Novolipetsk Steel : NLMK ESG presentation – November 2020

Leadership in

sustainability

November 2020

	DISCLAIMER		2

This document is confidential and has been prepared by NLMK (the "Company") solely for use at the presentation of the Company and may not be reproduced, retransmitted or further distributed to any other person or published, in whole or in part, for any other purpose.

This document does not constitute or form part of any advertisement of securities, any offer or invitation to sell or issue or any solicitation of any offer to purchase or subscribe for, any shares in the Company or Global Depositary Shares (GDSs), nor shall it or any part of it nor the fact of its presentation or distribution form the basis of, or be relied on in connection with, any contract or investment decision.

No reliance may be placed for any purpose whatsoever on the information contained in this document or on assumptions made as to its completeness. No representation or warranty, express or implied, is given by the Company, its subsidiaries or any of their respective advisers, officers, employees or agents, as to the accuracy of the information or opinions or for any loss howsoever arising, directly or indirectly, from any use of this presentation or its contents.

The distribution of this document in other jurisdictions may be restricted by law and any person into whose possession this document comes should inform themselves about, and observe, any such restrictions.

This document may include forward-looking statements. These forward- looking statements include matters that are not historical facts or statements regarding the Company's intentions, beliefs or current expectations concerning, among other things, the Company's results of operations, financial condition, liquidity, prospects, growth, strategies, and

the industry in which the Company operates. By their nature, forwarding- looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The Company cautions you that forward-looking statements are not guarantees of future performance and that the Company's actual results of operations, financial condition and liquidity and the development of the industry in which the Company operates may differ materially from those made in or suggested by the forward-looking statements contained in this document. In addition, even if the Company's results of operations, financial condition and liquidity and the development of the industry in which the Company operates are consistent with the forward-looking statements contained in this document, those results or developments may not be indicative of results or developments in future periods. The Company does not undertake any obligation to review or confirm analysts' expectations or estimates or to update any forward-looking statements to reflect events that occur or circumstances that arise after the date of this presentation.

By attending this presentation you agree to be bound by the foregoing terms.

• Key highlights
• • Corporate governance
  • Health & Safety
  • Environment
  • Tailings dam management
  • Social
  • ESG Ratings

	LEADERSHIP IN SUSTAINABILITY - KEY HIGHLIGHTS		4

NLMK's key principles of sustainable

development:

- Creating long-term shareholder value
-	Caring about health, wellbeing and
	development of employees
-	Treating environment responsibly

NLMK IS THE UN GLOBAL COMPACT'S PARTICIPANT

ENVIRONMENT

HEALTH & SAFETY

- Delivering value-added products to our

customers

- Adhering to high ethical standards in

conducting business

- Developing, supporting and respecting

the interests of local communities

- Maintaining transparency & high quality

information disclosure

Selected non-financial indicators for 2019 were independently verified

1.91 t/t

97%

4th

53%

92%

NLMK's CO2 specific emissions target by 2023

of water used in production is recycled

Every 4th tonne of steel is made of scrap

Reduction in air emissions intensity (per tonne of steel) 2000-2018

of generated waste is reused

56%

16k

18k

5.6%

Reduction in

LTIFR since 2013

More than 16K employees passed safety trainings in 2019

SOCIAL

In 2019, 18,000 of training sessions were achieved at NLMK's Corporate University

Turnover rate

• • Key highlights
• Corporate governance
• • Health & Safety
  • Environment
  • Tailings dam management
  • Social
  • ESG Ratings

	NLMK ADHERES TO HIGH CORPORATE GOVERNANCE STANDARDS		6

The Group's governance structure and

practices are aligned with G20/OECD Principles of Corporate Governance, Russia's Corporate governance code

Focus is on superior shareholder returns - dividend policy provides visibility and predictability

Voting rights: "one share/one vote", equitable treatment for all shareholders

The company's Board of Directors:

• Reputable board with superior track record
• Directors are not over-boarded with mandates
• Board performance is evaluated annually

Remuneration system based on clear KPIs, including ESG targets

THE MAJORITY OF THE	THE MAJORITY OF THE COMMITTEES
BOARD IS INDEPENDENT	ARE CHAIRED BY INDEPENDENT DIRECTORS
		Independent directors				Independent directors
63%	44%					33%
67%
				?				67%
38%	56%
33%
2014	2019	2014	2019

COMMITTEES WITH A MAJORITY OF

INDEPENDENT DIRECTORS

Independent directors

33%

67%

67%

33%

20142019

	NLMK'S BOARD OVERSIGHT OF KEY SUSTAINABILITY ASPECTS		7

NLMK's approach to sustainability management is governed by

	Corporate governance
BOARD OF DIRECTORS
Business ethics &
	countering corruption

Sustainable Development Policy (SDP) approved by the Board in October 2019

The Board's activity covers every ESG

aspect

The Board is responsible for the complying with Sustainable Development Policy as well as for defining goals and objectives

STRATEGIC PLANNING

COMMITTEE

Sustainability risks assessment

Environmental targets and respective investment program:

• Emissions, including greenhouse gases
• Discharges and waste
• Resource utilization

AUDIT COMMITTEE

Sustainability performance monitoring and reporting

Audit oversight of non-financial information

HR, REMUNERATION &

SOCIAL POLICIES COMMITTEE

Personnel and social issues:

• Employment and work
• Occupational health and safety
• Training and development
• Social policy
• Diversity and equal opportunities
• Non-discrimination
• Local communities

Integration of sustainability KPIs within the remuneration system

• • Key highlights
  • Corporate governance
• Health & Safety
• • Environment
  • Tailings dam management
  • Social
  • ESG Ratings

	SAFETY IS A TOP PRIORITY FOR THE GROUP		9

NLMK's governing document: Integrated Management System Policy in Quality, Environmental Protection, Energy Efficiency, Occupational Health and Safety

OHSAS 18001:2077 certified; ISO 45001:2018 is in process

In 2019, about $100 m was invested in safety systems and equipment

"No blame" policy for incidents reporting The company is signatory of "Vision Zero"*

Safety development programs

• Safety culture programs and communications
• Contractors management
• Safety risk management

Targets:

• Zero fatalities
• LTIFR of 0.5 (vs. 0.84 in 2018 as per WSA)

LOST TIME INJURY FREQUENCY RATE (LTIFR*)

1.60					NLMK Group
					World**
	1.17	1.01	1.12
1.39
			0.84	0.86
	1.15
		0.97
		0.85			0.5
			0.77
2014	2015	2016	2017	2018	2019	2023
						Target

• LTIFR refers to Lost Time Injury Frequency Rate, the number of lost time injuries? occurring in a workplace per 1 million
  man-hours worked, employees and contractors
• Worldsteel data

* http://visionzero.global

• • Key highlights
  • Corporate governance
  • Health & Safety
• Environment
• • Tailings dam management
  • Social
  • ESG Ratings

	REDUCING CARBON FOOTPRINT - 2023 TARGET		11

Measurable target to reduce CO2 emissions by 2023

NLMK's (Lipetsk site) CO2 intensity will be close to 30% of the most efficient mills in the world by 2023

NLMK joined Worldsteel's Step Up program to search ideas for further improvement in CO2 efficiency

Portfolio of projects for future footprint reduction

NLMK is a strategic partner for Russia's first green startup accelerator

DIRECT & INDIRECT CO2 EMISSIONS DYNAMICS

t/t NLMK Group (Scope 1+2)

2.04

1.98

1.91

2015

2019*

2023 target

*Adjusted for temporary production decrease at the Lipetsk site, based on 2018 Group's steel output

CO2 EMISSIONS INTENSITY TARGET

t/t NLMK Group, (Scope 1+2)

		0.03	-0.04
	1.98			-0.04
				-0.02
					1.91
	2019*	Output growth	Captive energy	Fe content	Other projects	2023 target
		(integrated)	generation	increase

IMPROVING AIR QUALITY

NLMK has reduced air emissions intensity by more than two times since 2000

The Group operates more than 500 modern dust and gas purifying facilities

ISO 14001:2015 standard implemented at 14 of the Group's facilities

Targets:

• Reaching the EU BAT level for air emissions intensity

12

AIR EMISSIONS INTENSITY

kg/t, NLMK Group

20.1	20.0	20.2
	19.5	18.9*?
	18.9

18

2015	2016	2017	2018	2019	2023
					Target

INCREASING ENERGY EFFICIENCY

ISO 50001:2011 certified (recertification under ISO 50001:2018 is underway)

Improved energy intensity was achieved via equipment upgrade and better processes

Higher share of captive electricity generation contributes to lower CO2 emissions

Targets:

• Attaining a minimum level of economically and technologically feasible level
• Increasing electricity self-sufficiency to 94%

In 2019, the use of electrical power generated from renewables accounted for 5.1% of total power consumption*

*The share of renewables in the total volume of electrical power generation is shown without transit flows; NLMK Group companies made no direct purchases from renewable energy suppliers

13

ENERGY INTENSITY

GCAL/t, NLMK Lipetsk

-0.4%

5.7	5.6	5.5	5.5	5.6

BAT

5.1

2015

2016

2017

2018

2019

GROSS ENERGY CONSUMPTION

PJ, NLMK Group

?

-10%

590.3 587.9 590.5 579.6

532.8

2015

2016

2017

2018

2019

	CASE STUDY: INTEGRATED PRODUCTION CHAIN - ENERGY SELF - SUFFICIENCY		14

Strategy 2022 envisages construction of the 3rd captive power plant at NLMK Lipetsk:

• The power plant will run on by - product fuel gases
• Leveraging successful experience of by-product gases reuse
• Unique technology for Russia of utilizing basic oxygen furnace gas
• Positive environmental impact

In 2019, NLMK Group signed the contracts for the supply of the main equipment, and design of the plant is in progress

ENERGY SELF-SUFFICIENCY TARGETS, NLMK LIPETSK

Captive energy generation

Secondary fuel gas recovery

	94%	89%	100%
65%
2019	2023	2019	2023
	Target		Target

ADDITIONAL PROJECT INDICATORS

Power plant capacity	300 MW
Reduction in CO2 emissions per annum	650k t
Investments	$420 M

	CASE STUDY: ELECTRICAL STEEL FOR LOW CARBON FUTURE		15

NLMK targets to increase production of electrical steel (GO and NGO) at its Russian facilities for global markets to benefit from growing energy demand and shift to low carbon economies:

• +0.1 m t of high grade GO for more efficient power and distribution transformers
• +0.1 m t of premium grade NGO for electric vehicles and energy-efficient motors

TARGET ELECTRICAL STEELS SALES, m t

	+35%
		0.8
0.6	0.5
2018	2019	2023
		Target

Photo source: World Economic Forum

	CASE STUDY: PREMIUM PLATES FOR LOW CARBON FUTURE		16

NLMK's Dansteel (Denmark) is a leading producer of steel plates used for wind energy equipment in Northern Europe

The wind energy market trends in the EU:

• Steel consumption by the wind energy sector is expected to rise significantly in the EU driven by the Clean Energy for All Europeans legislative package

NLMK's targets:

• +0.2 m t production growth

TARGET PREMIUM PLATES SALES BY DANSTEEL, m t

3.6x

0.3

0.10.1

2018	2019	2023
		Target

Photo source: World Steel Association

	MINIMIZING THE USE OF WATER RESOURCES		17

NLMK has substantially reduced water consumption in relative (per tonne of steel produced) and absolute terms

The Group doesn't operate in water- stressed areas

All of NLMK's production facilities are equipped either with closed loop water systems (no waste water discharge) or water recycling solutions

Target:

• Minimizing water consumption

WATER CONSUMPTION & USE INTENSITY

		Water сonsumption, m m3		Specific consumptive water use, m3/t of steel
5.7	5.5	4.9	4.7	5.3
							4.7 *
91	91	84	81	82
2015	2016	2017	2018	2019
WATER REUSE IN TOTAL WATER CONSUMPTION
% of water reuse					96.6%

96.5%

96.4%

96.3% 96.3%

2015

2016

2017

2018

2019

*Adjusted for temporary production decrease at the Lipetsk site, based on 2018 Group's steel output

	MINIMIZING WASTE GENERATION AND REUSING BY-PRODUCTS		18

NLMK targets lower waste generation and higher share of

WASTE RECYCLING

%, NLMK Russia, excl. mineral waste

waste reuse in its operations to 96% by 2023

Briquetting plant launched in May 2019:

96%

94%

92%

89%

- All newly accumulated Fe

containing waste will be reused for

briquettes production at NLMK

Lipetsk as feedstock in BOFs

- This project will help to achieve the

Group's Environmental Programme

2022 target of increasing waste

87%

?

2015

2016

2017

2018

2019

WASTE GENERATION INTENSITY

t/t, NLMK Group

utilization to 96%

4.0

3.63.43.6

2.9

2015

2016

2017

2018

2019

• • Key highlights
  • Corporate governance
  • Health & Safety
  • Environment
• Tailings dam management
• • Social
  • ESG Ratings

	NLMK'S TAILINGS DAM - SAFETY IS NUMBER ONE PRIORITY		20

NLMK's tailings dam was put into operation in 1984

Tailings dam development plan was independently audited

Emergency preparedness is regularly assessed and response procedures are developed

Safety drills are regularly performed with the participation

of Russia's Ministry of Emergency Situations

Water recycling system is in place

NLMK responded to the Church of England Pensions Board request

• • Key highlights
  • Corporate governance
  • Health & Safety
  • Environment
  • Tailings dam management
• Social
• • ESG Ratings

	DEVELOPING OUR TEAM		22

NLMK Group employs 52.8 thousand people

Employee turnover rate increased in 2019 due the implementation of the program to increase labor productivity

Regular staff satisfaction surveys are conducted

Feedback channels were developed and launched

Group employees completed 52.9 training sessions in 2019

NLMK GROUP'S EMPLOYEE TURNOVER RATE
8.8%
4.7%	4.4%	4.7%	5.6%

							?
2015	2016	2017		2018		2019
STAFF BREAKDOWN BY GENDER & CATEGORY	NO. OF TRAININGS COMPLETED BY EMPLOYEES
NLMK Group, %					NLMK Group, thousand trainings
15		22	25
47	58
85		78	75			53.4	55.4	52.5	52.9
53	42				47.7
Managers Specialists	Office	Shop floor Total NLMK
2015	2016	2017	2018	2019
		employees	employees	Group

Men Women

DEVELOPING LOCAL COMMUNITIES & SUPPORTING EMPLOYEES	23

Tools for community engagement:

INVESTMENTS IN SOCIAL PROGRAMMES IN 2019

• Assessment of existing social programmes
• Direct engagement via dedicated channels
• Public hearings
• Cooperation with regional governments
• "Steel tree" project - a grant competition for social and environmental public initiatives

3%	10%
6%	25%
10%	$88.2 m

7%

39%

Monetary support and benefits

Medicine and health improvement

Transport to/from work

Local communities development?

Corporate meals

Mass sports and cultural events Pensions co-financing

	RESPECTING HUMAN RIGHTS		24

Adhering to UN Global Compact principles on human rights and labor

• Human Rights Policy and Corporate Ethics Code are in place to reflect issues around respect of human rights

Key developments 2019:

• NLMK Group joined the UN Global Compact
• Participated in the BHR Peer Learning Series hosted by the Office of the UN High Commissioner for Human Rights and the UN Working Group on Business and Human Rights
• Member of the Committee on Corporate Social Responsibility and Demographic Policies of the Russian Union of Industrialists and Entrepreneurs (RSPP)

FUNDAMENTAL HUMAN RIGHTS PRINCIPLES AT NLMK

Fundamental principles	Areas of activity
Prohibition of forced and	NLMK only signs employment contracts with individuals that meet the minimum age
child labor	requirements stipulated by prevailing legislation. The Company does not make use of
	child labor. The Company also forbids the use of forced labor, penal and military labor,
	slavery, and human trafficking. All employment at the Company is exclusively
	voluntary in nature.
Prohibition of discrimination	NLMK does not tolerate discrimination based on sex, religion, or any other grounds in
	its staff management activities, including hiring, and adheres to the same principles
	when determining wages.
Respect for the right to a	Ensuring decent working conditions, including competitive salaries, and providing
minimum wage	both employees and retirees with a social benefits package are key priorities for
	the Group.
Support for freedom of	NLMK fulfils all of the requirements set forth in collective agreements, and regularly
association and collective	engages with trade unions. The Company also ensures that conditions are in place to
bargaining	facilitate the creation of associations to represent NLMK employee interests by
	making corporate communications tools available and by supporting employee
	volunteering initiatives.
Providing safe working	The health and safety of employees is a priority for NLMK. The Company's
conditions	management monitors and reduces risks associated with working conditions,
	increasing safety levels at the production sites of every operating unit of the Group.

• • Key highlights
  • Corporate governance
  • Health & Safety
  • Environment
  • Tailings dam management
  • Social
• ESG Ratings

	RECOGNITION OF NLMK'S RESULTS IN THE AREA OF SUSTAINABILITY		26

Continuous improvements across the board resulted in NLMK's ESG ratings upgrades by the leading research agencies in the area of sustainability

Sustainalytics revised NLMK's ESG rating score from the 31.5 in 2019 to 28 this year: the lower the number - the stronger management of ESG issues by a company

NLMK is currently ranked among top-3 steel companies analyzed by Sustainalytics

NLMK remained a constituent of the FTSE4Good Index following June 2020 review

Out of 100

33	45	36
22

NLMK NLMK NLMK Industry

2018 2019 2020 average score

FTSE RUSSELL ESG RATING

Max 5

3.4
	2.2	2.1
NLMK	Industry	Subsector
	average	average

	Out of 100	83
	77
53
NLMK	NLMK	NLMK
2018	2019	2020

Max AAA

	BВB	BВB
BB
NLMK	NLMK	Industry
2018	2019/2020	relative score

THE COMPANY'S IR CONTACTS

Dmitriy Kolomytsyn, CFA

Director, IR, Capital Markets

Address

40, Bolshaya Ordynka Str., Bldg. 3

Moscow, 119017, Russia

IR E-mail Address

[e-mail]

Phone Number

Office: [phone]

nlmkonair	nlmk_group		nlmk group