for specific emissions of class 1 substances. Set at 0.07 g/tonne of steel, the target was achieved in 2021.

Reducing impact on water resources

17.6

	15.3
	12.5		13.2
0.8		11.8	7.7

0.7 0.7

0.6 0.6 0.6

2018	2019	2020	2021	2022	2023
(baseline)					(target)

Specific water discharge (NLMK Lipetsk)*, m3/t of steel

Pollutant discharge into water bodies, k t

• Industrial and household wastewater, total.

Increasing the recycling rates23

93	99	99	100	100	101
		95	95	96
	92				92
89
2018	2019	2020	2021	2022	2023
(baseline)					(target)

Recycling of secondary iron-containing materials, %

Share of waste utilization, %

23 Without overburden and tailings; taking into account accumulated sludge.

23

SUSTAINABILITY REPORTI  2022

NLMK

ENVIRONMENTAL PROTECTION

INVESTMENT IN ENVIRONMENTAL PROTECTION

Each year NLMK Group commits significant resources to ensuring the accident-free operation of equipment and the implementation of investment projects that have an environmental impact. Environmental spending in 2022 was $317 million.

NLMK Group spending on environmental protection, $ m [GRI 103-2]

	479
	124	326	340
		317
242	355	101	125	153
95		226	215
		164
147
2018	2019	2020	2021	2022

Operational expenditure

Investment projects

In implementing its environmental programme, NLMK Group focuses on the introduction of the best available techniques (BATs). As part of a four-party agreement between NLMK, the Ministry of Natural Resources, Rosprirodnadzor and the administration of the Lipetsk Region, the Company has already implemented seven out of nine projects planned until 2024. They aim to implement the Ecology Federal Project. The reduction of air emissions due to these projects is 9,900 tonnes, which is 50% more than originally planned in the Federal project.

In 2022, NLMK Lipetsk completed a revamp

of the de-dusting system for capturing fugitive emissions in the mixer section of BOF Shop No. 1 and an upgrade

of de-dusting at BF-3 casthouse, with the total dust emissions reduction of more than 300 tonnes per year. NLMK Lipetsk also completed a revamp of the collection tank of hot- rolling mill water supply, which eliminates the risk of soil contamination on an area of 400 m2.

Total investment in environmental projects since 2000 has exceeded $2.2 billion. Over this period, specific air emission of NLMK Group has gone down from 43.3 kg/tonne of steel to 18.124 kg/t of steel. Overall, alongside a two-fold increase in production, the cumulative impact on the environment was reduced by 58% and complies with RF BAT.

Environmental monitoring system

NLMK Group seeks to assess its impacts on the environment and conducts continuous monitoring at its sites and in the cities of operation. In 2022 the Company took over 3.5 million measurements of air quality, water and soil conditions, which amounts to about seven measurements per minute.

For example, it has deployed more than 500 metering stations in Lipetsk: at source, at the sanitary-protection zone (SPZ) boundaries and in the city. The measurements are made by the NLMK Lipetsk own lab, a third-party lab reporting to Rosprirodnadzor, automated monitoring sensors, and stationary detection stations of the Russian Meteorological Service.

AT-SOURCE MONITORING

NLMK Production System tools for environmental monitoring

The Group's flagship site, NLMK Lipetsk, has its main emission sources outfitted with control sensors. Their concentration readings are fed into an IT system, which covers 70% of the site's emissions with real-time monitoring. These data are analysed against control charts. The Environmental Service is tracking the real-time values of dust, hydrogen sulphite, nitrogen concentrations as well as other substances. In case a threshold

is exceeded, experts can address the deviations promptly, identify the root causes, and take systemic action

to eliminate and prevent them.

One such action, for example, was to replace

the reagent in the on-site slag granulation facilities of Blast Furnace No. 6, which reduced the emission of hydrogen sulphide. Starting from 2019, milk of lime had been used to absorb nitrogen sulphide. This resulted in frequent clogging of the equipment and could potentially lead

to an unplanned furnace shutdown. Moreover, the lime contaminated the premises of the furnace, precipitated on vehicles and buildings. Expert analysis of alternative absorbers identified sodium carbonate as a viable option that offers better environmental performance: nitrogen sulphide emissions at this source went down several times.

Machine vision in service of the environment

In 2022, NLMK Lipetsk continued the deployment of a machine vision-based system for visible emission analysis. The purpose of the system is to identify any non-typical atmospheric emissions recorded by CCTV cameras, determine their location, estimated volume and send notifications to the plant's specialists for analysis and timely response.

The system enabled in-depth analytics that maps emissions onto shop processes, identifies causes of non- typical events and eliminates them on the production level.

The machine vision pilot run at the Coke and Chemical Plant has provided data to analyse coking battery door wear. This statistical analysis allowed the Company

to improve door maintenance. It led to a reduction of gassing from doors by almost 80%. In blast furnace operations, this tool enabled a 5−15% reduction of non- typical emissions at all blast furnaces.

The system currently has 11 cameras, located across coking, sintering and BOF operations. The project is going to be scaled to other sites of the Group.

24 Calculated indicator that takes into account the reduction in NOx emissions actually achieved by NLMK due to the implementation of a number of measures to improve the fuel efficiency of the diesel locomotive fleet implemented in 2018−2022. The results of this reduction will be taken into account by the regulator at the end of 2023 after the formal procedure is completed. Without taking into account the specified adjustment, the emission is - 18.5 kg/t of steel.

24

SUSTAINABILITY REPORTI  2022

NLMK

ENVIRONMENTAL PROTECTION

In addition to innovative monitoring systems, NLMK Lipetsk has procured portable gas analysis equipment for mobile and rapid measurements of pollutants in atmospheric air at the Lipetsk site. This will make it possible to control the quality of atmospheric air in places not equipped with stationary equipment.

NLMK Group has started to ensure compliance with the new regulatory requirement to outfit emission sources with automated control equipment.

Stoilensky installs automated emission control system

In 2022 NLMK Group completed the installation

of an automated emission control system at main sources of the Pelletizing Plant at Stoilensky. The automated system comprises 20 measurement sensors

and a software suite that collects and analyses data in real time. All real-time data are displayed on the monitors

of the plant's dispatcher and the site's environmental specialists. The data in the new system allows experts

to analyse the effects of induration modes on the emission volumes and introduce adjustments where necessary. This enables timely response to deviations and a reduction on dust and gas emission into the atmosphere.

The system ensures monitoring and control over 85% of the site's emissions.

MONITORING ON THE SANITARY PROTECTION ZONE BOUNDARIES AND IN THE CITY

The Company regularly publishes environmental monitoring data on the main controlled substances (carbon monoxide, hydrogen sulphide, sulphur dioxide and nitrogen dioxide) in the air of Lipetsk. It makes available a mapthat

shows the indicators of average monthly values in MPC shares both from the posts of Russia's Federal Service for Hydrometeorology and Environmental Monitoring (Roshydromet) and from 12 additional control points on the border of the sanitary protection zone of the plant and in the city.

Atmospheric air protection

[GRI 305-7] NLMK Group makes considerable efforts to reduce air emissions. Its Strategy 2022 sets a target of reducing specific air emissions from 18.9 kg/t in 2018 to 18.0 kg/t by 2023, or by 5%. At the end of 2022, total specific emission stood at 18.125 kg/t of steel.

COMPLETED EMISSION REDUCTION PROJECTS

Dedusting upgrade at the mixer section

A dedusting unit, rated at 600,000 m3 of gas per hour, was built in the mixer section at BOF Shop No.

1 of NLMK Lipetsk, which reduced dust emission in the area by five times.

The mixer section emits dust when hot iron is poured, which is now captured and treated by the dedusting system. It improves the gas treatment performance

to 5 mg of dust per m3, in line with best available techniques. The annual emission reduction is over 100 tonnes. The project investment was over RUB 650 million.

New filters at Blast Furnace No. 3

NLMK Lipetsk has completed a revamp of the dedusting system at Blast Furnace No. 3. The newly achieved effectiveness of dust capture is 99.9%. Sustained environmental upgrading has provided all blast furnaces at NLMK Lipetsk with modern dedusting units on par with best available techniques. Reduction of dust emissions is 237 tonnes per year. The entirety of captured dust is recycled into blast-furnace operations as an iron ore input. The project investment amounted to RUB 320 million.

Low air pollution levels
in the city of Lipetsk	25

Since 2014 the city of Lipetsk, which is home to NLMK Group's largest asset, has been officially recognized as the cleanest steelmaking city in Russia, according to data from Roshydromet. Thanks to environmental protection measures, the Integrated Air Pollution Index (IAPI) in the city of Lipetsk fell by a factor of more than 10 between 2000 and 2022.

Pollution level	Value
Very high	>14
High	7-13
Elevated	5-6
Low	0-4

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022

25 Сalculated indicator that takes into account the reduction in NOx emissions actually achieved by NLMK due to the implementation of a number of measures to improve the fuel efficiency of the diesel locomotive fleet implemented in 2018−2022. The results of this reduction will be taken into account by the regulator at the end of 2023 following formal procedures. Without taking into account the specified adjustment, the emission is - 18.5 kg/t of steel.

25

SUSTAINABILITY REPORTI  2022

NLMK

ENVIRONMENTAL PROTECTION

Mobile dust suppression at NLMK Lipetsk operating round the clock

The mobile dust suppression system is a unique unit fitted with a turbine to blast out water droplets. The droplets capture dust particles and reduce the dust content

in the air. The unit is also used to treat open bulk storage sites with specialized solution that reduces secondary dusting. These activities have decreased gross dust emission by warehouses by 40 tonnes per year, which is about five dump trucks worth of dust. The unit

is available on demand to any shop that plans operations that are prone to dust emission.

Improved efficiency

of industrial vacuum cleaners

October 2022 at NLMK Lipetsk was marked by the end of the second season when industrial vacuum cleaners were in operation, procured in 2020 to clean motor roads and site premises. In 2022, the vacuum cleaners collected 2,200 tonnes of dust, which is almost a two-fold increase year-on-year. Higher performance was achieved through optimization activities, switch to round-the-clock operation, etc. The total amount of dust collected over the two seasons in operation is over 3,500 tonnes.

Dedusting upgrade at Stoilensky

In 2022 Stoilensky completed the upgrade

of the aspiration system in the medium and fine crushing building of the beneficiation plant. Eight dedusting units were replaced, three upgraded, and four new ones installed. The implementation of the project has significantly reduced the concentration of dust in the air of the working area and halved the gross emission of dust into the atmosphere. Total investment in the project exceeded RUB 600 million.

Innovative solutions to cut emissions at Stoilensky

NLMK Group is developing non-standard and innovative solutions to meet environmental challenges. In 2022, for example, Stoilensky ran pilot tests of ceramic filters at the dedusting units of its Pelletizing Plant. Ceramic filters are made of a completely novel material type that performs much better during autumn and winter compared to conventional systems. The pilot was around a month long and approximately 400 kg of dust was collected. The residual dust concentration that was achieved dropped below 5 mg/m3, which is almost 20x better than the performance of current filters. Overall cleaning performance was 99.9%. The Company is going to continue testing this new technology in 2023.

Reduced dusting at the tailings storage facility

A set of measures was undertaken at Stoilensky in 2022 in order to reduce the impacts of its tailings storage facility. Grass was planted on the dry embankment (approx. 9 ha) and 114 ha of beaches were treated with

a binder solution. The second stage of the beach irrigation project completed in 2022, including the installation

of water ducts with sprinklers on the pile dam. These activities secured the dust concentration on the SPZ boundary below maximum permissible concentrations.

Reduction of emissions

at Coking Batteries of Altai-Koks

One of the no-cost operational improvements was aimed at cutting emissions during coke discharge at Altai-Koks batteries. Opening time of coking chamber doors is now tracked and displayed. This made the process easier

to control and adjust, and led to shorter opening times. As a result, the average opening time of coking chamber doors was reduced by 30% bringing atmospheric emission down significantly.

Replacement of filters at NLMK Kaluga

NLMK Kaluga replaced over 1,500 filters in its air treatment systems. Annual replacement of filters maintains the high cleaning performance and ensures high air quality

on the premises. The centralized gas treatment system at the EAF Shop of NLMK Kaluga ensures a residual dust concentration of 5 mg/m3, which is several timer better than household vacuums and on par with EU Best Available Techniques. The system captures over 99%

of dust from smelting. The dust captured by the filters at NLMK Kaluga is used in pellet production and supplied to consumers for downstream applications. Annual scheduled replacement of bag filters helps maintain comfortable and safe workplace conditions in NLMK Kaluga shops.

EMISSION OF CONTROLLED SUBSTANCES

NLMK Group's gross emission of non-controlled substances in 2022 decreased by 33,80026 tonnes, or 8.5%, vs. 2018, the baseline year in Strategy 2022. Specific emissions were reduced by 0.827 kg/t of steel.

74% of NLMK Group's emissions consist of carbon monoxide, a low-hazard substance of hazard class IV, which is not regulated as a harmful substance in many countries. It cannot harm human health, since it comes from high pipes, lighter than air, and is dispersed without forming high concentrations in the surface layers of the atmosphere. At the same time, substances of hazard classes I-II account for only 0.2% of the Group's gross emissions.

26 Calculated indicator that takes into account the reduction in NOx emissions actually achieved by NLMK due to the implementation of a number of measures to improve the fuel efficiency of the diesel locomotive fleet implemented in 2018−2022. The results of this reduction will be taken into account by the regulator at the end of 2023 following formal procedures. Excluding this adjustment, the decrease in gross emissions is 28,300 t (8.5%), specific - 0.4 kg/t of steel.

26

SUSTAINABILITY REPORTI  2022

NLMK

ENVIRONMENTAL PROTECTION

NLMK Group's emissions by hazard class, %

NLMK Group emission

		18.9	20.2	19.8		18.1*
				18.1
9		332
	10		317	313	314	298*
298,000 t	7	1
		0.2
74
		2018	2019	2020	2021	2022

IV carbon monoxide	I - extreme hazard
III nitrogen oxides	II - high hizard
III sulphur oxides	III - moderate hazard
III dust	IV - low hazard
III-IV other
I-II

Total emission, '000 t

Specific emission, kg/t

• The emission is shown with adjusted NOx calculation according to the methodology implemented in 2023.

Volume of significant emissions by NLMK Group by controlled substance type** [GRI 305-7]

Indicator	2018	2019	2020	2021	2022
Total, '000 t	331.5	317.0	313.3	314.2	297.7* (303.2)
per unit of production, kg/t****	18.9	20.2	19.8	18.1	18.1* (18.5)
NOx, '000 t	27.2	26.2	26.1	26.3	21.0* (26.5)
per unit of production, kg/t****	1.6	1.7	1.7	1.5	1.3* (1.6)
SO2, '000 t	31.7	29.5	31.0	30.6	30.2
per unit of production, kg/t****	1.8	1.9	2.0	1.8	1.8
Dust emissions, '000 t	24.4	22.5	23.0	20.7	20.1
per unit of production, kg/t****	1.4	1.4	1.4	1.2	1.2
СО emissions, '000 t	244.8	235.3	230.1	233.6	223.0
per unit of production, kg/t****	14.0	15.0	14.5	13.4	13.6
Volatile organic compounds, '000 t	2.7	2.8	2.6	2.6	2.9
Hazard class I substances***, t	1.3	1.2	1.2	1.1	1.1
per unit of production*, kg/t****	0.08	0.08	0.08	0.07	0.07
Hazard class II substances***, t	547	514	480	490	596
per unit of production*, kg/t****	0.03	0.03	0.03	0.03	0.04
NLMK Lipetsk
CO, per unit of production, kg/t****	16.3	17.7	16.8	15.7	15.6
NOx, per unit of production, kg/t****	1.2	1.3	1.3	1.2	0.9* (1.3)
SOx, per unit of production, kg/t****	1.7	1.7	1.7	1.5	1.5

• Calculated indicator that takes into account the reduction in NOx emissions actually achieved by NLMK due to the implementation of a number of measures to improve the fuel efficiency of the diesel locomotive fleet implemented in 2018−2022. The results of this reduction will be taken into account by the regulator at the end of 2023 following formal procedures.
• The Company does not report separately persistent organic pollutants because most of them are not regulated in Russia.
• Includes information only for the Group's Russian companies, since the emission hazard classes are specified only in the environmental legislation of the Russian Federation, and this information is not collected for the Group's international companies.
• [GRI 305-7] The Group's specific indicators "Significant specific emissions into the atmosphere by substances per unit of production". These indicators are calculated on the basis of steel production volumes by NLMK Group and the Lipetsk site, respectively, for the corresponding reporting period.

Note: [GRI 305-7] Data on emission of controlled substances are collected at all Group companies where emission is a relevant environmental aspect. Group-level emission indicators are calculated as a sum of individual enterprise emissions as disclosed in statutory reports to supervisory authorities.

27

SUSTAINABILITY REPORTI  2022

NLMK

ENVIRONMENTAL PROTECTION

PLANNED EMISSION REDUCTION PROJECTS

NLMK Group plans to continue pursuing projects that reduce its impacts on the atmosphere. Among key projects are recycling of off-gases from sintering machines, revamping of dedusting at Coke Dry Quenching Plant, construction

of a waterless slag cooling system at Blast Furnace Shop No. 2. The projects aim to reduce emission of dust, carbon monoxide, hydrogen sulphide, nitrogen and sulphur oxides. The expected emission reduction is several dozen thousand tonnes.

WATER WITHDRAWAL AND USE

The share of external fresh water intake by NLMK Group

in the production water supply is less than 3%. The remaining 97% is recycled water, or more than 3 billion m3, which

is comparable to the volume of Lake Ilmen, one of the largest lakes in Europe. On top of avoided withdrawal, this water is reused multiple times after treatment.

Water withdrawal by NLMK Group companies does not exceed 2.5% of the average annual water flow volume [GRI 303-5]. The total mineral content in withdrawn water across all sites is less than 1 g/l. [GRI 303-3]

Water resources [GRI 303]

NLMK Group seeks to eliminate all impacts on water resources through complete cessation of industrial effluent discharge and through reuse of water resources. A major role in this effort is given to implementation of closed-loop water systems at Group sites.

The Company regularly monitors and assesses risks

of water availability; for more details on the identified risks, see the Company official website.

COMPLETED WATER STEWARDSHIP PROJECTS

NLMK Ural fully stops discharge into water bodies

NLMK Ural completely stopped discharge of stormwater and wastewater into the Serga and Revda rivers as well as of industrial effluents from equipment cooling systems. The entirety of water used by the facilities is now treated and reused. Development of the closed-loop water system at NLMK Ural is a priority in NLMK Group Environmental Programme.

High-performance water treatment at NLMK Lipetsk

NLMK Lipetsk has completed a revamp of the collection tank of hot-rolling mill water supply. The revamp will make water treatment more effective and better suited to be used in equipment and hot strip cooling. It allows also to recycle petroleum waste from coking operations. The precipitated sediment is marketed to consumers

in the cement industry. The project investment amounted to RUB 100 million.

Stoilensky recycles storm water effluents into production processes

In 2022 Stoilensky built a large-scaleon-site storm sewerage system. It captures all effluents from rain or snow melting into collection wells that feed into centralized sewerage where underground pipelines take the water to the tailing dump. It is treated and recycled back into the production process. Stoilensky invested over RUB 120 million into the project.

Fresh water used for production needs by NLMK Group

	3.8	3.6
3.4
		3.3	3.3
59	60	57	57	54
2018	2019	2020	2021	2022

Fresh water used for production needs, m m³

Specific fresh water use for production needs, m³/t of steel

The volume of fresh water use for production needs by NLMK Group companies in 2022 was the lowest over the past 5 years. The activities aimed at prevention of discharge and at water recycling continue to drive

the sustained downward trend in fresh water consumption.

28

SUSTAINABILITY REPORTI  2022

NLMK

ENVIRONMENTAL PROTECTION

Fresh water withdrawal (intake) by NLMK Group, by source and region, and use of withdrawn water, m m³ [GRI 303-3][GRI 303-5]

Indicator	2018	2019	2020	2021	2022
Water use, total, including	68.9	70.6	65.1	65.2	62.1
for production needs	58.6	59.8	57.3	57.1	53.8
for household needs	10.3	10.8	7.8	8.1	8.4
Specific water consumption for production needs, m³/t of steel	3.4	3.8	3.6	3.3	3.3
Share of used water, % of water withdrawal (intake)	49%	51%	49%	48%	46%
Unused water*	72.3	70.3	67.9	71.7	73.5
Fresh water withdrawal (intake) by NLMK Group, including	139.4	139.4	131.6	135.5	134.2
Russian companies	104.8	103.7	98.9	101.6	102.0
international companies	34.7	35.8	32.7	33.8	32.1
Process water	120.5	120.9	113.8	116.2	114.9
Surface water, including	63.3	64.6	61.5	62.6	58.5
Russian companies	31.5	31.8	31.3	31.4	28.6
international companies	31.8	32.8	30.1	31.2	29.8
Groundwater, including	57.1	56.1	52.2	53.5	56.0
Russian companies	54.8	53.8	50.2	51.5	54.3
international companies	2.3	2.4	2.0	2.0	1.7
Rainwater collected and stored by the Group, including	0.1	0.1	0.1	0.1	0.4
Russian companies	0.1	0.1	0.1	0.1	0.4
international companies	0	0	0	0	0
Potable water	19.0	18.6	17.8	19.2	19.3
Surface water	0	0	0	0	0
Groundwater, including	17.9	17.6	17.0	18.3	18.5
Russian companies	17.6	17.3	16.9	18.0	18.2
international companies	0.3	0.3	0.3	0.3	0.3
Municipal water, including	1.0	0.9	0.8	0.8	0.7
Russian companies	0.9	0.7	0.6	0.6	0.5
international companies	0.2	0.2	0.2	0.2	0.2
Urban wastewater converted for treatment	1.7	1.5	1.4	1.4	1.4
Consumptive water use**	44.2	47.9	45.6	45.0	46.4
Specific consumptive water use, m³/t of steel	2.5	3.1	2.9	2.6	2.8
Recycled water supply	3265.1	3312.4	3186.0	3454.8	3291.1
Recycled water in the total water consumption, %	97.1 %	97.1 %	97.2 %	97.4 %	97.3 %

• Unused water is the water returned with an unchanged composition compared to intake: drainage water from the mines that is discharged without being used in the production process, as well as direct-flow water used for non-contact cooling of production units, lost water and third-party water. This water is not consumed in the production process and is not polluted.
• The difference between water intake, water returned without use, and water discharge off-site. The indicator calculation has been revised vs. the 2021 report: the new calculation excludes drainage water from Stoilensky pit moved to the tailings pond without prior use as it is returned unchanged into the natural water cycle

Fresh water withdrawal by the Group's flagship site NLMK Lipetsk from the Voronezh River has been reduced by an order of magnitude since 1980, from 189.3 to 19.5 m m3.

Fresh water withdrawal from the Voronezh River, NLMK Lipetsk

PRIORITY FOCUS ON WATER REUSE AND RECYCLING In order to reduce their negative impact on water resources, the majority of NLMK Group 's companies are equipped with water recycling systems, which also mitigates the Group's water-relatedrisks.

Share of recycled water in NLMK Group's total water consumption, %

189.3

138.9		97.3
96.5	97.1	97.2
	96.9

96.7

21.8 19.5

1980

1990

2000

2010

2022

2014

2016

2018

2020

2022

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SUSTAINABILITY REPORTI  2022

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ENVIRONMENTAL PROTECTION

Closed water-loop systems have been put in place at

14 NLMK Group sites. These solutions include both local systems for individual facilities and entirely self-containedsubsidiary-wide systems. This helps to reduce water withdrawal and effluent discharge into surface water bodies. The share of recycled water supply at NLMK Group remains at a consistently high level.

Volume of recycled water at NLMK Group companies, m m³

3,265	3,312	3,186	3,455	3,291
2018	2019	2020	2021	2022

Over the last five years, actions aimed at reducing waste, remedying leaks and advancing the Green Office Programme, which promotes water stewardship practices, have brought down the consumption of potable water by 19%.

Potable and household water consumption, m m³

10.3 10.8

7.8 8.1 8.4

2018

2019

2020

2021

2022

WATER DISCHARGE

The Group's companies are focused on reducing the volume and improving the quality of wastewater generated.

The Company's Environmental Programme sets the goal of reducing the discharge of pollutants with wastewater into water bodies by 25% compared to 2018. In 2022, compared to 2018, the pollutants discharge was reduced by 56% due to the upgrade of local treatment facilities at NLMK Lipetsk, completed in 2020, and a set of measures to reduce effluents. This result is already significantly above the original target. Going forward, NLMK Group seeks to bring industrial effluent discharge by its Russian companies to zero.

Each Group company makes use of water purification and treatment technologies that ensure that the quality

of effluents as well as water used for industrial and household purposes meets the standards set by applicable regulations. All discharged effluents have mineral content of less

than 1 g/l27 [GRI 303-4]. The trend of the total mineral content in effluents shows an improvement in the quality of wastewater. From 2018 to 2022, total mineral content decreased two-fold.

Measurements are regularly taken in accordance with permits by accredited laboratories at all discharge points. The water level in NLMK's settling ponds and the tailing pond of Stoilensky is also monitored to eliminate

the possibility of spills and unauthorized water discharges. There have been no cases of water level approaching critical levels in 2022.

The Group's international companies mainly discharge water that is used for cooling equipment in once- through systems. This water does not get polluted in use and is returned into water bodies in the same conditions as it was withdrawn, without disrupting the natural state of the environment.

Compliance with water discharge regulations is subject to regular monitoring by supervisory bodies as well

as the Company's internal environmental service. [GRI 303-2] The flagship Lipetsk site has not made direct industrial

effluent discharges into the Voronezh River since 2009. Furthermore, it pursues sustained efforts to reduce discharge of household effluents as well. At the end of 2022, compared to 2018, the volume of effluent discharge reduced by 8 million m3 (31%) and the flow of pollutants into the water body was reduced by 10,000 tonnes (-56%).

The methodology for calculating pollutants discharge into water bodies is disclosed in the Annexes to the Report.

27 Effluent mineralization is calculated as the ratio of pollutants' mass to effluent volume.

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SUSTAINABILITY REPORTI  2022

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ENVIRONMENTAL PROTECTION

Total volume of water discharge by type, quality, and receiving water body, m m3 [GRI 303-4]

Indicator	2018	2019	2020	2021	2022
Total used water discharge by NLMK Group*, including	26.3	24.1	20.7	20.8	18.2
NLMK Lipetsk, household effluents	8.6	7.3	6.7	6.0	6.2
Stoilensky	7.6	6.5	4.9	6.4	3.0
Other Russian companies	1.8	1.5	1.4	1.4	1.1
International companies	8.3	8.8	7.7	7.1	7.9
Specific water discharge* after use, m3 / t of steel	1.5	1.5	1.3	1.2	1.1
Total water discharge**, NLMK Group	50.5	49.1	43.4	46.0	41.6
to surface water (rivers, lakes, reservoirs and canals)	46.9	45.7	41.6	44.1	40.0
including to seawater	0.3	0.3	0.3	0.3	0.7
Converted to third parties for treatment	2.1	2.0	1.8	1.8	1.6
Specific total water discharge**, m³ / t steel	2.9	3.1	2.7	2.6	2.5
Water discharge as % of total water supply	1	1	1	1	1
Share of unused water*** in the total volume of water discharge, %	48	51	52	55	56
Pollutants discharge into water bodies with effluents****, '000 t	17.6	15.3	12.5	11.8	7.7
Effluent mineralization*****, g/l	0.36	0.32	0.29	0.26	0.18

• Industrial and household effluents.
• Including unused water (direct flow cooling water, third-party effluents, rainwater and drainage water). Water discharge volume does not include water collected and converted to third- party organizations / municipalities and the loss of withdrawn water during transportation. In 2022, the volume of such unused water totalled 9 m m³. Data for 2018 and 2019 were corrected relative to the Annual Report 2021 due to the adjustment of indicators.
• Drainage water, rainwater, non-contact cooling, third-party effluents.
• The sum of dissolved solids is equal to pollutants discharged into water bodies with wastewater according to the methodology of the Group.
• Calculated as the ratio of pollutants' mass to effluent volume.

Wastewater after use, '000 t

26.3

24.1

20.7 20.8

18.2

1.5 1.5

1.3

1.2

1.1

2018

2019

2020

2021

2022

Wastewater after use, NLMK Group, m m³

Specific water discharge after use, m³ / t of steel

Pollutants discharge into water bodies with effluents, '000 t [GRI 303-4]

17.6

PLANNED WATER STEWARDSHIP PROJECTS

The Company has already achieved the Strategy 2022 goals to reduce its impacts on water bodies.

Complete elimination of effluent discharge at NLMK Group's Russian companies

Stoilensky is developing a project to eliminate industrial effluents. This is possible with the separation of drainage water flows pumped up from the mine, whereby clean water is isolated and fed directly into the Chufichka River near the site. This will make the river cleaner and improve its depth. Plans for 2023 include the development

of project documentation and implementation kick-off.VIZ-Steel is designing an evaporator plant to remove salts from water, which should reduce the concentration of dissolved and suspended matter in the recycling loop.

In concert with operational improvements in rainwater utilization, this will eliminate discharge of water into the Iset River. Treated water will be reused.

			15.3						Recycling programme
				12.5		13.2	As a vertically integrated steelmaking company, NLMK
11.2		11.8	faces two types of waste generation: mining waste as well
			10.0						as waste from metal production. Mining waste accounts
				8.2		7.7	for 98% of the Group's total waste generation and has
					a negligible impact on the environment being a non-
8.0					6.6
				5.9	harmful inert material. Overall, 99.9 % of waste generated
									by NLMK Group's Russian companies in 2022 was non-
									hazardous. [GRI 306-2] [306-3] [306-4]. Furthermore, 99%
2018	2019	2020	2021	2022	of the Company's waste and recyclables is recycled back into
		NLMK Group					NLMK Group target		production, which prevents environmental impacts.
		NLMK Lipetsk					NLMK Lipetsk target		Additionally, ferrous metal products that have lost their
							functional properties (scrap) are a valuable raw material

that can be reused in steelmaking. This puts NLMK Group's

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SUSTAINABILITY REPORTI  2022

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ENVIRONMENTAL PROTECTION

operations into the loop of the circular economy: 100% of its products can be recycled or reprocessed, more than 30% of the Group's steel output (32.3% in 2022) is already made with ferrous metal scrap (recyclable input). [GRI 306-4}

NLMK Group operates its own scrap collection

and processing facilities that advance the circular economy vision. NLMK Vtorchermet is the most technologically advanced scrap processing company in the industry. It covers 85% of demand for quality scrap from NLMK Ural, NLMK Kaluga and NLMK Lipetsk. Vtorchermet annually processes 5 million tonnes of scrap metal.

COMPLETED PROJECTS IN SOIL PROTECTION AND RECYCLING

Recycling of reinforced concrete

In 2021 the Company started a project for the processing of concrete and reinforced concrete debris, which

is an example of the utilization of secondary resources

in production and an increase in the sales of by-products. NLMK Lipetsk commissioned an installation for processing of crushed concrete, reinforced concrete and bricks that are left after repairs and revamps. These materials used to be removed from the site for disposal. The new installation, rated at over 100,000 tonnes per year, can process the entire volume of such secondary materials generated by the site. It also has a magnetic device to recover metal from the debris. Recycled concrete contains about 5% of metal that is fed back into production. Concrete and brick debris is crushed into rock of various sizes. Crushed rock is in high demand

by construction companies, which makes this project effective both in terms of environmental protection and economic gain. As of the end of 2022, the installation has recycled 50,000 tonnes of material. This concrete recycling project won the Reliable Partner - Environment national competition in the Best Recycling Project category.

NLMK Lipetsk launches recycling of used sand

In 2022 NLMK Lipetsk launched an installation to reprocess sand from casting moulds. The new facility will recycle back into production up to 70%, or 20,000 tonnes, of sand, which used to be landfilled. Now, used sand moulds are crushed, the material is ground, stripped of binder and turned back into sand. It is mixed with binder again and reused for new moulds.

In 2022 the facility recycled approximately 15,000 tonnes of used sand. Avoided costs of disposal and procurement of sand totalled RUB 39 million. Going forward, NLMK plans to recycle and reuse the entirety of its natural mineral inputs. The project investment was over RUB 140 million.

NLMK launches a market-place for recyclables

In 2022 NLMK Group facilitated the first transactions on Vtorion, an e-commerce platform for the scrap collection and processing industry (https://vtorion.ru/). One of a kind in Russia, this digital platform provides matchmaking for market participants and ensures maximum efficiency and transparency.

The marketplace allows all participants to save on operational expenditures and lets suppliers access their largest customers - steel-making companies - directly and expand their market.

Vtorion offers a flexible set of tools tuned

to the specifics of scrap collection activities such as filters based on the material parameters and geography, search for best deals based on the volumes and regularity

of supplies, e-auctions in the partner's personal account, automatic qualification of suppliers, and streamlined electronic document flow.

The platform hosts a number of large customers such as NLMK Group's scrap collection network - NLMK Vtorchermet.

INDICATORS IN WASTE HANDLING

AND RECYCLING

NLMK Group's waste-handling operations are orientated towards key modern steelmaking trends: minimizing waste generation and increasing the proportion of waste that is processed, reused, and safely disposed of. The goal

of Strategy 2022 - to increase waste utilization and recycling at NLMK Group to 92%28 - has been achieved.

Even today, the vast majority of secondary resources is processed within the Group's facilities. [GRI 306-2] The remaining volumes are transferred to third parties that have appropriate licenses (permits). By optimizing the process of secondary raw materials processing, the volume of waste disposal from NLMK Lipetsk has been reduced significantly from 237,000 tonnes to 107,000 tonnes, meaning that on-site processing went up 130,000 tonnes. By creating a competitive environment between final processors and consumers

of secondary raw materials, as well as by optimizing logistics processes, the cost of third-party disposal in 2022 was reduced by 10% compared to 2021.

The volume of waste generation in 2022 went down

0.3 million tonnes. [GRI 306-3]

Recycling of iron-containing materials in 2022 exceeded 100% thanks to processing of iron-containing sludge (mixture of water and dust). The process is carried out

by the Briquetting and Slag Processing Plant built at NLMK Ural in 2019. The share of processed sludge increased from 47% in 2018 to 100% in 2022. The total share of recycling, excluding processing of previously accumulated raw materials, amounted to 99.0%, or taking into account

the accumulated waste, to 120.0 %. [GRI 306-1][GRI 306-2]

28 Not including mining waste - overburden and beneficiation tailings - which is not considered waste in many geographies.

32

SUSTAINABILITY REPORTI  2022

NLMK

ENVIRONMENTAL PROTECTION

Raw materials

from

third parties

Raw materials

from NLMK Mining

Division

TSF Overburden

25% 22%

Recycling, %

98.8 98.9

98.0

97.6

99.0%
recycling	>16 m t
32.3%	of metal products
and by-products
of steel made
of scrap
12.2 m t
internal processing	1.3 m t
of recyclables
Third party
100.4%
utilization
	waste
recyling of secondary
iron-containing
materials
Steel	0.1 m t
production	Landfilled
waste

Recycling of secondary iron-containing raw materials, %

99.0

98.8 99.5 99.6 100.4

93.3

2014

2016

2018

2020

2022

2014

2016

2018

2020

2022

33

SUSTAINABILITY REPORTI  2022

NLMK

ENVIRONMENTAL PROTECTION

Total waste generated and utilized by NLMK Group (downstream), m t [GRI 306-2][GRI 306-3][GRI 306-4][GRI 306-5]

Indicator	2018	2019	2020	2021	2022
Waste generation*	1.5	1.5	1.4	1.6	1.3
hazardous **	0.1	0.1	0.1	0.1	0.0
non-hazardous	1.5	1.4	1.3	1.5	1.2
Secondary inputs recycled in-house	1.8	1.9	2.0	1.3	0.2
hazardous **	0.0	0.1	0.1	0.0	0.1
non-hazardous	1.8	1.8	1.9	1.3	0.1
Waste and secondary inputs recycled in-house, total	3.4	3.4	3.4	2.8	1.5
hazardous **	0.1	0.1	0.1	0.1	0.1
non-hazardous	3.2	3.2	3.2	2.7	1.4
Secondary raw materials recovered by third parties	1.2	1.2	1.2	1.4	1.3
hazardous **	0.1	0.1	0.1	0.1	0.0
non-hazardous	1.1	1.2	1.2	1.3	1.3
Waste disposal at third-party landfills	0.1	0.1	0.1	0.1	0.1
hazardous **	0.0	0.0	0.0	0.0	0.0
non-hazardous	0.1	0.1	0.1	0.1	0.1
Waste incineration (in-house + third parties)	0	0	0	0	0
Secondary raw materials accumulated at year-end	5.9	6.1	6.1	1.6	1.5
Waste disposal, Russian hazard classes 1-4, %	89	90	95	95	95
Recycling of secondary iron-containing raw materials***, %	93.3	98.8	99.5	99.6	100.4
Recycling, total****, %	97.6	98.0	98.8	98.9	99.0

• Excluding secondary raw materials recovered in-house and Stoilensky's overburden and beneficiation tailings.
• "Hazardous waste" includes I-III hazard class waste.
• When calculating the recycling index, data on the total generation and utilization of iron-containing waste and associated products is used. Mining waste is not factored in. In addition to iron-containing waste, the recycling index takes into account slags, slurries, gas cleaning dust, and ferrous metal scrap, which, in accordance with the process and national legislation, are not waste and are marketed or used for the company needs.
• Recycling includes waste disposal and by-product recovery, excluding processing of accumulated raw materials.

Overburden and beneficiation tailings generated and utilized by NLMK Group (upstream), m t [GRI 306-3][GRI 306-4][GRI 306-5]

Indicator	2018	2019	2020	2021	2022
Generation of overburden and beneficiation tailings at Stoilensky	46.6	53.7	61.4	64.6	72.5
Share of utilized Stoilensky overburden and beneficiation tailings, %	10	10	8	8	8
Generation of overburden at Stoilensky, Stagdok and Dolomit*	39.8	51.3	60.5	60.7	67.6
Share of utilized overburden, %	26	29	29	28	22
Generated beneficiation tailings	19.5	20.5	21.4	23.9	24.1
Utilized beneficiation tailings	4.8	5.3	5.1	5.5	6.0
Utilized beneficiation tailings, %	24.7	25.8	23.9	22.9	24.7

• The total volume of generated overburden by NLMK Group. For Stagdok and Dolomit, overburden is not waste and is utilized for backfilling post-mining areas, as the mine is developed sidewards, in contrast to Stoilensky, where the mine is being developed primarily "into the depths", and the resulting overburden is mostly considered waste by Russian law, even though it is a non-hazardous inert material.

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SUSTAINABILITY REPORTI  2022

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ENVIRONMENTAL PROTECTION

Upstream

Iron ore production

by NLMK Group

Recycling			Stoilensky	Stagdok,
		Dolomit
	24.1
		48.5		8.2*
	m t	m t		m t
Beneficiation	Overburden
	tailings	(pile)
	Upstream waste**: 72.5 m t
				Overburden
					(recycling)

Downstream

Production of steel products

by NLMK Group

			0.2
Recycling		млн т	Waste generation from
				steel products
					Downstream waste: 1.5 m t
			Beyond NLMK Group
1.3				0.1
	m t					m t
Third-party recycling (utilization)		Disposal
of secondary materials, incl.	at third-party
the Green Office project		landfills

• For Stagdok and Dolomit, overburden is not waste and is utilized for backfilling post-mining areas, as the mine is developed sidewards, in contrast to Stoilensky, where the mine is being developed primarily "into the depths", and the resulting overburden is mostly considered waste by Russian law, even though it is a non-hazardous inert material.
• Many geographies do not classify beneficiation tailings and overburden as waste since they are non-harmful inert materials.

PLANNED PROJECTS IN SOIL PROTECTION AND RECYCLING

New strategy for secondary resource management

In 2022 NLMK Group developed a programme for secondary resource management. It features more than 40 different projects and will allow NLMK Group to achieve one of the strategic Sustainable Development Goals "Ensure sustainable consumption and production patterns" (SDG 12). The main goal of the programme is to drive in-house processing of secondary materials at NLMK Lipetsk up from 87% to at least 99%. [GRI 306-3] The main effects

for the Group are achieved through the extraction

of additional iron, the rational use of secondary energy resources, as well as the sales of products generated from sorting and separate collection of secondary materials. The Recycling Programme includes not only projects

to utilize iron waste in production, but also projects for the recycling of carbon waste (plastic, wood waste, paper) and other technogenic raw materials.

Manufacture of biocoal from NLMK's waste wood

Annual generation of waste wood by NLMK ranges from 4,000 to 7,000 tonnes (tree branches and stumps, wooden containers, defective pallets, etc.). Since these materials are not usable on site and not marketable, the entire unclaimed volume of this waste wood is usually disposed of.

At the end of 2022, the Company began working

on a project to start converting waste wood into charcoal. The goal of the project is to enable 100% conversion of waste wood into charcoal to be used as fuel in NLMK's production operations.

Fostering eco-friendly culture

TRAINING [GRI 2-24]

NLMK devotes special attention to fostering a culture

of environmental awareness among its employees and local communities in the regions where it operates. The Group developed a series of educational courses for the benefit of the entire staff. In particular, in 2022, the Green City course was developed, aimed at improving the environmental awareness. At least 10% or 5,000 of employees take environmental training sessions and development

courses every year.

GREEN OFFICE

NLMK Group has been running the Green Office programme for several years already. It aims to enhance the commitment of the Group's employees to eco-friendly culture. In 2022, the Group companies installed additional containers for the separate collection of waste: paper, cardboard, glass, plastic; there are also collection points for used office equipment. At the Lipetsk site alone, 218 tonnes of paper and cardboard were collected and sent for recycling, which is equivalent to 3,700 preserved trees. By the end of 2022, in office premises only the Group has installed more than 350 containers for separate collection of recyclables.

All collected recyclables are treated by external specialized organizations.

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SUSTAINABILITY REPORTI  2022

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ENVIRONMENTAL PROTECTION

As part of the development of a responsible consumption and eco-friendly culture, a series of events for the separate collection of recyclables took place in 2022. In a series

of videos, the Company executives talk about the most common mistakes in waste sorting. In addition, NLMK's Moscow office switched to separate waste collection.

Green Office is not only a project for separate waste collection; it is also a tool for developing employees' conscious attitude to their health. Thus, in 2022, as part of the project, 12 new bike parking racks were installed at NLMK Lipetsk.

NLMK has installed eco-friendly bins made of recycled plastic

Eco-friendly bins made of recycled plastic were installed at the Lipetsk site's corporate transport stops. As part

of the pilot, NLMK handed over more than 300 kg of plastic waste - containers and packaging - that was converted into eco-friendly and durable garbage bins.

Ecosystem development

NLMK Group conducts operations on industrial lands and residential areas in line with applicable law. With

a view to preserve biodiversity, the Group strictly prohibits to destroy or damage greenery, build fires, hunt, and fish on the premises of its companies. These requirements are the same for both the Group staff and employees

of contracting organizations. All water withdrawal inlets are equipped with fish protection devices. The sites' location does not prevent the movement of migratory birds or animals. According to the Group's assessment29, its operations have no direct significant impact on biodiversity. [GRI 304-2]

NLMK Group regularly participates in biodiversity conservation projects. Respective measures are in place at all Russian sites of NLMK Group. They include research work, cooperation with nature reserves, replenishment of rare bird populations, release of juvenile fish into rivers

and reservoirs, land reclamation, planting of trees and shrubs, and maintenance of forest plantations. The Group's total investment in biodiversity conservation in 2022 amounted to RUB 102.4 million.

NLMK Group's Environmental Programme already includes targets and metrics with a direct or indirect impact on biodiversity:

• NLMK Group's CO2 emission reduction programme (reducing specific emissions, t/t of steel),
• Reducing the impact of individual substances (CO, NOx , SOx , dust, Class I and II substances, kg/t of steel),
• Reducing the impact on water resources (specific water discharge, m3/t of steel),
• Reducing pollutant discharge into water bodies ('000 t),
• Increasing utilization of overburden, tailings, and iron- containing wastes (share of overburden and tailings, utilization, recycling of secondary iron-containing raw materials, %).

COOPERATION WITH STAKEHOLDERS

Swan Lake Environmental Park: a natural indicator of NLMK's commitment to a clean environment and biodiversity

Swan Lake Environmental Park is the only bioindicator in Russia and the former Soviet Union that is situated on the territory of an industrial site. The environmental park occupies more than 5 hectares of land situated between the BOF shops of the Lipetsk site.

The lake is filled with process water from the site that has undergone treatment following its use in production. The park is inhabited by 650 birds of 52 species, including nine species from the Russian Red Book and the Lipetsk Region Red Book. Every year up to 200 waterfowl from the urban surroundings flock here in winter.

In 2022, populations in the park were replenished,

bringing in 56 additional specimens from the Penza Zoo and the Malinki Bird Park in the Rostov region. Moreover, birds brought to the park in 2021 gave birth to almost 100 chicks at the Swan Lake.

Cooperation continues with the Oka Nature Reserve nursery of rare crane species under the Eurasian Cranes Conservation Programme. Experts studied the cranes at the park and entered them into the Russian register of cranes.

Stoilensky continues research

and monitoring of biodiversity jointly with Belogorye Nature Reserve

In relative proximity to the production site of Stoilensky lies Yamskaya Steppe, part of the Belogorye Nature Reserve. Since 2020 NLMK has been carrying out biodiversity activities and monitoring based on contracts with the reserve. In 2021, the two parties continued joint research work and environmental monitoring

of the impact of Stoilensky's industrial operations on biodiversity, including the inventory of biological diversity, assessing the condition of rare and endangered species of plants and animals, validating the monitoring methods and air quality and surface water evaluation.

NLMK Group companies offset fish stocks

Every year NLMK together with specialized organizations release juvenile fish into water bodies in order

to replenish fish stocks.

In 2022, the Altai-Koks environmental team released over 11,000 juvenile carp into the Ob River, and the NLMK Ural environmental team - 4,000 juvenile carp into the Volchikhin Reservoir.

29 See details in the Group's Annual Report for 2021.

36

SUSTAINABILITY REPORTI  2022

NLMK

ENVIRONMENTAL PROTECTION

NLMK Lipetsk renews planted greenery

In 2022, as part of a 5-year programme for

the replenishment of the site's greenery, more than 1,500 new trees and 6,700 shrubs were planted on the industrial site and along the internal roads, 25,000 square meters of lawns and flowerbeds were arranged and renovated. Plants occupy about 40% of the site's territory, or almost 2,500 square meters.

The inventory of green spaces at the industrial site continues for the fourth year. During this time, scientists have evaluated more than 13,500 plants.

In 2022, the survey covered 19.5 hectares. The main goal of the inventory is to maintain a stable ecosystem at the plant's territory.

Landscaping is also carried out in the city:

in 2022, 3,000 new trees were planted together with the Miloserdiye Charity Fund. The fund's initial plans were to plant a tree for each of the 500 participants

of the Durable Alloy race. However, the plan was exceeded and the fund donated more than 3,000 trees to the city.

The Group regularly implements measures to rehabilitate land affected by the operations of its extractive companies. The treatment of deposit sites includes phased rehabilitation work to restore the landscape and its plant cover and to enable plants to grow again in the soil. [GRI 304-3] Reclamation programmes have been developed and are publicly available on the websites of the Mining Division companies.

The programmes are being implemented as planned. In 2022, rehabilitation was carried out on 31 hectares of disturbed land.

Stoilensky restored 11 hectares of land

In 2022, Stoilensky rehabilitated more than 11 hectares of land of its tailings storage facility. Stoilensky conducts land reclamation annually. Environmental reclamation of industrial lands is one of the focal points of the Company's environmental protection activities.

In just five years, the plant restored grass cover on an area of 60 hectares, or close to 100 football fields.

PLANNED BIODIVERSITY CONSERVATION PROJECTS

NLMK Group's Biodiversity Conservation Programme includes a number of measures planned for 2023, including:

• Planting seedlings on an area of 14.6 hectares at Stoilensky,
• Treatment of 17.7 hectares of forests at Stoilensky and Stagdok,
• Release of more than 10,000 fry at the Altai-Koks site for the reproduction of aquatic biological resources; and further survey and monitoring of biodiversity in cooperation with research institutes.

Area occupied by Group companies and reclaimed land, ha

Indicator	2018	2019	2020	2021	2022
Occupied area*	11,973	11,973	11,918	11,906	11,926
Rehabilitated area	6	15	10	46	31

* The data has been adjusted in comparison with the Annual Report 2021.

37

SUSTAINABILITY REPORTI  2022

NLMK

SUSTAINABILITY

REPORT

2022

Social aspect

STAKEHOLDER DIALOGUE	39
SUPPLY CHAIN MANAGEMENT	40
OUR EMPLOYEES	43
OCCUPATIONAL HEALTH AND SAFETY (OHS)	55
DEVELOPING LOCAL COMMUNITIES	61

SOCIAL  ASPECT

STAKEHOLDER DIALOGUE

Our approach

to stakeholder engagement

[GRI 2-29] NLMK Group's sustainable development is built on a foundation of transparent, trust-based stakeholder engagement over the long term.

NLMK maintains a list of stakeholders and prioritizes them according to mutual influence and convergence of interests. The Company's stakeholder map is based

on the needs and interests of stakeholders and NLMK, as well as expert assessments from the Company management.

The stakeholder map is regularly reviewed and updated as necessary. In 2022, while preparing the Report the work

NLMK stakeholder map in 2022

group revised the stakeholder map. The revision confirmed that in 2022 the stakeholder map did not undergo any significant changes.

NLMK uses various means to engage with stakeholders, thereby enabling the Company to identify risks

and opportunities in joint efforts in a timely manner, and assess the Company's impact on them. A strategy and plan of interaction has been developed for each

of the stakeholder groups. In 2022, the Company continued to maintain an active dialogue with all of its stakeholders.

HIGH

Active engagement

Stakeholders' influence on the Company

Federal

and regionalShareholders authorities

Investment	Consumers
community

Our stakeholders

		Employees				Contractors
					and suppliers
		Trade unions				Local
					communities
		Maintaining appeal				Maintaining awareness
			LOW
		Business partners				Other external stakeholders
		Internal stakeholders				Development vector

C Theompany's influence on stakeholders

39

SUSTAINABILITY REPORTI  2022

NLMK

SOCIAL  ASPECT

SUPPLY CHAIN

MANAGEMENT1

KEY FIGURES FOR 2022

MATERIAL TOPICS

103	$	Supplier environmental assessment
	$	Supplier social assessment
suppliers of goods and services were audited
KEY EVENTS IN 2022
	$ Revision of the qualification system and tender procedures
	$ Launching of suppliers qualification pilot based on ESG
		requirements
	$ Risk analysis was carried out, ways to mitigate supply chain
		risks were identified
	$ Suppliers panel quality analysis was carried out, areas for
		development were identified

$ NLMK Group was recognized as the Company of the Year in Procurement at the main professional competition among Russian procurement experts

$ NLMK Group is in the TOP-5 of Expert RA's procurement management quality rating

The Group's efficient supply chain is crucial for its sustainable operation and the fulfilment of NLMK's commitments. The Company regularly partners with more than 2,500 contractors and suppliers from which it procures a wide range of services and goods. The Company's procurement behaviour is result-oriented and adheres

to the principles of transparency, continuous improvement and mutually beneficial cooperation. The Company is aware of its impact on sustainability in the supply chain as a major player in the market.

Approach to supply chain management

[GRI 2-6] The procurement process in the Company is designed in a way to ensure that high quality goods are procured

in a timely and accurate manner and that the procurement process is as transparent and competitive as possible.

The fundamental document regulating the Company's interaction with suppliers and contractors is itsPartner's Code of Business Conduct. In order to work with

NLMK Group, it is imperative that suppliers and contractors operate ethically and conscientiously. In this regard, all potential counterparties are invited to familiarize themselves with the Code at the qualification stage and to confirm that they agree with its provisions.

In order to ensure a reliable and uninterrupted flow of goods and materials to the Group's companies,

the procurement team has developed over 50 category-based

strategies. Procurement strategies for some of the goods categories take into account potential risks and include plans to prevent any risks from arising.

The rolling quarterly supplier evaluation system implemented in 2022 enables monitoring of the counterparty performance indicators in terms of procurement accuracy and identify areas for development. All counterparties

are rated.

The Group is particularly focused on digitalizing and automating procurement activities. Most key procurement processes have been automated, and the majority of the Group's tender procedures are carried out electronically using the Supplier Management System.

Sustainability in the supply chain

[GRI 2-24] As a large consumer of a number of goods and services, NLMK can positively impact social, environmental, and production risks within the supply chain. In accordance with NLMK Group's Procurement Policy,

the Group is committed to purchasing goods and services that have as few negative impacts on society and the environment as possible during their lifecycle. The Company prioritizes partners striving to promote reasonable consumption

of resources and ensuring compliance with legal and social standards within the supply chains.

1 Information on procurement practices is presented for the Group's Russian companies.

40

SUSTAINABILITY REPORTI  2022

NLMK

SOCIAL  ASPECT

SELECTION AND QUALIFICATION

OF SUPPLIERS AND CONTRACTORS

The Group carefully selects and screens counterparties, and expects a great deal from its counterparties in terms

of OTIF (on-timein-full) requirements, and quality standards for the goods and materials it supplies. All suppliers

and contractors that work at hazardous production facilities at NLMK companies have to be qualified.

OHS qualification [GRI 414-1]

The Company conducts mandatory OHS qualifications for contractors to confirm that such counterparties and their subcontractors are able to comply with legal and corporate requirements. Qualification is mandatory for all potential contractors planning to render any services on the territory of the Group's sites regardless of the cost of such services. More than 200 suppliers were unable to prove that their OHS system and practices are sufficient and operational and were disqualified before the tender proceedings.

In 2022, the Company developed a video briefing

and a slide deck to explain the basic requirements for the OHS qualification process and supporting documents, which streamlined the qualification procedure and enabled more contractors to receive a positive opinion.

Environmental qualification

The Company expects its counterparties to strictly comply with the applicable environmental regulations. In 2018- 2022, 100% of new suppliers were screened in line with environmental criteria. [GRI 308-1]

A specially developed checklist reflects the statutory environmental protection requirements that are mandatory for all contractors. Moreover, the Company requests

a declaration of compliance with corporate environmental and energy efficiency requirements. Of all suppliers, 10% have so far confirmed that they have a certified environmental management system in place that complies with the ISO 14001 international standard.

Number of counterparty audits

Human rights

A mandatory clause on compliance with human rights was included in the standard agreements with the Group's counterparties in order to mitigate the risks of human rights violations. Thus, NLMK's vendors and contractors confirm that at the time of contract execution they respect human rights envisaged by the Russian law and international legal instruments.

EVALUATING AND AUDITING SUPPLIERS

AND CONTRACTORS

NLMK evaluates the quality, efficiency and reliability of all its counterparties annually. In addition, a pilot project was launched in 2022 aimed at voluntary evaluation

of vendors for compliance with environmental criteria. Going forward, it is planned to add social and governance criteria to the evaluation. As of the end of 2022, 68 out

of 136 companies that filled out the voluntary questionnaire have successfully passed the environmental criteria evaluation.

Systematic audits aimed at, among other things, identifying sustainable development risks is another important tool for interacting with counterparties. As part of of such audits, the Group focuses on the counterparty's compliance with obligatory standards in the areas

of occupational safety and reducing its environmental footprint. Audits of contractors involve checking that the necessary documents are present and authentic, and include direct monitoring of the work of contractor employees.

A total of 83 suppliers were audited in 2022, 25 of which had their environmental impact evaluated. On top of that, 20 contractors had a comprehensive audit.

After the audit, the Company together with

the counterparties develop corrective action plans. Thus, in 2022, corrective measures were initiated at 10 suppliers and 15 contractors in order to ensure compliance with environmental requirements. The identified non-compliances are mainly associated with the failure of the counterparties to provide supporting documentation.

Subject of audit

Suppliers

Contractors

2018	2019	2020	2021	2022
39	34	13	57	83
17	24	20	20	20

Number of NLMK Group counterparties whose environmental impact was evaluated during the audit [GRI 308-2]

	21	16	24				Contractors
						20	Suppliers
					19
		39
	36	34	21
					23	25
				13
	2017	2018	2019	2020	2021	2022
41	SUSTAINABILITY REPORTI  2022				NLMK

SOCIAL  ASPECT

Suppliers with corrective action plans following audits (% of total audits conducted) [GRI 308-2]

Subject of audit

Goods and materials

Services

2018	2019	2020	2021	2022
80	41	38	48	40
63	50	43	79	75

CONCILIATION COMMITTEE

The Conciliation Committee is NLMK Group's collegial body that was set up to review situations involving inappropriate, unethical, or unreliable counterparties' behaviour. Some

of the issues that fall within the remit of the Committee include violations of the pricing policy, occupational health and safety rules, and environmental protection requirements.

2022 performance

In 2022, the Company introduced a process to simplify on-line registration of counterparties and improved efficiency of interaction with the suppliers by introducing a digital assistant. Moreover, NLMK continued the robotization of its standard tender procedures.

There were no significant changes in the Group's supply chain structure during 2022. [GRI 2-6]

In the reporting year, the main production sites2 purchased 90% of goods and materials from local3 suppliers. [GRI 204-1]

Plans for 2023

and the medium term

The Company intends to continue automating and improving its procurement processes . In particular, the Company plans to develop sustainable procurement practices, including migration to a new suppliers qualification, bidding and environmental risks audit platform. The Company will be developing marketplaces to support its own demand

and develop the market as a separate line of business.

In terms of risk reduction, the Company plans to develop captive production of the non-standard items.

Conciliation Committee performance

Indicator	2019	2020	2021	2022
Number of counterparties with which NLMK Group decided to temporarily suspend relations	6	7	6	6
Number of counterparties with which NLMK Group decided to terminate relations	11	13	18	15

2 Hereunder, main production sites are Russian sites of the Group. [GRI 204-1]

• Local supplier is a supplier registered in the same region as the site. [GRI 204-1]

42

SUSTAINABILITY REPORTI  2022

NLMK

SOCIAL  ASPECT

OUR EMPLOYEES

KEY FIGURES FOR 2022	MATERIAL TOPICS
RUB 586 m	$	Employees
$	Training and development
$	Diversity and equal opportunities
of total investment in staff training and development	$	Freedom of association and collective bargaining
3 million
$	Prohibition of child labour
	$	Non-discrimination
person-hours of training	$	Prohibition of forced or compulsory labour
7.7%
voluntary staff turnover at NLMK Group
34%
of women in management and administrative staff
25%
of women in the total number of employees
PRIZES AND AWARDS

$ NLMK Group was included into the leading ‒ platinum - group of best employers in Russia according to Forbes Magazine. $ NLMK Group was ranked among Top 20 employers by HeadHunter.

$ NLMK Group won the Crystal Pyramid Award 2022. The Company topped the Organization and Corporate Culture

Transformation nomination, while NLMK Corporate University came third in the Corporate University of the Year nomination. $ The Corporate University campus got the Best Office Awards 2022 as the best regional project.

$ NLMK Group entered the Top 50 rating of IT employers in Russia compiled by Habr.ru, the largest resource for IT experts, in partnership with ECOPSY HR Consulting Company.

$ The Company's learning solution called Systems Approach and Data Analysis got the SMART Pyramid - 2022 HR-award in the The Best Corporate Training Programme nomination.

$ In 2022, the Academy of Steel Opportunities Programme came second in the Best Student Programme nomination of the All-RussianGraduate Awards.

$ NLMK Group's mentoring system was announced the best practice for blue collars and future employees at industrial enterprises in several industry and cross-industry competitions.

$ NLMK Technology University took 1st place in the Digital Learning 2022 award in the Online Programmes nomination for its learning solutions for professional competencies development in mining and mineral processing and the Maintenance of Buildings and Installations e-course.

$ NLMK won the All-Russian Effective Education 2022 award in the Platform of the Year nomination. $ In 2022, a comprehensive programme to promote corporate volunteering in the Company won

the Best Social Projects of Russia award.

43

SUSTAINABILITY REPORTI  2022

NLMK

SOCIAL  ASPECT

HR strategy priorities

Our key personnel management goals within the current strategic cycle are to attract and retain the best professionals in their field and engage them in the process of continuous improvement. To do this, NLMK Group needs to remain

as progressive and attentive to safety, talent, and innovation as possible.

NLMK's corporate culture is built on the principle

of openness and transparency. To this end, NLMK has set up mechanisms that allow employees and their representatives to address the top management directly. In addition, NLMK has an internal corporate portal, one of the main sources of information about news and important events

of the Group, where employees can get answers to their questions in an interactive format.

Our corporate ethics dictate that we consistently adhere to the generally accepted principles and norms

of international law, as well as applicable employment laws in all countries of the world, regardless of the business practices in those countries. [GRI 2-23]

The following internal corporate documents approved by the Company's top management ensure a unified approach to HR management across all sites of the Group:NLMK Group's

Corporate EthicsCode,Human Rights Policy,Anti- Corruption Policy, and collective bargaining agreements. All corporate documents are available on the Company's official website in Russian and in English. The Human Rights Policy is available in all languages of the regions of our presence.

Our employees

[GRI 2-7] The headcount of NLMK Group at the end of 2022 was 51,400 people. Most of the Company's employees in Russia belong to the Mining and Raw Materials Processing, Long Products and Flat Products divisions due to the significant scale of these assets compared to the other segments.

Despite the headcount increase, NLMK Group's average headcount decreased by 300 people in 2022 vs. 2021 due to production process automation and the implementation of some other projects aimed at increasing labour productivity. [GRI 2-7]

The nature of the steel industry is such that the number of men in NLMK Group outweighs the number of women, this has always been the case historically. Thus,

in 2022, the share of men in NLMK Group was 75% while the share of women was 25% (among blue collars, 78% and 22%, respectively). However, among the administrative and managerial staff, the proportion of women is higher compared to production staff. 34% of IT and engineering professionals are women. [GRI 405-1]

As for administration and management staff, women account for 34% of all employees, including 49% of white- collars, 23% of white-collar managers and 4% of shop- floor managers (the total share of female managers is 17%). Women account for 17% in junior management positions. Among middle managers there are 15% of women, among top management (positions two levels below the CEO) - 19%.

[GRI 405-1]

In 2022, the Group's gender balance remained unchanged. During the reporting year, 2,379 men and 605 women were promoted (6% and 5% respectively).

Headcount breakdown by segment, '000 people [GRI 2-7]

52.4	51.3	51.4
31.1
30.8	31.2

8.4
8.1
	7.6
7.1		6.7		6.6

2.2		2.2		2.1
2.4	1.2	2.4	1.1	2.8	1.1
2020		2021		2022

	Russia Flat		NLMK Europe
	Russia Long		Service and auxiliary companies
	Mining		NLMK USA

NLMK Group's headcount breakdown by regions, % [GRI 2-7]

93.2	93.2	93.1
4.3	4.2	4.1
2.1	2.2	2.1
0.4	0.4	0.7
2020	2021	2022
Russia	USA
EU	India, Turkey, Switzerland

Approximately 49,600 of NLMK Group employees (97%) work under permanent contracts and 1,800 employees (3%) under fixed-term (temporary) contracts. When working under a temporary agreement, an employee is entitled to all the benefits provided to employees under the collective bargaining agreement. The vast majority of employees (almost 100%) are employed full-time.[GRI 2-7]

44

SUSTAINABILITY REPORTI  2022

NLMK

SOCIAL  ASPECT

Headcount by age and category at the end of the year, % [GRI 405-1]

22		20	21	24	23
74		75	64	60	62
		Under 30 years
						30-50 years
						Over 50
			15	16	15
	4
	5
Production		Non-production	White	Blue	Total for
leaders		leaders	collars	collars	NLMK Group

The average work experience of men and women at NLMK companies is at a comparable level: the average work experience for men is 12 years, for women it is 13 years.

NLMK employees represent various age groups, which attests to the lack of age discrimination in NLMK Group's HR policy. In 2022, 23% of the headcount were aged over 50, 62% were aged between 30 and 50, and 15% were under

30. 75% of production and non-production managers are in the age group from 30 to 50 years old, 21% are over 50 years old. [GRI 405-1] NLMK Group concludes employment contracts only with individuals that meet the minimum age requirements stipulated by the legislation. The Company does not make use of child labour and forbids the use of forced labour, penal and military labour, slavery, and human trafficking. All employment at the Company is exclusively voluntary in nature. [GRI 408-1][GRI 409-1]

NLMK Group is committed to supporting gender diversity within its governance bodies in a way that takes into account the specific nature of the Company's activities.

TURNOVER

Voluntary staff turnover increased year-on-year to 7.7% as more people retired in 2022.

STAFF RECRUITMENT

The Company understands the importance of attracting and retaining experienced and highly qualified staff in its efforts to achieve a strong performance.

In 2022, Regulations on the recruitment process for NLMK Group managers and specialists were amended

to include provisions on equal opportunities for all candidates and non-discrimination in the recruitment process.

The Company confirms that recruitment of external and internal candidates follows uniform criteria

and standards established by the Group seeking to ensure equal rights and opportunities regardless of gender, age, nationality and race, religious beliefs, physical features, and any other characteristics of the candidates not related to professional qualifications. [GRI 406-1]

NLMK Group employee voluntary turnover

7.7%

7.3%

7.0%

6.8%6.9%

6.0%

2017

2018

2019

2020

2021

2022

In line with the equal opportunities for all principle,

the Company implements targeted employment projects for people with disabilities. In total, the Company employs 455 people with disabilities (0.9% of the total number

of employees). Due to the specific nature of the steel industry, which involves working in hazardous conditions, recruitment specialists of the Company pay particular care and attention to the employment of people with disabilities as it complies with all legislative requirements. Besides, the Russian legislation4 places restrictions on the use of female labour

in hazardous conditions and in situations involving the movement of heavy weights.

The high standing of the Group in HH.ru, Forbes,

and Habr.ru employer ratings in 2022 attests to the Company being a preferred employer in the regions where it operates.

In 2022, NLMK hired 5,200 people (10% of the headcount), 24% of them were women (2% of the headcount). The share of hired employees with disabilities in 2022 was 0.4%

(23 people) of the total number of employees hired. 91% of new employees joined the Russian sites of the Group.

[GRI 401-1]

• Labour Code of the Russian Federation dd. 30 December 2001 No. 197-FZ (11 October 2018 edition), Art. 253: Labour restrictions for female employees.

45

SUSTAINABILITY REPORTI  2022

NLMK

SOCIAL  ASPECT

NLMK Group new hires by region, people [GRI 401-1]

Assessment and remuneration

123 100

264

5,206

 Russia  ЕU

 USA

  India, Turkey, Switzerland

Ensuring the rights of employees to decent working conditions, including competitive salaries and providing both employees and retirees with a social benefits package are key priorities for NLMK Group. The Company annually collects and analyses data on industry peers and in the regions where the Group operates, as well as the purchasing power of remuneration by personnel categories and individual professions to assess competitiveness of the remuneration. The Company is committed to annually increasing the level of employee remuneration. [GRI 2-20]

4,719

NLMK Group new hires by age, people [GRI 401-1]

351			Under 30 years
		30-50 years
5,206	2,098		Over 50

2,757

The Company created more than 1,500 jobs in 2022,

the majority of which were linked to the launch of investment projects.

NLMK Group relies on salary surveys provided by external independent consultants to assess the remuneration offered to the Company's employees, including top management.

[GRI 2-20]

Financial remuneration for employees consists of a basic salary and a bonus. The NLMK remuneration system

has been developed in accordance with best Russian and international practices. An annual assessment of the achievement of target KPIs (Management by Objectives, MBO) by employees is carried out

in conjunction with an assessment of the corporate behaviour (Management by Behavioural Indicators, MBI), which reflects the Сompany's approach to management as a whole. When preparing local regulations on remuneration, the opinion

of trade union organizations is taken into account. [GRI 404-3] Fixed remuneration management

in the Group is based on employee performance evaluation. The current approach introduced in 2019 enables

the Сompany to encourage the best of the best further, while maintaining a competitive level of salary indexation for all employees. This way a more dynamic increase in the salaries of high-performing employees will help strengthen

the principles of external competitiveness and the internal fairness of remuneration across the Group's companies, while unlocking the potential and stimulating the professional activity of each employee. In 2022, this system covered

93% of NLMK Group employees, including all managers and specialists [GRI 404-3]. In several divisions, the process of forming individual development plans for employees was launched, with the help of which employees will be able to strengthen those competencies that turned out to be underdeveloped.

Average monthly salary at NLMK Group's Russian companies, RUB '000/person

										+25%
								+10%	+7%	95
							+6%
						+7%
				+9%				76
			+10%				71
		+8%				65
					61
					57
				52
		47
	44
	2014	2015		2016	2017	2018	2019	2020	2021	2022
46	SUSTAINABILITY REPORTI  2022						NLMK

SOCIAL  ASPECT

The average salary5 of NLMK Group employees at Russian companies in 2022 increased by 25% up to RUB 95,000.

The increase was significantly ahead of the inflation rate.

8% of the growth in average wages is accounted for by a onetime payment to support employees in the face of uncertainty in the amount of RUB 4.7 billion. At our international companies, remuneration is determined based on collective bargaining agreements and local labour legislation,

and is also indexed annually.

The Company does not tolerate any form of discrimination on grounds of gender or other factors when implementing or further developing its remuneration system, and adheres to the equal pay for equal work principle and complies with legislative labour requirements.

In 2022, the performance of nearly 48,000 NLMK Group employees was assessed, which is 93% of the total headcount.

[GRI 404-3]

Proportion of NLMK Group employees who received

a regular performance and career development review, by category and gender as of 31.12.2022, persons

[GRI 404-3]

93%

93%

92%

96%

Of total number	Of total		Of men		Of women
of WC*	number of BC		total		total
By category			By gender

* Managers, specialists and white collars

Training and development

Professionalism and qualifications are the most important factors for sustainable development of employees at NLMK. An effective system of training and development is based on job profiling, regular knowledge tests and the use

of advanced training formats (micro courses, distance learning).

NLMK invests a significant amount of resources in training and development. The share of employees trained in the reporting year was 93%. In 2022, total investments into training stood at RUB 586 million, including RUB 296 million of expenses for training activities, RUB 281 million of expenses for the educational processes of the Corporate University and e-courses development, RUB 9 million of remuneration of coaches. Thus, total costs for 1 FTE amounted to RUB 11,400.

In 2022, NLMK employees received a total

of 2,981,098 person-hours of training (including OHS training), with 181,909 of them delivered to NLMK Group's Russian companies via the Corporate University. Divided by NLMK Group's average headcount, this means 63.7 hours of training per FTE based on the average headcount

of the Russian assets.

NLMK Lipetsk employees also provide trainings

on the Company's professional competencies to students of partner educational institutions. Altogether,

in the reporting year, 85,161 person-hours of training were invested into students. This allows to develop talent pool and mentors.

The overall time of OHS training in the reporting year was 819,579 person-hours (600,697 person-hours of external training, 214,857 person-hours of in-house training,

and 4,024 person-hours at the Corporate University).

[GRI 404-1]

The Company also continues to develop an end-to- end management system that aims to achieve the Group's objectives - MBO. In 2022, the MBO system covered all

Total number of training hours

Men

Women

managers and specialists of the Company. Blue-collar job employees not covered by the MBO system get monthly

29%

20%

bonuses based on the performance indicators of their unit or position.

On top of that, the Company is developing incentive systems aimed at the interests of certain personnel groups: incentives associated with project activities, initiatives, etc. All of them are linked with the main remuneration systems, complement each other and expand the opportunities for salary growth for an employee. In 2022, a special focus was placed on identifying employees with below-the-market-level pay in order to increase their pay levels more quickly.

NLMK has a personnel relocation policy. The Company is interested in allowing employees to move freely to new jobs in any regions where we operate, thereby enhancing opportunities for career and professional growth.

2,400,856580,242

71%	80%
		Safety training		Other external training

The training process is aimed at developing industry employess and implementing priority tasks in a rapidly changing business environment. It consists of several stages, which include not only educational programmes for the Company's employees, but also work with potential job candidates - schoolchildren and students of secondary schools and universities.

• The average monthly salary is calculated as per the NLMK Group methodology, which is based on the guidance of Article 139 of the Russian Labour Code, Decree of the Russian Government No. 922 dd. December 24, 2007, Methodological Provisions on Statistics (Issue 1,2,3,4,5) of the Federal State Statistics Service, and includes remuneration for time worked, vacation pay, compensation payments and bonuses. The average monthly salary is calculated as the payroll for the period divided by the average number of employees for the period divided by the number of months in the period.

47

SUSTAINABILITY REPORTI  2022

NLMK

SOCIAL  ASPECT

Structure of NLMK Group investment in employee training and development in 2022 [GRI 404-2]

	1%
	6%
			Training events
			Costs of the CU training
	RUB		processes
		Costs of e-courses
42%	586 m	51%	development
		Expenses for the remuneration
			of the CU coaching staff

TECHNOLOGY UNIVERSITY

NLMK established a dedicated unit to support development of professional competencies - the Technology University created specifically for professional training of blue-collar employees, development of technological and professional expertise of managers and specialists of production units, and training of young specialists. Technology University provides access to the Company's unique expertise , which cannot be acquired from outside the Company. At the basis of the Technology University is an assessment

of qualifications and professional competencies, as well as production stage processes and strategies.

Technology University focuses on the following:

• Career guidance for schoolchildren
• Primary student training
• Training for blue collars
• Vocational training and professional development

CAREER GUIDANCE FOR SCHOOLCHILDREN

The key task of vocational guidance is to attract young people to the partner secondary vocational institutions to master the professions relevant for the Group. Over the past three years, NLMK Group has increased its target audience to over 20,000 people.

As part of cooperation with schools and continuing education centres, the Company implements a wide range of outreach and educational activities through corporate career guidance projects, including steelmaking shifts, the School of Professional Skills, NLMK Class, training schoolchildren in working professions, Children Corporation, and Combinatorium: Build your Career! board game, Steelmaker's Quest, Schoolchildren Portfolio.

PRIMARY STUDENT TRAINING

NLMK is a strategic partner of more than 20 specialised educational institutions of secondary vocational and higher education, including nine partner colleges and technical schools in the regions of operation where NLMK established joint educational projects.

The Interregional Methodological Council created to engage stakeholders and make collegial decisions, coordinates joint development of educational programmes. In 2022, the Council examined 37 educational programmes, and 3 comprehensive programmes aimed at developing educational and industrial clusters in the Lipetsk, Sverdlovsk and Belgorod regions.

4,500 students study at the specialised secondary vocational education institutions to get the professions relevant for NLMK.

The students also have an opportunity to take internships at the Group companies: in 2022, 2,500 students became Company interns, 770 of them got individual agreements that provide scholarships covered by the employer.

NLMK Group continued its Academy of Steel Opportunities programme and the Resolve Case Championship.

NLMK's Academy of Steel Opportunities consists

of three stages that take 14 months in total. It includes training provided by the Company and an internship under the guidance of a mentor in the chosen function. The programme brings together university students

of various professions, and allows them to learn business processes and technologies of the steelmaking industry, and to acquire in-demand skills and competencies

to enhance their future career growth.

Participants of the programme receive income that grows stage wise, those subject to relocation get their travel and accommodation expanses compensated.

During the first wave, 75 trainees from 40 universities and 20 cities out of more than 2,000 applications were selected to become participants of the Academy.

47 trainees successfully completed the programme and 33 of the best graduates were employed

by NLMK Group's sites in Lipetsk, Belgorod, Yekaterinburg and Moscow.

More than 2,000 applications were received for the new wave of the programme, 45 interns were admitted to the programme. The second wave is going to last until May 2023.

NLMK's Resolve Case Championship is a competition between student teams in solving an urgent business challenge set by NLMK. When solving a case that

a Company sets during of the championship, students get acquainted with business processes and experience team work.

In 2022, 163 teams from 55 educational organizations of Russia applied for participation in the case championship, i.e. almost 700 students. Consultants and experts of the Company supported the teams throughout the championship. About 100 employees took part in the championship as experts of the jury and team consultants.

Prizewinners and winners of the Resolve Case Championship's major league received additional points upon admission to the Production Systems

and Operational Efficiency master degree programme at the High School of Economics. The programme is taught by a team of NLMK top managers, and the Academic Council is chaired by NLMK Vice President for Operational Efficiency. Since 2022, NLMK has been running

an in-depth internship for those on this programme giving the students an opportunity to join project teams of the Operational Efficiency function.

48

SUSTAINABILITY REPORTI  2022

NLMK

SOCIAL  ASPECT

INDEPENDENT QUALIFICATION ASSESSMENT

At the end of 2020, NLMK Group opened Independent Qualification Assessment Centres at the Lipetsk

site and NLMK Long Division. The centres conduct a professional examination, consisting of theoretical and practical parts. Practical exam takes place in live production environment. Based on the results of the exam, employees receive an industry certificate of qualification valid throughout the country. Thus, certified employees can confirm that their professional competencies meet the professional standard requirements.

At the end of 2022, qualification assessment centres were opened at Stoilensky and Altai-Koks. The total number

of employees who managed to confirm their qualifications at the industry level exceeded 1,300 people.

Independent assessment of qualifications is carried out by more than 60 technical experts including managers and specialists.

In 2022, NLMK experts took part in the development

of nine professional standards, NLMK Group led preparation and updating of assessment tools sets for 14 qualifications.

Moreover, in the reporting year, NLMK introduced

a new tool for managing qualification assessment results - Expert Qualification Councils - held on a regular basis and consisting of the heads of units, production efficiency improvement departments and technical experts. The Expert Councils review the qualification assessment results, develop measures aimed at improving skills and abilities, and evaluate the efficiency of such measures. In 2023, such system will cover all transformation stages and structural divisions where a regular independent qualification assessment of blue collars is carried out.

VOCATIONAL TRAINING AND PROFESSIONAL DEVELOPMENT [GRI 404-2]

Given the nature of the Company's operations, vocational training and onboarding programmes play a significant role for NLMK employees. These programmes include training that qualifies employees to access independent equipment operation, vocational training, and professional development programmes. Training takes place at NLMK's own sites or in collaboration with certified third-party training institutions. For example, the Lipetsk site has

an educational centre that holds state-licensed trainings in over 300 occupations.

In 2022, the programme for developing the material and technical base of NLMK Group's training centres continued. For example, two new mechanics and hydraulics workshops were opened and over 150 employees were trained and examined there.

One of the important professional competencies of managers and specialists is knowledge of English. In 2022, the corporate English language-training programme continued its development. Thus,

the English Club was launched in Lipetsk, Stary Oskol and Yekaterinburg. More than 120 club members meet regularly both online and offline to develop and practice conversational English skills.

Echo On-line Translator

In order to master concepts and terms specific

to the blast furnace and steelmaking industries in English, the Technology University developed and launched

the Echo Translator extension that contains NLMK Group- specific glossaries.

MENTORING

Mentoring system is one of the key focuses of NLMK Group's HR strategy. It is a methodology and a management system that brings together about 8,000 mentors represented in 10 functional roles, each having a dedicated competency profile and supporting their own training programme.

The Annual Mentoring Cycle concept offers internal tools for planning, analytics and encouragement of mentors. Over 20% of the mentor pool is refreshed annually. Mentors are selected based on their professional experience and corporate competencies level. The training programme is built on real- life cases and is aimed at getting the skills needed to train and motivate beginners. In 2022, more than 1,600 mentors passed the new training programme.

180-degree assessment concept, where all participants of a particular training episode (mentee, mentor and direct supervisor of the mentee) share feedback and evaluate the results of joint work is used to evaluate efficiency

of individual training with a mentor.

The Group holds annual supporting events for

the mentors: the Best Mentor contest, the Mentoring Week and the Thank You to Mentors campaign. The Second Meeting of NLMK Group's Best Mentors enabled the traditional best practices exchange and provided a platform for the first meeting of the Group's local mentors communities where mentors established principles and rules for working

with mentees, and came up with an action plan for the coming year.

CORPORATE PROGRAMMES

AND PROFESSIONAL SKILL COMPETITIONS

Young Professional

The Young Professional programme is aimed at identifying and developing young employees who hold creative, production and leadership potential. It accelerates social and professional growth of young employees. NLMK Lipetsk launched the programme in 2006, the Mining Division joined it in 2015; over 3,000 employees had completed

the programme since then.

Best in Profession

The Best in Profession competitions are held to identify the best employees in a particular profession, create incentives to improve expertise, promote occupational advancement of young employees, master practical skills and strengthen professional excellence traditions.

In 2022, 110 competitions were held with almost 3,000 participants.

49

SUSTAINABILITY REPORTI  2022

NLMK

SOCIAL  ASPECT

NLMK CORPORATE UNIVERSITY

NLMK Corporate University was established in 2016 in order to centralize and implement a unified system of management education in NLMK Group. The Corporate University's mission is to create a learning environment for managers enabling sustainable growth of NLMK business.

Objectives

• Develop the leadership capabilities of NLMK managers
• Improve the management system through training and development
• Identify and replicate NLMK's best practices

The target audience of the NLMK Corporate University includes 6,500 leaders of the Company, including

the talent pool.

In 2022, the training plan was exceeded, reaching 105%, and the number of individual trainings amounted

to 22,772. The average number of training hours per year per employee of the target audience of the Corporate University is 17.5 hours.

In 2022, the Corporate University provided learning solutions in English for the audience of 242 people at NLMK Group's international sites.

On top of that the University provided training for the companies that belong to the ecosystem in three key areas: development/handing over of learning solutions on request, adaptation and implementation of learning solutions, participation of colleagues from the ecosystem in the learning solutions of the Corporate University.

The Leaders Train Leaders approach

Senior and middle managers and key experts of the Group assist in the development of the Corporate University programmes, and they also deliver training as in-house trainers for at least four days every year. As far as the end- to-end learning solutions of the Corporate University are concerned, the vice presidents of the Company conduct such trainings in mixed groups consisting of employees of various levels of management from supervisors to vice presidents of the Company. The Leaders Train Leaders approach

is the foundation of training in the Corporate University enabling:

• An engaging environment and unity of meanings via sharing personal experiences
• An exchange of views, which ensures an effective two-way feedback channel during training
• Managers' development with the help of in-house trainers via repeated internalization of programme content

All internal trainers complete a special certification programme and receive further advice from the Corporate University in order to ensure that all learning solutions are taught to the highest professional standards. In 2022, the number of in-house trainers exceeded 430 employees.

Leadership Development Programmes

Leadership development programmes is a new stream

in the Corporate University's portfolio of learning solutions launched in 2020. In 2022, the Corporate University delivered three leadership development programmes: Dream100, Level Up, and Foremen School.

The Dream100 Programme continued in 2022 with in-person immersive sessions.

The Level Up Programme, which aims to develop mid- level talent pool, conducted two streams reaching more than 60 people. Programme work continued with advancement of individual projects, including regular feedback and advice from trainers.

The Company continued cascading the Foremen School

Programme, reaching a target audience of over 3,300 people. The current number of trainees at the Foremen School is over 800 NLMK Group employees. The programme is aimed at developing managerial competencies of NLMK supervisors and candidates to supervisor positions from the talent pool.

Development activities, hours

2022	171,516
2021	160,324
2020	197,481
2019	180,040

Learning solutions, No.

2022	57
2021	37
2020	23

NLMK Corporate University Campus

In June 2022, the Corporate University Campus hosted the First Corporate Education Leaders Forum attended by more than 300 managers and key experts from over 85 organizations: corporate universities and training and development departments, colleges and universities, business schools and EdTech providers.

Later, in the autumn the campus hosted the Science as Art Expo. It featured lectures on science in steelmaking and on digital technologies in academic research.

International collaboration

Since 2019 the NLMK Corporate University has been

a member of several international communities: European Foundation for Management Development (EFMD), Executive Corporate Learning Forum (ECLF), and Education and Training Committee of Steeluniversity and Worldsteel (ETCO).

International recognition

In 2022 NLMK Group's Corporate University successfully completed the second stage of the CLIP (Corporate Learning Improvement Process) international accreditation programme of the European Foundation for Management Development (EFMD). EFMD is a leading independent corporate training organization that audits and evaluates all aspects of training and development for compliance with international quality standards.

50

SUSTAINABILITY REPORTI  2022

NLMK

SOCIAL  ASPECT

ASSESSMENT AND DEVELOPMENT

OF COMPETENCIES

In 2022, the Company revised its approach to assessment of managers. The coverage of the assessment centre was expanded to all managers in key positions. The assessment is administered by M+2 level executives. More than 110 shop managers from all Group companies have undergone

the assessment, which involved 17 vice presidents and directors. An online survey was launched called Navigator. This

tool evaluates the corporate competencies at NLMK and incorporates development recommendations into individual reports. The survey was taken by more than 1,700 managers and specialists.

Since 2018, the Company has been using the 360-degreefeedback personnel assessment system. The results

of the assessment are used to determine development goals

and cannot be the basis for making HR decisions. In 2022, more than 150 employees were reviewed with 360-degree feedback.

The personal role of an employee and their immediate colleagues in terms of development planning is rising gradually. More focus is given to discussion of performance with the immediate superior, identification of most relevant growth areas, alignment on speed and quality of task execution.

End-to-end assessments continued for the following competencies:

• Corporate ethics and anti-corruption, including human rights
• Operational efficiency practices and tools
• Mastery of the Integrated Management System

Assessment of the end-to-end Corporate Ethics competency provides insight into the level of awareness of the Company's requirements to professional conduct across the dimensions of corporate ethics, adherence to human rights, and anti-corruption.

TALENT POOL

NLMK Group creates opportunities for employee development and ensures continuity in its managerial staff. To this end, the Company has run a talent pool programme for several years. Talent pool members make use of comprehensive programmes for the development of managerial skills. When filling in a managerial position, talent pool members are considered first.

In 2022, based on all Career Committee deliberations, the talent pool amounted to over 3,000 employees. From 2018 to 2022, 75% of managerial job openings were filled with the talent pool members.

CAREER PLANNING

Since 2019 NLMK Group has been developing the Career Planning process. Its goal is to incentivize staff to develop their competencies and to ensure availability of highly skilled internal candidates for new positions.

These efforts have resulted in maps for typical career paths at most functional areas of the Company, which enables better control over skillsets, including through staff rotation. The maps also provide for cross-functional transfers to develop specialists and managers with a broader business background.

The main focus in 2023 is on introduction of career planning practices. This is done through regular employee- manager dialogue on development and career, which improves engagement and motivation.

CAREER COACHING

A major effort went into raising awareness among NLMK employees about all available career development opportunities. This lent a new impetus to career coaching at the Company in 2022: 11 HR specialists were certified as career coaches and are available for employee requests. Members of the League+ HiPo Programme were given early access to this service and took 90 personal consultations.

STAFF ONBOARDING

A number of initiatives was implemented in 2022 based

on early results and feedback from the previous year, including robocall surveys to identify general trends and individual challenges among the new hires. Furthermore, detailed guides and memos were developed for new hires and their managers.

EMPLOYEE SUPPORT [GRI 404-2]

An issue of growing urgency is that of recruiting

and developing qualified IT specialists. To this end, NLMK has launched a pilot project, Discover IT. It offers passionate employees a unique opportunity to learn coding for free in order to potentially make a career pivot and go into IT.

A pilot group enrolled 15 people following a selection process. A mandatory qualification condition is to use the newly acquired skills to implement an IT project on the current job.

INCENTIVE AND RECOGNITION PROGRAMMES

NLMK Group has now operated the NLMK Sferrum recognition programme for two years. By participating

in the recognition programmes, employees receive ferrums, a corporate currency that can be saved and exchanged

at the Group's online store for useful goods at any time. At the end of 2022, more than 12,000 participants

of the recognition programmes received rewards.

Social policy

[GRI 401-2] Corporate social programmes are a key tool for supporting high employee engagement, which creates additional labour market advantages. Social policy issues fall within the remit of the Human Resources function. This makes social projects more effective and targeted, focusing on the real needs of employees, and enables efficient feedback analysis. The Company's internal social policy is focused

on supporting the objectives of NLMK Group's HR Strategy and sustainable development goals.

In 2022, NLMK Group continued to implement its Social Strategy until 2022, approved by the Management Board in 2019. The Social Strategy is a set of programmes that promote the long-term sustainability of business taking into account the interests of both the Company and its employees. The Strategy's key objectives include:

• Achieving a high and well-balanced level of staff satisfaction and engagement
• Reducing waste (in terms of time, health, personal efficiency)
• Higher competitiveness and attractiveness of jobs and the employer.

NLMK Group's total social investments in 2022 stood at RUB 11.9 billion, of which RUB 10.4 billion was allocated to social support programmes for NLMK Group employees.

51

SUSTAINABILITY REPORTI  2022

NLMK

SOCIAL  ASPECT

NLMK Group social investment, RUB bn [GRI 201-1]

			11.9
			10.4
	8.4				Internal social spending
	7.4
				External social spending
5.7		6.6
	5.7

2.7	5.1
2,4
0.3	0.6	1.0	0.9	1.5
2018	2019	2020	2021	2022

Social spending on NLMK Group employees by area6 [GRI 201-1]

9.1% 6.9%

23.3%

6.0%

5.9%

1.8%

1.0%

0.7%

  Employee social support

 Medicine and healthcare

  Material aid and pay-outs Catering

 Private pension co-funding Delivery

 Sporting and mass culture events   Accident and critical disease insurance

 Children's health and recreation

45.3%

For more information about investment in the development of local communities, see the Development of Local Communities section.

The main changes in 2022 affected the following key projects of the Wellbeing Programme.

Mental health week

The event was aligned with the World Mental Health Day and touched upon various aspects of mental wellbeing: emotional health, stress management, resilience, positive attitude. The larger part of activities was organized online in order to reach the maximum possible audience. Leading specialists delivered webinars on headaches, healthy sleep habits and resilience, psychologists and therapists held coaching practice sessions and discussions, employees could sign up for free examinations by neurologists and physicians and take educational courses on emotion management offered by the Corporate University.

Employee assistance programme

In 2022 the employee assistance programme extended its coverage to all Russian companies of NLMK Group. The Company's employees can get free advice from

a lawyer, a healthy lifestyle expert, a psychologist, and a financial advisor at any time. 5% of employees used the service in 2022, of which 96% are willing to recommend the service to their colleagues.

Pilot project to professionally assess burnout and stress levels

Following the pilot assessment of stress factors and levels in selected functional areas in 2021, corrective action was taken in 2022: management training focusing

on identification of stress in employees, employee seminars on stress prevention and mental resilience,

a series of webinars with psychologists addressing various psychology questions, in-person counselling at NLMK sites, mental health interactive event on Telegram.

• Employee social support includes the one-off payment during a period of macroeconomic uncertainty in the amount of RUB 4.7 billion.

52

SUSTAINABILITY REPORTI  2022

NLMK

SOCIAL  ASPECT

CHILDREN'S HEALTH AND RECREATION

The comprehensive health programme for the children of all Russian employees, launched in 2021, continued into the next year. Parents could choose one of three options:

• Regional summer camps
• Mother and Child programmes at health resorts in the Black Sea and Caucasus regions or locally
• Summer camps in the southern regions of Russia

The Company purchased vouchers for the children of employees aged 11 to 15 to a summer seaside camp, organized transfers for them and paid for their insurance. The children's health and recreation programme was expanded with educational activities covering NLMK Group operations, healthy lifestyles, useful digital tools. Employees' children received branded merchandise kits. The total number of funded health resort trips for children was 2,026.

HEALTHY EATING

The Company develops and promotes a culture of healthy eating at NLMK Group companies as part of the corporate nutrition programme "NLMK Eats!" launched in 2020-2021.

In 2022, as part of a strategic partnership with federal catering operators, the Company:

• Improved the quality of food and service in corporate canteens and buffets
• Increased canteen coverage from 33 to 60%
• Reviewed the menus regularly to add more healthy meals (more seasonal fruits and vegetables, Healthy Eating weeks, etc.)
• Introduced online orders and delivery
  of hot meals (lunch boxes) to remote production sites and offices. In 2022 the number of lunch boxes ordered and delivered was 83,000.

HEALTHY CHOICE PROJECT

[GRI 403-6][GRI 403-10] The implementation of the Healthy Choice programme continues. The project fosters healthy lifestyle culture among employees, aiming to increase

the commitment of staff to the basics of a healthy lifestyle, to identify and involve the leaders of this movement (health managers) in promoting and supporting best healthy practices among employees. As of the end of 2022, more than 1,600 employees participated in the programme. Feedback indicated that over 97% of participants would recommend it to their colleagues.

DIVERSITY, EQUALITY AND INCLUSION

NLMK Group, as an international socially responsible company, promotes the culture of diversity, equality and inclusion. NLMK employs people of different ages, gender, education, marital status, young mothers and fathers, parents raising children with disabilities, representatives

of many nationalities and cultures. NLMK Group strives to create a comfortable working environment where each employee can realize their full potential while staying true to themselves with their own individual differences and traits.

Gender balance

NLMK Group strives to maintain gender balance, taking into account the specifics of the steel industry, provides

the necessary support to working parents and their children, and takes care of the health of future generations.

The Company pays special attention to women's health, support for pregnant women and young parents. According to the Company's employees, flexible work hours and shorter workdays are the most desired support measures for working parents.

The Company is developing measures to ensure equal career opportunities for women, encouraging their participation in leadership programmes and competitions. The corporate media highlight successful examples

of women's career growth and work-life balance.

In 2022 the Company began developing a dedicated re-onboarding programme for employees after parental leave.

In 2022, 344 employees of the Company used the right to take early paid parental leave before the birth of a child. All employees, regardless of gender, can receive financial assistance at birth and take parental leave. In 2022, 3% of male employees took parental leave, which is 1% more than the previous year. In total, the Сompany employs more than 4,000 parents raising children under the age of three.

[GRI 401-3]

The Сompany employs 445 parents of children with disabilities and provides them with financial assistance and additional days off.

NLMK PULSE CORPORATE SURVEY

NLMK Pulse corporate survey in 2022 covered over

39,000 respondents from NLMK Group's Russian companies (approx. 80% of average headcount) as well as NLMK DanSteel, NLMK Verona, NLMK Pennsylvania and NLMK La Louvière.

Participation in the survey gives each employee

an opportunity to directly impact changes in the Company. Following the 2022 survey:

• More than 400 meetings were organized
  to improve the efficiency of communication between managers of different levels and employees
• RUB 240 million was invested in improving working conditions: repair of canteens, dining rooms, and gyms
• Close to RUB 80 million was invested in the renovation of sanitary facilities
• Over RUB 400 million was invested into increasing the quality and quantity of PPEs

TRADE UNION ORGANIZATIONS

AND COLLECTIVE BARGAINING AGREEMENTS

[GRI 407-1] The Company fully supports employees' right of association and collective bargaining. NLMK complies with the requirements specified in collective bargaining agreements, and also interacts with representatives of trade union organizations. Collective bargaining agreements are concluded both at Russian and international companies

of the Group. They apply to all employees, regardless of their membership in a trade union. The Company announces the possibility of joining a trade union organization in its corporate media, including its corporate portal.

In 2022 NLMK Group established a parity-engagement collegiate body: Council for Social and Labour Partnership. The Council employs as parity members the representatives of the Group company management and of the primary trade union organizations.

53

SUSTAINABILITY REPORTI  2022

NLMK

SOCIAL  ASPECT

Number of employees covered by collective agreements, % [GRI 2-30]

Region of NLMK Group

Russia

NBH JV7

USA7

2018	2019	2020	2021	2022
100	100	100	100	100
88	88	87	97	97
72	71	72	72	71

Representatives of NLMK Group regularly participate in the activities of working groups and commissions

in the Association of Metallurgists of Russia, an all- Russian industry association of employers, to improve

the Industry Tariff Agreement and negotiate with the Mining and Metallurgical Trade Union of Russia.

VOLUNTEERING

The Group companies focus on three main areas in its corporate volunteering activities:

• Environment: campaigns for cleaning and landscaping of local and environmentally sensitive areas, eco-quests for children and youth, environmental hikes, etc.
• Healthy lifestyle: activities to promote a healthy lifestyle and engage residents of the 'home' regions in grassroots sports, equipping sports grounds, etc.
• Assistance to socially vulnerable groups of people: children, pensioners and people with disabilities, urgent assistance on express requests of the community without employer involvement, etc.

As of the end of 2022, close to 1,600 NLMK employees were part of the volunteer movement.

CORPORATE SPORTS

NLMK traditionally provides its employees with all conditions for healthy physical activity. The Сompany has equipped gyms and playgrounds on its sites, corporate sports facilities, rents external gyms for team sports, co-finances subscriptions to swimming pools and gyms. NLMK

also regularly holds corporate competitions and sports days, employees regularly participate in various sports competitions, sporting communities are developing (jogging, chess, Nordic walking, GTO).

Corporate sports development session

In September 2022, the Corporate University hosted

a strategy session on development of corporate sports at NLMK. The event attracted more than 100 members

of NLMK movement for sports and healthy living - curators and organizers of sports sections and communities, practising athletes and coaches, representatives

of sporting clubs and the trade union. The session also featured guest speakers who shared best practices and cases in corporate sports. The goal of the strategy session was to review the trends in corporate sports and to discuss the approach to development of corporate sports at NLMK Group. Inputs by the session participants served as the foundation of the development concept for corporate sports at NLMK which is being drafted in 2023.

Plans for 2023 and the medium term

TRAINING AND DEVELOPMENT

In 2023 the Company will continue to improve its educational programmes for key working professions. It is planned

to continue development and delivery of educational solutions for key transformation stages and key functions.

ONBOARDING

The work on improving the Company's onboarding process will continue focusing on pain points identified in onboarding satisfaction assessment.

ASSESSMENT AND DEVELOPMENT

In 2023 the Company will continue the introduction

of an updated HR cycle with a new approach to employee assessment and development. The new approach offers

a revised taxonomy of assessment tools, an updated career committee methodology, and newly developed career paths for all pilot areas.

A comprehensive assessment will inform the new format of career committees and continued development processes. The focus is on development of managerial culture and introducing the practice of development dialogue

to support quality career planning. Furthermore, additional communications and awareness raising efforts will be undertaken on development processes and opportunities, including such development tools as Comprehensive Development Guide and a new approach to building technical expertise.

SOCIAL POLICY

The plan for 2023 includes drafting corporate sports development framework, expanding the corporate volunteer movement and holding the third contest of volunteer projects Social Help, revising the competition procedure within

the Healthy Choice project to attract past participants. Another task will be to develop methodological

approaches to assessing how well these activities comply with the principles set out in NLMK's Human Rights Policy.

CAREER GUIDANCE

The Company plans to launch new guidance tools

to introduce school students to steelmaking with Steelmaker's Quest, to main jobs at the Company with Occupation Mixer, to self-presentation and portfolio skills with School Student Portfolio. The main focus in career guidance will be to increase the enrolment of secondary vocational education students into NLMK partner colleges and universities. Reformatting of existing career counselling programmes

is planned in 2023 to focus on the 9th grade and blue-collar occupations.

7 In % of the actual headcount. In accordance with national legislation, some categories of employees do not have the right to conclude a collective bargaining agreement, the coverage of other categories is 100%. [GRI 2-30]

54

SUSTAINABILITY REPORTI  2022

NLMK

SOCIAL  ASPECT

OCCUPATIONAL HEALTH AND SAFETY (OHS)

KEY FIGURES FOR 2022	MATERIAL TOPICS
0	$ Occupational health and safety
KEY EVENTS IN 2022
accidents at hazardous production facilities
5	Results of injury prevention programmes:
	$ 32% decrease in LTIFR among employees and contractors
top risk programmes introduced to prevent injuries	$ 54% less falls from height
$ 45% less injuries from dropped objects
98%
$ 36% less same-level falls
$ 33% less injuries from moving equipment parts
of drivers and operators completed the two-year training	$ 15% less injures during manual operations and while using
cycle on Defensive Driving (more than 3,500 employees)
hand tools
	$ 9% less falls with a level difference
AWARDS AND COMPETITIONS

In 2022, the Company's OHS officers were recognized with awards from the International IPWeek and the Case In international competition for young professionals

Our approach to managing occupational health and safety

Occupational safety is a top priority for NLMK Group. Striving for a zero injury rate at all its operations, the Сompany is continuously improving its OHS management system. OHS aspects are integral components of a large-scale project to develop the NLMK Production System. To ensure a high level of safety at work, the Сompany is guided by a set of internal principles that shape the OHS culture throughout the Group.

The Company's approach is based on:

• Strict compliance with Russian and international OHS regulations
• Introduction of best practices
• A risk-based approach and control of key risk factors
• Developing and fostering a safety culture among NLMK Group's employees and contractors

In order to implement these principles, the Group is committed to:

• Identifying hazards and efficiently managing risks, thus controlling the level of risk to the life and health of employees and contractors
• Constantly increasing the skills of managers, employees, and contractors in matters concerning occupational health and safety

• Complying with Russian and international OHS regulations

OHS issues are regulated at all management levels within NLMK Group, with the key role assigned to the CEO.

CEO determines the Group's OHS development strategy and approves its foundational document,the Integrated Management System Policy[GRI2-24]. In addition

to the IMS Policy, the Company has a series of corporate documents that regulate individual aspects of OHS, including the OHS Risk Management Regulations, Road Safety Regulations, etc.

The Group has established the following strategic objectives in matters concerning OHS:

• Zero fatalities involving employees and contractors
• Total Lost Time Injury Frequency Rate (LTIFR), including contractors, of not over 0.5
• Raising awareness among staff vis-à-vis personal safety

The Management Board is updated on a monthly basis on key aspects and projects in OHS and the results

of occupational accident investigations. OHS strategy status and goals are reviewed every quarter. These reports make it possible to analyse the performance of the OHS management system and develop measures to improve it. [GRI 2-24]

These KPIs are included in the annual assessment system for managers at all levels and are taken into consideration when promoting candidates to management positions.

55

SUSTAINABILITY REPORTI  2022

NLMK

SOCIAL  ASPECT

People are the utmost value of the Company.	OHS is an integral part of the business
Preservation of life and health is the priority	and the foundation of business process
in production activities	development and improvement

NLMK

OHS

principles

Any cases of injury, accidents,	Production safety each
incidents and occupational diseases
employee's responsibility
can and must be prevented

Operational OHS issues are handled by NLMK Group's OHS Department. Each site has its own OHS service; shops of larger sites, too, have dedicated occupational safety staff. The Group-level service has established

a development project office that is tasked with maintenance and improvement of the OHS management system.

A separate unit works on contractor engagement at major reconstruction and development CAPEX projects.

OHS management system and certification

NLMK Group applies a risk-based approach to OHS management. All Company sites have an OHS management system that annually undergoes an independent audit for compliance with ISO 45001. [GRI 403-1]

In 2022 the OHS Department audited 32 contractors in order to evaluate their OHS management systems. Each contractor organization received a follow-up action plan aimed at addressing observations and development of OHS processes. These proposed actions should ensure compliance of contractor OHS management systems with the requirements of the Russian law. [GRI 403-8]

NLMK is committed to establishing an OHS management system that operates effectively and covers 100% of employees and contractors. Ten production companies have been certified under ISO 45001:2018, 100% of their staff is covered with the OHS management system. [GRI 403-8][GRI 403-1]

Hazard investigation, risk assessment and incident investigation

NLMK Group applies a risk-based approach to OHS management. The Company assesses risks in all production operations.

An e-learning course has been developed in order to ensure due quality of operational risk assessment.

The OHS Department and local site specialists conduct audits to ensure effectiveness of the process for operational risk assessment management. In 2022 more than 85,000 operations were inspected as part of this effort.

All OHS incidents are followed up with an investigation, including identification of systemic causes and development of corrective actions. [GRI 403-2]

INDUSTRIAL MEDICINE [GRI 403-3]

The Industrial Medicine Development Strategy includes several major clusters of projects with a focus on building up a system of emergency response when providing aid to the injured and ill.

On-site clinic equipment

In 2022, the level of on-site clinic equipment increased

on average by 30%. Six major on-site clinics were remodelled and upgraded. All corporate on-site health clinics operate modern equipment for emergency and first aid, condition monitoring and immobilization. More than 30 paramedics completed the Immediate Life Support (ILS) Provider course in 2022 and were ILS certified.

First aid

The Groups' sites have installed a total of over 220 advanced automated external defibrillators. In 2022, more than

400 employees took the in-person course "Cardiopulmonary Resuscitation with AED" and 800 employees took in-person training in first aid. Also, two interactive e-courses

were developed: "Cardiopulmonary Resuscitation with

AED" and "First Aid: Injuries and Critical States". Over 9,000 employees took the training and the total number of people trained exceeded 20,000. In 2022, Stoilensky held its first corporate first air competition.

In January 2022, an on-site clinic paramedic

and an employee of NLMK Lipetsk carried out successful defibrillation and resuscitation of a colleague in distress while waiting for an ambulance. They were officially recognized by the Company management and received certificates "For Saving a Life".

Emergency evacuation

Training sessions (medical drills) are organized regularly to test emergency medical evacuation plans. More than 160 training sessions were held at on-site clinics; four large-scale drills were organized with involvement of emergency services.

Health checks

In order to boost the efficiency of pre-shift and pre- trip medical check-ups, in 2022 nine sites of the Group commissioned 95 electronic check-up terminals. Pre-shift and pre-trip medical check-ups have been 100% automated and a total of over 1.3 million such checks were administered.

56

SUSTAINABILITY REPORTI  2022

NLMK

SOCIAL  ASPECT

Staff engagement

Since 2020 the Company has operated a single system of incentives that promotes pro-active involvement

and engagement in OHS processes. The structure of incentives in OHS splits into two parts: regular encouragement

and the Safety Leaders contest on site- and group-levels.[GRI 403-2] The number of employees rewarded for

desired behaviours in 2022 as part of regular incentives went up 43% year-on-year.

Furthermore, the number of applications to participate in the Safety Leaders contest more than doubled.

One of the key tools in promoting safety awareness is last minute risk assessment. It aims to form a habit of evaluating the workplace situation in terms of safety before commencing work. In case of a threat to health or life, operations are halted until safe conditions are established. More than a thousand employees received recognition for active participation in last minute risk assessment in 2022. [GRI 403-2]

Suspension of unsafe operations is a legitimate right of each employee which entails no repercussions as guaranteed by the CEO.

Electronic work permits

In 2022, NLMK Lipetsk and the Mining Division completed the integration of electronic work permits (EWP). More than 98% of all work permits issued at NLMK Lipetsk are electronic, and more than 95% of permits at the Mining Division. The plan for 2023 is to roll-out the electronic system at all Group sites.

LOTO safety system

The purpose of the LOTO project is to decrease one of the key risks for NLMK Group: injuries from a source of hazardous energy during maintenance or repairs, and in case of contact with rotating or moving parts of equipment, machines, and mechanisms.

The LOTO system is currently piloted at seven sites of NLMK Group. Over 50% of preventative maintenance activities rely on the LOTO system. More than 100 in-house coaches were trained in LOTO. More than 500 employees involved in the LOTO processes received training. All Russian sites underwent an assessment audit.

All NLMK Group sites are to be covered by the LOTO system until 2025.

Staff get more actively involved in hazard identification and risk assessment also through the use of dedicated Hazard Reporting IT service. The app allows each employee to report workplace hazards and enables more effective risk management by leaders. Employee engagement in managing unsafe events through the IT service was 70% (+25% vs. 2021).

Throughout the year, the programme for leadership development in OHS was being actively implemented, curated by the NLMK Group CEO. [GRI 403-4] OHS Committees operate at all Russian companies of the Group.

OHS issues are discussed monthly with employee representatives and trade unions. The staff of structural units can submit proposals related to ensuring safety, safe work methods, and actions to improve working conditions.

[GRI 403-4] [GRI 403-4]

Launched in December 2019, the hotline is available 24/7 for all employees of the Group's Russian operations, including contractors, former employees, and trade union representatives. The hotline registered over 140 employee communications.

Training [GRI 403-5]

Since 2018, the Company's main focus has been on developing a culture of safety at NLMK. Particular attention is paid

to improving the level of safe behaviour: internal and external training sessions are conducted for Group employees

and contractors. Over 90% of employees have already been trained in OHS tools in line with the official plan.

The Company is also developing a culture of safe driving. As part of the project to increase traffic safety for road and rail transport, almost 3,000 drivers of road and process transport took the Defensive Driving course. The training activities cover also the contractors who operate moving transport on NLMK sites.

Industrial safety

In 2022 the Company was pursuing planned activities

to develop industrial safety. It assessed the safety of technical equipment, buildings and structures, updated the regulations of industrial safety review process and procedure.

The employees involved in the safety review process received appropriate training.

In 2022, the Company carried out 100% of planned safety reviews and all follow-up actions were implemented.

The OHS IT system is being developed as well.

An automated Industrial Safety module was developed and launched to track relevant analytics in real time.

The Investigations module was updated to support quarterly factor analysis of industrial safety incidents.

The industrial safety management system regularly undergoes internal and external audits.

Employee health and wellbeing

[GRI 403-6] Health and wellbeing of employees is one of the indispensable priorities of NLMK Group. Actions to promote employee health and wellbeing are part

of the Group's HR Strategy. For more on health and wellbeing, see the Social policy section.

Partnerships with contractors

[GRI 403-7] In 2022, NLMK Group companies engaged over 1,100 contractors and subcontractors, as well

as outsourced service providers with an average headcount of 17,500 employees.

Ensuring safe working conditions for contractor staff is an integral part of NLMK's risk-based approach

57

SUSTAINABILITY REPORTI  2022

NLMK

SOCIAL  ASPECT

to corporate social responsibility and one of the strategic goals of NLMK Group.

The Group has a mandatory OHS qualification procedure applied to any counterparty that intends to provide services on company premises. For more details on counterparty qualification, see the Supply Chain Management section.

In 2022, introductory OHS briefings were recorded as videos and tailored specially for production and non- production personnel. There is a test following the briefing and site entry permits are issued strictly subject to successful completion of the test.

In 2022 more than 200 line managers and OHS officers from 50 contractor organizations took knowledge tests in the Russian OHS legislation. Around 3,900 contractor employees took corporate learning courses in OHS. Such comprehensive approach to development of contractor staff and the system of in-house coaches introduced contractor- side enabled a qualitative improvement in the efficiency of training.

In order to assess OHS management systems, comprehensive audits were carried out at 32 contractor organizations. Following the audit, each organization received a custom plan of corrective actions. Full implementation of these plans will allow contractors to ensure compliance of their OHS systems with

the requirements of the Russian law and improve

the business reputation of NLMK Group. Penalties for low performance in comprehensive audits were introduced for contractors in 2022.

The OHS system for contractor organizations continued to evolve in 2022 in two new areas: development of approaches to managing outsourcers and lease-holders. Based on OHS tools from the Group's investment projects a methodology and responsibility chart have been prepared for the Group companies that outsource key processes.

In October 2022, a second OHS Executive Forum was organized to increase engagement of contractors into OHS matters. It was attended by over 140 people.

A dedicated forum was held also for contractor organizations that operate vehicles on NLMK Group's premises. As part of the road safety culture programme, the Company holds regular webinars on various aspects of motor safety.

Emergency preparedness and incident reporting

NLMK prioritizes efforts to prevent and respond to emergencies. These issues consistently feature on the agenda of NLMK Group's leadership.

The responsibility for emergency preparedness, response and incident investigation lies with competent services at each site. Each company has regulations in place

on preventing and managing the consequences of both man-made and natural disasters. The schedule of planned emergency training sessions for 2022 included sessions on fires, gas leaks, acid/alkali spills, molten zinc leaks or spillages, as well as power outages.

OHS investments

The Company invests in OHS development annually to attain its safety objectives.

2022 performance

In 2022 the Company continued to implement its anti- concealment programme for incident registration at all levels. NLMK Group strives to determine the systemic causes, develop corrective measures, and prevent incidents from happening again.

The Company also proceeded with the maintenance programme aimed at reducing fatal and high risks. The programme is based on the Vision Zero concept: all incidents are preventable.

WORK-RELATED INCIDENTS

[GRI 403-9] In 2022, employees and contractors at NLMK Group sites suffered 98 lost time injuries. The total number of injuries went down by 32%, employee injuries reduced by 40%, contractor injuries increased by 14%.

Breakdown of occupational health and safety investments in 2022, %

11.3% 5.0%

4.9%

4.6%

22.6%4.4%

41.4%

1.4%

0.9%

3.6%

 Personal protective equipment  Risk management

 Industrial safety  Medical checks

 Improving working conditions for employees

 Fire safety

 Dedicated OHS development programmes

 OHS training  Healthy dietary meals

 Other

58

SUSTAINABILITY REPORTI  2022

NLMK

SOCIAL  ASPECT

Work-related injuries [GRI 403-9]

Indicator	2018	2019	2020	2021	2022
Total number of occupational incidents	89	105	167	144	98
Employees	65	72	133	123	74
Contractors	24	33	34	21	24
Number of occupational fatalities	3	6	3	6	5
Employees	3	2	1	5	1
Contractors	0	4	2	1	4
Number of lost time injuries	86	99	164	138	93
Employees	62	70	132	118	73
Contractors	24	29	32	20	20
Total person-hours worked for employees	93,637,091	95,179,559	93,300,837	97,493,913	95,175,295
Total person-hours worked for contractors	22,612,132	26,995,931	39,798,091	44,452,504	46,252,482

In 2022, total person-hours worked for contractors was

46,252,482 million hours, which is 4% more year-on-year due to an increased number of contractors on site up 7%. Work time statistics for contractors are recorded in person-hours. NLMK Group engages contractors at production facilities mostly for temporary or on-and-off tasks. [GRI 2-8]

The Company deeply regrets the fatalities that involved one employee and four contractor workers at the sites

in Lipetsk, Kaluga and Stary Oskol. All accidents were investigated thoroughly to identify the root causes and take corrective actions.

Number of work-related incidents resulting in injury to NLMK Group employees and contractors in 2018- 2022 (without fatalities) [GRI 403-9]

132

						118
62	70				73
24	29	32	20	20
2018	2019	2020	2021	2022
		Contractors			Employees

The system for recording work-related injuries at NLMK Group is based on industry-wide methods adopted by the World Steel Association (WSA). The main injury rate indicator used in the Group is Lost Time Injury Frequency Rate (LTIFR). The jump in LTIFR for employees in 2020 was due to the introduction of an open incident registration policy in the Company, however, thanks to implemented safety programmes and measures, LTIFR is gradually decreasing - by 19% in 2021 and by 32% in 2022 year-on-year.

LTIFR is calculated on a monthly basis for each subsidiary taking into account data for both NLMK employees

and contractors. During the reporting period, LTIFR stood at 0.69 calculated per one million of person-hours.[GRI 403-9]

NLMK Group's LTIFR without 'light' injuries vs. the industry average [GRI 403-9]

0.84 0.83 0.85 0.81

0.66 0.75 0.77 0.64

0.54

2018

2019

2020

2021

2022

 Industry average (WSA data)  NLMK Group (excl. 'light' injuries)

NLMK Group's LTIFR vs. the industry average [GRI 403-9]

		1.25
			1.01
0.84	0.86	0.85	0.81
0.77	0.83			0.69
2018	2019	2020	2021	2022

 Industry average (WSA data)

 NLMK Group (employees and contractors)

The top-3 materialized hazardous factors were same- level trips and falls, manual operations and hand tools, and dropped objects.

Analysis was conducted to identify Group-wide priority areas of effort for 2023: risk management during planning and preparation of works, and contractor management.

59

SUSTAINABILITY REPORTI  2022

NLMK

SOCIAL  ASPECT

LTIFR for NLMK Group employees and contractors [GRI 403-9]

				1.43
			1.22		1.26
1.06
			0.76	0.85		0.78
0.69
					0.47	0.52
2018	2019	2020	2021	2022
		Contractors		Employees

The Group keeps records of all work-related injuries and measures the Total Recordable Injury Frequency Rate (TRIFR)8, which is calculated every month for each subsidiary and includes data on contractors. In 2022, total TRIFR decreased vs. last year to 2.19 due to a reduction in lost-time injuries by 32% and in non-disabling injuries by 32% among employees and contractors.

TRIFR (RI) for NLMK Group employees and contractors* [GRI 403-9]

				3.68	3.75
2.47	2.42	26.3	26.3	2.60
			2.43
2.12	2.37
2.55			2.07	2.19
	2.01
								1.36
2018	2019	2020	2021	2022
		Employees			Contractors		Employees + contractors
Injuries by severity
				147
						126
77	80					81
			25	20	18	17
12
2018	2019	2020	2021	2022
		Light injouries			Severe, fatal, group injuries

The number of light injuries decreased by 36 %,

and the number of severe, fatal, and group injuries went down by 6% year-on-year.

Plans for 2023 and the medium term

OHS tools and injury reduction programmes

• Continued implementation of programmes
  to manage top injury risks at NLMK Group sites.
• Consolidation of skills related to OHS tools focused on quality and analysis.
• Introduction of a professional risk management process.
• Development of the safety culture and leadership.
• Piloting of an educational solution aimed at development of safety awareness.
• Development of the incentive system in OHS.
• Implementation of the OHS leadership programmes for line managers.
• Revision of the safety culture maturity assessment system.

Industrial safety

• Further development of the industrial safety management system through update of key processes in line with
  the Russian law and best practices in industrial safety.
• Organization and performance of ISMS audits with follow-up corrective action for all Group sites in order to ensure safety at hazardous production facilities.
• Elaboration of a strategy for development of the industrial safety management system in 2024-2026.
• Increased efficiency of the production control system at NLMK Group companies to ensure safety at hazardous production facilities.
• Development and implementation of reactive programmes based on incident investigations.

Traffic safety for road and rail transport

• Continued introduction of international practices for
  the development of personnel driving automotive, industrial (in-shop), and mining transport and special equipment.
• Continued introduction of new technologies
  and digital solutions in railway transport, updating and fine-tuning of security and control systems.
• Installation of safety and control features in vehicles: satellite monitoring, two-way dashcams, back-up sound alarms, parking radar systems, safety circuits, driver sleep detection and alarming systems.

Industrial healthcare

• Set of actions to minimize risks of sudden death from systemic diseases at NLMK Lipetsk and Stoilensky.
• Audit of actions and projects in industrial healthcare, development and implementation of follow-up corrective measures.

Engagement with contractors

• Introduction of a knowledge testing system for hiring contractors on high-hazard jobs.
• Roll-outof contractor training practices to all Group companies.
• Digitalization of contractor management processes, deployment of IT solutions at Group companies.
• Improved control over all contractor and outsourcer operations based on risk levels.
• Development of OHS management systems at large contractor organizations employed by the Group.

8 TRIFR includes fatalities, disability cases, and cases requiring treatment. It is calculated on the basis of the method adopted by the Group for determining recordable injuries (RIs).

60

SUSTAINABILITY REPORTI  2022

NLMK

SOCIAL  ASPECT

DEVELOPING LOCAL

COMMUNITIES

[GRI 413]

KEY FIGURES FOR 2022

MATERIAL TOPICS

RUB 1.5 bn	$	Indirect economic impacts
	$	Local communities
investment in external social programmes
KEY EVENTS IN 2022
74
$	The Marathon of Good Deeds expanded its geography:
projects supported through the Steel Tree grant competition		in 2022, the event took place at all Group production sites.
	$ Residents of the Lipetsk region took part in the survey
		on social programmes implemented by the Miloserdiye
		Charitable Fund.
AWARDS

$ The Steel Tree grant programme and NLMK's corporate volunteering programme won the Best Social Projects in Russia competition.

$ Miloserdiye Charitable Fund for Social Assistance was awarded a certificate of honor of the Chamber of Commerce and Industry of Russia, two golden badges For Merit to Lipetsk and the highest awards of the Point of Reference All-Russian competition

of voluntary public annual reports.

$ In 2022, Miloserdiye Charitable Fund was ranked 7 in the RAEX rating of corporate and private charitable organizations, improving its position by 11 notches.

Priority areas of support to local communities

As a major company engaged in mining, production

of steel and steel products, NLMK has a significant impact on the environment and the lives of local communities.

The departments responsible for corporate citizenship aim to ensure that the common interests of NLMK Group, its employees, local communities, state authorities and local governments on issues related to the sustainable development of the Company and the regions of presence are met, guided by wellbeing of employees and the local population.

The main document regulating the Company's approach to the implementation of social programmes is NLMK Group's Sustainable Development Policy, according to which one of the Company's key goals is to contribute to the social development of the regions where it operates.

In 2022, the Company continued the development of its Charity and External Social Strategy and Policy. These top- level documents will become an integral part of the Group's strategic documents. They are developed taking into account the best Russian and international practices based on the assessment of the key regions of presence.

The Company implements its charitable projects in the following main areas:

• Health and well-being
• Education
• Grassroots and children's sports
• Community relief and responsible leadership
• Support for vulnerable social groups
• Culture, urban development.

NLMK's corporate citizenship and philanthropy activities to support and develop the regions in which it operates

are pursued chiefly in collaboration with the Сompany's social partner, the Miloserdiye (Mercy) Charitable Fund for Social Assistance. It is the largest charitable organization in the Lipetsk region. The Fund is included in the All- Russian Register of Socially Responsible Enterprises

and Organizations; it is also a member of the Donors Forum Association of Grant-giving Organizations.

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SUSTAINABILITY REPORTI  2022

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SOCIAL  ASPECT

The Fund supports the development of sport and healthcare, the preservation of cultural heritage, and provides assistance to pensioners, veterans,

and other vulnerable social groups. The Miloserdiye Fund is a longstanding trusted partner of NLMK in the Lipetsk and Belgorod Regions and in Altai Krai. In 2022, branches of the foundation were opened in Stary Oskol and Zarinsk. Over 50,000 people benefit from the Miloserdiye Fund each year.

NLMK is committed to enhancing the tools it uses to collaborate and engage with communities and its employees in order to develop a culture of everyday charity. Examples of such tools are the Steel Tree grant competition and the Marathon of Good Deeds.

Steel Tree grant competition

The Steel Tree grant competition has been held since 2017. Every year the number of applications and awarded grants is rising. In 2022, grants were awarded to projects in the following categories ecology and urban improvements, family values, science and culture, sports and health, supporting young adults, mercy and care, and longevity. A jury board was set up to select the best initiatives from among 500 applications, with members to represent NLMK, the Miloserdiye Fund, regional

and local authorities. A total of 74 grants were awarded to projects from various regions of presence, of which NLMK contributed RUB 25 million.

In 2022, work was underway to increase transparency and digitalize competitive procedures. The regulations on the competition have been substantially finalized; the website of the competition was prepared for launch. Online application submission, full information about application status, feedback from the organizers

and experts is available to participants on the website, and the work of the administrators and experts

of the competition is also fully automated.

Geography of the Steel Tree grant competition, number of projects

4

7

		29		Lipetsk Region
15	74		Stary Oskol
		Sverdlovsk Region

Zarinsk

Kaluga Region

20

Marathon of Good Deeds

In September 2022, the Marathon of Good Deeds was held for the second time, timed with the International Day of Charity. This year the marathon expanded its geography: it was held at all Russian sites of the Group.

The sports and environmental marathon was held with the support of the Miloserdiye Charitable Fund. The family holiday included eco-competitions for the collection

of plastic and waste paper, an eco-game for children, a children's break-dance championship, and master classes from fitness instructors. The Moscow office organized a race in support of the wards of the Marfo- Mariinsky Monastery of Mercy.

NLMK also operates various volunteering and charity programmes and conducts research on the needs of local communities in the regions where it operates. It determines such needs through surveys and public hearings as well

as various internal corporate communication channels.

Tools used to engage and determine the needs of local communities [GRI 413-1]

Measure	Description
Assessment of existing social programmes	NLMK regularly analyses ongoing social programmes in order to determine their impact and audience reach and to obtain
	feedback from the intended beneficiaries including through the communication channel of the Miloserdiye Fund
Direct engagement via	Given that many of NLMK Group's companies are the main employers in their respective areas and that a significant proportion
internal communication channels	of the regional population work for them, the social needs of local people can be determined with the help of internal
	communication channels, including telephone hotlines, text messages, and the intranet portal. The portal can be used to leave
	messages, which a specialist then responds to; these messages can be read and commented on by all portal users
Working with local authorities	The company works with regional and local authorities that are fully aware of the current needs and requirements of local
	communities in the regions where the company operates. Using this information, NLMK collaborates with representatives from
	these authorities to develop social initiatives that meet the needs of local communities
Public hearings	Public hearings are held to review the environmental impacts of NLMK investment projects that are subject to State Environmental
	Expert Review. The hearings help identify the expectations of the locals and integrate them into project development
	and operations. In 2022, 20 NLMK projects were heard publicly and approved by Lipetsk residents

62

SUSTAINABILITY REPORTI  2022

NLMK

SOCIAL  ASPECT

Local community impact assessment

In the reporting period, NLMK Group ran programmes on engaging and developing local communities in all regions of operation. This included a local community impact assessment. Requests from the population

and proposals on charitable programmes of the Miloserdiye Fund are analyzed through regular monitoring of various communication channels. Every month, the Company receives up to 20 such requests and promptly responds

to them.

Performance in 2022

Each year, NLMK allocates significant resources to corporate citizenship programmes in a variety of areas. In 2022, NLMK Group allocated RUB 1.5 bn to external social programmes.

Local community engagement programmes are in place at all companies of the Group. [GRI 413-1]

Investments in corporate citizenship programmes, % [GRI 203-1]

6.6	4.8			Grassroots and
11.8				children's sports
			Socially vulnerable groups
	RUB
			Education
12.0	1.5 bn	49.1		Healthcare
			Veterans and former

employees

Culture and infrastructure

15.7

HEALTH AND WELL-BEING, HEALTHCARE

Projects in this area aim to promote development

of healthcare institutions, including through procurement of medical equipment and targeted aid to people with severe illnesses (reimbursement of costly surgery, medicines, and rehabilitation).

A total of RUB 178.2 million was allocated

to support healthcare in 2022, which amounted to 11.8% of the Company's total investment in corporate citizenship programmes.

SUPPORT FOR SOCIALLY VULNERABLE GROUPS

Social support by the Group is delivered in the form

of targeted aid to people in need, support to initiatives with positive social impacts, facilitation for the Group employees and proactive local residents to participate in social causes, including through the grant competition.

A total of RUB 236 million was allocated to support this category in 2022, which amounted to 15.7% of the Company's total investment in corporate citizenship programmes.

SUPPORT FOR VETERANS AND FORMER EMPLOYEES

NLMK places considerable emphasis on supporting veterans and retired employees. This includes organizing regular trips and other cultural events, regular exhibitions of art by veterans as well as sporting tournaments and healthy lifestyle activities. One important aspect of the Company's engagement with veterans is computer training, which helps elderly people use computers, mobile apps, and the Internet to find useful information, access electronic services,

and communicate with family and friends online.

In order to bolster ties between generations, NLMK works with local veterans' organizations and trade unions to host meetings with veterans, organize visits to war memorial sites, and give lessons on courage in schools and basic educational institutions.

A total of RUB 99.2 million was allocated to support this category in 2022, which amounted to 6.6% of the Company's total investment in corporate citizenship programmes.

GRASSROOTS AND CHILDREN'S SPORTS

The development of grassroots and children's sport is one of the priorities within the Company's social activities. NLMK creates conditions for engaging in sports not only for the Company's employees and their family members, but also for local communities, regularly allocating resources for the maintenance of sports facilities and to provide assistance to children's and young people's sporting academies

and groups as well as sports clubs and promising athletes. For example, NLMK covers all costs for the Lipetsk Metallurg sports club in Lipetsk and for Olympic Reserve School No. 13 for Children and Young People, which was set up on the core of the club. The school trains world-class athletes in skeet shooting: almost half of the current Russian skeet shooting team are graduates of this school.

In the Lipetsk region, the Steel Tree grant programme supported the set-up of a new multifunctional sports and gaming complex in the village of Gryaznoye and a new skate park in the village of Borinskoye.

In the Belgorod region, a new athleisure public space was set up as well as an outdoor powerlifting complex for pupils of the Starooskolskaya children's football school.

In Zarinsk, Altai Krai, a workout area and a playground were opened.

In the Kaluga region, the Miloserdiye Fund supported the set up of a new playground for the children

of the social shelter for children and adolescents, as well as another playground in the Borovsky district.

In the Revda town of the Sverdlovsk region,

a new volleyball court was funded by the Steel Tree grant competition.

A total of RUB 738.7 million was allocated to support this category in 2022, which amounted to 49.1% of the Company's total investment in corporate citizenship programmes.

63

SUSTAINABILITY REPORTI  2022

NLMK

SOCIAL  ASPECT

EDUCATION

The focuses of scientific and educational development pursued in NLMK Group's social policy consist

of multifaceted support for certain educational institutions in the regions where the Company operates, and support for high-quality technical education for young people. The Company provides targeted funding for scientific and educational activities at educational institutions, and also arranges and sponsors conferences dedicated

to scientific research as well as scientific and technical competitions for students. In order to introduce the next generation of employees to the Company, NLMK organizes open days and trips to production facilities for schoolchildren as well as industrial internships at the Company's sites

for students from certain educational institutions. NLMK also finances a range of grants.

The Company also allocates significant resources

to improving facilities at nursery schools, schools, secondary schools, vocational institutions, children's centres for

the creative arts, children's homes, and residential schools.

In 2022, the Miloserdiye Fund assisted over 400 high school students in studying such applied technologies as metallography, electrolysis, and alloy casting.

The Lipetsk State Technical University hosted these interactive workshops. The Steel Tree grant programme funded special educational equipment to organize master classes.

Students of the Starooskolsky branch of the Sergo Ordzhonikidze Russian State Geological Exploration University also received new interactive equipment from the Fund. The Steel Tree grant programme funded the GeoLab Laboratory project.

In the Sverdlovsk region, the Steel Tree grant programme supported creation of a new public space for the development and recreation of children with disabilities. A training apartment for the social adaptation of special children was opened in the village of Monetny in the Berezovsky city district.

As part of efforts to support culture and arts, NLMK Group provides assistance to organizations that promote cultural history and education in the regions where

the Company operates and makes financial contributions to the preservation and proper maintenance of cultural and architectural monuments and other sites with cultural and historic value.

The Group also supports the activities of corporate museums, including NLMK's Novolipetsk Museum in Lipetsk, the Demidov Centre in the Sverdlovsk Region town of Revda, and museum sites at Stoilensky and Altai-Koks.

A new cultural project was opened in the city

of Berezovsky, Sverdlovsk region, with the support of the Miloserdiye Fund. Thanks to a grant from

the Steel Tree programme, an open-air cinema was set up here, which was marked by an open-air cinema festival.

A museum of Russian folk crafts opened its doors in the Dobrovsky district of the Lipetsk region with the support of the Miloserdiye Fund. Another project of the grant programme helped more than 500 Lipetsk schoolchildren to master the skills

of traditional folk crafts.

A total of RUB 180.8 million was allocated to support this category in 2022, which amounted to 12% of the Company's total investment in corporate citizenship programmes.

CULTURE AND COMFORTABLE WORKING ENVIRONMENT

The main priorities of NLMK Group's corporate citizenship programmes include determining and facilitating solutions to issues that currently affect the regions where the Company operates as well as social infrastructure development.

A total of RUB 72.5 million was allocated to support this category in 2022, which amounted to 4.8% of the Company's total investment in corporate citizenship programmes.

64

SUSTAINABILITY REPORTI  2022

NLMK

SUSTAINABILITY

REPORT

2022

Corporate governance

CORPORATE GOVERNANCE SYSTEM	66
COMPLIANCE AND CORPORATE ETHICS	76
OPERATIONAL CONTROL AND RISK MANAGEMENT	81

CORPORATE GOVERNANCE

CORPORATE GOVERNANCE SYSTEM

Corporate governance in action

NLMK Group's corporate governance system plays a key role in the Company's operations, its successful sustainable development, risk management, and in balancing the rights and interests of shareholders, the Company management, and other stakeholders. The system is built on best international practices, the requirements of the prevailing Russian legislation and laws of the countries where the Group companies operate, the OECD Principles of Corporate Governance, applicable listing rules, and provisions

of the Corporate Governance Code recommended for use by the Central Bank of Russia.

A well-developed corporate governance system that secures the rights of shareholders and potential investors is considered a driving force for enhancing NLMK's efficiency and investment appeal.

The key documents regulating corporate governance practices and principles are available onNLMK Group's official website.

Key principles at the core of our corporate governance:

CORPORATE GOVERNANCE STRUCTURE [GRI 2-9] According to internal Company documents, NLMK's corporate governance structure includes [GRI 2-9]:

• The General Meeting of Shareholders, which is the Company's supreme governing body that makes decisions on key business issues.
• The Board of Directors, which handles the overall management of the Company's activities, excluding issues that fall within the purview of the General Meeting of Shareholders according to the NLMK Charter.
• Committees of the Board of Directors, which were established to tentatively review key matters concerning the Company's activities.
• Executive bodies: the CEO (Chairman of the Management Board) and the Management Board, which manage day-to-day activities of the Company and ensure its efficient operation, while implementing the objectives set by the Board of Directors.
• The Corporate Secretary, who handles interaction with shareholders, coordinates the Company's activities that aim to protect shareholders' rights and interests, and supports the Board of Directors.
• Internal audit, which oversees the Company's financial economic activities.

1 Sustainable development and long-term growth of return on equity investment

1. Equal and fair treatment of all shareholders when they exercise their right to be involved in management processes, receive dividends from the Company, participate in meetings, vote on issues on the agenda, and get up-to-date information
   on the activities of the Company and its governing and controlling bodies
2. Equal treatment of all shareholders, including non-Russians and minority shareholders
3. Commitment to ensure reliable and effective registration of title to shares and guarantee the opportunity to alienate them freely and without encumbrances
4. Compliance with existing laws, principles of the Corporate Governance Code recommended by the Bank of Russia and international corporate governance standards
5. Observing the rights of third parties, including creditors and NLMK employees, as required by the law, the Charter, and other regulatory documents
6. Adherence to a common corporate policy in respect of subsidiary companies, affiliates and other legal entities in which NLMK is the founder, a participant, or a member
7. Complying with business ethics in conducting operations

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CORPORATE GOVERNANCE

NLMK's Corporate Governance Structure

Independent		General Meeting	Strategic Planning
Auditor		of Shareholders	Committee

Human Resources,

Remuneration and Social

Policy Committee

Corporate		Board
Secretary		of Directors

Audit

Committee

CEO (Chairman	Internal
of the Management Board)	Audit

IMPROVING CORPORATE GOVERNANCE

PRACTICES IN 2022

In 2022, the Company continued to improve its corporate governance system to ensure its compliance with international standards focusing on safeguarding the rights and interests of its shareholders and investors under

the significant regulatory changes and the associated risks. As at the end of 2022, NLMK complies with all principles of the Corporate Governance Code: 70 principles (89%) are fully observed and nine principles are partially observed. The Company uses the recommendations of the Bank

of Russia on preparing a report on compliance with

the Corporate Governance Code as a methodology to assess compliance with corporate governance principles.

At meetings held in 2022, the Company successfully employed an electronic voting service, which allows shareholders to vote regardless of where their shares are registered. NLMK shareholders have ranked among the top-5 most active users of the e-voting (NSD). For

the convenience of its shareholders, the Company launched an additional electronic voting service on the website

of NLMK registrar. The shareholders were able to use it at the Annual General Meeting held on 30 June 2022, and at the Extraordinary General Meeting held on 31 December 2022.

In accordance with Federal Law No. 17-FZ dd. 24 February 2022 and a resolution of the Board of Directors, the Company's Annual General Meeting of Shareholders on 2022 performance was held by absentee ballot.

PLANS FOR 2023 AND THE MEDIUM TERM

In 2023, NLMK will continue to analyse the best corporate governance practices and evaluate them in terms of their applicability to the Company's activities. Particular attention will still be paid to the implementation of sustainability practices. As always, the Company will analyse rankings, ratings and benchmarking, which allow to assess issuers' achievements objectively and to identify practices that might bring the greatest benefit to the Company and are important

for its stakeholders. The Group is going to keep analysing best practices, new approaches and tools for ensuring alternative ways of corporate meetings participation, and to maintain its focus on the aspects associated with protecting the rights and interests of shareholders and investors in the context

of significant regulatory changes and associated risks.

General Meeting of Shareholders

NLMK'S GENERAL MEETING

OF SHAREHOLDERS PROCEDURES

The General Meeting of Shareholders is NLMK's supreme governing body that functions based on the legislation of the Russian Federation, the NLMK Charter,

and the Regulations on the General Meeting of Shareholders. The Federal Law "On Joint-StockCompanies"

and the NLMK Charter establish the General Meeting's competence. The procedure for preparing, convening, holding, and summarizing the results of NLMK's General Meeting of Shareholders is set forth in the Regulations on NLMK's General Meeting of Shareholders published on the Company's official website.

Shareholders have two options for online voting: through the e-voting service of the National Settlement Depository and the online voting service on the website of NLMK's registrar, the Regional Independent Registrar Agency. These services are available to all Company shareholders, regardless of whether they are the depository's clients or if their share rights are recorded in the register.

The notice about the upcoming General Meeting

of Shareholders and materials to the meeting are published on the Company's website in Russian and English. In addition to the mandatory materials required by law, the Company provides its shareholders with additional information

and materials pertaining to the agenda items of the General Meeting of Shareholders in line with the recommendations of the Corporate Governance Code recommended

by the Central Bank of Russia.

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CORPORATE GOVERNANCE

The Company's independent registrar functions as the counting commission of the General Meeting of Shareholders.

ACTIVITIES IN 2022

Two General Meetings were held in 2022.

NLMK's General Shareholders Meetings held in 2022

General Meeting of Shareholders by status (format)	Quantity
Annual meeting (absentee ballot using e-voting technology)	1
Extraordinary meeting (absentee ballot using e-voting technology)	1

NLMK's Annual General Meeting of Shareholders on 2021 performance was held on 30 June 2022 by absentee ballot. During the meeting, resolutions were passed on the issues envisaged by Item 1, Article 47 of the Federal Law "On Joint- Stock Companies".

NLMK's 2022 Extraordinary General Meeting

of Shareholders was held on 31 December 2022 by absentee ballot.

Board of Directors

NLMK BOARD OF DIRECTORS PROCEDURES

A key component of the Company's corporate governance system, the Board of Directors determines its strategic vectors, lays down the principles of and approaches

to the risk management and internal control system, monitors the activities of executive bodies, and has other key functions within the Company. NLMK's Board of Directors reports

to the Company's shareholders and is elected by a resolution of the Company's General Meeting of Shareholders.

The NLMK Charter and theRegulations on the Board of Directorspublished on the Company's official website govern the procedures of the Board of Directors.

In addition to the main functions of the Board of Directors stipulated by legislation and NLMK's Regulations

on the Board of Directors, key importance is attached to such goals and objectives as assessing various kinds of risks, ensuring compliance with corporate governance and sustainable development principles, and monitoring compliance with the Sustainable Development Policyand Information Disclosure Policy. [GRI 2-12]

Board members are engaged in various business aspects, both within the committees of the Board and outside of it. Directors ensure productive interaction and experience exchange with the management including at informal meetings. With the view to integrate long-term trends and challenges in the Company's development strategy, working groups have been formed at the Board of Directors level. The groups include both members of the Board

and the management.

Members of the Company's Board of Directors ensure the reliability and stability of the Company's operations, facilitate the adoption of balanced decisions by the management, and make objective independent judgements and decisions that serve the interests of NLMK and its shareholders.

The Regulations on the Board of Directors establish the procedure of preparing for and holding Board meetings, as well as the procedure for the nomination and selection of potential Board members. Members of the Board

of Directors shall be the individuals elected at the General Meeting of Shareholders, whose candidatures are nominated by shareholders or by the Board of Directors. The quantitative composition of the Board of Directors is determined

by the corporate documents. [GRI 2-10] Independent directors are elected to NLMK's Board

of Directors to ensure well balanced decision-making process and improve operational efficiency, which is a global corporate governance practice. The Company is interested in no less than three independent directors to be members of the Board of Directors. Moreover, the Company seeks

to diversify the composition of the Board of Directors in terms of competencies, experience, field of expertise, gender and other indicators. [GRI 2-10]

Members of the Board of Directors are elected by cumulative vote at the Annual General Meeting

of Shareholders. The candidates who have polled the majority of votes are considered elected to the Board of Directors.

Members of the Board of Directors have sufficient time to fulfil their obligations efficiently and in good faith, including for participation in meetings of the Board of Directors and its committees. The requirement for members of the Board of Directors to have sufficient time for efficient participation in the Board's work is enshrined in NLMK's Corporate Governance Code.

Meetings of the Board of Directors are held on a regular basis at least six times a year in accordance with

the approved schedule.

The format of NLMK Board meetings is determined based on the importance of the agenda items. The most important items within the Board's remit are resolved at in-person meetings, and as a rule, are first reviewed by the Board's committees, thereby ensuring their thorough consideration and informed decision-making.

CHAIRMAN OF THE BOARD OF DIRECTORS

[GRI 2-11] The Chairman of the Board of Directors ensures the efficient functioning of the Board, arranges for

the preparation of its schedule, supervises the execution of resolutions passed by the Board, compiles the agenda, and makes sure that the most efficient decisions

on the agenda items are made.

The Chairman of the Board also plays a key role

in organizing its activities and ensuring that its committees function efficiently.

The Chairman is elected by Board members among themselves by a majority vote of the total number of members.

The Chairman of NLMK's Board of Directors has extensive experience, professional expertise, and authority among the Company's shareholders, members of governing bodies, and employees.

In line with best corporate governance practices the Company elected the Deputy Chairman of the Board of Directors.

The Chairman of the Board of Directors does not hold any executive positions in the Company.

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CORPORATE GOVERNANCE

INDEPENDENT MEMBERS

OF THE BOARD OF DIRECTORS

In order to ensure that the Board of Directors effectively performs its functions, including those related

to the protection of shareholders' interests and risk management, the Company's Board of Directors includes independent directors. Their participation in the Board's activities contributes to the formation of objective opinions on items discussed, improves management efficiency, and has a positive impact on the Company's image.

Independent directors make a decisive contribution to discussions and decision-making on issues that may affect the interests of shareholders including devising the Company's development strategy, assessing

the conformity of the Company's activities with the approved strategy, preventing and resolving corporate conflicts, assessing the quality of work performed by the executive bodies, establishing an efficient incentive system,

and conducting performance assessments to ensure that the Company's activities are in the interest of all its shareholders. In 2022, the number of independent directors reduced to 1/3 of the of the Board of Directors' panel. However, it must be noted that independent directors play a key role in the operation of the Board's committees.

The Corporate Secretary regularly conducts a preliminary analysis and assessment of the Board members' compliance with independence criteria. The latest assessment confirmed that the directors fully meet the independence criteria stipulated by the Regulations on the Company's Board of Directors and the Corporate Governance Code recommended by the Bank of Russia.

COMPOSITION OF THE BOARD OF DIRECTORS

[GRI 2-9][GRI 405-1] The composition of the Company's Board of Directors is balanced in terms of qualification, experience, knowledge, business acumen, and diversity. Members of the Board of Directors have an impeccable professional reputation in the business community, as well as extensive work experience in key executive positions in leading international companies of various sectors.

In addition, many Board members have occupied CEO positions at various companies, which enabled them to obtain competencies in all aspects of business operation, including knowledge and skills in steelmaking, mining, finance, investment, risk management, ESG. Most Board members have substantial work experience in the boards of directors and supervisory boards of other companies.

The share of directors meeting the independence criteria is 33%.

The Board of Directors of ten people in force as of 31 December 2022 was elected at the Annual General Meeting of Shareholders on 30 June 2022.

BOARD OF DIRECTORS' ACTIVITY IN 2022

In 2022, NLMK's Board of Directors held twelve meetings, nine of which were held by absentee ballot. The Board considered 35 items at the meetings.

The main issues considered by the Board of Directors in 2022 related to the strategy implementation and priority areas for development, designations and remuneration, as well as issues of corporate governance and financial reporting.

All members of the Board of Directors took part

in all meetings scheduled after the respective director's appointment.

SUSTAINABILITY AGENDA MANAGEMENT AT THE BOARD OF DIRECTORS LEVEL [GRI 2-12][GRI 2-13][GRI 2-24]

Sustainability management is integrated into NLMK Group's corporate governance system and is carried out at all NLMK companies, including international ones. Sustainability issues consistently feature on the agenda of NLMK Group's leadership. The Board of Directors, the Board's committees, СЕО (Chairman of the Management Board), and the Management Board determine strategic growth priorities and ensure overall sustainability management.

Vice Presidents of functional units are responsible for identifying specific tasks and initiatives to manage the social, economic, and environmental aspects of the Group's activities and monitor their implementation. Departments responsible for developing approaches and implementing measures in matters concerning sustainability report to these Vice Presidents.

The Group's functional departments and teams are directly responsible for executing the tasks assigned

to them and for local management of sustainability issues at the Group's companies.

The detection, monitoring, and management

of sustainability risks is an integral part of the corporate risk management system (see the Operational Control and Risk Management section for more details).

All stakeholders of the Company, including employees, have the opportunity to bring any issues related to the actual and potential negative impact of the Company's activities on them to the attention of the members of the Board

of Directors through, among other means, contacting the Corporate Secretary. [GRI 2-16]

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CORPORATE GOVERNANCE

Sustainability agenda management at the Board of Directors level [GRI 2-9-b]

BOARD COMMITTEE	KEY ASPECT OF SUSTAINABILITY
Strategic Planning Committee	Sustainability risk assessment.
	Environment:
	$	Air emissions
	$	Discharges and waste
	$	Use of resources
	$	Biodiversity
	$	Climate change
Human Resources, Remuneration	Integration of ESG KPIs in the remuneration system.
and Social Policy Committee	Social and employment:
	$ Operational health and safety
	$	Training and development
	$	Social policy
	$ Diversity and equal opportunities
	$	Non-discrimination
	$	Local communities
Audit Committee	Performance monitoring and sustainability reporting [GRI 2-14]
Board of Directors; Human Resources,	Corporate governance:
Remuneration, and Social Policy Committee,	$	Сorporate governance
Audit Committee	$	Business ethics
	$	Anti-corruption

Organizational structure for managing sustainability issues at NLMK [GRI 2-12]

			Strategic Planning
			Committee
Board		HR, Remuneration
	and Social Policy
of Directors
	Committee
			Audit
			Committee

CEO (Chairman

of the Management Board)

Investment

Committee

Management

Board

Risk Management

Committee

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CORPORATE GOVERNANCE

BOARD OF DIRECTORS

SUCCESSION PLANNING [GRI 2-10]

Considering high significance of succession and performance assessment the Board of Directors approved the Succession Policy in 2022. This document reflects the recommendations of the Bank of Russia, as well as the principles

of the Corporate Governance Code, the research results

of leading international consultants, and the best experience of global companies with advanced corporate governance practices.

Thus, the Succession Policy of the Company's Board of Directors includes such aspects as:

• Principles of the Board of Directors formation, ensuring diverse, competent and efficient composition,
• Succession goals,
• Succession process,
• Approaches and tools for performance assessment.

BOARD OF DIRECTORS

PERFORMANCE ASSESSMENT [GRI 2-18]

The Board of Directors is one of the key bodies

in the Company's corporate governance system. The quality of the Company's governance depends on the efficiency of its activities, and its decisions directly affect the Company's market capitalization. The Board of Directors' performance assessment is an effective tool for improving the corporate governance system, each component of which is related

to the work of the governing body.

The main purpose of the assessment is to determine the efficiency of the Board's performance as a collective governing body and enhance its role in achieving

the Company's goal of successful development. The assessment of the Board's performance helps

to determine the focus and changes in the performance of the Board of Directors and its committees, get

a comparative analysis of their contribution to the Сompany's successful development, and identify areas for the continuous improvement of the Board's procedures. In line with

the Corporate Governance Code recommended by the Bank of Russia and best international practices, the Сompany has been conducting an annual assessment (self-assessment)

of the Board of Directors' performance since 2016. The formal assessment procedure does not only cover the Board

of Directors, but also assesses the work of its committees, as well as Board and committee Chairs. The assessment includes an analysis of the Board's composition

and qualifications, its agenda, meeting efficiency,

and interaction with the management and the Corporate Secretary.

RESULTS OF THE BOARD OF DIRECTORS

PERFORMANCE ASSESSMENT

The Board's strengths and areas for improvement were analysed as part of an annual assessment carried out in January 2022 in the form of an online survey

of its members in the format approved by the Committee. According to the results of the self-assessment, the Board structure, content of the meeting agendas and contribution of the Chairman of the Board of Directors were attributed to the strengths of the Board of Directors. Furthermore, the Company received recommendations on development of specific competencies of the Board of Directors

and improvement of a number of working procedures. Results of the assessment were issued in the form of a report that was considered at a meeting of the Board of Directors.

INDUCTION OF NEWLY ELECTED MEMBERS OF NLMK'S BOARD OF DIRECTORS AND THE ONBOARDING PROCESS

An induction course for newly elected members

of NLMK's Board of Directors was developed and approved by the Human Resources, Remuneration, and Social Policy Committee, in compliance with best corporate governance practices to ensure the efficient functioning of the Board of Directors.

The programme of the induction course includes an introduction to NLMK Group's key operational

and financial indicators and its systems of risk management, internal control, and corporate governance.

Meetings with the CEO, members of the Board

of Directors, the Management Board, and other senior executives of the Company are arranged as part of the course. The newcomers also have an opportunity to get acquainted with the Group's core facilities, processes, and products. Other Board members and representatives of the Company management are actively engaged in integrating newly elected Board members into the work of the Company's governing bodies and its operations.

PREVENTING A CONFLICT OF INTEREST

AMONG BOARD MEMBERS

[GRI 2-15] Members of the Board of Directors must act

in good faith and reasonably in the interests of the Company and its shareholders based on sufficient awareness and with due care and discretion. Given that the reasonable and good- faith actions of the Board members require the adoption

of decisions based on all available information without any conflict of interest and taking into account the equal treatment of shareholders the Company has developed a number

of measures to prevent conflicts of interests. As part of these requirements, members of the Board of Directors shall:

• Put the Company's interests above their own under all circumstances and notify the Board in case there is a potential conflict of interest (including an interest in the Group making a transaction).
• Refrain from any acts that will or may lead
  to a conflict between their personal interests and those of the Company.
• Promptly inform the Board of Directors of any conflict of interest and the grounds for it before the start
  of a discussion on the item with respect to which the Board member has a conflict of interest at a Board meeting or
  a Board committee meeting.
• Abstain from voting on items in which they have a conflict of interest. Where the nature of the item discussed or
  the specific aspects of a conflict of interest so require, the Board member experiencing said conflict of interest should not be present at the Board's meeting when the item is discussed.

According to the information available to the Company, there was no conflict of interest among the members

of the Board of Directors in 2022 (including those related to their participation in the governing bodies of NLMK's competitors).

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CORPORATE GOVERNANCE

Committees of the Board of Directors

[GRI 2-9] In order to improve the efficiency of the decisions taken by the Board of Directors, ensure the preliminary examination and study of the most essential matters

in the Company's activities, and prepare the appropriate recommendations, the Board of Directors has set up the following standing committees:

• Strategic Planning Committee
• Audit Committee
• Human Resources, Remuneration, and Social Policy Committee

The structure of committees is built based on the most important areas of the Board's activities. Their composition is formed to ensure the most efficient use of the committee members' expertise and professional experience.

The committees of the Board of Directors report

to the Board and serve as its advisory bodies. The resolutions of the committees are advisory in nature.

Due to the need for a comprehensive discussion

of the issues under consideration, the committees are composed of Board members with specialized knowledge and skills. Committee composition is balanced to ensure optimal application of the members' competencies

and professional experience.

If necessary, a committee chair may engage experts

and consultants to work with their committee on a temporary or permanent basis with no right to vote during decision- making on issues within the committees' remit.

The status, goals, objectives, and functions

of the committees, as well as the procedures for their composition, formation, and operation are set out in Regulations on Committees, which are approved by the Company's Board of Directors and published on NLMK's official website.

In order to balance approaches to problem solving with respect to risk management and the protection

of shareholders' interests, in two out of three committees the majority of members, including their chairpersons, are independent directors.

STRATEGIC PLANNING COMMITTEE

The Strategic Planning Committee provides support

to the Board of Directors in resolving matters that involve enhancing the efficiency of the Company's activities

in the long-term and promoting asset growth, profitability, and investment appeal. The committee defines the goals for minimizing the Company's environmental and climate impact, including greenhouse gas emissions, and reviews and approves the appropriate investment programme.

The Strategic Planning Committee includes one independent director. All members of the Committee, including those who are not members of the Board

of Directors, have the right to vote on the Committee's agenda items.

In 2022, one meeting of the Committee was held, where decisions related to improving operational efficiency and the R&D projects portfolio were made.

AUDIT COMMITTEE

[GRI 2-5] The Audit Committee's main purpose is to draft and submit recommendations to the Board of Directors

in order to ensure its effective involvement in the supervision of the Company's financial and business activities, including matters related to:

• Conducting an annual independent external audit
  of NLMK's accounting (financial) statements, the quality of the auditor's services, and their compliance with
  the requirements of auditor independence.
• The independent assessor's evaluation of property in cases stipulated by Russian legislation and in other cases.
• The Company's sustainable development disclosure. Since 2019, one of Committee's responsibilities is monitoring results and considering reports related to sustainable development, including matters of environment
  and occupational health and safety. The Committee analyses, evaluates the Company's information disclosure system on sustainable development issues, and monitors its completeness, accuracy, and reliability.
• The Audit Committee is chaired by an independent director. Most of the Committee members are also independent directors. In addition, the Audit Committee includes independent directors with a background
  in the preparation, analysis, evaluation, and audit of accounting (financial) statements.

In 2022, the Audit Committee held four scheduled meetings, another four unscheduled meetings were held due to geopolitical changes in order to intensify cooperation with the management in managing new challenges for

the Company.

The Committee reviewed and passed resolutions on the following key issues:

• Accounting (financial) statements with respect
  to the consideration of the relevant draft documents.
• Risk management, internal control, and corporate governance, as well as other reports related to asset protection and management of the Company's significant risks. Consideration of the report on the statistics
  of hotline requests.
• External and internal audits, including non-audit services provided by the independent auditor

The Audit Committee also had meetings with the external auditor without the management present.

Risk management and internal control

The Audit Committee exercises control over the reliability and efficient functioning of the risk management, internal control, and corporate governance systems, and the drafting of proposals on their improvement. In fulfilling its oversight responsibilities, the Committee reviews reports on the performance of the internal control and risk management system prepared by the external auditor, internal auditor, and the Group's other bodies responsible for fulfilling the risk management, oversight, and compliance functions. The Audit Committee holds regular meetings with the teams of the independent auditor, the Audit Director, and other Company management.

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CORPORATE GOVERNANCE

Internal Audit

The Audit Committee is responsible for monitoring

the operation and evaluating the efficiency of the internal audit function. The Committee ensures this by discussing significant matters with the Audit Director, approving the annual internal audit plan, and reviewing reports

on conducted audits, which contain the main conclusions and recommendations, as well as the report on the activities of the Audit Department. The Audit Committee, which assessed the effectiveness of the internal audit, was satisfied with the quality of the services provided by it.

Reports on monitoring the execution of the Internal Auditor's recommendations are submitted to the Committee to ensure that the actions taken by the executive management are efficient.

In an effort to ensure independence, the Audit Director reports directly to the Board of Directors. The Audit Director has the right to raise any matter that they deem to be important, and meets with the external auditors as required.

The Internal Audit undergoes regular quality self- assessment, and independent external assessment.

The results of these assessments are submitted to the Audit Committee for consideration.

External audit

Technologies of Trust Audit JSC (formerly PricewaterhouseCoopers Audit JSC, hereinafter TeDo) is the Group's auditor. From time to time, Group entities engage TeDo for the provision of non-audit services. NLMK management has concluded that such services do not impair the auditor's independence and are not related to financial statements preparation. In 2022, the share of non-audit services was at an acceptable level of no more than 13%

of the total services provided by TeDo. TeDo regularly rotates key audit staff (at least once every seven years) to ensure compliance with independence requirements.

HUMAN RESOURCES, REMUNERATION

AND SOCIAL POLICY COMMITTEE

[GRI 2-20] The main purpose of the Human Resources, Remuneration and Social Policy Committee is conducting preliminary reviews and developing recommendations for the Board of Directors to ensure the efficient operation of its decision-making on the following issues:

• Appointment of members of the Company's management and other key employees and the training of succession candidates for their positions.
• Performance assessment of the Company's management and other key employees.
• Remuneration of the Company's management and other key employees.
• Social policy of the Company.

The Human Resources, Remuneration and Social Policy Committee is chaired by an independent director. Most of the Committee members are also independent directors. The Human Resources, Remuneration and Social Policy Committee includes an independent director who is knowledgeable in matters concerning motivational management and personnel administration.

In 2022, the Human Resources, Remuneration and Social Policy Committee continued to analyse and evaluate

the implementation of the Company's HR Strategy,

the performance of key executives, and the execution of the Committee's instructions.

The Committee continued its systematic succession planning efforts for the position of CEO. Several documents were approved and recommendations were given to the Board of Directors, including those related to the Board of Directors' succession.

Corporate Secretary

NLMK's Corporate Secretary ensures day-to-day interaction with shareholders, coordinates the Company's activities

to protect shareholders' rights and interests, and supports the efficient operation of the Board of Directors.

The Corporate Secretary's activities, rights, and obligations are fixed in the Regulations on the Corporate Secretary, developed in accordance with the recommendations

of the Corporate Governance Code of the Bank of Russia. The Corporate Secretary is also in charge of the induction

of newly elected members of the Company's Board of Directors, corporate governance in the Group's subsidiaries and affiliates, working with insiders, and registering affiliates of the Group's companies. All these functions enable the establishment

of a dynamic and balanced corporate governance system that ensures efficient interaction between the Company's shareholders, Board of Directors, and management.

Functionally subordinate to the Board of Directors and administratively to NLMK's CEO, the Corporate Secretary is appointed and dismissed by the CEO based on a resolution from the Board of Directors.

The Corporate Secretary oversees the Corporate Secretary's Office.

Management Board

MANAGEMENT BOARD PROCEDURES

The Management Board is in charge of managing

the Company's day-to-day operations and implementing the approved strategy and specific resolutions of the General Meeting of Shareholders and the Board of Directors.

The main objective of the Management Board is to ensure that the Company is operating efficiently. In its efforts to reach this objective, the Management Board is guided by the following principles:

• Efficient and objective decision-making that favours the interests of the Company and its shareholders
• Fair, timely, and efficient execution of the resolutions of the General Meeting of Shareholders and the Board of Directors
• Cooperation with trade unions of the Company's employees to engage with the employees
• Cooperation with government agencies and local authorities on the most important
  issues

The list of issues in the Management Board's remit is regulated by the NLMK Charter andRegulations on the Management Board, which are available

on the Company's website. [GRI 2-12]

NLMK Group's Management Board consisted of seven members as of 31 December 2022.

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CORPORATE GOVERNANCE

ACTIVITIES OF THE MANAGEMENT BOARD IN 2022

The Management Board functions in accordance with

the approved meeting plan or as necessary. CEO determines the format of the Management Board's meetings.

In 2022, the Management Board held 37 meetings, including 11 by absentee ballot. The following issues were considered at these meetings:

• Achievement of the Group's targets and status
  of the development programme on occupational health and safety
• Execution of NLMK Group's budget
• Implementation of the strategy regarding operational efficiency, investment programme, and sales portfolio management
• HR and Social Strategy implementation
• Development programmes for functional areas and production facilities
• Development avenues and projects
• The Group's participation in and withdrawal from other companies, defining position on participation of subsidiaries in other companies
• Recommendations to the governance bodies of subsidiaries

NLMK Management Board members had no conflict of interest in 2022. [GRI 2-15]

The Company has no particular share ownership requirements for the CEO (Chairman of the Management Board) and other Management Board members.

CEO (Chairman

of the Management Board)

The CEO (Chairman of the Management Board) is the permanent sole executive body, whose main responsibility is to manage the Company's day-to-day activities, arrange for the execution of resolutions passed by the General Meeting of Shareholders and the Board of Directors, organize the work of the Management Board, and ensure the timely adoption of resolutions by the Management Board.

The rights and obligations of the CEO are outlined

in the existing legislation of the Russian Federation as well as the CEO's contract with the Company.

The CEO is elected by the General Meeting

of Shareholders for a period lasting until the next Annual Meeting unless otherwise stipulated by the resolution of the General Meeting of Shareholders.

According to the prevailing corporate documents, the CEO cannot simultaneously be the Chairman of the NLMK Board of Directors.

Remuneration policies

for members of governing bodies

The level of remuneration the Company pays to members of governing bodies is sufficient to attract, motivate, and retain persons with the expertise and qualifications NLMK seeks.

APPROACH TO REMUNERATION

AND REIMBURSEMENT PAID TO MEMBERS

OF THE BOARD OF DIRECTORS [GRI 2-19][GRI 2-20]

The Company's remuneration policy for members

of the Board of Directors serves to align the financial interests of directors with the long-term financial interests of shareholders.

Members of the Board of Directors are paid remuneration during the period in which they perform their duties,

and they also receive reimbursement of expenses related to the performance of their duties. The Regulations

on Remuneration of Members of the Board of Directors, approved by the General Meeting of Shareholders, establish the amount of remuneration and determine the terms

and conditions as well as the procedure for remuneration payment. The Regulations are available on the Company's official website.

The Regulations contain transparent mechanisms for determining the amount of remuneration paid to the Board members and govern all types of compensation, benefits, and privileges offered to them.

Remuneration is paid to members of the Board of Directors for exercising their rights and duties reasonably and faithfully in the interests of the Company. It consists of basic remuneration and a bonus.

Members of the Board of Directors are entitled to basic remuneration if they participated in over half of the Board meetings over the reporting period.

Members of the Board of Directors are also paid for chairing the Board, as well as for being a member or Chair of one or more Board committees.

A member of the Board of Directors may receive a bonus that shall not exceed the amount of two basic remuneration packages. The amount of bonuses is determined based

on the member's contribution to the work of the Board

of Directors and its committees and the recommendations of the Human Resources, Remuneration, and Social Policy Committee.

Remuneration is paid based on a resolution

of NLMK's General Meeting of Shareholders. Regulations on the Remuneration for Members of the NLMK Board of Directors outline the rules for reimbursing Board members' work-related expenses. The following expenses are considered to be reimbursable:

• Transportation expenses of Board members incurred while travelling to and from meetings
• Accommodation costs incurred while attending meetings
• Representation expenses
• Costs associated with obtaining the professional advice of experts on issues under consideration at Board meetings

The maximum amount of a Board member's expenses reimbursed by the Company during the reporting period is determined by a resolution of the General Meeting

of Shareholders and shall not exceed the amount of the basic remuneration package. Compensation shall only be paid

if the Board member participated in more than half of its meetings.

The Company does not have other forms of remuneration, including short-term or long-term incentive programmes that depend on financial performance, or stock option programmes.

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CORPORATE GOVERNANCE

APPROACH TO REMUNERATION

AND REIMBURSEMENT PAID TO MEMBERS

OF THE MANAGEMENT BOARD AND OTHER TOP EXECUTIVES [GRI 2-19]

The material interest of members of the Management Board in achieving the Company's strategic goals is ensured

by short-term and long-term incentive systems. Short-term motivation system is based on the current system of key performance indicators (KPIs). The amount of bonuses paid to the members of the Board depends on their KPIs. The variable part of remuneration for Management Board members amounts to approximately half of the total yearly remuneration.

The KPIs used to determine rewards for senior management are related to NLMK's financial and operating performance and are intrinsically linked to shareholder value. They include operational performance, social responsibility and occupational safety, ecology and energy efficiency,

and organizational development indicators.

KPIs for the CEO include annual financial indicators, as well as long-term indicators of NLMK's strategy implementation, such as achieving the sustainable development targets. For example, the weight of the LTIFR indicator is 10% of the CEO's annual compensation.

Top executives including heads of NLMK Group's main production sites, have KPIs related to reducing air emissions and СО2 emissions, as well as increasing the share of recycled waste. In addition, energy efficiency KPIs are set for

the relevant executives, including heads of sites and the Vice President for Energy and Environment. For top executives, KPI data is recorded as financial gains from implementing the corresponding operational efficiency projects. The KPIs of all top managers include targets for the injury rate reduction and OHS-related indicators.

The Company also has a long-term incentive programme for members of the executive bodies and other senior executives. The current programme adopted in March 2019 covers the 2019-2023 strategic cycle.

Long-term incentive programme payments depend on attainment of NLMK's strategic goals on the five-year horizon. 50% of the payment depends on achieving structural effect of the Company's strategy, while the other 50% -

on achieving the target value of the Company's EBITDA over the five-year horizon.

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CORPORATE GOVERNANCE

COMPLIANCE AND CORPORATE ETHICS

NLMK Group's Code

of Corporate Ethics [GRI 2-23]

The Company believes that by communicating honestly and openly with business partners and the public, adhering to best practices in corporate governance and business ethics norms, and maintaining its corporate culture, NLMK Group reinforces its business reputation and position

on the global steel market. With this in view, NLMK Group not only observes the applicable legislative provisions, but also establishes and adheres to additional ethical principles and rules of business practice.

The Code of Corporate Ethicsapproved by the Board of Directors in 2018 is a public document available

on the Сompany's official websites.

All Company employees review the Code when joining the Company and undergo regular training.

NLMK Group developed an on-line course on the Code and the Anti-CorruptionPolicy, which over 5,000 Company employees took in 2022. Knowing and complying with

the requirements of the Code is an obligation for all Company employees, which is included into all job descriptions

as a standard requirement. Moreover, questions assessing knowledge of the Code were included in the assessment

of employees' professional competencies, which is conducted once every three years. In 2022, 908 employees were assessed for the Corporate Business Conduct crosscutting competence.

The Company also expects adherence to basic values and principles of good business conduct not only from its employees, but also from its business partners. In 2022, the Company approved the Partner Code of Business Conduct, which sets out the Company's main requirements for counterparties in terms of respect for human rights,

Basic ethical values set in NLMK Group's Corporate Ethics Code

Human rights	NLMK Group acknowledges the inviolability of human rights, prohibits human rights violations,
	and builds up its decision-making system in line with the NLMK Group Human Rights Policy
	approved by the Chairman of the Management Board in 2018
Compliance with	NLMK Group and its employees meet the requirements of Russian and other applicable legislation,
the legislation	industrial and corporate regulations, standards, and procedures
Transparency	NLMK Group honours its obligations towards its counterparties and employees, maintains
and honesty	its reputation as a reliable business partner, and ensures the transparency of transactions
	and operations
Efficiency	NLMK Group strives for continuous improvement of the efficiency of its business, e.g. by improving
	the corporate governance system, streamlining production processes, and introducing innovative
	technologies
Mutual respect	NLMK Group employees are one of the Company's basic values, with their competence, trust,
and professionalism	friendliness, cooperation, and team spirit enabling the Group to reach its objectives and ensure
	sustainable development
Safety and social	NLMK Group ensures that all its production processes comply with occupational health and safety
responsibility	requirements, adheres to the policy of social responsibility before its employees and the population
	of the regions where the Company operates, and takes environmental protection measures

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CORPORATE GOVERNANCE

anti-corruption measures and preventing conflicts

of interest, fair competition, labour protection and industrial safety, as well as other requirements in the most significant areas for the Company. Six webinars were held in 2022, which were attended by 200 representatives of the Company's suppliers and contractors in order to inform the partners about the requirements adopted by the Company.

The Company's business partners familiarize themselves with the provisions of the Code during qualification, counterparty selection, and contract conclusion. Thus, in 2022, over 2,000 organizations confirmed their familiarization with the requirements of the Partner Code of Business Conduct and compliance with it.

In addition, the Group requires its business partners to sign the Anti-Corruption Provisions adopted

in the Company.

Compliance system

In 2022, the Company continued actively developing its compliance system, which aims to ensure that NLMK's operations comply with applicable legislation and internal documents.

The unified compliance system covers the following areas:

• Anti-corruptioncompliance
• Antitrust compliance
• Personal data protection
• Insider compliance
• Intellectual property risk management

Established in 2020, the Compliance Unit implements anti-corruption and antitrust compliance programmes and coordinates the introduction and operation

of the compliance system as a whole. The Compliance Unit reports directly to the Vice President for Legal Issues and Risk Management.

Compliance related to personal data, insider information legislation, and intellectual property risk management

is curated by the corresponding functional areas. Each

of them implements its own system of measures for managing corresponding compliance risks.

Regardless of the area, NLMK Group's compliance

system particularly emphasizes measures for developing a compliance culture where employees act ethically

and in good faith, both within the Company and in relations with other stakeholders. To this end, the Company introduced an independent compliance hotline available to any interested party willing to report a non-compliance.

NLMK GROUP'S INDEPENDENT

COMPLIANCE HOTLINE.

[GRI 2-26] Since 2022, the independent compliance hotline covers not only Russian but also foreign sites of NLMK Group. Highly reputable operators both in Russia and abroad are engaged as independent hotline operators.

In 2022, internal documents were developed for both Russian and foreign sites of NLMK Group fixing

the operation procedure for independent compliance hotline channels including non-retaliation guarantees. [GRI 2-25] In line with the specified documents:

1. The hotline accepts information about any event within NLMK Group's activities that are considered illegal by the caller in good faith including violations of applicable law, and any types of corruption and fraud, as well as violations of the Company's corporate documents, including the Corporate Ethics Code, Anti- Corruption Policy and Human Rights Policy.
2. Any caller can contact the compliance hotline including employees of NLMK Group sites, counterparties and any third parties.
3. For each piece of information received by the compliance hotline, a reliability check is carried out; the results of such checks are recorded in a dedicated information system and brought to the attention of the caller.
4. The Company strictly adheres to the non-retaliation principle: anyone who has reported a violation in good faith is protected from any form of pressure, harassment, and discrimination.

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CORPORATE GOVERNANCE

Independent compliance hotline statistics

Reasons for whistleblowing

4% 3%

21%9%

3%140 18%

12%

16% 14%

Conflict of interests Sales procedures Security and access control

Violations of ethics and business conduct Salary

Other labor issues Procurement procedures

Other corporate procedures violations Requests for clarification

Confirmed and non-confirmed cases (for 105 calls with completed investigation excluding the clarification requests)

Non-confirmed	16

Confirmed					14	13
					11
9
7	7			6			7
					5
	2	2	2					2	2
				0
Procurement	Security and	Sales	Conflict	Violations of ethics	Salary	Other labor	Other corporate
procedures	access control	procedures	of interest	and business		issues	procedures violation
					conduct

Anti-corruption practice (compliance)

In its day-to-day operations, NLMK Group is guided by high ethical standards, principles of business transparency, and zero tolerance for corruption in any form or manifestation, as well as the stipulations of international and regional documents, such as the United Nations Convention against Corruption. The Company engages

in targeted work to prevent and counteract corruption and fraud. The matter of timely detection and response to wrongdoings is in the area of constant attention

of the Company's management.

NLMK Group's anti-corruption compliance programme aims to prevent and detect corruption in due time

by integrating and developing:

• The internal control system
• The corporate culture of zero tolerance for corruption
• The effective use of feedback mechanisms in the Company for reporting instances of corruption

The new version of the Anti-Corruption Policy approved in 2021 by the Board of Directors bans financing political parties and other participation of the Company in political activities.

The Compliance Unit is responsible for ensuring that employees are aware of the anti-corruption requirements

by regularly publishing them on the internal portal

and in printed editions of the NLMK Company corporate magazine and Nash Kombinat (Our Plant) corporate newspaper, publishing printed leaflets on information board at production sites, and also in the form of videos with the participation of senior management on NLMK TV.

Thus, in December 2022, the Company's corporate portal hosted a competition for anti-corruption interpretations

of paintings by artists and an anti-corruption quiz dedicated to the UN International Anti-Corruption Day.

Risks associated with corruption and fraud are identified, analysed, and assessed at all levels of management and at all Group's companies [GRI 205-1].

Thus, every two years the Company assesses corruption

risks inherent in certain positions/powers of employees. After the assessment, a list of activity areas/positions of employees that carry risks of corruption and fraud is compiled. Exposed employees are required to declare conflicts of interest or absence of such conflicts annually including confirmation of compliance with the anti-corruption requirements

in the previous period, and passing additional training on the Anti-Corruption Policy.

The distribution of responsibilities and powers between the Company's units in the anti-corruption system

is enshrined in the Appendix to the Anti-Corruption Policy. The Audit Committee of the Board of Directors, the CEO

(Chairman of the Management Board) and the Risk

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CORPORATE GOVERNANCE

Management Committee of the Management Board all play a key role in establishing an operating anti-corruption system that functions efficiently.

In addition, the Audit Committee regularly considers the results of specific processes audits including

the corruption and fraud risks assessment. The Risk Management Committee deals with issues of corruption risk identification and assessment, approval and control of the efficiency of corruption risk management measures. In 2022, the Risk Management Committee approved a new version of the list of activity areaspositions of employees exposed to corruption and fraud risks.

CEO appoints the person responsible for anti-corruption in the Company and is responsible for the overall control

of the implementation of anti-corruption measures. The Vice President for Legal Issues and Risk Management has been appointed as the person responsible for anti-corruption activities. Compliance Unit directly reports to the Vice President and takes responsibility for implementation of anti- corruption programmes in line with the Anti-Corruption Policy and the annual anti-corruption compliance action plan. The Compliance Unit interacts with related structural units responsible for security, human resources and personnel management, risk management and internal audit.

INTERNAL CONTROL AND PROCEDURES FOR MANAGING CONFLICTS OF INTEREST

Corruption and fraud risks at the level of specific processes are managed as part of the procedures of the overall internal control system in the Company, which include procedures at the hiring stage, checks and monitoring of counterparties in procurement activities, when effectuating payments,

in processes related to event organization and hospitality expenses, and other processes.

The assessment of corruption risks in third-party relations is part of the contractor and supplier qualification procedure. All qualified partners of the Company confirm their familiarization with the requirements of the Partner Code of Business Conduction and the Anti-Corruption Policy and undertake to comply with the above.

In 2022, audits of the Group potential counterparties resulted in a rejection of close to 400 counterparties during the qualification procedure due to non-compliance with corporate security requirements. NLMK Group's contract approval process was supplemented with compliance control to ensure that the Company contracts contain the anti- corruption provisions.

In 2022, a new Regulation on the Conciliation Committee was approved. The Committee includes representatives

of the Compliance, Security and Risk Management Units and is chaired by the Legal Affairs Director. An employee from the Compliance Unit was appointed Secretary

of the Conciliation Committee. The Committee makes decisions on counterparty's qualification status based on, among other things, confirmed violations of the requirements adopted by the Company in the field of corporate ethics

and anti-corruption.

MANAGING CONFLICTS OF INTEREST

In 2022, a new version of the Regulations on Preventing, Disclosing and Managing Conflicts of Interest was developed fixing the procedure for conflicts of interest declaration for the following categories of employees:

• New employees during probation
• Employees exposed to corruption and fraud risk (annually)
• All other employees in the event of a situation stipulated by the Regulations (self-declaration).

As part of the declaration, employees must confirm the presence or absence of situations bearing the risk of conflicts of interest listed in the Regulations. These situations include, but are not limited to, ownership of shares or stakes in the charter capital of counterparties of NLMK Group companies. In accordance with the new Regulations on Conflict of Interest, the list of situations subject

to reporting has been expanded to include the presence of any related parties in NLMK Group's counterparties.

In addition to the list of situations to be disclosed by all employees, members of the Company's governing bodies additionally disclose information about participation

in the management bodies of any third-party organizations. All types of declarations are carried out in the Conflict

of Interest Declaration e-service. As part of these procedures of declaring conflicts of interest, employees also confirm that they adhere to the NLMK Group Corporate Ethics Code, Anti-Corruption Policy, and Regulations on Preventing, Disclosing and Managing Conflicts of Interest.

In 2022, more than 7,500 employees filled in the conflict of interest declaration and certified compliance with

the internal documents, including 100% of employees classified as members of the Company's governing bodies.

As a result, 32 cases of actual conflict of interest and 74 cases of potential conflict of interest were detected.

As of the reporting date, 26 out of 32 cases of actual conflict of interest were settled; for the rest, settlement

is in progress. All cases of a potential conflict of interest are monitored in the security service information system.

FOSTERING ANTI-CORRUPTION CULTURE [GRI 2-24]

The Company dedicates particular attention to integrating a culture of zero tolerance for corruption via a programme for training and informing employees about NLMK Group's behaviour standards, including management example ("tone of voice"). In 2022, the Company management made five communications about anti-corruption and countering fraud, including the addresses of the Vice President for Procurement, Corporate Secretary, the Vice President

for Operations Digitalization, and the Vice President for Legal Issues and Risk Management. Information about the Company's behaviour standards is communicated to employees via the following channels:

• The welcome email that every new employee receives
• Publications in blogs and the feed on the internal portal
• Videos on NLMK TV
• Publications in the NLMK Company corporate magazine and Nash Kombinat corporate newspaper
• Speeches by representatives of the Compliance Unit at strategic sessions.

In 2022, over 30 publications on compliance and anti- corruption were made through corporate communication channels.

Moreover, all employees of the highest management level are required to be familiarized annually with the Company's anti-corruption policies and practices as part of the annual conflicts of interest declaration procedure. [GRI 205-2]

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CORPORATE GOVERNANCE

In addition to informing, the Company also has

a programme for training employees in anti-corruption requirements that covers:

• Employees exposed to corruption risks (trained annually, alternating webinars and e-courses)
• All other managers and experts (take the anti-corruptione-course every other year). In 2022, 5,115 exposed employees (11% of the average headcount) took the anti- corruption e-course.

In addition to developing a compliance culture

in the Group, NLMK is also taking steps to inform and train its partners in the anti-corruption requirements that

the Company abides by. In 2022, training on anti-corruption requirements in the form of trainer-led webinars was held for 256 representatives of 183 business partners of the Company.

[GRI 205-2]

Employee training in 2022 by regions and management status

3%

5%

4%

8%

31%

8%5,115 people

13%69%

60%

Lipesk Region		White collars
Sverdlovsk Oblast		Managers

Belgorods Region

Moscow

Altay Krai

Kaluga Region

Other: 32 regions of Russia

EFFICIENCY ASSESSMENT AND AUDIT

The Compliance Unit regularly assesses the efficiency

of the anti-corruption compliance programme and provides information to the person responsible for anti-corruption efforts. Reports on the overall operation of the compliance system are presented to the CEO annually.

The anti-corruption and fraud system efficiency is assessed during internal audits. Thus, in 2022,

the Internal Audit conducted audits of individual processes of the Procurement and Logistics Functional Areas

and issued recommendations aimed at improving

the processes, including, among others, the ones combating corruption and fraud.

In 2022, external experts audited the Company's anti- corruption compliance system. As a result of the audit, NLMK Group was rated as Class A2 - Companies with a high level of anti-corruption compliance.

Business partners' training in 2022 by regions

4045

183

12 business partners

1433

		39
	Lipetsk Region			Sverdlovsk Oblast
	Moscow			Saint Petersburg
	Belgorod Region			Other: 24 regions of Russia

Antitrust compliance

[GRI 206-1] In 2022, the Company continued developing the system ensuring compliance with the requirements

of an antimonopoly legislation (antitrust compliance) to address the development of the regulatory law enforcement practices.

Key changes in 2022:

• Head of the Compliance Unit was appointed responsible for antitrust compliance in the Company
• A procedure was introduced to identify and address cases of potential exchange of information with the Company's competitors to prevent the risks of cartel agreements
• Over 500 employees of the dedicated departments were trained through trainer-led webinars in line with the previously approved training programme on antimonopoly requirements

Monitoring of actual changes in antimonopoly legislation and law enforcement practice was introduced with four reference and analytical reports prepared and brought

to the attention of employees of the dedicated departments.

Plans for 2023 and the medium term

In 2023, the Company plans to continue developing its compliance system, including compliance programmes for specific areas. The planned actions include:

• Approval of the new Code of Ethics and Business Conduct by all NLMK Group companies
• Implementation of training programmes and informing employees of all NLMK Group companies about
  the ethical standards adopted by the Group
  and the operation of compliance hotline channels
• Improvement of procedures related to the qualification and selection of counterparties
• Further development of the Company antimonopoly compliance programme
• Implementation of new intellectual property protection compliance programmes

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CORPORATE GOVERNANCE

OPERATIONAL CONTROL AND RISK MANAGEMENT

As a major international steel producer, NLMK is subject to a variety of operational risks, which could have a negative impact on the Group's business and on our stakeholders

if materialized. In order to safeguard shareholder value and ensure sustainability, we employ the latest operational control and risk management practices and methods. NLMK Group's approach to operational control is based on a clear segregation of authority and functions between the entities involved in its Internal Control and Risk Management System; it also provides for 'three lines of defence'

and four levels of management. Control procedures apply to the Group's Russian and international operations, and are an integral component of key corporate decision-making activities and processes.

Internal Control

and Risk Management System

The internal control and risk management system employed by NLMK is designed to ensure reasonable certainty that the Group's strategic and operational goals will be achieved, to create and protect value for the Group, and to ensure sustainable development by rapidly identifying, assessing, and effectively managing risks and opportunities. The NLMK Board of Directors, which determines the principles and approaches to the organization of the risk management system and regularly reviews

Division of internal control and risk management functions among corporate governance system participants

reports on the status of the Company's risks, plays a key role in the risk management process. The Internal Control and Risk Management Department functions as a separate structural unit within NLMK. Its goals and objectives include analysing risks associated with key business processes, ensuring that risk management processes are effective, implementing monitoring procedures, and developing

a corporate culture of risk awareness.

Our approach to risk management

Risk management is a continuous process that aims to reduce risk to an acceptable level and prevent events that could have a negative impact on NLMK achieving its business goals. The Group is committed to effectively and proactively managing risks and opportunities on a day-to-day basis and to the ongoing development of a risk-awareness culture.

NLMK's internal control and risk management system was developed to take into account the challenges posed by the external environment and in accordance with the principles set forth in international risk management standards, including ISO 31000:2018 and COSO ERM:2017. NLMK's key internal document in risk management

is the Internal Control and Risk Management Policy, approved by the Board of Directors. Internal documents have also been developed for managing individual risk categories, which are of relevance to the Group.

PARTICIPANT	KEY FUNCTIONS
Level I
Board of Directors	$	Defines principles for and approaches to the organization of the internal control and risk
		management system
Audit Committee	$	Monitors the reliability and effectiveness of the internal control and risk management system
	$	Monitors procedures to ensure the Group's compliance with legislative and trade exchange
		requirements, and with corporate ethical standards, rules, and procedures
	$	Carries out analysis and assessment of execution of the conflict of interest management policy
	$	Oversees compliance with policies and operational controls over environmental and social risks,
		as well as occupational health and safety risks

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CORPORATE GOVERNANCE

PARTICIPANT

KEY FUNCTIONS

Level 2

Management Board	$	Determines risk management strategy and approves critical risk management measures
	$	Ensures the effective functioning of the Internal Control and Risk Management System
Management Board Risk	$	Approves the principles, strategy, and regulatory instruments for risk management processes
Management Committee		and the internal control system
	$	Regularly reviews the Company's risk map (a list of significant risks, indicating their weight
		and trends for a certain period) and ensures the overall monitoring of the implementation of risk
		management measures
	$	Approves and performs general monitoring of risk management measures
	$	Regularly reviews the results of an analysis and assessment of the internal control system,
		approves and ensures the general monitoring of the implementation of measures to enhance
		the system
	$	Ensures the overall organization of activities to enforce the Corporate Ethics Code and Anti-
		corruption Policy
	$	Regularly reviews reports on anti-corruption issues
	$	Coordinates the work of subdivisions participating in the risk management process and internal
		control system
Investment Committee	$	Provides general control over the magnitude of risks and over the selection, implementation,
		and inclusion into the budget of investment project risk management measures
Level 3

$ Internal Control

and Risk Management Department

$ OHS (see the OHS section for more details)

$ Environment and Climate

(see the Environment

and Climate Change sections for more details)

$ Legal Support

$ Compliance (see

the Compliance section for more details)

$ Corporate Security $ Financial Controlling

$ Information Security (see the Information Security section for more details)

$ Ensures assessment and regular monitoring of the level of risks taken and assessment of the efficiency of management activities

$ Coordinates and provides methodological support for risk management process

$ Drafts regulatory and methodological documents concerning risk management and internal control

$ Records and processes incidents associated with deviations in the internal control system and risk management, plans and monitors corrective measures

$ Systematically looks into the risk coverage by the internal control system in cooperation with line managers, plans and monitors the implementation of corrective measures

$ Builds system for effective internal communication about risks $ Increases the Company's resilience to business interruptions

$ Ensures effective response and business recovery after interruptions

$ Ensures compliance of NLMKs operations to the relevant legislation and internal documents $ Promotes and assesses the effectiveness of measures to counteract corruption and fraud

implemented in accordance with the Groups anti-corruption policy $ Creates a risk-awareness culture

Level 4

Risk owners (business subdivisions)

$ Risk identification

$ Implement risk management measures $ Monitor key risk indicators (KRIs)

Internal Audit

$ Assesses the reliability and effectiveness of internal control and risk management and evaluates the corporate governance system with a view to providing independent and objective guarantees and consultations to the Board and the CEO

$ Provides advice and recommendations, promotes knowledge sharing

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CORPORATE GOVERNANCE

The Risk Management Committee of the Management Board is an important link in the internal control

and risk management process. During its meetings, it conducts a detailed review of changes in the Сompany's risk profile, issues related to the functioning of the risk management system, and methodological approaches

to risk management. The Management Board and the Board of Directors review the map of significant risks to which NLMK is exposed on an annual basis and take into account information on current and emerging risks in the course of decision-making.

NLMK's functional units work on identifying

and responding to risks that are relevant to their operations with methodological support from the Internal Control and Risk Management Department. The Department monitors the effectiveness of the measures used to manage risks as part of an analysis of management reporting from risk-owning functional units; this includes operational data at the business process level on current and planned KRI values, the status of risk management measures, and risks that have materialized.

NLMK is committed to the continuous development of its corporate risk management culture, which aims to identify and respond to risks in a timely and effective manner. With this aim in mind, the management regularly emphasizes the importance of risk management in internal corporate communications. Systematic training in managing individual risk categories and integrating risk management into

the daily activities of the Group's also help to develop a risk- awareness corporate culture.

Assessing the probability and impact of risks is one

of the most crucial factors in making informed management decisions. To this end, NLMK utilizes modern risk analysis practices and tools. By applying specially developed methods for assessing individual risk categories, anticipated losses and the probability of risk materialization can be determined with a very high degree of precision, and effective risk management measures can be developed.

The majority of significant risks to which NLMK

is exposed are assessed on a quantitative basis, which leads to better-informed management decisions. The Group assesses significant risks using scenario analysis models and stress testing.

Risk management requires specific knowledge and often involves data processing and modelling. In order to cope with specific local tasks in business units, the Risk

Lab competence centre was created in 2020, which develops innovative methods and tools for quantifying risk and making decisions in conditions of uncertainty to contribute to the continuous improvement of the risk management methods.

The Company regularly monitors the effectiveness of its internal control and risk management system and implements measures to improve it.

Risk map

The Company has developed a Risk Map to rationalize its approach to identifying, analysing, and monitoring risks and drawn up a list of salient (critical) risks. This list covers both financial and non-financial risks, which, according to the Group's estimations, are highly likely to materialize or may have a big impact on the Company's operations. Analysing critical risks and monitoring the implementation of measures to manage risks of this kind are a continuing priority for the NLMK Group management team. The Risk Map is regularly updated to reflect the strategy, changing operations, and external context.

In 2022, the major changes in the Risk Map were related to external factors: supply continuity risks increased triggering risk exposure of the investment projects management and IT&IS. The Company developed a list of measures to ensure business continuity, and analysed the IT&IS risk profile. The Group continues to pay particular attention to occupational safety and the social well-being of employees.

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CORPORATE GOVERNANCE

Significant risks

OCCUPATIONAL AND INDUSTRIAL SAFETY RISKS →1

Risks of industrial and fire safety, risks of emergencies, occupational risks.

Why is this risk important?

NLMK Group is a manufacturing company. The Company's activities involve operating hazardous production facilities and using a large amount of mechanical equipment, which creates risks related to the health of employees and contractors (one of the key human rights risks), as well as the risks of accidents, fires, equipment breakdown, the decay of buildings and structures, floods, and other natural disasters.

Potential risk factors	Current risk management measures
$	Design and operational	$	In-depth survey of buildings and structures and development of relevant repair programmes
	errors	$	Industrial safety expert review process
$	Poor and untimely	$	Fire safety programme based on the results of an external fire risk assessment
	maintenance	$	A new format of fire work permit, including risk assessment and control at all stages of work
$	Hidden defects	$	Internal cross-audits on fire safety
		$	Regular audits of the state of production facilities (observations, inspections, surveys)
		$	Updated cardinal safety rules for employees and contractors
		$	New injury prevention programmes, including LOTO (the procedure for using energy sources
			for the safety of workers during maintenance, repair or cleaning of equipment), safety at height,
			eye protection, etc.
		$	Pre-work hazard analysis and dynamic risk assessment
		$	Developing a response system for emergency medical care, medical evacuation,
			first aid, and resuscitation, including employee training
		$	Introducing electronic work permits for hazardous operations
		$	Mobile app for risk registration

HEALTH & SAFETY RISKS →

Risks of occupational diseases, epidemiological risks

Why is this risk important?

Due to the specifics of the company processes, the operations at the Group's sites are associated with the impact of harmful factors. In organizing production, the company prioritizes the health and safety of its employees above all. The management of NLMK monitors and reduces risks associated with hazardous working conditions, increasing safety levels at the sites of every NLMK company year-on-year.

Potential risk factors	Current risk management measures
$	Harmful working	$	Early diagnosis and prevention of diseases, development of a conscious attitude of employees
	conditions		to their health, voluntary medical insurance, insurance against accidents and critical illnesses,
$	Poor quality of mandatory		health resort treatment
	medical check-ups,	$	Ensuring the availability of high-quality food and dietary regime
	emergency medical aid,	$	Upgrading corporate medical institutions (purchase of medical equipment,
	first-aid training		training of medical personnel)
$	Seasonal epidemiological	$	Voluntary vaccination against seasonal flu and pneumococcal infection
	risks		in all regions where the company operates
		$	Handing over medical diagnostic and therapeutic equipment to medical facilities
			in the regions where the company operates
		$	Additional payments to medical workers' payroll, organizing catering for them
		$	Training workers in latest first aid algorithms
		$	Using quality personal protective equipment

1 Risk trend compared to the previous year → - risk increased; ↘ - risk reduced; → - no changes.

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SUSTAINABILITY REPORTI  2022

NLMK

CORPORATE GOVERNANCE

ENVIRONMENTAL RISKS →

Risks associated with events caused by NLMK Group's operations, which may impact the environment. Risks associated with the impact of the environmental situation on the activities of the Group's enterprises2.

Why is this risk important?

The materialization of environmental risks may result in serious consequences for the Group's financial performance, reputation, and operational efficiency, and business continuity.

A responsible attitude towards the environment and the efficient use of natural resources are the key principles of NLMK's Sustainable Development Policy. The Company objectively assesses environmental risks and strives to minimize them recognizing the right of local communities and future generations to a clean environment, and invests heavily in various environmental programmes and innovative technologies introduction.

Environmental protection is a top priority of NLMK Group's activities (see the Environmental Protection section for details).

Potential risk factors	Current risk management measures
$	Environmental non-	$	Making sure that engineering and design are duly aligned with environmental requirements
	compliance of current		and reduce environmental impact
	processes	$	Developing, implementing and annually updating the Environmental Programme, which
$	Changes environmental		encompasses projects to reduce emissions, waste, negative impacts on water, land
	laws		and biodiversity
$	Availability of natural	$	Monitoring and maintaining the operability of environmental protection equipment through
	resources for continuous		regular periodic maintenance, scheduled repairs and overhauls
	operation	$	Collaborating with government authorities by taking part in associations and offering
			comments on draft documents on environmental protection
		$	Monitoring the availability of natural resources, regular assessment of the state of reserves
			and soil conditions in the locations of the Group's production facilities

CLIMATE RISKS →

Risks associated with the physical effects of climate change and the transition to low-carbon economy

Why is this risk important?

Climate change is one of the greatest threats facing the world today, impacting society, the economy, and security globally. Climate risks can be classified as:

$ Physical risks are those related to natural phenomena, emerging due to climate change, and becoming more probable due to global warming

$ Transition risks are those associated with the transition to low-carbon economy. The main drivers of climate change are greenhouse gas emissions. According to various estimates, steel industry accounts for 7% to 9% of global greenhouse gas emissions.

NLMK Group takes climate change issues very seriously and consistently reduces the carbon footprint of its products (see the Climate Change section for details)

Potential risk factors	Current risk management measures
Physical risks:	$	Making sure that engineering and design are duly aligned with climate change specifics
$	Extreme risks (destructive	$	Developing the Climate Programme and implementing investment and operational projects
	events)		to reduce CO2 emissions.
$	Chronic risks (long-term	$	Taking part in associations and working groups and offering comments on draft documents
	climate change)		on transitioning to low-carbon economy

Low-carbon economy transition risks:

$ Political risks $ Economic risks $ Reputation risks $ Process risks

2 In this group of risks, in particular, the risks of water availability and its quality are assessed separately (see the Company website for details).

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SUSTAINABILITY REPORTI  2022

NLMK

CORPORATE GOVERNANCE

IT AND INFORMATION SECURITY RISKS →

Disruption of business continuity due to unavailability of IT systems, data transmission network following technical and software failures, non-fulfilment of obligations by service providers, faulty or intentional actions of the company's employees, actions of third parties. Damage caused by unauthorized access of third parties to trade secrets.

Why is this risk important?

The Company's business processes and their efficiency directly depend on IT systems and the security of confidential information in all its forms.

Potential risk factors	Current risk management measures
$	Targeted external attacks,	$	Integrated information security system development programme
	viruses	$	Improvement of information security processes
$	Human error or deliberate	$	External audits for compliance with the legal requirements in the field of personal data
	actions of employees		protection and external testing of information security system stability
$	Physical loss	$	Information security incident response plans (DRP, BCP)
	of infrastructure
	and equipment (due
	to accidents or natural
	disasters)

CURRENCY AND PRICE RISKS ↗

Risks associated with financial losses as a result of adverse changes in prices for finished products and raw materials, as well as exchange rates

Why is this risk important?

The key factor determining the size of the Group's revenue is global steel prices. Since most of the Group's revenue is denominated in foreign currencies and most of expenses are denominated in rubles, NLMK faces currency risk.

Potential risk factors	Current risk management measures
$	Lower finished product	$	Formula-based pricing, concluding long-term contracts
	prices	$	Hedging using derivative financial instruments (if necessary)
$	Increase in raw material	$	Hedge accounting according to IFRS standards
	prices
$	Volatile supply
	timeframes
$	Currency exchange
	rate variations affecting
	financial results

The Company also considers the following risks:

• Reputational risks and risks related to stakeholder engagement
• Risks related to skills depreciation
• Equipment failure risks
• Inventory risks
• Supply continuity risks
• Liquidity risks
• Tax risks
• credit risks
• Interest risks
• Compliance risks (see the Compliance section for more details)

2022 performance

In 2022, commodity and financial markets demonstrated negative trend and increased volatility, especially in terms of foreign exchange rates. The Company had to operate in a constantly changing market and proactively respond to emerging restrictions and new conditions. At the same

time, it went on with the projects to improve the Internal Control and Risk Management System, and with developing approaches to risk management and risk culture.

The Company focused on sustainability of the processes under transformation. Thus, the following key projects can be highlighted:

• Processes were adapted to changing market conditions for raw materials, equipment and finished products
• IT&IS strategy was updated to meet the increased challenges
• Production infrastructure maintaining process efficiency was improved through the introduction of more advanced diagnostic and inspection tools that allow making risk- oriented decisions
• The main physical risks and risk factors associated with climate change for the sites in the central Russia were studied. The impact of risks is taken into account when designing new infrastructure (for more details, see the Climate Change section)
• Support tools for automatic control of making decisions on transactions with deferred payment were cascaded to several sites of the Group.

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SUSTAINABILITY REPORTI  2022

NLMK

CORPORATE GOVERNANCE

Risk strategy and plans for 2023 and the medium term

NLMK has introduced the practice of regularly updating the internal control and risk management strategy. In 2022, three main areas for developing internal control and risk management system were approved for the next two years.

BUSINESS CONTINUITY MANAGEMENT

Systematic work on continuity management is one

of NLMK's priorities in its risk minimization activities. In view of this approach, a project is underway to organize a Business Continuity Management System in accordance with the Business Continuity international standards and best international practices.

The Company is committed to prevent the negative impact of possible business interruptions due to external and internal factors, to ensure stability in crises and to fulfil its obligations to stakeholders.

In 2023, it is planned to introduce regular training on responding to negative events in the Company's key business processes.

PROCESS MATURITY

NLMK is consistently increasing the maturity level of its internal control and risk management system to ensure achievement of project and process targets. This includes the following processes: improving existing control procedures by analysing them, identifying areas for development; redesigning controls; eliminating redundancy; developing key risk indicators and defining their boundaries; developing approaches to joint risk modelling, stress testing, and scenario analysis.

CORPORATE CULTURE OF RISK AWARENESS

The Company is creating a risk awareness culture that meets the principles of engagement, responsibility, and risk prevention. As part of this commitment, NLMK plans to develop additional training solutions, conduct trainings, raise awareness of employees about the Internal Control and Risk Management System, as well as about communication channels.

Internal Audit

Internal audit is a source of independent and reasonable guarantees to the Board of Directors and management. The objective is to improve the Group's performance by:

Conducting objective audits in line with the risk-based approach

Giving recommendations following the results of audits and knowledge sharing

The Group's internal audit function is built in line with legal requirements and the recommendations of professional standards, the Bank of Russia's Corporate Governance Code, and best international practices.

Internal audit is a centralized function performed by the Audit Department. It fully encompasses

the core activities of NLMK Group companies, including international ones. The unified management of the internal audit allows for the use of uniform standard approaches

to planning, auditing, and reporting, and ensures an effective exchange of information within the function and with key stakeholders.

The internal audit:

• Assesses the efficiency of the internal control and the risk management systems
• Assesses the Group's corporate governance
• In addition, internal audit acts as a consultative body and provides independent opinions to internal customers on certain matters concerning financial and business operations.

NLMK's internal control and risk management system is evaluated taking into account the principles set forth

in international standards for risk management and internal control, including ISO 31000:2018, COSO ERM:2017,

and COSO 2013.

The main internal document of NLMK Group governing the internal audit is the Regulations on the Audit Department. The Regulations are approved by the Board of Directors and are available on the Company's official website.

The Audit Director submits reports on the audit results of the effectiveness of the internal control and risk management system to the Audit Committee.

2022 PERFORMANCE

In 2022, internal audit continued to implement

the Development Strategy approved by the Audit Committee. The following planned activities were carried out:

• Maturity assessment of the top risk management system, incl. through preparation of guarantee maps for the key risks
• Efficiency assessment of the internal control system for end-to-end processes at NLMK Group: system
  of qualification, tenders, and contract approval, logistics processes management, OHS, and ferroalloy management from acceptance to consumption
• Assessment of the quality of key data in the production information systems
• Local audits of process control efficiency

PLANS FOR 2023 AND THE MEDIUM TERM

The internal audit plans to assess the reliability of risk management and internal control for NLMK Group's key business processes according to the Internal Audit Plan, including development of the guarantee process chart as a continuous auditing tool.

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SUSTAINABILITY REPORTI  2022

NLMK

CORPORATE GOVERNANCE

Principles of internal audit and their enforcement

Principle	Tools and mechanisms for enforcing the principles
Independence	$	The Audit Director functionally reports to NLMK's Board of Directors.
and objectivity	$	The Audit Director is appointed (dismissed) by resolution of NLMK's Board of Directors.
	$	The Audit Director has the right of direct and free access to the Chairman of the Board
		of Directors, Chairman of the Audit Committee and CEO to provide information on significant
		risks that have been identified.
	$	Third parties are prohibited from interfering in the process and the results of the audit.
Systematic and consistent	$	The internal audit is guided by a risk-based Audit Plan.
approach	$	Resources are distributed between limited scope and comprehensive audits of processes
		in devising the Audit Plan.
	$	The internal audit prepares recommendations taking into account the costs/value ratio. Priority
		is given to systemic measures.
	$	The internal audit regularly monitors the execution of post-audit recommendations.
Efficient use of resources	$	Lead auditors are appointed from among the most qualified auditors.
	$	Engagement of internal and external experts (consultants).
	$	The internal audit updates the Company's management about the requirements (limitations)
		for the resources needed to conduct audits in due time.
Professionalism	Internal auditors have special knowledge, skills, and expertise needed to carry out practical
and a professional approach	professional activity in the Company; they continuously develop and improve the said knowledge,
to work	skills, and other expertise through assessment, training, and sharing experience; they also
	continuously develop their expertise in IT systems as they are the key source of information during
	audits.
Continuous audit quality	The internal audit undergoes annual internal and periodic external (once every five years)
improvement	assessments of the internal audit to determine whether the internal audit activities comply with
	the definition of internal audit, the International Standards or the Professional Practice of Internal
	Auditors, and the Code of Ethics of the Institute of Internal Auditors (IIA), with a view to further
	improve the function's performance.

Independent Auditor

The Company engages an independent audit organization to audit and confirm the accuracy of NLMK Group's IFRS (International Financial Reporting Standards) consolidated financial statements, and NLMK's RAS (Russian Accounting Standards) accounting (financial) statements. In June 2022, NLMK's Annual General Shareholders' Meeting approved Technologies of Trust Audit (formerly PricewaterhouseCoopers Audit, hereinafter - TeDo) as the Company's auditor.

The independent auditor is selected from among recognized independent auditors with an impeccable professional reputation. The main criteria for selecting an independent auditor are the qualifications of the audit organization, the quality of the services provided, as well as compliance with the audit independence requirements. The candidate for an independent auditor is reviewed by the Audit Committee of the Board of Directors

and the Board of Directors and is approved by NLMK's Annual General Meeting of Shareholders.

TeDo has been the auditor of the Group since 2003. The Board's Audit Committee, which is responsible for evaluating the efficiency of the current independent auditor, was satisfied with the quality of the services provided.

In 2019, it recommended that the Board of Directors

and the General Meeting of Shareholders re-appoint PwC as the Group's auditor for 2020-2022.

Compliance with the auditor's independence principle

In order to comply with the requirements for audit independence and ensure a high level of professionalism, TeDo has several systems that ensure audit independence and maintain a high level of professionalism and quality of the services provided. For example, it rotates key audit personnel on a regular basis (at least once in seven years) with the latest rotation in 2020.

In addition to providing auditing services to verify financial statements, NLMK Group companies may hire TeDo

and other companies under TeDo umbrella to provide consulting (non-audit) services. The management of NLMK Group and, in particular, the Audit Committee, are certain that these services do not affect the independence of the auditor and are not related to financial reporting.

In 2022, the share of non-audit services in the total volume of services provided by TeDo was at an acceptable level and did not exceed 13% of the total volume.

88

SUSTAINABILITY REPORTI  2022

NLMK

CORPORATE GOVERNANCE

REMUNERATION OF INDEPENDENT AUDITOR

NLMK's Board of Directors has determined the value of remuneration for the provision of audit (verification) services of NLMK's 2022 interim and annual IFRS consolidated financial statements, as well as for the audit of the 2022 RAS statements in the amount of RUB

79.1 million (VAT excluded).

Remuneration paid to NLMK Group's Independent auditor for 2022, $ '000 (VAT excluded)

Types of services

Audit and reviews

Non-audit services

Remuneration

1,420.2

204.5

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SUSTAINABILITY REPORTI  2022

NLMK

APPENDIX

Entities included in the organization's sustainability reporting [GRI 2-2]

The main companies that are part of NLMK Group and grouped by segments are:

NLMK Russia Flat Products

• NLMK Lipetsk
• VIZ-Steel
• Altai-Koks
• NLMK Trading S.A.

NLMK DanSteel1 and plate distribution network

NLMK USA

• NLMK Indiana LLC
• NLMK Pennsylvania LLC& Sharon Coating LLC

NLMK Russia Long products

• NLMK Ural
• NLMK Metalware
• NLMK Kaluga
• NLMK Vtorchermet

Mining Division

• Stoilensky
• Stagdok
• Dolomit

NLMK Belgium Holdings2

Service and Supporting Businesses, including VIZ

External assurance [GRI 2-5]

Proper preparation of selected qualitative and quantitative information for the year ended 31 December 2022 in accordance with the relevant GRI Standards (selected information) has been assured in accordance with the International Standard on Assurance Engagements (ISAE) 3000 Revised, Assurance Engagements Other than Audits or Reviews of Historical Financial Information and International Standard on Assurance Engagements (ISAE) 3410 Assurance Engagements on Greenhouse Gas Statements. The independent auditor's conclusion on the results of the assurance prosedures, which provides limited assurance in respect of selected information, can be found in the Appendix. The independent auditor was AO Technologies of Trust - Audit.

1. In October 2022 NLMK Group signed an agreement with NLMK Belgium Holdings S.A. on the sale of 100% of NLMK DanSteel shares.
2. NLMK Belgium Holdings S.A. is jointly controlled by the Group and the Belgian state-owned company Societe Wallonne de Gestion et de Participations S.A. (SOGEPA), (Note 4). The joint venture includes manufacturers of flat rolled products and plate in Belgium, France, Italy and Denmark.

90

Membership associations [GRI 2-28]

Association/Initiative

NLMK Group's status

World Steel Association, an international association of iron and steel product manufacturers

Member

2018 signatory to worldsteel's Sustainability Charter.

UN Global Compact	Participant
The Russian Union of Industrialists and	Participation in the work of commissions and committees,
Entrepreneurs (RUIE)	including on the development of the steel sector, environment,
	human resources development
Russian Steel Association	Member of the Supervisory Board and the Management
	Committee
	Member in all commissions of the Association, including the
	Commission for protection of labour, industrial and
	environmental safety
Council of Electricity Consumers of the Russian	Member of the Council
Federation
Council of Non-Resource Exporters − Expert	Member of the Council
Council of the Committee on Transport and	Participation in the Council as an expert
Construction of the State Duma of the Russian
Federation
RUSLOM.COM (Non-Profit Partnership National	Party to the Partnership
Self-Regulatory Organization for the Recycling of
Ferrous and Non-Ferrous Metal Scrap and Waste
and Recycling of Vehicles)
Anti-Corruption Charter of Russian Business	Party to the Charter
Steel Construction Development Association	Member in the Association

Methodology of the calculation for Pollutants discharged into water bodies with effluents

Calculation is made as sum of discharges of the Group companies both in volumes of water and weight of pollutants. Volumes of water are measured where is required by the permits and reported. In permits, wastewater quality standards are established by authorized bodies based on the profile of water bodies and the so-called fisheries standards (standards for water bodies intended for fish breeding), which in Russia are significantly stricter that similar foreign requirements for industrial wastewater, but also requirements to drinking water quality. The number of regulated indicators for the main production sites of the Group is approaching 20. For all indicators regulated by the permits, the Group's enterprises carry out regular laboratory control of compliance with established standards and requirements. Compliance with water discharge regulations is subject to regular monitoring by supervisory bodies. Measurements are carried out by accredited laboratories.

The main component in discharges is the dry residue, which determines water mineralization. Mineral content of water is defined as the ratio of the mass of pollutants to the volume of discharge. This indicator is at the level of 300 mg/L. Summary data for the Group on the volume of water discharge and pollutants content are formed based on the basis of official statistics reports (2-TP Water management) for the Russian companies and reporting data of the Groups international companies. The bulk of pollutants are suspended solids, dry residues and biological oxygen demand.

91

Approval procedure

No.	Stage	Document
1	Preliminary approval by the Board of Directors	Minutes of the meeting of the Board of
		Directors No. 300 dated 26.05.2023
2	Approval by the General Shareholders' meeting	Minutes of the meeting No. __ dated 30.06.2023

TCFD index

TCFD recommendations			Sustainability report 2022	Page
Governance
Disclose the organisation's governance around climate-related risks and opportunities
Describe the board's oversight of climate-	Sustainability agenda management at the	P. 8, 69
related risks and opportunities			Board of Directors level; Climate change
Describe management's role in assessing and	Climate change	P. 8
managing	climate-related	risks	and
opportunities.
Strategy

Disclose the actual and potential impacts of climate-related risks and opportunities on the organization's businesses, strategy, and financial planning where such information is material

Describe the climate-related risks and	Climate change	P. 8
opportunities the organisation has identified	Company website
over the short, medium, and long term
Describe the impact of climate-related risks	Climate change	P. 8
and opportunities on the organisation's	Company website
businesses, strategy, and financial planning
Describe the resilience of the organisation's	Climate change	P. 8
strategy, taking into consideration different	Company website
climate-related scenarios, including a 2°C or
lower scenario
Risk management
Disclose how the organisation identifies, assesses, and manages climate-related risks
Describe the organisation's processes for	Climate change	P. 8
identifying and assessing	Company website
climate-related risks
Describe the organisation's processes for	Climate change	P. 8
managing climate-related risks	Company website
Describe how processes for identifying,	Climate change	P. 8
assessing, and managing	Company website
climate-related risks are integrated into the
organisation's overall risk management
4.	Metrics and targets

Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material

Disclose the metrics used by the organisation	Climate change	P. 8
to assess climate-related risks and
opportunities in line with its strategy and risk
management process
Disclose Scope 1, Scope 2, and, if appropriate,	Climate change	P. 8
Scope 3 GHG emissions, and the related risks
Describe the targets used by the organisation	Climate change	P. 8
to manage climate-related risks and

92

opportunities and performance against targets

SASB index

	Indicator		Reference / Comment		Page

GREENHOUSE GAS EMISSIONS

EM-MM-110a.2 Discussion of long- term and short-term strategy or plan to manage Scope 1 emissions, emissions reduction targets, and an analysis of performance against those targets

NLMK Group is progressively reducing greenhouse gas emissions by cutting consumption of fossil fuels, increasing energy efficiency, and introducing innovative decarbonization solutions.

The Board of Directors, the Board's P. 8 committees, СЕО (Chairman of the Management Board), and the Management Board determine strategic growth priorities and ensure overall sustainability management

ENERGY MANAGEMENT

EM-MM-130a.1 Total energy

consumed, percentage grid electricity, percentage renewable

Total energy consumed - 382 PJ; Percentage grid electricity - 18% (consumption of purchased electricity P. 18

• sold to external customers / total energy consumption of the Group); Percentage renewable - 0.43%.

WATER MANAGEMENT

EM-MM-140a.1 Total fresh water withdrawn, total fresh water consumed, percentage of each in regions with High or Extremely High Baseline

Water Stress

Total fresh water withdrawn - 134 m m3;

Ttotal fresh water consumed - 46,4 th

m3;P. 29 The regions of the Group's presence

are characterized by high availability of water resources. The Group does not operate in water-scarce areas.

BIODIVERSITY

	NLMK Group conducts operations on
	both industrial lands and residential
	areas in line with applicable law. The
EM-MM-160a.1 Description of	Company's activities have no direct
significant impacts on biodiversity.
environmental management
NLMK Group production sites are not	P. 37
policies and practices for active
located on industrial sites that are
sites
leased. More specifically, they are not
	located on sites that are situated on
	environmentally protected land or on
	land with a high biodiversity value.
EM-MM-160a.2 Percentage of mine
sites where:

93

	Indicator		Reference / Comment			Page
			NLMK Group has one ore mining
			company, and acid effluents are not
			predicted to form there. Drainage
			waters as well as bottom waters at
			Stoilensky GOK pit mine are collected
			and pumped out into a buffer tank or a
			dam reservoir of the tailing dump. The
			control of the physical and chemical
			composition of drainage water is
	1) Acid rock drainage is predicted		carried out both at the stage of
	to occur		entering the tailing dump and its near-
			dam reservoirs, and during the
			discharge of drainage water into a
			water body after biological treatment
			in natural conditions. The pH value
			(measure of acidity) of the drainage
			water entering the tailing dump and
			discharged into the water body is
			within the pH range of 7.7-8.0
			(alkaline)
	2) Acid rock drainage is actively		Not applicable. Acid effluents are not
	mitigated		formed
			Not applicable. Wastewater treatment
	3) Acid rock drainage is under		is	carried	out by sedimentation of
		suspensions in the tailing dump and
	treatment or remediation
		biological	treatment	in natural
			conditions
	EM-MM-160a.3 Percentage of		Percentage of proved and probable
	proved and probable reserves in or		reserves in or near sites with protected
	near sites with protected		conservation status or	endangered
	conservation status or endangered		species habitat - 0%
	species habitat
	GREENHOUSE GAS EMISSIONS
	EM-MM-110a.1 Gross global Scope		Gross global Scope 1 emissions (Scope
	1 emissions, percentage covered		1) - 29.2 m t CO2- eq.			P. 10
	under emissions-limiting		Only 1.2% is regulated by legal
	regulations		requirements at factories in the EU.
	AIR QUALITY
	EM-MM-120a.1 Air emissions of the		(1) carbon monoxide (CO) - 223 th t,
	following pollutants: (1)		(2) nitrogen oxides (excluding N2O) -
	CO, (2) NOx (excluding N2O), (3)		21 th t, (3) sulfur oxides - 30.2 th t, (4)
	SOx, (4) particulate matter (PM10),		particulate matter 20.1 th t, (5)		P. 26
	(5) mercury (Hg), (6)		mercury (Hg) - 0 t, (6) lead (Pb) - 1 t,
	lead (Pb), and (7) volatile organic		(7) volatile organic compounds (VOC) -
	compounds (VOCs)		2.9 th t
	WASTE & HAZARDOUS MATERIALS MANAGEMENT
	EM-MM-150a.1 Total weight of		Total weight of tailings - 24.1m t
	tailings waste, percentage		The share of used tailings is 24.7% of		P. 34
	recycled		the total volume
	EM-MM-150a.2 weight of mineral		The total weight of overburden is 67.6
	processing waste, percentage		m	t	(including	non-waste).		P. 34
		The share of used overburden is 22% of
	recycled		the total volume
							94

	Indicator		Reference / Comment			Page
	EM-MM-150a.3 Number of tailings		NLMK Group operates one tailing
	impoundments, broken down by		dump. Detailed information	is
	MSHA hazard potential		available at the link

LABOR RELATIONS

EM-MM-310a.1 Percentage of active workforce covered under collective bargaining agreements, broken down by local and foreign employees

P. 53

SECURITY, HUMAN RIGHTS, RIGHTS OF INDIGENOUS PEOPLES

EM-MM-210a.2 Percentage of 0; According to the Company proved and probable reserves in or estimates, there is no presence of

near indigenous landindigenous peoples in the regions where NLMK Group operates

EM-MM-210a.3 Discussion of

engagement

processes

and

due

diligence practices with respect to

P. 40

human

rights,

indigenous rights,

and operation in areas of conflict

COMMUNITY RELATIONS

EM-MM-210b.1 Discussion of

process

to

manage

risks

and

P. 61

opportunities

associated

with

community rights and interests

EM-MM-210b.2

Number

and

There were no non-technical delays at

duration of non-technical delays

Russian assets

ACTIVITY METRICS

EM-MM-000.A Production of (1)

The Company has decided not to

metal ores and (2) finished metal

disclose

operational information

for

products

2022

EM-MM-000.B Total number of

The headcount of NLMK Group at the

P. 44

employees

end of 2022 was 51,400 people

BUSINESS ETHICS & TRANSPARENCY

EM-MM-510a.1 Description of the

The Company has adopted the Code of

management system for prevention

Corporate Ethics and Anti-Corruption

of

corruption

and

bribery

Policy. Whenever a new version of the

throughout the value chain

Code of Corporate Ethics or Anti-

Corruption Policy comes into effect, all

employees of the Company review

latest

version and

sign

an

acknowledgement form.

The Company also expects its business

P. 80

partners to adhere to basic values and

principles of good business conduct.

The Company's business partners

familiarize themselves

with

the

provisions of the Partner's Code of

Business

Conduct

during

the

qualification and selection process as

well as the conclusion of a contract.

95

	Indicator				Reference / Comment			Page
	EM-MM-510a.2 Production in		NLMK Group does not have production
	countries that have the 20 lowest		assets in countries ranked in one of the
	rankings	in	Transparency		last 20 places in the Transparency
	International's	Corruption		International Corruption	Perceptions
	Perception Index			Index

96

GRI content index

NLMK Group has reported in accordance with the GRI Standards for the period 1 January 2022 - 31 December 2022.

GRI 1 used: GRI 1: Foundation 2021. No applicable GRI Sector Standards.

GRI indicator	Page/comment
GRI 2 (2021) General diclosures
Organizational details and reporting process
2-1		Organizational details	P. 2
2-2		Entities included in the organization's sustainability reporting	P. 90
2-3		Reporting period, frequency and contact point	P.2, 6
2-4		Restatements of information	Information on restatements of
			indicators for previous periods is
			provided in the footnotes to the
			text of the Report
2-5		External assurance	P. 90
•	Organizations activities and headcount
2-6		Activities, value chain and other business relationships	The information is available at the
			corporate website of NLMK Group
2-7		Employees	P. 44
2-8		Workers who are not employees	The Company does not disclose
			information about workers who
			are not employees as therir details
			are not monitored
•		Corporate governance
2-9		Governance structure and composition	P. 66
			The information is sensitive for the
			Company and is partially disclosed
2-10		Nomination and selection of the highest governance body	P. 69
2-11		Chair of the highest governance body	P. 68
2-12		Role of the highest governance body in overseeing the	P. 69
		management of impacts
2-13		Delegation of responsibility for managing impacts	P. 69
2-14		Role of the highest governance body in sustainability reporting	P. 70
2-15		Conflicts of interest	P. 71
2-16		Communication of critical concerns	The information is sensitive for the
			Company and is not disclosed
2-17		Collective knowledge of the highest governance body	The information is sensitive for the
			Company and is not disclosed
2-18		Evaluation of the performance of the highest governance body	P. 71
2-19		Remuneration policies	P. 74
2-20		Process to determine remuneration	P. 74−75
2-21		Annual total compensation ratio	The information is sensitive for the
			Company and is not disclosed
Strategy,	policies and practices
2-22		Strategy, policies and practices	In 2022, the Company decided not
			to publish the CEO/Board of
			Directors' Statement, see GRI 2-23
2-23		Policy commitments	P. 3, 44, 76
2-24		Embedding policy commitments	P. 5, 23, 35, 40, 55−56, 69, 79
2-25		Processes to remediate negative impacts	The Company's practices to reduce
			the negative impact are disclosed
			in the relevant thematic sections
2-26		Mechanisms for seeking advice and raising concerns	P. 77

97

2-27	Compliance with laws and regulations	The information is sensitive for the
		Company and is not disclosed
2-28	Membership associations	P. 91
Stakeholder engagament
2-29	Approach to stakeholder engagement	P. 39
2-30	Collective bargaining agreements	P. 54
GRI 3 (2021) Material topics
3-1	Process to determine material topics	P. 2
3-2	List of material topics	P. 3
3-3	Management of material topics	The approach to the management
		of material topics is disclosed in
		the relevant topical sections
GRI 200 Economic aspect
GRI 205 (2016) Anti-corruption
205-1	Operations assessed for risks related to corruption	P. 78
205-2	Communication and training about anti-corruption policies and	P. 79
	procedures
205-3	Confirmed incidents of corruption and actions taken	The information is sensitive for the
		Company and is not disclosed.
GRI 206 (2016) Anti-competitive Behavior

206-1

Legal actions for anti-competitive behavior, anti-trust, and monopoly practices

The information is sensitive for the Company and is not disclosed

GRI 300 Environmental aspect

GRI 302 (2016) Energy

302-1	Energy consumption within the organization	P. 17
302-2	Energy consumption outside of the organization	The Company does not keep
		records of energy consumption by
		counterparties
302-3	Energy intensity	The Company considers it
		impractical to calculate the energy
		intensity indicator for the Group as
		a whole due to the different
		specifics of production at
		subsidiaries.
		The indicator is calculated
		only for the main Russian
		production asset - the Lipetsk site
302-4	Reduction of energy consumption	P. 21
302-5	Reductions in energy requirements of products and services	Not applicable
GRI 303 (2018) Water and effluents
303-1	Interactions with water as a shared resource	P. 28
303-2	Management of water discharge-related impacts	P. 30, appendix
303-3	Water withdrawal	P. 28
303-4	Water discharge	P. 30
303-5	Water consumption	P. 29
GRI 305 (2016) Emissions
305-1	Direct (Scope 1) GHG emissions	P. 10
305-2	Energy indirect (Scope 2) GHG emissions	P. 10
305-3	Other indirect (Scope 3) GHG emissions	P. 11
305-4	GHG emissions intensity	P. 12
305-5	Reduction of GHG emissions	P. 13
305-6	Emissions of ozone-depleting substances (ODS)	NLMK Group enterprises do not
		produce, emit into the atmosphere
		and do not use ozone-depleting
		substances in the manufacture of
		products, except for use in
		extremely limited quantities as a
		98

		reagent during chemical analyses in
		laboratories, as well as for
		refueling and refueling compressor
		equipment, air conditioning units,
		industrial air conditioners and fire
		extinguishing systems
305-7	Nitrogen oxides (NOx), sulfur oxides	P. 27
	(SOx), and other significant air emissions
GRI 306	(2020) Waste
306-1	Waste generation and significant waste-related impacts	P. 32
306-2	Management of significant waste-related impacts	P. 32
306-3	Waste generated	P. 34
306-4	Waste diverted from disposal	P. 34
306-5	Waste directed to disposal	P. 34
GRI 308 (2020) Supplier Environmental Assessment
308-1	New suppliers that were screened using environmental criteria	P. 41
308-2	Negative environmental impacts in the supply chain and	P. 41
	actions
	taken
GRI 400 Social aspect
GRI 401 (2016) Employment
401-1	New employee hires and employee turnover	P. 45
401-2	Benefits provided to full-time employees that are not provided	P. 51
	to temporary or part-time employees
401-3	Parental leave	P. 53
GRI 403 (2018) Occupational Health and Safety
403-1	Occupational health and safety management system	P. 55
403-2	Hazard identification, risk assessment, and incident	P. 56
	investigation
403-3	Occupational health services	P. 56
403-4	Worker participation, consultation, and communication on	P. 57
	occupational health and safety
403-5	Worker training on occupational health and safety	P. 57
403-6	Promotion of worker health	P. 57
403-7	Prevention and mitigation of occupational health and safety	P. 57
	impacts directly linked by business relationships
403-8	Workers covered by an occupational health and safety	P. 56
	management system
403-9	Work-related injuries	P. 58
403-10	Work-related ill health	The Company pays special
		attention to the prevention of
		occupational diseases, strives to
		provide safe and comfortable
		working conditions and reduce the
		number of cases of occupational
		diseases, develops corporate
		healthcare and encourages
		employees to lead a healthy
		lifestyle
GRI 413 (2016) Local communities
413-1	Operations with local community engagement, impact	P. 62
	assessments, and development programs
413-2	Operations with significant actual and potential negative	Not applicable
	impacts on local communities
		99

Joint-Stock Company	White Square Office Center,
"Technologies of Trust - Audit"	10 Butyrsky Val, Moscow,
("Technologies of Trust - Audit" JSC)	Russian Federation, 125047
	T: +7 (495)	967	6000,
www.tedo.ru	F: +7 (495)	967	6001

Independent Auditor's Limited Assurance Report

To the Management of Novolipetsk Steel:

Introduction

We have been engaged by the Management of Novolipetsk Steel (hereinafter - the "Company") to provide limited assurance on the selected information described below and included in the Sustainability Report of the Company for the year ended 31 December 2022 (hereinafter - the "Sustainability Report"). The Sustainability Report represents information related to the Company, its subsidiaries and a joint venture and its subsidiaries (hereinafter together - the "Group"), unless otherwise stated in the Sustainability Report.

Selected information

We assessed the quantitative and qualitative information specified in Appendix to this report, that is disclosed in the Sustainability Report and referred to in the GRI Content Index of the Sustainability Report (hereinafter - the

"Selected Information").

The scope of our limited assurance procedures was limited to the Selected Information for the year ended

31 December 2022 only. We have not performed any procedures with respect to earlier periods or any other items included in the Sustainability Report and, therefore, do not express any conclusion thereon.

Reporting criteria

We assessed the Selected Information using relevant criteria, including applicable requirements, in the GRI Sustainability Reporting Standards 303 and 305 (hereinafter - the "GRI Standards"), published by Stichting Global Reporting Initiative, and in the Group's specific indicators methodology as set forth in the "Atmospheric air protection" section of the Sustainability Report (hereinafter - the "NLMK Methodology", and together with the GRI Standards - the "Reporting Criteria"). We believe that the Reporting Criteria are appropriate given the purpose of our limited assurance engagement.

Responsibilities of the Group's management

Management of the Group is responsible for:

• designing, implementing and maintaining internal control relevant to the preparation of the Selected Information that is free from material misstatement, whether due to fraud or error;
• establishing internal methodology and guidelines (including the NLMK Methodology) for preparing and reporting the Selected Information in accordance with the Reporting Criteria;
• preparing, measuring and reporting of the Selected Information in accordance with the Reporting Criteria; and
• the accuracy, completeness and presentation of the Selected Information.

Our responsibilities

We are responsible for:

• planning and performing the engagement to obtain limited assurance about whether the Selected Information is free from material misstatement, whether due to fraud or error;
• forming an independent conclusion, based on the procedures we have performed and the evidence we have obtained; and
• reporting our conclusion to the Management of the Group.

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This report, including our conclusion, has been prepared solely for the Management of the Group in accordance with the agreement between us, to assist management in reporting on the Group's sustainability performance and activities. We permit this report to be disclosed in the Sustainability Report, which will be published on the Company's website*, to assist management in responding to its governance responsibilities by obtaining an independent auditor's limited assurance report in connection with the Selected Information. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Management of the Group for our work or this report except where the respective terms are expressly agreed between us in writing and our prior consent in writing is obtained.

Professional standards applied and level of assurance

We performed our limited assurance engagement in accordance with International Standard on Assurance Engagements 3000 (Revised) "Assurance Engagements other than Audits or Reviews of Historical Financial Information" and, in respect of the greenhouse gas (GHG) emissions in accordance with International Standard on Assurance Engagements 3410 "Assurance Engagements on Greenhouse Gas Statements", issued by the International Auditing and Assurance Standards Board.

A limited assurance engagement is substantially less in scope than a reasonable assurance engagement in relation to both the risk assessment procedures, including an understanding of internal control, and the procedures performed in response to the assessed risks.

Our independence and quality management

We have complied with the independence and other ethical requirements of the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code)], which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour, and the ethical requirements of the Auditor's Professional Ethics Code and Auditor's Independence Rules that are relevant to our limited assurance engagement in respect of the Selected Information in the Russian Federation.

Our firm applies International Standard on Quality Management 1, which requires the firm to design, implement and operate a system of quality management including policies or procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Work done

We are required to plan and perform our work in order to consider the risk of material misstatement of the Selected Information. In doing so, we:

• made enquiries of the Group's management, including the Group Sustainability Reporting (SR) team and those with responsibility for SR management and Group SR reporting;
• conducted interviews of Group's personnel responsible for the preparation of the Sustainability Report and collection and analysis of underlying data;
• performed analysis of the relevant internal methodology and guidelines (including NLMK Methodology), gaining an understanding of the design of the key structures, systems, processes and controls for managing, recording, preparing and reporting the Selected Information;
• performed limited substantive testing on a selective basis of the Selected Information to check that data had been appropriately measured, recorded, collated and reported in the Selected information; and
• reviewed the Selected Information for compliance of the disclosures with the relevant requirements of the Reporting Criteria.

• The maintenance and integrity of the Company's website is the responsibility of management; the work carried out by us does not involve consideration of these matters and, accordingly, we accept no responsibility for any changes that may have occurred to the reported Selected
  Information or Reporting Criteria when presented on the Company's website.

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The procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent than for, a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been performed.

Reporting and measurement techniques

Under the GRI Standards there is a range of different, but acceptable, reporting and measurement techniques. These techniques including NLMK Methodology can result in materially different reporting outcomes that may affect their comparability with other organisations. The Selected Information should therefore be read in conjunction with the methodology used by management in preparing the Sustainability Report, described therein, and for which the Group is solely responsible. In addition, GHG quantification is subject to inherent uncertainty because of incomplete scientific knowledge used to determine emission factors and the values needed to combine emissions of different gases.

Limited assurance conclusion

Based on the procedures we have performed and the evidence we have obtained, nothing has come to our attention that causes us to believe that the Selected Information for the year ended 31 December 2022 has not been prepared, in all material respects, in accordance with the Reporting Criteria.

29 May 2023

Moscow, Russian Federation

A. B. Fomin is authorised to sign on behalf of the general director of Joint-Stock Company "Technologies of Trust - Audit" (Principal Registration Number of the Record in the Register of Auditors and Audit Organizations (PRNR) - 12006020338), certified auditor (PRNR - 21906104343)

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Appendix to the Independent Auditor's Limited Assurance Report dated 29 May 2023

The Selected Information subject to limited assurance procedures and prepared in accordance with the GRI Disclosures and the NLMK Methodology, as applicable, is set out below:

	GRI Disclosure			Description of GRI			Selected information for the year ended 31 December 2022*
	number			Disclosure
303-4			Water discharge		• Total water discharge, NLMK Group, million m3;
							• Volume of water discharge to surface water, million m3;
							• Volume of water converted to third parties for treatment, million m3;
							• Pollutants discharged into water bodies, thousands of t.
305-1			Direct (Scope 1) GHG		• Direct GHG emissions (Scope 1), thousands of t of CO2-equivalent.
				emissions
305-2			Energy indirect (Scope 2)		• Indirect energy GHG emissions (Scope 2), market-based method and
				GHG emissions		location-based method, thousands of t of CO2-equivalent.
305-4			GHG emissions intensity		• Specific direct emissions from stationary sources (Scope 1), t of CO2-
							equivalent per t of steel and Fe;
							• Specific indirect energy emissions from stationary sources (Scope 2,
							location-based), t of CO2-equivalent per t of steel and Fe;
							• Specific indirect energy emissions from stationary sources (Scope 2,
							market-based), t of CO2-equivalent per t of steel and Fe;
							• Specific total emissions from stationary sources (Scope 1 + Scope 2,
							location-based), t of CO2-equivalent per t of steel and Fe;
							• Specific total emissions from stationary sources (Scope 1 + Scope 2,
							market-based), t of CO2-equivalent per t of steel and Fe.
305-7			Nitrogen oxides (NOx),		• Volume of significant air emissions by the Group by substance type,
				sulphur oxides (SOx),		thousands of t (except for the calculated indicators that takes into
				and other significant air		account the reduction in NOx emissions actually achieved by NLMK
				emissions		due to the implementation of a number of measures to improve the
							fuel efficiency of the diesel locomotive fleet).
	The Group's specific disclosures in			Selected information for the year ended 31 December 2022*
	accordance with the NLMK Methodology
	Significant specific emissions into the		• Significant specific emissions by the Group and by the Company by
	atmosphere by substances per unit of		substance type, per unit of production, kg/t and g/t (except for the
	production					calculated indicators that takes into account the reduction in NOx
							emissions actually achieved by NLMK due to the implementation of a
							number of measures to improve the fuel efficiency of the diesel
							locomotive fleet).

• Reporting boundaries in terms of the Company and its subsidiaries and a joint venture and its subsidiaries are set up in

Appendix "Entities included in the organization's sustainability reporting" to the Sustainability Report, unless stated otherwise in the Sustainability Report.

103

Report on compliance with the Сorporate Governance Code principles and recommendations

The present report on observance of principles and recommendations of the Corporate Governance Code was reviewed by NLMK's Board of Directors at 25.05.2023 (MoM No 300).

The Board of Directors confirms that the data given in the present report contain complete and reliable information on the Сompany's observance of principles and recommendations of the Corporate Governance Code in 2022.

A detailed description of the key aspects of the corporate governance model and practices is presented in the Corporate Governance section of the Report.

Information on compliance with specific principles and key recommendations of the Corporate Governance Code is presented in the table below in the format recommended for use by the Bank of Russia.

The methodology for evaluating NLMK's compliance with the principles of corporate governance enshrined in the Corporate Governance Code is based on the Recommendations for compiling reports on compliance with Corporate Governance Code principles and recommendations (Letter of the Bank of Russia No. IN-06-28/102 dd. 27 December 2021).

Explanations of non-compliance with the criteria of the corporate governance principles, a description of corporate governance mechanisms and tools, and plans for its improvement are given in the table below, as well as in the Corporate Governance section of this Report.

104

Item No.		Principles of corporate		Criteria of corporate governance principles		Status of compliance with	Clarification of a deviation from criteria of
		governance		observance evaluation		a corporate governance	corporate governance principles observance
						principle	evaluation
1. 1		The Company shall provide equal and fair treatment to all shareholders exercising their right for participation in the Company governance
1.1.1		The Company creates the		1. The Company provides an accessible way		☒ Compliance ensured
		most favourable conditions		of communication with the company, such as
		for shareholders to		a hotline, e-mail or a web-based message		☐ Partial compliance
		participate in GSM as well as	board, which allow shareholders to express
		conditions to elaborate a	their opinion and ask about an agenda in the
		grounded stand in terms of	course of the General Meeting preparation.		☐ Non compliance
		GSM agenda items, to	The Company ensured the availability of the
		coordinate their actions as	above-mentioned communication methods
		well as a possibility to express	shortly before the convocation of every
		their opinions in relation to	General Meeting within the reporting period.
		the items under consideration
1.1.2		The procedure of GSM		1. A notice of the General Meeting of		☐ Compliance ensured	In 2022, General Meetings of Shareholders of the
		holding and submission of		Shareholders is published on the Company's		company were held in the form of absentee ballot
		materials for the GSM shall		website at least 30 days ahead of the date of		☒ Partial compliance	(using electronic voting technology), including
		provide shareholders with a		the meeting.		within the framework of Federal Law No. 25-FZ of
		possibility to get properly		2. The notice about the meeting specifies		February 25, 2022. At the same time, when holding
				☐ Non compliance
		prepared for participation		the documents needed to get an access to		in-person Meetings of Shareholders, the notice of
		therein		the meeting room.		such meetings shall include, among other things, the
				3. Shareholders have access to the			documents required to get access to the premises
				information about who proposed the agenda			where the general meeting will be held.
				items and who nominated the candidate for			At the same time, in 2022, a number of practices
				election to the Board of Directors and Audit			related to the provision of information about
				committee of the Company)			General Meetings of Shareholders were adjusted,
							including taking into account the norms of newly
							introduced regulations, including the Decree of the
							Government of the Russian Federation of
							12.03.2022 N 351 On the specifics of disclosure and
							provision of information in 2022.
							The Company will strive to take all reasonable and
							conscientious actions within the framework of the
							105

				issues of convening, preparing and holding General
				Meetings of Shareholders.
1.1.3	In the course of the General	1. In the reporting period shareholders were	☒ Compliance ensured
	meeting preparation and	given a chance to ask members of executive
	holding shareholders had an	bodies and members of the Company's BoD	☐ Partial compliance
	opportunity to receive	during the preparation for of the meetings
	information on the meeting	held and during the General Meeting.
	☐ Non compliance
	and materials to it, to ask	2. The opinion of the Board of Directors
	questions to executive bodies	(including specific opinions, if any, entered
	and members of the	into the MoM) on each agenda item of the
	Company's BoD, to	General Meetings of Shareholders held
	communication with each	within the reporting period was quoted in the
	other in a free and in time	materials to the General Meeting
	manner.	Shareholders.
		3. The Company provided an access to a list
		of persons having the right to participate in
		the General Shareholders' Meeting to the
		shareholders entitled to it starting from the
		date on which the Company received it, in all
		cases of General Shareholders' Meeting
		convocation in the reporting period.
1.1.4	The shareholders experienced	1. In the reporting period, shareholders had	☒ Compliance ensured
	no needless complexities in	an opportunity to propose items for inclusion
	exercising their right to	in the agenda of the Annual General Meeting	☐ Partial compliance
	convene a General	of Shareholders at least 60 days after the
	Shareholders' Meeting, to	respective calendar year-end.
	☐ Non compliance
	nominate candidates to the	2. In the reporting period the Company did
	governing bodies, and to	not refuse to accept proposals on the agenda
	propose agenda items for a	items or candidates to the Company's bodies
	General Shareholders'	due to misprints and other minor faults in a
	Meeting	shareholders proposal.
1.1.5	Every shareholder had an	1. The Charter stipulates that the digital	☒ Compliance ensured
	opportunity for unhindered	ballot can be filled on the website indicated
	exercise of the voting right by	in the notice on General Shareholders'	☐ Partial compliance
		Meeting.
			106

	the simplest and the most		☐ Non compliance
	convenient way for him
1.1.6	The rules of the General	1. When General Meetings of Shareholders	☒ Compliance ensured	In 2022, General Meetings of Shareholders of the
	Shareholders' Meeting	were held in the reporting period in the form	company were held in the form of absentee ballot
	procedure established by the	of a meeting (the joint presence of	☐ Partial compliance	(using electronic voting technology), including
	Company provide for an equal	shareholders), sufficient time was given for	within the framework of Federal Law No. 25-FZ of
	possibility for all persons	reports on the agenda items and time to	February 25, 2022. When General Meetings of
	☐ Non compliance
	present at the meeting to	discuss those items, shareholders were given	Shareholders were held in the reporting period in
	express their opinions and ask	the opportunity to express their opinion and	the form of a meeting (the joint presence of
	relative questions	ask questions on the agenda.		shareholders):
		2. The Company invited candidates to the		- sufficient time was given for reports on the agenda
		management and control bodies of the		items and time to discuss those items;
		Company and took all necessary measures to		- shareholders were given the opportunity to
		ensure their participation in the General		express their opinion and ask questions on the
		Meeting of Shareholders, at which their		agenda; candidates for management and control
		candidacies were put to a vote. Candidates to		bodies are invited;
		the Company's management and supervision		-The President (Chairman of the Management
		bodies were available to answer questions		Board), members of the Audit Committee (including
		from shareholders in those meetings where		the Chairman), as well as candidates for
		their nominations were put to vote.		management and control bodies are available to
		3. The sole executive body, the person		answer questions from shareholders
		responsible for maintaining accounting
		records, the chairman or other members of
		the audit committee of the board of directors
		were available to answer questions from
		shareholders at the general meetings held in
		the reporting period.
		4. In the reporting period, the company used
		telecommunications to provide shareholders
		with remote access to participate in general
		meetings, or the board of directors made a
		reasonable decision that there was no need
				107

(possibility) to use such means in the reporting period.

1.2 The shareholders are provided an equal and fair opportunity to participate in the Company's profit by receiving dividends.

1.2.1	The Company developed and	1. 1. The Dividend Policy was developed by	☒ Compliance ensured
	implemented a transparent	the Company, approved by the Board of
	and obvious mechanism of	Directors, and disclosed at the company's	☐ Partial compliance
	dividends determination and	website.
	their payment	2. If the Company's Dividend Policy uses the
	☐ Non compliance
		Company's statement indicators to
		determine dividends, the respective
		provisions of the Dividend Policy take
		intoaccount consolidated financial statement
		indicators.
		The rationale for the proposed distribution of
		net profit, including for the payment of
		dividends and the company's own needs, and
		an assessment of its compliance with the
		dividend policy adopted in the company, with
		explanations and an economic justification
		for the need to allocate a certain part of net
		profit for own needs in the reporting period,
		were included in the materials to the general
		meeting of shareholders, the agenda of
		which includes the issue of distribution of
		profits (including the payment
		(announcement) of dividends).
1.2.2	The company does not take a	1. In addition to the restrictions established	☒ Compliance ensured
	decision on payment of	by the legislation, the Regulations on the
	dividends, if such a decision,	company's Dividend Policy define	☐ Partial compliance
	not violating legal restrictions	financial/economic circumstances under
	formally, is economically	which the company should not make a
	☐ Non compliance
	groundless and can lead to	decision to pay dividends
	false representations on the
	company's business.
			108

1.2.3	The company does not allow	1. In the reporting period the company has	☒ Compliance ensured
	for impairment of dividend	not taken any actions resulting in impairment
	rights of the existing	of dividend rights of the existing shareholders	☐ Partial compliance
	shareholders
			☐ Non compliance
1.2.4	The Company seeks to	1. In the reporting period, the persons	☒ Compliance ensured
	exclude the use by	controlling the company exploited no other
	shareholders of other	ways of receiving profit (income) at the	☐ Partial compliance
	methods of obtaining profit	expense of the company in addition to
	(income) at the Company's	dividends (for example, through transfer
	☐ Non compliance
	expense, except for dividends	pricing, unreasonable provision of services by
	and liquidation value	the controlling person to the company at
		inflated prices, through internal loans
		replacing dividends to the controlling person
		and (or) the controlled persons).
1.3	Corporate governance system and practice ensure parity for all shareholders owning shares of the same category (type), including minority shareholders and
	foreign shareholders, and their equal treatment by the company
1.3.1	The company established	1. During the reporting period the entities	☒ Compliance ensured
	conditions for fair treatment	controlling the company prevented any
	of each shareholder by	abuse of rights in relation to the shareholders	☐Partial compliance
	managerial and supervisory	of the company, there were no conflicts
	bodies of the company	between the entities controlling the company
	including conditions ensuring	and the shareholders, and if there were, the	☐ Non compliance
	inadmissibility of abuse by	Board of Directors paid due attention to such
	major shareholders with	conflicts.
	regard to minor shareholders
1.3.2	The company does not take	1. There are no quasi-treasury shares or they	☒ Compliance ensured
	any actions which result in or	have not participated in voting within the
	may result in artificial	reporting period	☐ Partial compliance
	redistribution of corporate
	governance.
		☐ Non compliance
			109

1.4	Shareholders are provided with reliable and efficient registration procedures for rights for shares and possibility for free and easy disposal of shares owned by
	them.
1.4.1	Shareholders are provided	1. The quality and reliability of the Registrar's	☒ Compliance ensured
	with reliable and efficient	activities in maintaining the Register of
	registration procedures for	shares comply with the requirements of the	☐ Partial compliance
	rights for shares and	Company and its shareholders.
	possibility for free and easy
		☐ Non compliance
	disposal of shares owned by
	them.
2.1.	The Board of Directors performs	strategic management of the Company, identifies	the basic principles and approaches to the Company's risk management and
	internal control systems, supervises over the activity of executive bodies of the Company, and performs other key functions
2.1.1	The Board of Directors is	1. In line with the company's Charter, the	☒ Compliance ensured
	responsible for taking	Board of Directors is entitled to appoint
	decisions related to the	members of executive bodies, dismiss them	☐ Partial compliance
	appointment and dismissal	from office and define their contractual
	from office of executive	terms and conditions.
	☐ Non compliance
	bodies including because of	2. During the reporting period, the
	underperformance. The	Nominations (appointments, personnel)
	Board of Directors ensures	committee considered the issue of
	that the Company's executive	compliance of the professional qualifications,
	bodies act in compliance with	skills and experience of members of the
	the approved development	executive bodies with the current and
	strategy and main activities of	expected needs of the company dictated by
	the Company.	the approved strategy of the company.
		3. In the reporting period, the Board of
		Directors reviewed the report(s) of the sole
		executive body and the collegial executive
		body (if any) on the implementation of the
		company's strategy
2.1.2	The Board of Directors	1. Within the reporting period the issues	☒ Compliance ensured
	defines the main reference	related to the progress of the strategy
	points of the Company's	execution and updating, approval of the	☐ Partial compliance
	business on a long-term basis,	Company's business plan (budget) as well as
	evaluates and approves key	consideration of criteria and indicators
	☐ Non compliance
	business indicators and main	(including intermediate ones) of
			110

	business objectives of	implementation of the Company's strategy
	the Company, assesses and	and business plans were reviewed at the
	approves strategy and	Board of Directors' meetings.
	business plans related to core
	activities of the Company.
2.1.3	The Board of Directors	1. The Board of Directors defined the	☐ Compliance ensured	The issue of risk appetite was not submitted for
	defines the principles and	principles and approaches to the	consideration by the Company's bodies in 2022. It is
	approaches to the	arrangement of the Company's risk	☒ Partial compliance	planned to consider this issue as part of the
	arrangement of the	management and control system.	reporting on the internal control and risk
	Company's risk management	2. The Board of Directors evaluated the	management system for 2023.
	☐ Non compliance
	and internal control system.	Company's risk management and internal
		control system within the reporting period.
2.1.4	The Board of Directors	1. The Company elaborated and introduced	☒ Compliance ensured
	defines the Company's policy	the policy (policies) approved by the Board of
	on remuneration and/or	Directors on remuneration and	☐ Partial compliance
	reimbursement of expenses	reimbursement of expenses (compensations)
	(compensations) to members	to members of the Board of Directors,	☐ Non compliance
	of the Board of Directors,	executive bodies, and other key executives of
	executive bodies, and other	the Company.
	key executives of the	2. During the reporting period the issues
	Company.	related to the above policy (policies) were
		reviewed at Board of Directors meetings.
2.1.5	The Board of Directors plays a	1. The Board of Directors plays a key role in	☒ Compliance ensured
	key role in the prevention,	prevention, identification and settlement of	☐ Partial compliance
	identification, and settlement	internal conflicts.
	of internal conflicts between	2. The Company established the system of
	☐ Non compliance
	the Company's bodies,	identification transactions related to a
	shareholders, and employees.	conflict of interests and the system of
		measures aimed at settlement of such
		conflicts.

111

2.1.6	The Board of Directors plays a	1. The Board of Directors approved the	☒ Compliance ensured
	key role in ensuring the	Regulations on Information Policy.	☐ Partial compliance
	Company's transparency,	The Company appointed persons responsible
	timely and complete	for ensuring compliance with the Information	☐ Non compliance
	information disclosure, and	Policy.
	easy access for shareholders
	to the Company's documents.
2.1.7	The Board of Directors	1. During the reporting period the Board of	☒ Compliance ensured
	exercises control over the	Directors reviewed the Company's corporate	☐ Partial compliance
	corporate governance	governance practices.
	practices in the Company and
		☐ Non compliance
	plays a key role in the
	Company's significant
	corporate events.
2. 2	The Board of Directors is accountable to the Company's shareholders.
2.2.1	Information on the activities	1. The Company's Annual Report for the	☒ Compliance ensured
	of the Board of Directors is	reporting period includes information on	☐ Partial compliance
	disclosed and provided to	individual directors' attendance of the Board
	shareholders.	of Directors and committee meetings.	☐ Non compliance
		2. The Annual Report contains information on
		the key results of an evaluation of the Board
		of Directors' activities performed during the
		reporting period.
2.2.2	The Chairman of the Board of	1. The Company employs a transparent	☒ Compliance ensured
	Directors is available for	procedure enabling shareholders to ask	☐ Partial compliance
	communication with the	questions to the Chairman of the Board of
	Company's shareholders.	Directors and share their opinion on these
	☐ Non compliance
		matters with them.
2.3	The Board of Directors is an effective and professional governing body of the Company, capable of making impartial independent judgements and decisions that are
	in the interest of the Company and its shareholders.

112

2.3.1	Only persons who have an	1. In the reporting period, the Board of	☒ Compliance ensured
	impeccable business and	Directors (or its Nomination Committee)	☐ Partial compliance
	personal reputation, and have	evaluated the candidates to the Board of
	the knowledge, skills, and	Directors in terms of whether they have the
	☐ Non compliance
	experience required to make	necessary experience, knowledge and
	decisions within the Board of	business reputation, lack of conflict of
	Directors' area of expertise	interest, etc.
	and necessary for the
	effective performance of its
	functions are elected as
	members of the Board of
	Directors.
2.3.2	Members of the Board of	1. In all cases in the reporting period when	☐ Compliance ensured	In 2022, a number of practices related to the
	Directors are elected through	the agenda of a General Meeting of	☒ Partial compliance	provision of information about candidates were
	a transparent procedure that	Shareholders included an item on election of	adjusted, including taking into account the norms of
	allows shareholders to	the Board of Directors, the Company	newly introduced regulations, including the Decree
	☐ Non compliance
	receive information on the	presented to shareholders the curricula vitae	of the Government of the Russian Federation of
	candidates, sufficient to get	of all the candidates to the Board of	12.03.2022 N 351 On the specifics of disclosure and
	an idea of their personal and	Directors, the results of evaluation of the		provision of information in 2022.
	professional qualities.	candidates performed by the Board of		The Company will strive to take all reasonable and
		Directors (or its Nomination Committee), as		conscientious actions within the framework of the
		well as information on the candidates'		issues of convening, preparing and holding general
		compliance with the independence criteria, in		meetings of shareholders.
		accordance with recommendations No. 102
		to 107 of the Code, and the written consent
		of the candidates for election to the Board of
		Directors.
2.3.3	The composition of the Board	1. As part of the procedures for the Board of	☒ Compliance ensured
	of Directors is balanced,	Directors evaluation held during the	☐ Partial compliance
	including the qualifications of	reporting period, the Board of Directors
	its members, their	reviewed its own needs in the field of
	☐ Non compliance
	experience, knowledge, and	professional qualification, experience, and
	business qualities, and enjoys	business skills.
	the trust of shareholders.
				113

2.3.4	The quantitative composition	1. As part of the Board of Directors	☒ Compliance ensured
	of the Board of Directors	evaluation procedure carried out in the	☐ Partial compliance
	makes it possible to arrange	reporting period, the Board of Directors
	the activities of the Board of	considered the issue of compliance of the
	☐ Non compliance
	Directors in the most efficient	quantitative Board composition with the
	manner, including the	Company's needs and the interests of
	formation of the Board's	shareholders.
	committees; it also provides
	significant minority
	shareholders an opportunity
	to elect a candidate for whom
	they vote.
2.4.	The Board of Directors has a sufficient number of independent directors.
2.4.1	An independent director is	1. During the reporting period, all	☒ Compliance ensured
	the person that has sufficient	independent Board members met all the	☐ Partial compliance
	competence, experience and	independence criteria set out in
	independence for forming its	recommendations 102-107of the Code or
	☐ Non compliance
	own position, able to	were recognized as independent by the
	conclude objectively and	decision of the Board of Directors.
	fairly, independent from the
	influence of the Company's
	executive bodies, individual
	groups of shareholders or
	other interested parties.
	It should be borne in mind,
	however, that in ordinary
	circumstances a candidate
	(elected member of the Board
	of Directors) who is
	associated with the Company,
	its significant shareholder,
	significant counterparty, or a
	competitor, or is associated
	with the state, cannot be
			114

	regarded as an independent
	candidate.
2.4.2	The candidates for members	1. In the reporting period, the Board of	☒ Compliance ensured
	of the Board of Directors are	Directors (or the Board's Nomination
	evaluated for compliance	Committee) formed an opinion of each	Partial compliance
	with the criteria of	candidate's independence and submitted a	☐ Non compliance
	independence, as well as	conclusion on the matter to shareholders.
	independent members of the	2. During the reporting period, the Board of
	Board of Directors are	Directors (or the Board's Nomination
	regularly analysed for	Committee) evaluated the independence of
	compliance with the criteria	the current Board members indicated in the
	of independence. During this	Annual Report as independent directors at
	evaluation, the content	least once.
	should prevail over the form.	3. The Company has procedures in place
		which define the necessary actions for a
		Board member to take in case they cease to
		be independent, including the obligation to
		inform the Board of this fact in due time.
2.4.3	At least one third of the	1. At least one third of the members of the	☒ Compliance ensured
	elected members of the	Board are independent directors.	☐ Partial compliance
	Board are independent
	directors.
		☐ Non compliance
2.4.4	Independent directors play a	1. Independent directors (with no conflict of	☒ Compliance ensured
	key role in preventing internal	interest) give a preliminary evaluation of	☐ Partial compliance
	Company conflicts and in the	material corporate actions related to a
	Company's execution of	possible conflict of interest; this evaluation is
	material corporate actions.	submitted to the Board of Directors.	☐ Non compliance
2.5	The Chairman of the Board of	Directors promotes the most efficient implementation of the functions assigned	to the Board of Directors.

115

2.5.1

An independent director is elected Chairman of the Board of Directors, or a Senior Independent Director is chosen from among the elected Independent Directors, who coordinates the activities of independent directors and carries out interaction with the Chairman of the Board of Directors.

1. The Chairman of the Board of Directors is an independent director or a Senior Independent Director chosen from among independent directors.
2. The role, rights, and duties of the Board Chairman (and Senior Independent Director, if any) are duly defined in internal corporate documents.

• Compliance ensured

• Partial compliance

• Non-compliance

1. Non-compliance

The Chairman of the Board of Directors is not an independent director; a Senior Independent Director has not been chosen from among independent directors. The Chairman of the Board of Directors is a member who made a significant contribution to the development of the Company and has the most experience, professional competence, and authority among shareholders, members of management bodies, and employees of the Company.

Independent Directors, who make up the majority of members of the Company's Board, have full opportunity to have face-to-face communication with the Chairman of the Board of Directors.

The Company has opted for a model whereby having a sufficient number of independent directors ensures their key role in resolving all matters and eliminates the need for a Senior Independent Director.

The Company believes that its Chairman of the Board of Directors not being an independent director and there being no Senior Independent Director does not entail additional risks for the Company.

The Company adheres to the position of the inexpediency of mandatory election of an independent chair of the Board of Directors in the presence of a sufficient number, from the point of view of the Сompany, of independent directors. The Company will continue to analyze and evaluate the feasibility of introducing the position of Senior Independent Director during 2023.

2. Compliance ensured

116

2.5.2.	The Chairman of the Board	1. The efficiency of Chairman of the Board's	☒ Compliance ensured
	creates a constructive	performance was evaluated during the	☐ Partial compliance
	atmosphere at meetings,	evaluation of the Board's performance in the
	ensures open discussions on	reporting period.	☐ Non compliance
	the agenda items, and
	monitors the implementation
	of resolutions passed by the
	Board of Directors.
2.5.3.	The Chairman of the Board	1. The obligation of the Chairman of the	☒ Compliance ensured
	takes reasonable measures to	Board to take measures to ensure timely	☐ Partial compliance
	ensure timely submittal of	submittal of materials required for taking
	information required by the	decisions on the agenda items to the Board
	☐ Non compliance
	Board members for taking	members is set out in the Company's internal
	decisions on the agenda	documents.
	items.
2.6	Members of the Board act reasonably and in good faith in the interests of the Company and its shareholders, based on sufficient information, with due diligence
	and care.
2.6.1	Members of the Board make	1. The company's internal documents state	☒ Compliance ensured
	decisions taking into account	that a Board member must duly notify the	☐ Partial compliance
	all available information, with	Board of Directors if a conflict of interest
	no conflict of interest, on the	arises pertaining to any agenda item of the
	☐ Non compliance
	condition of equal treatment	Board meeting or a Board committee
	of the Company's	meeting, before the beginning of discussions
	shareholders, within the	of the respective agenda item.
	normal business risk.	2. Internal documents of the company state
		that a Board member must refrain from
		voting on any item where he/she has a
		conflict of interest.
		3. There is a procedure in place in the
		Company which entitles the Board of
		Directors to receive professional
		consultations on items within their area of
		expertise at the Company's expense.
			117

2.6.2	The rights and obligations of	1. There is a published document in effect in	☒ Compliance ensured
	the Board members are	the Company which clearly defines the Board	☐ Partial compliance
	clearly worded and stated in	members' rights and obligations.
	the Company's internal
		☐ Non compliance
	documents.
2.6.3	Board members have enough	1. Individual presence at the meetings of the	☒ Compliance ensured
	time to perform their duties.	Board and committee meetings, as well as	☐ Partial compliance
		the time dedicated to the preparation for
		such meetings, were taken into consideration
		during the Board evaluation in the reporting	☐ Non compliance
		period.
		2. According to the Company's internal
		documents, members of the Board must
		notify the Board of Directors of their
		intention to enter the management bodies of
		other organizations (except the controlled
		and affiliated companies) and of the fact of
		such an appointment.
2.6.4	All members of the Board	In accordance with the Company's internal	☒ Compliance ensured
	have equal access to the	documents, members of the Board of	☐ Partial compliance
	documents and information	Directors have the right to access documents
	of the Company. Newly	and make inquiries regarding the Company	☐ Non compliance
	elected members of the	and the companies it controls, while the
	Board receive sufficient	Company's executive bodies are obliged to
	information on the Company	provide the relevant information and
	and the Board of Directors'	documents.
	activities as promptly as	2. The Company has a formal induction
	possible.	procedure for newly elected members of the
		Board.
2. 7	Meetings of the Board of Directors, preparation for them, and attendance by the Board members ensure the	efficient performance of the Board of Directors.

118

2.7.1	Meetings of the Board of	1. The Board of Directors had at least six	☒ Compliance ensured
	Directors are conducted on an	meetings during the reporting year.	☐ Partial compliance
	ad hoc basis, taking into
	account the scope of activities
		☐ Non compliance
	and tasks that the Company is
	facing at a given time.
2.7.2	The Company's internal	1. The Company has an approved internal	☒ Compliance ensured
	documents set the procedure	document in place which sets the procedure	☐ Partial compliance
	for preparing and holding	for preparing and holding Board meetings,
	Board meetings, enabling	stating, inter alia, that the notice of the
	☐ Non compliance
	Board members to be	meeting should be made, as a rule, at least 5
	properly prepared.	days in advance.
		2. During the reporting period, members of
		the Board of Directors who were absent from
		the venue of the meeting of the Board of
		Directors were given the opportunity to
		participate in the discussion of agenda issues
		and voting remotely - via conference and
		video conferencing
2.7.3	The form of holding the Board	1. The Charter or an internal document of the	☒ Compliance ensured
	meeting is determined by the	Company requires that the most significant	☐ Partial compliance
	degree of importance of the	issues (according to the list specified in
	agenda items. The most	recommendation 168 of the Code) should be
	important issues are resolved	considered at Board meetings held in	☐ Non compliance
	at meetings held in	praesentia.
	praesentia.
2.7.4	Resolutions on the most	1. The Company's Charter stipulates that	☐ Compliance ensured	In accordance with the Charter, resolutions on most
	important issues of the	resolutions on the most important issues	☒ Partial compliance	of the issues that are in the competence of the
	Company's business are	listed in recommendation 170 of the Code	Board of Directors are made by open voting of the
	passed at the Board meetings	are to be passed at the Board meetings by	members of the Board of Directors participating in
	☐ Non compliance
	by qualified majority or by a	qualified majority, at least 75% of votes, or by	the meeting with a simple majority, except in cases
	majority of votes of all the	a simple majority of votes of all the elected	stipulated by law. This way, full compliance with
	elected Board members.	Board members.		legislative requirements is achieved.
				The Company believes that the risks related to
				partial compliance with the requirements of the
				119

				Code are offset by the high attendance of meetings
				by members of the Company's Board of Directors
				and preliminary study of the most important issues
				by independent directors as part of the activities of
				the Board Committees, as well as the maximum
				consideration of the opinions of all Board members
				when taking decisions on the most important issues
				concerning the Company's activities. Thus, in
				practice, compliance with this Code
				recommendation is ensured.
				In view of the above, the Company eliminates the
				possibility of any risks and is not planning to alter its
				practices related to this recommendation. At the
				same time, in case of risk factors, it will take
				measures to adjust this system by amending
				internal corporate documents.
2. 8	The Board of Directors sets up	committees for preliminary consideration of the	most important issues of the	Company's activity.
2.8.1	An Audit Committee	1. The Board of Directors has set up the Audit	☐ Compliance ensured	1. Partial compliance
	consisting of independent	Committee, which consists only of	☒ Partial compliance	The Board of Directors has set up an Audit
	directors is set up for the	independent directors.	Committee chaired by an independent director; the
	preliminary consideration of	2. The Company's internal documents define	majority of Committee members are independent
	issues related to the control	the tasks for the Audit Committee, including,	☐ Non compliance	directors. Most of the Committee members are
	over the company's financial	among others, the tasks listed in	independent directors.
	and economic activities.	recommendation 172 of the Code.		The Audit Committee was formed based on the
		3. At least one member of the Audit		requirements of maximum effectiveness, taking into
		Committee who is an independent director		consideration members' qualifications in order to
		has experience in and knowledge about the		attain the optimal balance of relevant expert
		compilation, analysis, evaluation, and audit of		competencies and professional experience. The
		accounting (financial) statements.		Board of Directors does not limit itself to a formal
		4. Meetings of the Audit Committee were		Committee formation approach, considering not
		held at least once per quarter during the		only the independence of its members, but also
		reporting period.		their professional knowledge and skills necessary to
				ensure the Committee's effective operation. The
				Board takes into account the entirety of factors
				related to the Committee members' specialized
				120

competencies, including the relevant professional expertise and education, and other important aspects concerning the ability to form objective, independent opinions and judgements and to take decisions based on the long-term interests of the Company and all its shareholders. Additionally, the Board considers the effectiveness of the members' previous work on the Committee and their engagement in its activities.

The Committee member acting as a non-executive director has extensive experience, a deep understanding of business, and comprehensive knowledge in areas related to the Committee's remit, making a substantial contribution, which is required for the Committee's functioning.

In order to ensure thorough consideration of issues included in the Committee meeting agenda, the Company takes into account the maximum number of committees that every Board member may participate in (stipulated in NLMK's Regulations on the Board of Directors in accordance with the Corporate Governance Code recommended by the Bank of Russia).

Thus, the Company takes into account the expediency of attaining maximum engagement of independent directors and their required prevalence in the above Committees.

In view of the above, the Company believes that the optimal Committee composition has been formed, with the vast majority of members (two out of thre), as well as the Chairman, being independent directors. The Company holds that non-compliance with this recommendation does not entail additional risks and has no plans to ensure compliance with this recommendation in the near future.

121

				2. Compliance ensured
				3. Compliance ensured
				4. Compliance ensured
2.8.2	For the preliminary	1. The Board of Directors has set up a	☐ Compliance ensured	1. Partial compliance
	consideration of issues	Remuneration Committee, which consists	☒ Partial compliance	The Board of Directors has set up a Human
	related to the development of	entirely of independent directors.	Resources, Remuneration and Social Policy
	an efficient and transparent	2. The Chairman of the Remuneration	Committee headed by an independent director.
	☐ Non compliance
	remuneration practice, a	Committee is an independent director who is	Most of the Committee members are independent
	Remuneration Committee has	not the Chairman of the Board.	directors.
	been set up, which consists of	3. The Company's internal documents define		The Human Resources, Remuneration and Social
	independent directors and is	the tasks of the Remuneration Committee,		Policy Committee was formed based on the
	chaired by an independent	including, among others, the tasks listed in		requirements of maximum effectiveness, taking into
	director who is not the Board	Recommendation 180 of the Code.		consideration members' qualifications in order to
	Chairman.			attain the optimal balance of relevant expert
				competencies and professional experience. The
				Board of Directors is not limited to a formal
				approach to the formation of the Committee and
				takes into account not only the independence of its
				members, but also their professional knowledge and
				skills necessary to ensure the effective work of the
				Committee, including the availability of relevant
				professional expertise, education, and other
				important aspects related to the ability to form
				objective and independent opinions and judgments,
				make decisions based on the long-term interests of
				the company and all its shareholders. Additionally,
				the Board considers the effectiveness of the
				members' previous work on the Committee and
				their engagement in its activities.
				In order to ensure thorough consideration of issues
				included in the Committee meeting agenda, the
				Company takes into account the maximum number
				of committees that every Board member may
				participate in (stipulated in NLMK's Regulations on
				the Board of Directors in accordance with the
				122

				Corporate Governance Code recommended by the
				Bank of Russia).
				Thus, the Company takes into account the
				expediency of attaining maximum engagement of
				independent directors and their required prevalence
				in the Committee.
				In view of the above, the Company believes that the
				optimal Committee composition has been formed,
				with the majority of members (three out of five), as
				well as the Chairman, being independent directors.
				The Company holds that non-compliance with this
				recommendation does not entail additional risks
				and has no plans to ensure compliance with this
				recommendation in the near future.
				2. Compliance ensured
				3. Compliance ensured
2.8.3	For the preliminary	1. The Board of Directors has set up a	☒ Compliance ensured
	consideration of issues	Nomination Committee (alternatively,	☐ Partial compliance
	related to human resources	another committee performs its tasks, listed
	planning (succession	in recommendation 186 of the Code), which	☐ Non compliance
	planning), occupational	mostly consists of independent directors.
	structure, and efficient	2. The Company's internal documents define
	performance of the Board of	the tasks of the Nomination Committee (or
	Directors, a Nomination	another committee performing related
	(Appointments, Staffing)	tasks), including, among others, the tasks
	Committee has been set up,	listed in recommendation 186 of the Code.
	which mostly consists of	3. In order to form a board of directors that
	independent directors.	best meets the goals and objectives of the
		company, the nomination committee in the
		reporting period independently or jointly
		with other committees of the board of
		Directors or the authorized division of the
		company for interaction with shareholders
		organized interaction with shareholders, not
		limited to the circle of the largest
			123

		shareholders, in the context of the selection
		of candidates to the board of directors of the
		company.
2.8.4	Considering the activity scale	1. During the reporting period, the Board of	☒ Compliance ensured
	and risk level, the Board of	Directors has considered the compliance of	☐ Partial compliance
	Directors has made sure that	its committees' composition with the goals of
	the composition of its	the Board and objectives of the Company.	☐ Non compliance
	committees is fully in line	Additional committees have either been
	with the Company's business	formed or deemed unnecessary.
	objectives. Additional
	committees have either been
	formed or deemed
	unnecessary (Strategy
	Committee, Corporate
	Governance Committee,
	Ethics Committee, Risk
	Management Committee,
	Budget Committee, Health,
	Safety and Environment
	Committee, and others).
2.8.5	The committees are	1. Committees of the Board are chaired by	☒ Compliance ensured
	composed in such a way as to	independent directors.	☐ Partial compliance
	enable comprehensive	2. The company's internal documents
	examination of issues under	(polices) contain provisions stating that non-
	consideration based on	members of the Audit Committee,	☐ Non compliance
	various opinions.	Nomination Committee, and Remuneration
		Committee may only attend their meetings
		when invited by the respective committee's
		chair.
2.8.6	Committee chairs regularly	1. Within the reporting period Committee	☒ Compliance ensured
	inform the Board of Directors	chairmen regularly reported on the work of	☐ Partial compliance
	and its Chairman of their	the committees to the Board of Directors
	respective Committees'
		☐ Non compliance
	activities.
2. 9	The Board of Directors ensures	that the performance of the Board, its committees	and members is evaluated.

124

2.9.1	The evaluation of the Board	1. Во внутренних документах общества	☒ Compliance ensured
	of Directors is designed to	определены процедуры проведения	☐ Partial compliance
	determine the efficiency of	оценки (самооценки) качества работы
	the Board's, its Committees',	совета директоров.
	☐ Non compliance
	and members' performance	2. Within the reporting period, self-
	and the correspondence of	assessment or external assessment of the
	their performance to the	Board's performance was carried out,
	development needs of the	including a performance evaluation of the
	Company, as well as to step	Committee, individual members of the Board,
	up the Board's activities and	and the Board of Directors as a whole.
	identify the areas for	3. The results of self-assessment or external
	potential improvement.	assessment of the Board of Directors made
		within the reporting period have been
		reviewed at the Board of Directors' meeting
		in praesentia.
2.9.2	Assessment of performance	1. An independent performance evaluation of	☒ Compliance ensured
	of the Board of Directors,	the Board of Directors was carried out by an	☐ Partial compliance
	committees and Board	independent auditor (consultant) at least
	members is made on a	once within the last three reporting periods.
	☐ Non compliance
	regular basis minimum once a
	year. For an independent
	quality assessment of the
	Board of Directors'
	performance, an external
	company (consultant) is
	involved at least once every
	three years.
3. 1	The Corporate Secretary of the	Company ensures efficient day-to-day interaction	with shareholders, coordinates	the Company's activities aimed at the protection
	of shareholders' rights and interests, and supports the efficient operation of the Board of Directors.

125

3.1.1	The Corporate Secretary has	1. The biography of the Corporate Secretary	☒ Compliance ensured
	sufficient knowledge,	published on the company's website and the	☐ Partial compliance
	experience, and qualification	Annual Report is as detailed as the
	to perform his obligations, as	biographies of Board members and the
	☐ Non compliance
	well as an impeccable	company's executive management.
	reputation and credibility
	with shareholders.
3.1.2	The Corporate Secretary has	1. The company has adopted and made	☒ Compliance ensured
	sufficient independence from	known an internal document - Regulations on	☐ Partial compliance
	the Company's executive	the Corporate Secretary.
	bodies and has the required	2. The Board of Directors approves the
	☐ Non compliance
	authority and resources to	appointment, dismissal from office, and
	execute the tasks assigned to	additional remuneration of the Corporate
	him.	Secretary.
		3. The company's internal documents
		stipulate the right of the corporate secretary
		to request and receive company documents
		and information from management bodies,
		structural divisions and officials of the
		company
4. 1	Level of remuneration is sufficient to attract, motivate and hold the persons having required competence and	qualification for the company. Remuneration to the
	Board members, executive bodies, and other key executives of the company is paid according to the remuneration policy adopted in the Company.
4.1.1	The level of remuneration	1. The Company has adopted an internal	☒ Compliance ensured
	paid by the company to the	document (internal documents): a policy	☐ Partial compliance
	Board members, executive	(policies) on remuneration of the Board
	bodies and other key	members, members of executive bodies, and
	managers is enough to	other key executives, which expressly	☐ Non compliance
	motivate them to have	establishes approaches to the remuneration
	efficient performance	paid to these persons.
	allowing the company to
	attract and keep competent
	and qualified specialists. At
	the same time the company
	avoids having a higher than
	necessary remuneration level
			126

	and an unreasonably large
	gap between the
	remuneration of the persons
	mentioned above and the
	company employees.
4.1.2	The company's remuneration	1. Within the reporting period the	☒ Compliance ensured
	policy is developed by the	Remuneration Committee reviewed the	☐ Partial compliance
	Remunerations Committee	remuneration policy (policies) and practices
	and is approved by the	and, if required, gave relevant
	☐ Non compliance
	company's Board of Directors.	recommendations to the Board of Directors.
	With the assistance of the
	Remuneration Committee,
	the Board of Directors
	oversees the incorporation
	and implementation of the
	remuneration policy in the
	Company, and, if required,
	revises and amends it.
4.1.3	The Company's remuneration	1. The Company's remuneration policy	☒ Compliance ensured
	policy contains transparent	(policies) contains (contain) transparent	☐ Partial compliance
	mechanisms for determining	mechanisms for determining the
	the remuneration level of the	remuneration level of the Board members,
	☐ Non compliance
	Board members, members of	members of executive bodies, and other key
	executive bodies, and other	executives of the Company, and regulates
	key executives of the	(regulate) all types of payments, benefits, and
	Company, and regulates all	privileges granted to the these persons.
	types of payments, benefits,
	and privileges granted to the
	these persons.

127

4.1.4	The company establishes the	1. The Company's remuneration policy	☒ Compliance ensured
	policy of reimbursement of	(policies) or other internal documents	☐ Partial compliance
	expenses (compensation),	establish the rules of expense reimbursement
	specifying the list of	of the Board members, members of executive	☐ Non compliance
	reimbursable expenses and	bodies, and other key executives of the
	the level of service to which	Company.
	Board members, executive
	bodies and other key
	managers of the company are
	entitled. This policy can be a
	part of the Company's
	remuneration policy.
4. 2	The remuneration system for	members of the Board of Directors aligns the financial interests of directors with the long-term financial interests of shareholders.
4.2.1	The company pays fixed	1. In the reporting period, the company paid	☒ Compliance ensured
	annual remuneration to the	remuneration to members of the Board of	☐ Partial compliance
	Board members. The	Directors in accordance with the
	company does not pay	remuneration policy adopted by the
	☐ Non compliance
	remuneration for	company.
	participation in individual	2. In the reporting period, the company did
	meetings of the Board of	not apply forms of short-term motivation or
	Directors or Committees of	additional financial incentives to the
	the Board.	members of the Board of Directors, the
	The Company does not use	payment of which depends on the results
	any forms of short-term	(indicators) of the company's activities.
	incentives and additional	Remuneration for participation in individual
	material incentives for	meetings of the Board or committees of the
	members of the Board of	Board of Directors was not paid
	Directors.

128

4.2.2	Long-term holding of the	1. If the Company's internal document	☒ Compliance ensured
	company's shares provides	(documents) - policy (policies) on	☐ Partial compliance
	for proximity of financial	remuneration - provides for the ownership of
	interests of the Board	the Company's shares by the Board	☐ Non compliance
	members with long-term	members, clear and explicit rules aimed at
	interests of the shareholders	encouraging long-term ownership of the
	to the utmost. At the same	Company's shares by the Board members
	time, the Company does not	should be introduced and disclosed.
	tie the rights to sell shares to
	achieving certain
	performance indicators, and
	members of the Board of
	Directors do not participate in
	option programmes.
4.2.3	The Company does not	1. The Company does not provide for	☒ Compliance ensured
	provide for additional	additional payments or compensations in the	☐ Partial compliance
	payments or compensations	event of early termination of the Board
	in the event of early	members' appointment in connection with
	☐ Non compliance
	termination of the Board	the transfer of control over the Company or
	members' appointment in	other circumstances.
	connection with the transfer
	of control over the Company
	or other circumstances.
4. 3	The Company's remuneration system for members of executive bodies and other key executives provides for a correlation between the amount of remuneration
	and the Company's performance and personal contribution to achieving this performance.
4.3.1	The remuneration of	1. Within the reporting period annual	☒ Compliance ensured
	members of executive bodies	performance indicators approved by the	☐ Partial compliance
	and other key executives of	Board of Directors were used to determine
	the Company is determined in	the amount of variable remuneration of
	☐ Non compliance
	such a way as to ensure a	members of executive bodies and other key
	reasonable and justified	executives of the Company
	correspondence between the	2. During the latest evaluation of the
	fixed part of remuneration	Company's remuneration system for
	and the variable part of	members of executive bodies and other key
	remuneration, depending on	executives, the Board of Directors

129

	the Company's performance	(Remuneration Committee) made sure that
	and the employee's personal	an efficient ratio of the fixed part and the
	(individual) contribution to	variable part of remuneration is applied in
	the final result.	the Company.
		3. The Company provides for a procedure
		which ensures that the Company's bonuses
		illegally received by members of executive
		bodies and other key executives of the
		Company are returned to the Company.
4.3.2	The Company has	1. In line with the long-term incentive	☐ Compliance ensured	In conditions when significantly changing market
	implemented a long-term	programme, members of executive bodies	☒ Partial compliance	prices have a determining influence on the share
	incentive programme for	and other key executives of the Company	price, a long-term incentive programme using the
	members of executive bodies	have the right to sell shares and other	Company's shares has been recognized as
	☐ Non compliance
	and other key executives of	financial instruments not earlier than three	ineffective and is not used in the Company. The
	the Company using the	years from the moment of their granting.	Company has adopted a long-term incentive
	Company's shares (options or	Additionally, the right to sell them depends		programme for members of executive bodies and
	other derivative financial	on the Company achieving certain		other key executives of the Company, which does
	instruments based on the	performance indicators.		not provide for the use of the Company's shares
	Company's shares).			(financial instruments based on the Company's
				shares). The current long-term incentive programme
				is based on defining and evaluating long-term
				strategic KPIs. The right to receive long-term
				remuneration appears no earlier than three years
				after the KPIs are set if there is confirmation of their
				successful attainment expressed in quantitative
				terms. The KPIs for the long-term programme
				correlate directly with the Company's strategic
				success.
				In the near future there are no plans to implement a
				long-term incentive programme for members of
				executive bodies and key executives of the
				Company using the Company's shares (financial
				instruments based on the Company's shares). If a
				long-term incentive programme is implemented
				using the Company's shares (financial instruments
				130

				based on the Company's shares), it will be provided
				that the right to sell such shares and other financial
				instruments comes no earlier than three years from
				the date of their provision and is conditioned on the
				achievement of certain performance indicators of
				the Company.
4.3.3	The amount of compensation	1. The amount of compensation (golden	☒ Compliance ensured
	(golden parachute) paid by	parachute) paid by the Company to members	☐ Partial compliance
	the Company to members of	of executive bodies or other key executives in
	executive bodies or other key	case of their early termination initiated by	☐ Non compliance
	executives in case of their	the Company and with no fraudulent actions
	early termination initiated by	on their part did not exceed the two-fold
	the Company and with no	amount of the fixed part of their annual
	fraudulent actions on their	remuneration in the reporting period.
	part does not exceed the two-
	fold amount of the fixed part
	of their annual remuneration.
5. 1	The Company has an efficiently	functioning risk management and internal control	system in place, aimed at	providing reasonable assurance that the Company will
	achieve its targets.
5.1.1	The Board of Directors	1. The Company's internal	☒ Compliance ensured
	defines the principles and	documents/respective policy approved by the	☐ Partial compliance
	approaches to the Company's	Board of Directors explicitly defines the
	risk management and internal	functions of the Company's various
	☐ Non compliance
	control system.	management bodies and subdivisions in the
		risk management and internal control
		system.
5.1.2	The Company's executive	1. The Company's executive bodies ensured	☒ Compliance ensured
	bodies ensure that an	that risk management and internal control	☐ Partial compliance
	efficiently functioning risk	functions and authority are well distributed
	management and internal	between the managers (heads) of the
	☐ Non compliance
	control system is established	subdivisions reporting to them.
	and maintained in the
	Company.
			131

5.1.3	The Company's risk	1. The Company has adopted an anti-	☒ Compliance ensured
	management and internal	corruption policy.	☐ Partial compliance
	control system ensures an	2. There is a procedure in place in the
	objective, fair, and clear	Company aimed at informing the Board of
	☐ Non compliance
	understanding of the	Directors or the Board's Audit Committee
	Company's current state and	about any violations of legislation, the
	prospects, the integrity and	Company's internal procedures, and ethics
	transparency of the	code.
	Company's statements, and
	that the risks assumed by the
	Company are reasonable and
	acceptable.
5.1.4	The Company's Board of	1. During the reporting period, the Board of	☒ Compliance ensured
	Directors takes the necessary	Directors or the Board's Audit Committee	☐ Partial compliance
	measures to ensure that the	evaluated the efficiency of the Company's
	Company's risk management	risk management and internal control
	☐ Non compliance
	and internal control system	system.
	functions efficiently and	2. In the reporting period the Board of
	complies with the principles	Directors reviewed the results of the
	and approaches determined	assessment of the reliability and efficiency of
	by the Board of Directors.	the risk management and internal control
		system and the results of this review is
		included in the Report
		____________________________________
5. 2	The Company arranges internal	audits for a systematic independent evaluation of the reliability and efficiency	of the risk management and internal control system
	and corporate governance practice.

132

5.2.1	A separate structural	1. The Company has set up a separate	☒ Compliance ensured
	subdivision has been set up in	structural subdivision for internal audit,	☐ Partial compliance
	the Company for internal	which functionally reports to the Audit
	audit or an independent	Committee and the Company's Board of
	☐ Non compliance
	outside company has been	Directors, or engaged an independent auditor
	involved. Functional and	under the same accountability principle.
	administrative subordinations
	of the Internal Audit Division
	are split. The Internal Audit
	Department functionally
	reports to the Board of
	Directors.
5.2.2	The Internal Audit	1. During the reporting period, the internal	☒ Compliance ensured
	Department evaluates the	audit evaluated the efficiency of the internal	☐ Partial compliance
	efficiency of the internal	control and risk management system.
	control, risk management,	2. The Company is guided by generally
	☐ Non compliance
	and corporate governance	accepted approaches to internal control and
	systems. The Company is	risk management.
	guided by generally accepted
	internal audit standards.
6. 1	The Company and its activity are transparent for its shareholders, investors, and other stakeholders.
6.1.1	The Company has developed	1. The Company's Board of Directors has	☒ Compliance ensured
	and implemented an	approved the Company's Information Policy	☐ Partial compliance
	information policy, which	developed with regard to recommendations
	ensures efficient interaction	of the Code.
	☐ Non compliance
	between the Company, its	2. The Board of Directors (or one of its
	shareholders, investors, and	Committees) has reviewed the issues related
	other stakeholders	to information policy observance at least one
	information-wise.	time within the reporting period.

133

6.1.2	The Company discloses	1. The Company discloses information on the	☒ Compliance ensured	1. Compliance ensured
	information on its corporate	corporate governance system in the	☐ Partial compliance	2. Compliance ensured
	governance system and	Company and on the general principles of	3. Compliance ensured
	practices, including detailed	corporate governance used in the Company	The Board of Directors is chaired by a person
	☐ Non compliance
	information on observance of	including on the Company's web-site in the	controlling the Company, whose plans with regard
	the principles and	Internet.	to the Company's corporate governance are
	recommendations of the	2. The Company discloses information on the		reflected in the documents approved by the
	Code.	executive bodies and the Board of Directors,		Company's General Meeting of Shareholders and
		independence of the Board members and		Board of Directors, available to an unlimited number
		their membership in the Committees of the		of interested parties.
		Board of Directors (in accordance with the
		definition of the Code).
		3. If there is a person controlling the
		Company, the Company publishes a
		memorandum of the controlling person
		regarding their plans with regard to the
		Company's corporate governance.
6. 2	The Company discloses complete,	valid, and reliable information on the Company	in due time to enable the	Company's shareholders and investors to make
	informed decisions.
6.2.1	The Company discloses	1. The Information Policy of the Company	☒ Compliance ensured
	information guided by the	defines approaches and criteria of	☐ Partial compliance
	principles of regularity,	determining information that can significantly
	consistency, efficiency,	affect the Company's valuation and the value	☐ Non compliance
	availability, reliability,	of its securities; it also defines procedures
	completeness, and	ensuring timely disclosure of such
	comparability of the	information.
	information disclosed.	2. If the securities of the company circulate
		on foreign regulated markets disclosure of
		significant information in the Russian
		Federation and on these markets is done
		simultaneously and equivalently during the
		reporting year.
		3. If foreign shareholders own a significant
		quantity of the Company's shares, the
		information was disclosed not only in Russian
				134

		but also in one of the most common foreign
		languages during the reporting year.
6.2.2	The Company avoids a box-	1. During the reporting year, the Company	☒ Compliance ensured
	ticking approach while	disclosed its annual and semi-annual IFRS	☐ Partial compliance
	disclosing information; it	financial statements.
	discloses material information	2. The Company discloses information on the
	on its activities even if law	its equity structure in full in its Annual Report	☐ Non compliance
	does not require such	and on the Company's website in line with
	disclosure.	Recommendation 290 of the Code.
		4. The Company discloses a non-financial
		report - a sustainable development report, an
		environmental report, a corporate social
		responsibility report or another report
		containing non-financial information,
		including factors related to the environment
		(including environmental factors and factors
		related to climate change), society (social
		factors) and corporate governance, except
		for the report of the issuer of equity
		securities and the annual report of the joint-
		stock company
6.2.3	The Annual Report as one of	1. The Company's Annual Report contains	☒ Compliance ensured
	the most important tools of	information on the key aspects of the	☐ Partial compliance
	interaction with shareholders	Company's operations and its financial
	and other stakeholders	performance.
	☐ Non compliance
	contains information, which	2. The Company's Annual Report contains
	enables the evaluation of the	information on environmental and social
	Company's performance over	aspects of the Company's activities.
	a year.	_________________________________
6. 3	The Company provides information and documents requested by shareholders in line with the principle of equal and easy access.

135

6.3.1	Information and documents	1. The information policy (internal	☐ Compliance ensured	1.Compliance ensured
	requested by shareholders	documents defining the information policy)	☒ Partial compliance	2. Partial compliance
	are disclosed in line with the	of the company defines a non-burdensome	When providing information to shareholders the
	principle of equal and easy	procedure for providing access to information	Company ensures a reasonable balance between
	access.	and documents of the company at the	☐ Non compliance	the interests of certain shareholders and the
		request of shareholders.	interests of the Company itself, which seeks to keep
		2. The Company's Information Policy		important commercial information, which may
		determines an easy procedure of giving		significantly affect its competitiveness, confidential.
		access to information for shareholders		During 2023, the Company plans to continue
		including the information on legal entities		evaluating the feasibility of updating the current
		controlled by the Company on shareholder's		version of the Information Policy. At the same time,
		request.		in practice, this recommendation of the Code is
				observed: at the request of the shareholder, the
				Company provides all the necessary information,
				and in case of its absence, the necessary efforts are
				made to obtain the missing information from the
				relevant organizations controlled by the company
6.3.2	Upon presentation of	1. In the reporting year the Company didn't	☒ Compliance ensured
	information to shareholders	refuse to satisfy the shareholders' requests to	☐ Partial compliance
	by the Company a reasonable	provide information or such refusals were
	balance is ensured between	justified.
	☐ Non compliance
	the interests of certain	2. In cases defined by the Information Policy
	shareholders and the	of the Company shareholders are warned
	interests of the Company	about the confidential nature of the
	itself which is interested in	information and undertake to keep it
	preservation of important	confidential
	information confidentiality
	which may have significant
	influence on competitiveness
	of the Company.
7. 1	Actions that significantly influence or can significantly influence the structure of the equity and the financial	status of the Company and thus, the shareholders'
	situation (i.e. material corporate actions) shall be performed on principles of justice ensuring observance of the rights and interests of shareholders and other
	interested parties.
7.1.1	The material corporate	1. The company's Charter defines a list	☒ Compliance ensured
	actions are restructuring of	(criteria) of transactions or other actions that

136

	the Company, acquisition of	are significant corporate actions. Decision-	☐ Partial compliance
	30 and over percent of voting	making in relation to significant corporate	☐ Non compliance
	shares of the Company	actions by the company's charter is attributed
	(takeover), increase or	to the competence of the Board of Directors.
	decrease in the Company's	In cases when such corporate events are
	equity, material transactions	statutorily assigned to the competence of the
	by the Company, listing and	General Meeting of Shareholders, the Board
	delisting of the Company's	of Directors provides respective
	shares and also other actions	recommendations to shareholders.
	which may cause a significant
	change of the shareholders'
	rights or violation of their
	interests. The Company's
	Charter does not list
	transactions and other
	actions that are recognized as
	material corporate events and
	the criteria to determine
	them.
7.1.2	The Board of Directors plays a	1. The Company has a procedure in place	☒ Compliance ensured
	key role in decision-making or	ensuring that the independent directors	☐ Partial compliance
	in preparing	declare their opinion on material corporate
	recommendations regarding	events before they are approved.
	☐ Non compliance
	material corporate events;
	the Board of Directors relies
	on the opinion of the
	Company's independent
	directors.

137

7.1.3	When taking material	1. The Company's Charter, taking into	☒ Compliance ensured
	corporate actions involving	account the specifics of the Company's	☐ Partial compliance
	rights and legitimate interests	activities, establishes the minimal criteria for
	of shareholders equal	the attribution of the Company's transactions	☐ Non compliance
	conditions are provided for all	to material corporate events, which are lower
	the Company's shareholders	than those statutorily required.
	and if the procedures aimed	2. During the reporting period all material
	at protection of the	corporate events underwent an approval
	shareholders' rights and	procedure prior to their implementation.
	envisaged by the legislation
	are not enough then
	additional measures are
	provided to protect rights and
	legitimate interests of the
	Company's shareholders.
	In this case, the Company is
	guided not only by
	compliance with formal
	statutory requirements but
	also by principles of the
	corporate governance
	outlined in the Code
7. 2	The Company ensures such a	procedure for material corporate events that enables shareholders to receive full information thereof in due time and to influence
	such events; it guarantees observance and proper level of protection of their rights when such events take place.
7.2.1	Information on material	1. During the reporting period, the Company	☒ Compliance ensured
	corporate events is disclosed	disclosed information on its material	☐ Partial compliance
	with an explanation of the	corporate events in a timely and detailed
	grounds, conditions, and	manner including the grounds and timing of
	☐ Non compliance
	consequences of such events.	such events.

138

7.2.2	The rules and procedures	1. The Company's internal documents provide	☒ Compliance ensured
	related to the Company's	for a procedure for engaging an appraiser to	☐ Partial compliance
	performance of material	estimate the value of property to be disposed
	corporate events are	of or acquired as a material transaction or as	☐ Non compliance
	specified in the Company's	an interested party transaction.
	internal documents.	2. The Company's internal documents provide
		for a procedure for engaging an appraiser to
		estimate the value of acquisition and buyback
		of its shares.
		3. The Company's internal documents provide
		for an expanded list of grounds on which
		Board members and other parties are
		recognized as an interested party in the
		Company's transactions under the Russian
		legislation.

139