Mining and Metallurgical Norilsk Nickel : Сorporate Environmental and Climate Change Strategy

Strategy 2021

Prerequisites

for the update

Updated strategy

The Environmental and Climate Change Strategy was developed in 2020 and approved by the Company’s Board of Directors in 2021

• 
  21 goals of which 16 are numerical indicators in six areas, and five relate to compliance with international standards
• 
  360+ measures with an indicative budget of RUB 536 bn until 2031

Tightened environmental laws of the Russian Federation, growing role of the state in the regulation of environmental operations, and geopolitical changes

New geopolitical environment and the previous experience of implementing the strategy have laid the groundwork for the update.

The role of the state continues to grow, and budgets are subject to a major redistribution within the Company. At the same time, our clients expect us to be compliant with international requirements/standards.

The strategy is divided into mandatory and voluntary parts

• 
  The mandatory part is aimed at ensuring compliance with requirements of the Russian environmental legislation in order to prevent the Company from incurring penalties and damages caused to environment components
• 
  The voluntary part includes optional focus areas related to the environment

Central elements of the

general strategy

Core Production Strategy

Marketing/

Sales Strategy

Fixed Assets Reliability

Strategy

Technology Innovation

Strategy

Other industry-specific strategies1

Sustainable Social

Development Strategy

Other function-specific strategies2

Environmental Strategy

Integration of goal-setting into the environmental strategy

Assessing environmental impact in line with the core production development scenario, compliance with the national environmental legislation

Ensuring compliance of products with industry environmental standards and customer requirements to ensure competitiveness

Taking into account climate-related physical risks, risk-based approach

Reducing environmental impact (quantity and concentration of polluting emissions / discharges / production waste)

Taking into account critical environmental risks

Meeting sustainability standards, taking into account relevant critical requirement of key stakeholders

Taking into account the updated regulatory environment and import substitution (including postponement of the CEP execution for two years)

Implementation of the

Company’s general strategy

Development and implementation of a programme to mitigate critical environmental risks, compliance with Russian environmental laws, regulations, critical obligations of the Company, minimisation of environmental impact in the long term, factoring into the configuration of the core production and auxiliary/supporting infrastructure

Risk management of core

and auxiliary production continuity

• Ensuring reliable operation of fixed assets of the core and auxiliary production facilities

Core Production Strategy

• 
  Ramping up production
• 
  Maximising capital returns
• 
  Mitigating market risks

Environmental Strategy

• 
  Taking into account environmental risks
• 
  Ensuring compliance with environmental laws for the continuity of core and auxiliary production (fuel and energy complex, logistics, production of auxiliary materials, etc.)

Sustainable Social

Development Strategy

• 
  Implementing the local communities development programme
• 
  Supporting employees
• 
  Developing social infrastructure
• 
  Taking into account the Company’s critical social commitments to mitigate material reputational risks

Element

Number of emergencies

Air

Water

Tailings and waste

Land

Biodiversity

Proposed updated targets

Number of interregional and federal emergencies affecting the environment in the regions of operation

SO2 emissions, kt

Reduction of SO2 emissions, %1

Compliance with the Russian standards as regards pollutant concentration in discharges

Compliance with fresh water withdrawal limits, %

Compliance of waste disposal facilities with Russian regulations

Rehabilitation of disturbed territories in 2022-2031 (reclamation3, reforestation4, and sanitation, ha)

Achievement of net zero biodiversity losses as a result of the Company’s operations (∆ Integral Indicator of Ecosystem Health (IIEH))5

95% 95%

0360

0.89 0 6

0 • Recovery of damages

• 
  Recovery of damages to the air

300 • Charges for excess emissions

• Suspension of operations of up to 90 days

Stock exchange requirements

Exchange, etc.)

Element

Climate change2

Land

Tailings and waste

Standards

Proposed updated targets

Volume of GHG emissions (Scopes 1 and 2), mt of CO2 equivalent

Specific GHG emissions (of facilities involved in the manufacturing of finished metal products) per tonne of Ni equivalent, tonnes of CO2 equivalent

Share of renewable energy use

Rehabilitation of disturbed territories in 2022-2031 (landscaping), ha

Share of non-mineral waste recycling, %

Share of mineral waste (other than gypsum waste) recycling, %

Share of gypsum waste recycling5,%

Compliance with sustainability standards

Updated values

Implementation of TCFD compliance roadmap Implementation of ICMM compliance roadmap Implementation of IRMA compliance roadmap and achieving IRMA 50 performance level Efforts to ensure compliance with GISTM

Prerequisites for the performance

1. 
   Strategy of Socio-economic Development of the Russian Federation with Low Greenhouse Gas Emissions until 2050
   (No. 3052-r dated 29 October 2021)
2. Federal Law No. 296 On Limiting Greenhouse Gas Emissions dated 2 July 2021 (annual report)
3. 
   Carbon Border Adjustment Mechanism (CBAM)
4. 
   Charges for exceeding greenhouse gas emission quotas (if the Russian Tax Code is amended)

1. Voluntary obligations of Kola MMC to the government

1. 
   Waste recycling, reduction of pollution charges.
2. 
   Compliance with the Order on approval of the list of production and consumption waste types which include useful components banned from landfilling

1. Retention of existing and potential new customers
2. 
   LME requirements4
3. 
   ECOVADIS requirements
4. 
   TСFD requirements form the basis for IFRS S2 disclosures

TOP – mandatory measures of Norilsk Division

1. 
   Integrated Sulphur Programme project to reduce pollutant emissions at NMP and Copper Plant
2. 
   Off-gastreatment facility of AP No. 1-4 anode furnaces in Smelting Shop No. 3 of Copper Plant
3. Equipment modernisation at the drying section in Smelting Shop No. 1 of NMP
4. 
   Provision of Norilsk Division with automatic monitoring systems (as part of emission quotas and CEP)

1. 
   Technical and biological rehabilitation of 430 ha of legacy process material spills along the NMP slurry pipeline
2. 
   Modernisation of waste dump 1 in line with global industry standards
3. 
   Technical and biological rehabilitation of 5.25 ha of a mining water stream at discharge point No. 170

2024/2027

2029

2033

2025/2027

2030

2030

2030

CEP – comprehensive environmental permit

EPEP – environmental performance enhancement programme