NAVIGATING THE TRANSITION
TO A NET ZERO WORLD
Annual Report 2021
CONTENT
ABOUT
NORNICKEL
Company profile | 2 |
Performance highlights | 4 |
Business model | 10 |
Geography | 12 |
About Annual Report
NORNICKEL
STRATEGIC REPORT | COMMODITY MARKETS | BUSINESS OVERVIEW | |||||
Deputy Chairman's Letter | 17 | Nickel (Ni) | 42 | Mineral resource base | 68 | ||
President's letter | 19 | Copper (Cu) | 50 | Operational performance | 78 | ||
Our Strategy | 22 | Palladium (Pd) | 54 | Sales and supply chain | 91 | ||
Key strategic projects | 32 | Platinum (Pt) | 58 | Energy assets | 95 | ||
Rhodium (Rh) | 62 | Transport assets | 99 | ||||
Financial performance (MD&A) | 102 |
SUSTAINABLE | CORPORATE | CONTROL SYSTEM | |||||
DEVELOPMENT | GOVERNANCE | AND RISK MANAGEMENT | |||||
Environmental and climate change | 117 | Corporate governance structure | 162 | Control system | 200 | ||
Human resources | 133 | General Meeting of Shareholders | 170 | Risk management | 209 | ||
Health and safety | 143 | Board of Directors | 171 | ||||
Social strategy | 151 | Board committees | 183 | ||||
President and Management Board | 187 | ||||||
Remuneration | 196 |
Annual Report 2021
We are pleased to present to you the 2021 Annual Report of MMC Norilsk Nickel focused on our Sustainable Development Strategy. This strategy is driven by management's long-term vision for global commodity markets as the world economy progresses toward a carbon-free future. Nornickel has a unique resource base underpinning our ambitious programme of production growth and operational efficiency, along with an unprecedented environmental programme. This clean growth strategy not only lays out long- term ore production and capital investment targets but also sets out concrete action plans to reduce the Company's environmental footprint in its regions of operation.
This Annual Report has been prepared by the Company's Investor Relations Department in line with best practices in information disclosure and in accordance with the requirements of Bank of Russia's Regulation No. 714-P from 27 March 2020.
VLADIMIR ZHUKOV
Vice President for Investor Relations
MMC NORILSK NICKEL
SHAREHOLDER | IFRS FINANCIAL | |||
INFORMATION | STATEMENTS | |||
Share capital | 232 | Consolidated financial statements | 242 | |
Securities | 233 | |||
Dividend policy | 236 | |||
Investor relations | 238 |
REPORTING PERIOD | ACCURACY OF INFORMATION | APPROVED | APPROVED |
FROM 1 JANUARY 2021 TO 31 DECEMBER 2021 | CONFIRMED | by the Board of Directors | by the Annual General |
The 2021 annual report of PJSC «MMC «Norilsk Nickel» | by the Audit Commission | of MMC Norilsk Nickel | Meeting of Shareholders |
incorporates the results of MMC Norilsk Nickel and other | of MMC Norilsk Nickel | Minutes | of MMC Norilsk Nickel |
operations of the Norilsk Nickel Group (MMC Norilsk Nickel, | Opinion of | No. GMK/12 -pr-bd of | Minutes No. 1 of |
Nornickel, the Company, Group). | 28 April 2022 | 29 April 2022 | 3 June 2022 |
APPENDIX
Report on payments to government | 317 |
Glossary | 318 |
Contacts | 320 |
VLADIMIR POTANIN | SERGEY MALYSHEV |
President, | Senior Vice President - |
Chairman of the Management Board | Chief Financial Officer |
MMC NORILSK NICKEL | MMC NORILSK NICKEL |
1
About Nornickel
COMPANY PROFILE
Industry rankings
Nornickel's share of the global
metals market , %
1
NORNICKEL
Competitive advantages
Nornickel boasts a world-class resource | copper and platinum group metals (PGMs). |
base that is unique in many ways, including | In 2021, the mineral resource estimate was |
the amount of valuable minerals in ores, | updated, resulting in an increase of total |
2021
ReportAnnual
2
Nornickel is Russia's leading metals and mining company, the largest palladium and high-grade nickel producer in the world, and a major producer of platinum and copper. Nornickel also produces cobalt, rhodium, silver, gold, iridium, ruthenium, selenium, and tellurium. Nornickel's shares are listed on the Moscow Exchange and are included in its Blue Chip Index. As of the end of 2021 its American Depositary Receipts (ADRs) traded on the US OTC market, as well as on the London, Berlin, and Frankfurt exchanges (OTC sections). Nornickel had a 7.02% weight in the MSCI Russia Index.
The Group's assets
The Group's production assets | Polar Division and LLC Medvezhy Ruchey, | |
are concentrated in Russia and Finland. | located in the Norilsk Industrial District) | |
The Group's core businesses | Kola Division including Kola MMC and Norilsk | |
are represented by vertically integrated | Nickel Harjavalta Oy nickel refinery | |
metals and mining operations. They | in Finland, and also Trans-Baikal Division | |
include the Norilsk Division (including | (GRK Bystrinskoye, 50.01% stake), located | |
in Trans-Baikal Region. |
Shareholding structure as of 31.12.2021 (%)
37.3 35.95
0.5
26.25
INTERROS LIMITED1
МКПАО ЭН+ ГРУП»1
Treasury shares
Free float
1 Indirect ownership via controlled persons.
In South Africa, the Group owns 50% of Nkomati, which operates a nickel mine of the same name, put on care and maintenance due to termination of operations following a decision made jointly with African Rainbow Minerals, the Group's partner in the project, in 2019.
In addition to the production facilities, the Group operates captive global sales network and owns a wide range of R&D facilities, fuel and energy assets, river fleet, river and sea port terminals, a unique Arctic cargo sea fleet, as well as a number of other auxiliary units.
Nornickel is focused on the mining and processing of minerals,
as well as the production and sale of non-ferrous and precious metals, as well as exploration.
№ 1
38% Palladium
17% High-grade nickel
№4
10% Platinum
6% Primary nickel
№ 5 7% Rhodium
№ 12 2% Copper
№ 14 2% Cobalt
1 As of March 05, 2022. Based on refined metal (including tolling) output for palladium, nickel, platinum, and rhodium; based on contained metal production for copper and cobalt.
Consistently strong EBITDA margin vs global peers2, %
Company No. 1 | 67 | |||||
Nornickel | ||||||
59 | ||||||
Company No. 3 | 58 | |||||
Company No. 4 | 56 | |||||
Company No. 5 | 48 | |||||
Company No. 6 | 29 | |||||
2 The peer group includes Anglo American, BHP Billiton, Rio Tinto, Vale, and Glencore.
their high content and extensive reserve | reserves and resources by 225 mln t of ore. |
life. The Group's key metals are nickel, |
Resources at the current | ||||||||
9mines | production rate | |||||||
over 75years | ||||||||
Proven and probable reserves | Measured and indicated resources | |||||||
1,293mln t | 1,824mln t | |||||||
Ni - 8.7 mln t | Ni - 13.5 mln t | |||||||
Cu | - 15.5 mln t | Cu | - 22.0 mln t | |||||
6PGMs | - 175 moz | 6PGMs | - 246 moz | |||||
For more information about the resource base, see the Mineral Resource Base
3
About Nornickel
NORNICKEL
PERFORMANCE HIGHLIGHTS | Sustainability highlights |
Injury rates (per million hours worked) | SO2 emissions | |||||||||||||||||||||||||||||||||
0.44 | (mln t) | -16% | ||||||||||||||||||||||||||||||||
0.38 | ||||||||||||||||||||||||||||||||||
Financial highlights | 0.32 | 1.9 | 1.9 | 1.9 | ||||||||||||||||||||||||||||||
FIFR | +25% | 2017 | 2021 | |||||||||||||||||||||||||||||||
2018 | 2019 | 2020 | ||||||||||||||||||||||||||||||||
0.23 | 0.21 | 1.8 | 1.6 | |||||||||||||||||||||||||||||||
0.1 | 0.1 | 0.1 | 0.1 | 0.1 | LTIFR | +81% | ||||||||||||||||||||||||||||
2017 | 2018 | 2019 | 2020 | 2021 | ||||||||||||||||||||||||||||||
GHG emissions | ||||||||||||||||||||||||||||||||||
Key financial | highlights (USD bn) | (mln t) | ||||||||||||||||||||||||||||||||
11.7 | 15.5 | 17.9 | +15% | Work-related fatalities | 9 | 9 | +8% | |||||||||||||||||||||||||||
13.6 | 9 | 11 | 8.5 | 0.5 | ||||||||||||||||||||||||||||||
9.1 | +92% | 9.1 | ||||||||||||||||||||||||||||||||
2.1 | 6.0 | 7.0 | Revenue | 0.5 | 8.6 | |||||||||||||||||||||||||||||
3.1 | 3.6 | 6 | 3 | 8.0 | ||||||||||||||||||||||||||||||
Net income | 1 | 2 | 1 | 2 | Employees | +33% | Scope 1 | |||||||||||||||||||||||||||
2017 | 2018 | 2019 | 2020 | 2021 | ||||||||||||||||||||||||||||||
Contractors | -22% | Scope 2 | ||||||||||||||||||||||||||||||||
2017 | 2018 | 2019 | 2020 | 2021 | 2020 | 2021 | ||||||||||||||||||||||||||||
EBITDA & EBITDA margin | Capital investments | Debt | ||||||||||||||||||||||||||||||||
(USD bn) | (USD bn) | (USD bn) | Water use (mcm) | Electricity consumption | ||||||||||||||||||||||||||||||
53% | 58% | 59% | 2.8 | 2.1x | ||||||||||||||||||||||||||||||
44% | 49% | 2.0 | 1.8 | 1.1x | 0.9x | 0.6x | 0.5x | (TJ) | ||||||||||||||||||||||||||
1.6 | 1.3 | 0.1 | 85% | 86% | 87% | 86% | 85% | 44% | 45% | 46% | 47% | |||||||||||||||||||||||
10.5 | 0.5 | 0.8 | 8.2 | 38% | ||||||||||||||||||||||||||||||
7.7 | 0,2 | 0.1 | 7.1 | 7.1 | ||||||||||||||||||||||||||||||
7.9 | 0.1 | 1.9 | 1,342 | 1,412 | 1,344 | 1,458 | ||||||||||||||||||||||||||||
6.2 | 0.8 | 0.7 | 0.5 | 4.7 | 4.9 | 1,138 | 1,210 | 1,172 | 1,260 | 1,281 | 12,175 | 14,480 | 14,837 | 15,111 | ||||||||||||||||||||
0.4 | 1,084 | 14,351 | ||||||||||||||||||||||||||||||||
4.0 | 1.2 | |||||||||||||||||||||||||||||||||
0.7 | 0.7 | 0.8 | 20,180 | 18,762 | 18,501 | 17,750 | 16,135 | |||||||||||||||||||||||||||
2017 | 2018 | 2019 | 2020 | 2021 | 2017 | 2018 | 2019 | 2020 | 2021 | 2017 | 2018 | 2019 | 2020 | 2021 | 2017 | 2018 | 2019 | 2020 | 2021 | 2017 | 2018 | 2019 | 2020 | 2021 | ||||||||||
+37% | +4% | |||||||||||||||||||||||||||||||||
EBITDA | Stay-in-business CAPEX | Debt | Total water used | Electricity from natural gas | ||||||||||||||||||||||||||||||
EBITDA margin | +10 p. p. | Growth CAPEX | Net debt/EBITDA | -0,1х | Water recycled and reused | Electricity from renewables | ||||||||||||||||||||||||||||
Bystrinsky project | Share of water recycled and reused | Share of renewables |
2021
ReportAnnual
Operating highlights | Key ESG initiatives |
Shareholder | Current status/rating as of 31 December 2021 |
The company joined the UNGD in 2016 and every
year confirms its commitment to the principles of sustainable development
Nickel from own feedstock | Copper from own feedstock | Palladium from own | Platinum from own feedstock | Inclusion in the index | |
constituent is reiterated: | |||||
(kt) | (kt) | feedstock (koz) | (koz) | ||
score at 4.3 (out of 5) | |||||
-18% | -16% | -7% | -8% | Environmental - 2, Social- 3, | ||||||||||||||||
Governance - 6 (where 1 is low risk, and 10 is high risk), | ||||||||||||||||||||
210 | 217 | 225 | 233 | 190 | 398 | 474 | 499 | 487 | 407 | 2 728 2 729 2 919 2 820 2 616 | 650 | 653 | 700 | 693 | 641 | ISS ESG rating - "С+" | ||||
Score - 43 (out of 100) | ||||||||||||||||||||
2017 | 2018 | 2019 | 2020 | 2021 | 2017 | 2018 | 2019 | 2020 | 2021 | 2017 | 2018 | 2019 | 2020 | 2021 | 2017 | 2018 | 2019 | 2020 | 2021 | ESG risk score: 36.9 (out of 100), |
Susnainalytics | where 1 is low risk and 100 is high risk | |||||||||||||||||||
Ni | Сu | Pd | Pt | ESG rating - BB, | ||||||||||||||||
score - 3.4 (out of 10) | ||||||||||||||||||||
Climate Change - D rating, | ||||||||||||||||||||
Water Security - C rating |
CREDIT RATINGS
AS OF 31 DECEMBER 2021
«BAA2», Negative
«ВВВ-», Stable
«ВВВ-», Stable
«RUААА», Stable
4
5
About Nornickel
The Company's history
2013-2020
NORNICKEL
2021-2030
TOWARD A CARBON-
FREE FUTURE
1960-1992 | |
1935-1959 | NEW DEPOSITS |
CREATION AND | DEVELOPED AND |
NEW FACILITIES | |
EVOLUTION OF | PUT ONLINE |
NORILSK PLANT |
1993-2012
TRANSFORMATION IN A MARKET ECONOMY
IMPLEMENTING A NEW STRATEGY
Vladimir Potanin and his new management team took the helm of the Company. The Board of Directors adopted a new long- term development strategy focused on world-class assets of the Polar Division and Kola MMC. Bystrinsky GOK, the largest
The Company announced a new investment cycle aimed at the comprehensive development of mining assets and the expansion of processing capacities, which is expected to increase metal production by 30%-40% by 2030 (nickel equivalent, from a 2017 baseline). Boasting the lowest carbon footprint in the global industry, Nornickel intends to ramp up its supplies of metals supporting the
2021
ReportAnnual
6
In 1935, the USSR Council of People's Commissars resolved to build Norilsk Plant. The first batch of converter matte was produced in 1942, with Norilsk Plant opening a nickel tankhouse in 1943. In 1953, Norilsk was granted the status of a town, with Norilsk Plant producing 35% of nickel, 12% of copper, 30% of cobalt, and 90% of PGMs of the Soviet Union's total output.
The Talnakhskoye deposit, the world's largest deposit of copper-nickel ores, was discovered in 1960, giving a new lease on life to Norilsk Plant. The construction of new mines and the town of Talnakh started. The Oktyabrskoye deposit of copper-nickel ores was discovered in 1965. Nadezhda Metallurgical Plant and the 1st Stage of Talnakh Concentrator were put on stream in 1981.
In 1993, in line with an Executive Order of the Russian President, the Norilsk Nickel State Concern for the Production of Precious and Non-ferrous Metals was transformed into Russian Joint Stock Company (RJSC) Norilsk Nickel for the Production of Precious and Non-ferrous Metals. In 2001, the Company was restructured, with shareholders of RJSC Norilsk Nickel exchanging 96.9% of their stock to shares in MMC Norilsk Nickel. Since then, the Company shares have been trading on the RTS and MICEX stock exchanges and as ADRs in London and New York.
greenfield project in the Russian metals industry, was constructed from scratch in the Zabaykalsky Region.
A programme was launched to improve the environmental situation across the Company's footprint, including the shuttering of Nickel Plant in Norilsk, the launch of the Sulphur Project to drastically reduce sulphur dioxide emissions in the Norilsk Industrial District and the closure of obsolete metallurgical facilities in the Murmansk Region.
transition to a low-carbon economy.
By 2030, the Company plans to invest about USD 35 billion, with USD 6 billion to be spent on environmental projects and USD 8 billion on energy infrastructure upgrades.
Highlights of the year
7
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OJSC MMC Norilsk Nickel published this content on 22 June 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 22 June 2022 11:04:09 UTC.