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

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

Attachments

  • Original Link
  • Original Document
  • Permalink

Disclaimer

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.