SUSTAINABILITY REPORT 2019 ABOUT THIS REPORT

GRI 102-1

The Sustainability Report 2019 (hereinafter, the Report) covers the key results of PJSC ALROSA’s (hereinafter, the Company) sustainability performance and in case of specific material issues the performance results of its diamond mining subsidiaries, together referred to as ALROSA Group (hereinafter, the Group, ALROSA, the Company) for the period from 1 January 2019 to 31 December 2019, as well as the Company’s plans for 2020 and the medium term.

For the purposes of this Report, terms ALROSA Group, Group, ALROSA, and Company used herein are regarded as equivalents and refer to PJSC ALROSA and its diamond mining subsidiaries PJSC ALROSA is the parent company of ALROSA Group.

Operational and financial results of ALROSA Group are presented in the Report in accordance with the IFRS Consolidated Financial Statements for the year ended 31 December 2019, unless otherwise stated.

This Report, like previous social and environmental reports of ALROSA Group, has been prepared in accordance with Global Reporting Initiative Sustainability Reporting Standards (“GRI Standards”), core option. When preparing the Report, ALROSA was also guided by the applicable requirements of the GRI Mining and Metals Sector Supplement. In addition, the Report discloses ALROSA's contribution to the UN Sustainable Development Goals (SDGs). MESSAGE FROM THE CEO AND CHAIRMAN OF THE EXECUTIVE COMMITTEE

GRI 102-14

DEAR SHAREHOLDERS, PARTNERS AND COLLEAGUES!

I am pleased to present to you ALROSA Group’s Sustainability Report for 2019.

Last year was extremely difficult for the global diamond mining industry. The midstream, mostly diamond cutting enterprises, was overstocked. There were several reasons for this: a slowdown in demand in key markets, including due to an escalation of trade disputes between the United States and China, and the financial crisis in India, which made debt financing of working capital virtually unavailable for the diamond cutting industry. As a result, all major diamond miners faced a serious drop in sales and had to lower their production plans. According to the results of 2019, ALROSA's revenue fell by 26% to USD 3.3 billion. Nevertheless, even in such a difficult time the Company once again demonstrated its resilience, and proved its sales strategy of "price over volume" was a success leading to lower rough diamonds supply to polishers while arresting a significant decline in rough diamond prices.

A balanced financial policy and sales strategy, focus on efficiency and long-term value creation allow us to balance the interests of our shareholders and maintain a high financial stability of our business, as well as meet our commitments to our team, customers, shareholders and local communities. Our Company is also trying to ensure gender balance — in Our Company's performance was recognized by international recent years, the share of women in the structure of the rating agencies and organizations that assess corporate We have adopted the UN Sustainable Development Goals (SDGs) as a strategic framework for our approach to Company's personnel exceeds 30%, approximately the governance, social and environmental responsibility. ALROSA sustainable development. Last year, we analyzed and identified a number of priority SDGs, on the achievement of same share in the executive staff. We stand for equal maintains its BB rating in the MSCI ESG system and is included which ALROSA will focus in the near future. An important long-term objective of the Company is to determine strategic career opportunities and abide by the principle of equal in the international FTSE4Good rating, as well as being one of sustainability priorities and ESG key performance indicators. remuneration for men and women. the top 10 leaders in the WWF environmental rating. In 2019, we received the Diamond Empowerment Fund Award for social projects in the regions where we operate. A core element of our sustainable development activities is adherence to responsible business practices. ALROSA’s Another priority of ALROSA's production activities is careful all trading operations with diamond products comply with the requirements of the updated World Diamond Council's and rational use of natural resources and minimization (WDC) System of Warranties. Moreover, ALROSA is a certified member of the Responsible Jewellery Council (RJC) of environmental risks. In the year of 2019, a large-scale The success of our Company would not have been possible and regularly undergo independent certification in alignment with the requirements of the RJC Code of Practices, the assessment was made of the probability of such risks at without the dedicated work of our employees. I thank them industry's leading standard for responsible business conduct. We ensure Company's compliance with international ALROSA's hydraulic engineering facilities, including the for their efforts and look forward to supporting our future standards, as well as strive to be a leader in promoting and further developing these standards. ALROSA is actively tailings dams. An independent auditor confirmed the high projects and plans. working to improve the effectiveness of international regulatory mechanisms for responsible supply chains and industry security level of the Company's facilities. self-regulation mechanisms. In 2019, the Company chaired a Kimberley Process Working Group of Diamond Experts. ALROSA is committed to ensure maximum transparency for With our participation in RJC as a Vice Chair, the Code of Practices has been updated and aligned with the OECD Due The Company annually allocates about RUB 6 bln all stakeholders and to continue to strengthen its market Diligence Guidance for Responsible Mineral Supply Chains from Conflict-Affected and High-Risk Areas. to environmental protection initiatives that affect all position, maintain sustainable financial and operating environmental aspects: air, water, soil, animal and plant performance, and deliver on its sustainability goals. ALROSA remains a leader in the diamond industry in terms of social investments, allocating over 3% of its revenue or protection. more than RUB 10 bln annually to social programs (including pension contributions in the amount of RUB 3.4 bln) for employees and their families, who make up the vast majority of our single-industry towns' residents, to programs to help In 2019, together with the Ministry of Ecology of Yakutia, the regions where it operates and to provide gratuitous material assistance to individuals and organizations. we developed a comprehensive program of environmental protection and ecological safety measures in the area of our One of the most important activities of ALROSA is to create conditions and opportunities for sustainable development in Company's presence and adjacent areas. Total investments the regions of its presence, primarily in the Republic of Sakha (Yakutia), where our main production facilities are located. until 2023 will amount to about RUB 30 bln, a significant part of which will be spent on waste management, land protection In 2019, the Company's dividend and tax payments accounted for over 40% of Yakutia's budget. The Company's total Sergey Ivanov contribution to the federal budget and regional budgets amounted to almost RUB 100 bln. and rehabilitation, collection and treatment of wastewater. Moreover, we plan to further develop the tailings thickening project and complement our enrichment plants with CEO AND CHAIRMAN ALROSA mainly employs local personnel. In 2019, we hired more than 3,000 residents of Yakut regions, of whom about thickening and recycling water supply areas. OF THE EXECUTIVE COMMITTEE 1,400 came under our joint program with Yakutia "Local Personnel - into Industry". As for human resources, a key area for us is ensuring a safe working environment. We continue to train our employees in safe working practices and to develop ALROSA and promote a safety culture at work.

In 2019, ALROSA entered into an agreement with Rostekhnadzor in the field of health and safety, under which it intends to create and implement remote control mechanisms, a system for assessing, monitoring and managing risks in the operation of facilities. In addition, in 2019 we approved a new mechanism of social support to employees in the event of industrial accidents, which will allow the families of affected workers to receive compensation within a shorter period of time without an insurance company audit.

2 3 Dear ladies and gentlemen! FORWARD-LOOKING

My name is Sergey Simonov. For many years now, I have been managing the unique and only nature park in our republic, created with ALROSA's support STATEMENTS in 2006. It is known as the Living Diamonds of Yakutia, which is an accurate reflection of its essence: animal species that are of exceptional value for us live there, steeped in legends and folk tales. These are Yakutian horses, the world's most cold-resistant creatures who can be found on the coat of arms of the Republic of Sakha, musk sheep, Manchurian wapiti, yaks, axis deer, moose, wood bison, roe deer, bears and peacocks. Their living environment This Report presents data for the past period, as well as some structure, and other financial issues. The content of such resembles the natural one — there are no cages or enclosures. forward-looking statements. Such statements include, in statements is forward-looking and is expressed by the words particular, the statements of future operational performance, "expected", "anticipated", "planned", "intended", etc. The reserve is located 11 km from the town of Mirny and covers an area of plans and/or forward-looking statements on future economic over 32,000 hectares. Dense blueberry and cranberry forest, clean and and financial results, the Company's goals and objectives By their nature, forward-looking statements involve general clear rivers and blue lakes give a special beauty to these places. Our park is regarding development plans, including those related to and specific risks and uncertainties. There is a risk that future open for guests, many of whom are happy to help care for the animals. We products and services. actual results may differ significantly from the plans, goals, even have schoolchildren in charge of some of the species. This is a great expectations, estimates, and intentions expressed in such opportunity for the town dwellers to discover the beauty of our northern Statements on future performance may also include forward-looking statements or may not be achieved due to a nature, as well as how to be caring for the environment, devoted and information on the forecasted or expected income, profit variety of factors. responsible. (loss), net profit (loss), in relation to shares, dividends, capital

Sergey Simonov, Director of the Living Diamonds of Yakutia Nature Park

4 5 CONTENTS

CHAPTER 01 30 Key sustainability priorities CHAPTER 04 109 Water management

ABOUT ALROSA HUMAN RESOURCES 32 Contribution to the UN Sustainable MANAGEMENT 114 Management of production 10 Overview Development Goals and consumption waste 58 Management approach

11 Mission and strategic goals 36 Risk management 116 Air protection and climate 59 Personnel structure change prevention

14 Where we operate 41 Responsible supply chains 64 Renumeration and motivation system 119 Energy efficiency and power consumption

16 Business model 41 Business ethics and anti-corruption 67 Personnel building and development 121 Protection of land resources

18 Our performance in 2019 43 Human rights 73 Social programs 123 Biodiversity conservation

20 Key events of 2019 45 Stakeholder engagement CHAPTER 05 CHAPTER 07 OCCUPATIONAL 24 Engagement in industry organizations CHAPTER 03 REGIONAL and initiatives HEALTH AND SAFETY DEVELOPMENT ALROSA’S ECONOMIC CONTRIBUTION 82 Management approach 129 Contribution to regional infrastructure 25 Key ESG indices and ratings and economy 50 Key economic indicators 86 Major events CHAPTER 02 132 Charity projects and sponsorship RESPONSIBLE 51 Creation and distribution of economic value 92 Prevention of occupational injuries BUSINESS CONDUCT 134 Creation of jobs in regions

28 Approach to sustainability 52 Approaches to economic value CHAPTER 06 distribution ENVIRONMENTAL 135 Support for indigenous peoples 28 Sustainability management PROTECTION 54 Procurement 96 Management approach 138 Contact Information 29 Key documents

106 Total environmental costs and investments 139 APPENDICES

6 7 CHARTER 01

Yakutia, my native republic, is one of those rare places on Earth where the pristine nature has ABOUT ALROSA been preserved. Though it is considered one of the coldest places in the whole world, Yakutia is rich in flora and fauna. There is also the merit of ALROSA: not so far from the diamond capital (the town of Mirny), the Company helped to establish our nature park aimed at conserving natural ecosystems, which has become a favorite recreation area for children and adults.

215.4 Sergey Simonov, Director of the Living Diamonds RUB bln of Yakutia Nature Park revenue from sales of rough and polished diamonds

27 % global market share

38.5 mln carats mined in 2019 SUSTAINABILITY REPORT 2019 ABOUT ALROSA

ABOUT ALROSA MISSION AND STRATEGIC

GRI 102-2, 102-4, 102-6, 102-7, 102-10 GOALS

ALROSA's mission is to maintain a leading global position in the diamond mining industry that consistently delivers in terms of the long-term interests of the shareholders through efficient OVERVIEW utilization of mineral resources.

ALROSA is the largest diamond-producing the Arkhangelsk Region, as well as in Africa. company in the world in terms of mining volume ALROSA has the largest diamond reserves in the in carats. The Company’s main assets are located world (over 1 bln carats)1. In 2018, ALROSA updated the Development Strategy for 2018–2024.1 The document includes measurable strategic in Russia — the Republic of Sakha (Yakutia) and development goals, a target financial business model and strategic events. ALROSA is a public company, with its shares traded on the Moscow Stock Exchange. The company has 34% of shares in public float and The strategy is based on the assumption that the natural polished diamond jewelry market will face pressure from synthetic ALROSA's share in the global diamond production 66% owned by the Russian Federation, the alternatives, as well as from other goods and services that will restrict the growth of rough diamond prices until 2024. in 2019 Republic of Sakha (Yakutia), and municipal regions of the Republic of Sakha (Yakutia). At the end of 2019, the market capitalization of the 27 % Company amounted to RUB 621 bln Successful strategy implementation will make it possible to strengthen (USD 10.0 bln). the leading positions of ALROSA in the rough diamond market and en- For more sure consistent long-term growth of production and revenue, and will information on the The ALROSA Group headcount totals 34.5 Company's core also increase the shareholder value. business, corporate thousand employees. ALROSA is committed governance, investor and shareholder to sustainability and the highest international relations, see responsible business standards. The Company’s ALROSA Annual Report 2019. achievements are recognized with high positions and presence held in FTSE4Good, MSCI ESG, Sustainalytics and WWF Russia ratings.

ALROSA's shareholder capital structure, %

33.0256 33.9739

Indicator %

Russian Federation 33.03

Republic of Sakha (Yakutia) 25.00 8.0003 Administration of the districts (uluses) of the Republic of Sakha 8.00 25.0002 (Yakutia) Free float 33.97

1 Approved by the Supervisory Board, Minutes No. A01/283-PR-NS dated November 16, 2018. 1 According to the State Commission on Mineral Reserves of the Russian Federation.

10 11 SUSTAINABILITY REPORT 2019 ABOUT ALROSA

Key Strategic Priorities of ALROSA In 2018, ALROSA's Long-Term Development rough diamond mining of existing enterprises, Program was developed for 2018–2024,1 which energy efficiency and environmental friendliness Strategic Priority Summary ensures the achievement of strategic objectives of production, developing and implementing and includes a list of program events and new technologies for rough diamond mining, expected outputs over the long-term period. increasing the efficiency of exploration and processing works, introducing integrated ALROSA is committed to a mono-product strategy with a focus on the exploration and Focus on the rough diamond As part of the implementation of strategic information systems, including digitalization of mining of rough diamonds as the most attractive sector of the diamond industry with business the highest operating margin. priorities, the Company also developed a production along the entire value chain — from Program for Innovative Development and exploration, mining and processing of rough Technological Modernization of PJSC ALROSA diamonds, to finished products sale. The economic until 2024. Investments in this program in the effect of the R&D and TW (research, development For more information ALROSA will continue investing in exploration and development of new deposits and reporting period amounted to RUB 2.2 bln. and technological works) implementation in 2019 on implemented maintenance of the existing deposits to ensure continuous operations in the long run. innovation Replenishing the mineral resources to Russia will remain the principal mining region, while African countries are considered They are aimed at improving the efficiency of amounted to RUB 608.1 mln. development projects, see ALROSA ensure long-term growth of ALROSA forward-looking regions for further growth. ALROSA intends to enhance the efficiency Annual Report 2019, of geological survey through improving the existing and implementing new exploration page 46. methods and technologies.

To enhance the operational efficiency and support profitability both during periods Productivity increase through of stable and falling prices for rough diamonds, ALROSA actively searches for ways to continuous improvement of optimize cost structure at all production process stages and regularly monitors new production processes and mining and processing technologies. ALROSA also intends to improve logistics, rough implementation of new technologies diamond sorting and classification processes, and to ensure improved liquidity through minimizing the inventory turnover rate.

ALROSA key priorities are occupational health and safety, with its strategic purpose of Complying with high standards and completely eliminating injuries and accidents, and 100% engagement of managers shaping the culture of industrial and in resolving safety issues. ALROSA intends to minimize negative impact on the environmental safety environment, to implement rational mining and resource saving, and to comply with the requirements of international environmental protection and safety standards.

Stimulating the consumer demand ALROSA aim is to shape the long-term demand on natural polished diamonds against on natural diamonds by means of changing preferences of the target audience, to promote the natural polished diamond generic marketing as the emotional symbol of the relations.

Gradually withdrawing from non-core Focusing on the rough diamond core business through disposing of non-core assets. businesses

ALROSA social policy is based on the principles of socially responsible business and mutually beneficial cooperation with state authorities and local governments in High social responsibility in all areas the regions of the company's presence. Its long-term guiding landmark is retaining of presence investments in regional development, maintaining its own social facilities, and charity and sponsorship.

1 Approved by the Supervisory Board, Minutes No. А01/283-PR-NS, dated November 16, 2018.

12 13 SUSTAINABILITY REPORT 2019 ABOUT ALROSA

WHERE WE OPERATE Aikhal, Moscow, Russia Russia Aikhal Mining and • The United Selling Organization branch Processing Division • Diamonds of ALROSA branch

Nakyn, Russia Udachny, Russia Nyurba Mining and Processing Division Udachny Mining and Processing Division Arkhangelsk, Russia Smolensk, Severalmaz PJSC Russia Kristall Production Corporation

Barnaul, Russia Yakutsk, Russia Antwerp, Diamonds of • JSC Almazy Anabara Belgium ALROSA LLC • YAPTA branch ALROSA Belgium NV

Mirny, Russia • Mirny Mining and Processing Division • Vilyuiskaya Mining and Drilling Expedition Vladivostok, Russia • Research and Development Geological Vladivostok branch Enterprise • ALROSA-Spetsbureniye LLC New York, USA • Kommeral Enterprise ALROSA USA Inc. Hong Kong, PRC ALROSA Hong Kong Ltd.

Exploration

Mumbai, India Mining and processing Representative office in India

Sorting, evaluation, and sale Dubai, UAE ALROSA East DMCC Polished diamond production Ramat Gan , Trading companies Angola Israel • Catoca Mining ALROSA Israel Ltd. Branches, representative offices, JV Company Ltd. • Luaxe • Branch in the Republic of Angola

Harare, Zimbabwe ALROSA (ZIMBABWE) Limited

14 15 SUSTAINABILITY REPORT 2019 ABOUT ALROSA BUSINESS MODEL TYPES OF ALROSA VALUE CREATION FOR GROUP’S ACTIVITIES THE GROUP AND ITS STAKEHOLDERS** ** Sales and marketing RESOURCES 33.4 million carats — rough Rough diamond diamond sales in 2019 Rough diamond NATURAL sorting and USD 3.3 bln — revenue from cutting Mineral resources evaluation rough and polished diamond FINANCIAL VALUE — 1,114 million carats — the volume Production of unique by 16 grain sizes and sales of rough diamond reserves polished diamonds, RUB 215.4 bln — revenue from more than 8,000 — 63 rough diamond mining licenses mainly handicraft rough and polished diamond sales positions RUB 107.1 bln — EBITDA PRODUCTION Rough diamond RUB 47.6 bln— net cash flow Production capacity mining — 6 mining and processing RUB 62.7 bln — net profit 38.5 million carats complexes mined in 2019 S LE RUB 61.3 bln — taxes and — 10 open pits A S mandatory payments — 3 underground mines D N — 14 placer deposits A RUB 7.5 bln — interest payments — 3 diamond cutting N IO enterprises T RUB 58.6 bln — dividends*** C Exploration U D OUTPUT Sustainable financial position: and evaluation O R 0.7 — net debt /EBITDA FINANCIAL P 2.9 million carats —

— Gem-quality rough

Investment projects reserve growth

diamonds — RUB 22.4 bln capital in 2019*

investments in 2019 — Polished diamonds

— Industrial rough INTELLECTUAL diamonds Innovation — Automated production management NON-FINANCIAL VALUE systems at key MPDs — Diamonds’ origin identification RUB 124,000 — average salary of an systems ALROSA Group employee Development of regions of presence 3.6 % — share of social expenses in S

U revenue HUMAN S — Funding of social T A 3.2 % — share of environmental Team of professionals infrastructure projects I N expenses in revenue — 34,500 employees A of single-industry — Over11 % employees are B Responsible L towns and settlements 85.5 % — share of renewable power representatives of indigenous E business conduct D in the regions of in the power consumption communities E V presence E Over 500 projects and initiatives in — ­Conformity with L O SOCIAL AND REPUTATIONAL international standards P the area of local support and charity M of business conduct E Impeccable reputation worldwide N — A leading company in the rough diamond T — ­Improvement of the mining industry through its active Environmental participation in the work of international corporate governance responsibility organizations and risk management system — Environmental Support to local communities conservation and — Cooperation agreements with regional restoration activities authorities where we operate — The largest taxpayer in the Republic of Occupational — Reduction of the Sakha (Yakutia) health and safety Development environmental footprint of human capital — Ensuring a safe working The ALROSA business model is aimed to strengthen the environment and reduced — Ensuring an efficient leading positions of the world diamond market, maintain industrial injuries performance of Company * Without the depletion of reserves. Economic consistent volume of mining and revenues in the long run, personnel feasibility of the development of individual deposits or and increase the shareholder value. ALROSA does not only sites is assessed on a case-by-case basis and depends — Improvement of incentive and on many factors. use the existing competitive advantages, but also pays much salary systems ** Resource and performance indicators are given as of attention to developing innovations and utilizing modern December 31, 2019. *** Dividends approved in 2019 for the year of 2018 technologies to enhance the operational efficiency and (RUB 30.3 bln) and the first half of 2019 (RUB 28.3 bln). business profitability. STRATEGY: — Efficient management of the — Focus on the diamond — Maintaining the leadership responsible business business in the market

16 17 SUSTAINABILITY REPORT 2019 ABOUT ALROSA

OUR PERFORMANCE IN 2019 REVENUE INCLUDING SALES OF ROUGH INCOME FROM DIAMONDS AND EBITDA SUBSIDIES POLISHED DIAMONDS

107.1 238.2 215.4 RUB bln RUB bln RUB bln

INVESTMENTS1 RESERVES EMPLOYEES

22.4 1.114 RUB bln bln carats 34.5 thousand

FREE SOCIAL CASH FLOW EXTRACTION EXPENSES

47.6 38.5 RUB bln mln carats 8.6 RUB BLN

CAPITALIZATION DIVIDENDS PAID ENVIRONMENTAL COSTS 621 57.5 RUB bln RUB bln 7.7 RUB BLN

1 As per RAS.

18 19 SUSTAINABILITY REPORT 2019 ABOUT ALROSA

APRIL 9 JUNE 24 KEY EVENTS ALROSA issued 5-year Amendments were approved OF 2019 Eurobonds for USD 500 mln in ALROSA's Dividend Policy. The bonds were issued by In particular, the amendments ALROSA Finance S.A. under the were related to refining the guarantee of PJSC ALROSA. The methodology for determining coupon rate is set at 4.65% per the amount of dividend annum. payments. FEBRUARY 12 MARCH 22

Moody's increased ALROSA's The Supervisory Board of rating from Baa3 to Baa2, with PJSC ALROSA approved the a "stable" outlook. social support standard for MAY 31 AUGUST 2 workers in case of industrial The decision was made accidents. ALROSA remains constituent following a revision of the Diamond Empowerment of FTSE4Good Index Series. sovereign rating of the Russian The new payment mechanism Fund Award. Federation from Ba1 to Baa3 will allow families of The index is designed to and a change in the country affected workers to receive ALROSA received an award for measure the performance of ceiling for foreign currency compensation in a shorter time the implementation of social companies demonstrating obligations from Baa3/P-3 to than when carried out by an projects for residents of its strong Environmental, Social Baa2/P-2. insurance company. areas of presence. and Governance (ESG) practices.

I QUARTER II QUARTER

MARCH 20 APRIL 25 JULY 29

ALROSA and the Federal Agency Fitch Ratings increased An agreement with Rostekhnadzor for Ethnic Affairs (FAEA of Russia) ALROSA's long-term issuer was signed. default rating (IDR) from BB+ to signed a cooperation agreement on preserving the traditional way of life BBB- With a "stable" outlook. ALROSA concluded an agreement with of indigenous peoples of the North, the Federal Service for Environmental, Siberia and Far East of Russia. The agency noted the Company's Technological, and Nuclear Supervision in the leading position in the global field of occupational health and safety. diamond market, increased financial stability and improved transparency.

APRIL 17 JULY 1

The new diamond mine Zarya ВALROSA introduced a new was launched. system of basic remuneration.

The mine is developed by According to the new system, Aikhal Mining and Processing categories were replaced by Division (AMPD) and is designed grades, and tariff rates — by new for more than 10 years of ranges of official salaries. production. Design capacity is 1.25 mln tons of ore per year (from 2021).

20 21 SUSTAINABILITY REPORT 2019 ABOUT ALROSA

SEPTEMBER 5 SEPTEMBER 20 DECEMBER 10 DECEMBER 13 DECEMBER 23 MARCH 13, 2020

ALROSA and the Government ALROSA's IR program was ALROSA's Supervisory The Development Strategy for An agreement was signed to The Supervisory Board of of Yakutia agreed on the recognized as one of the best in Board decides to sell shares the Diamond-Cutting Entity create a joint venture with ALROSA re-elected Sergei gasification of the town of the mining sector, according to of Non-State Pension Fund for 2020–2022 and the JSC PA Zimbabwe Consolidated Ivanov as Chief Executive Udachny. Institutional Investor. Almaznaya Osen. Kristall integration plan were Diamond Company (ZCDC). Officer and Chairman of the approved. Executive Committee for a Construction of new gas facilities ALROSA's IR program ranked among The sale of this asset, which First and foremost, the period of five years. was scheduled for 2020–2023. the top three in the metals and is a non-core asset for a The delivery of the Strategy will joint venture will involve As a result, an additional source mining sector across emerging EMEA diamond mining company, to a increase the operational efficiency the geological exploration of energy supply will be created markets (Europe, the Middle East professional market participant of ALROSA Group's consolidated of greenfield mines. The aimed to minimize the risk of and Africa). ALROSA Chief Executive is designed to contribute to the diamond-cutting sector, which subsequent goals of the emergency situations. Officer Sergey Ivanov took the top further development of the fund will have a positive impact on cooperation are the mining spot in the Best CEO category. for the benefit of its customers, the financial results of this area and independent sale of rough most of which are employees of business. A set of measures is diamond in foreign markets. and veterans of the Company, envisaged to improve the efficiency and to provide an economic of assortment management, benefit to the Company. optimize the production cycle, and create a consolidated sales system for polished diamonds.

III QUARTER IV QUARTER 2020

SEPTEMBER 10 NOVEMBER 19 DECEMBER 17 DECEMBER 25

ALROSA Supervisory Board ALROSA entered the top 10 best ALROSA is included in the ALROSA and Profalmaz trade approves withdrawal from employers of the Russian Federation top 10 of WWF's environmental union signed a collective ALROSA-Nyurba by way of its according to Forbes. openness rating. agreement. voluntary liquidation . Against the background of harsh ALROSA was included in the top 10 The collective agreement will The consolidation of core assets climatic conditions in Yakutia, the main companies in terms of openness regulate the relationship between on the ALROSA’s balance sheet area of presence, ALROSA offers an in the field of environmental the company and the employees in is designed to improve their impressive social package and a high responsibility among Russian metals 2020–2022. management. average salary. & mining companies. The annual rating is prepared by WWF Russia in conjunction with the European Union OCTOBER and the United Nations Environment Programme.

Kristall (Smolensk), the largest polished diamond producer in Europe, joined ALROSA Group.

The purpose of the acquisition is to integrate the production and marketing processes of diamond-cutting sites.

22 23 SUSTAINABILITY REPORT 2019 ABOUT ALROSA

arranged a session dedicated to cooperation between In the context of intergovernmental cooperation, the Russia and African countries in the diamond sector with the Company took part in the work of intergovernmental ENGAGEMENT IN INDUSTRY participation of heads of relevant ministries and national commissions with Armenia, Namibia, the UAE, and diamond mining companies from Angola, Botswana, Zimbabwe. ORGANIZATIONS AND INITIATIVES Namibia, Russia, South Africa, and Zimbabwe, as well as WDC, DPA, and RJC leaders. The participants discussed In April 2019, ALROSA and Endiama E.P., Angola's national GRI 102-13 fundamental drivers of the entire diamond industry and diamond company, signed a memorandum of understanding. identified possible coordinated solutions for facilitating The memorandum provides for cooperation in the field of the industry's sustainable development and strengthening diamond mining, taking into account the best practices of consumer confidence. sustainable development and transparency. As part of its engagement in the international industry In 2019, ALROSA chaired the Kimberley Process Working cooperation, ALROSA has been actively working to enhance Group of Diamond Experts. The Company played a part the efficiency of international regulatory mechanisms and in facilitating the introduction of special commodity the industry self-regulation system and promote high subheadings for unworked and worked synthetic diamonds KEY ESG INDICES AND RATINGS standards of responsible business and diamond supplies, in the new Code of the Harmonized Commodity Description thus contributing to stronger consumer confidence and and Coding System of the World Customs Organization sustainable development of the diamond industry, including scheduled to enter into force in 2022. ALROSA also KEY ESG RATINGS in the context of achieving the UN Sustainable Development contributed to the effective implementation of the KP peer Goals. review system by participating in KP review visits to Canada FTSE4Good World Wildlife Fund (WWF) Bloomberg and Switzerland. In 2019, in the format of Diamond Producers Association index member since 2016 Top 10 ranking 55 out of 100 (DPA) that brings together major global diamond mining ALROSA continued promoting responsible business of environmental companies, important global projects aimed at further standards for the diamond industry through its participation responsibility among mining companies in Russia delineating natural and synthetic diamond markets and in the Responsible Jewellery Council (RJC), an international improving HSE practices were implemented. Thus, with the non-profit organization created to strengthen consumer DPA's participation, the Diamond Terminology Guidelines confidence in the jewelry supply chain, enhance corporate (DTG) were adopted to later form the basis of new national social responsibility and promote ethical business, RobecoSAM MSCI ESG RAEX-Europe regulation in Belgium and industry standards in Great Britain certifying participants who comply with its standards. 30 out of 100 BB 8th place and the UAE. In the EAEU, EU and India, special customs With the Company's input as Vice Chair of the RJC in 2019 codes for synthetic diamonds were introduced. Along with the organization updated its key standard - the Code of that, initiated by the DPA, an independent study of the socio- Practices. The main changes in the standard include: economic and environmental impact of the DPA member — Alignment of due diligence requirements with the companies was conducted and published. In particular, the OECD Due Diligence Guidance for Responsible ISS ESG Sustainalytics results showed that the DPA's consolidated contribution Mineral Supply Chains from Conflict-Affected and to socio-economic and environmental development High-Risk Areas; 5 out of 10 59 out of 100 exceeds USD 16 bln, mostly invested in the wellbeing of local communities through creating jobs, purchasing — Implementation of more stringent requirements on human rights in accordance with the UN Guiding goods and services from local suppliers, paying taxes and Principles on Business and Human Rights; royalties, implementing social programs and investing in infrastructure. — Expanding environmental requirements.

As part of ALROSA's membership in the World Diamond In 2019, ALROSA put a strong emphasis on strengthening AWARDS AND CERTIFICATES Council (WDC) representing the global diamond industry bilateral cooperation with leading countries and national in the Kimberley Process (KP) – an intergovernmental forum organizations of the global diamond industry. To add — ALROSA is a certified member of the Responsible — PJSC Severalmaz won the first place in all-Russian aimed at preventing conflict diamonds from entering the momentum to Russia-Angola business cooperation, Jewellery Council (RJC), which acknowledges the award “Labor Productivity: Russian Industry Leaders legitimate international trade, important industry initiatives including in the area of implementation of joint diamond Company’s compliance with the highest responsible 2019 all-Russia award in the Labor Productivity: were implemented to ensure responsible sourcing of mining projects, the Russia-Angola Business Council was business standards. Leaders of Russian Regions-2019” of the diamonds. On behalf of the WDC, ALROSA coordinated the established in the structure of the Chamber of Commerce Arkhangelsk Region. KP work on establishing a permanent secretariat for better and Industry of the Russian Federation in March 2019. Sergey — ALROSA was awarded by the Diamond efficiency and professionalization of KP activities. As a result Ivanov, CEO of ALROSA, was elected as its Chairman. In April Empowerment Fund (DEF) for the implementation — PJSC Severalmaz won in the regional stage of the of the KP review cycle ended in 2019, the key modalities of 2019, with the support of the business council, a Russia- of social projects for residents in the regions of all-Russian competition “Russian Organization of the future structure were agreed, a request for proposals Angola business forum was held with the participation of operations (Community Stewardship). High Social Efficiency”, nomination “For the Best on hosting the secretariat was published, and the review of the President of Angola. In October 2019, as part of the Working Conditions of the Employees with Family proposed candidates kicked-off. Economic Forum held at the Russia-Africa Summit, ALROSA — ALROSA was ranked in the top 10 best Russia's Responsibilities in Production Companies”. employers according to the Forbes magazine (7th place).

1 In June 2020, the Diamond Producers Association (DPA) was renamed the Natural Diamond Council (NDC).

24 25 CHARTER 02

The living diamonds of Yakutia inhabit the park: Manchurian RESPONSIBLE wapiti, yaks, bison, native Yakutian horses, axis deer, moose, bears, rabbits, lynx, and wildfowl. Their living conditions are close to the wild ones, thus contributing to the maintenance BUSINESS CONDUCT of populations of rare animal species. Visitors of our park are allowed not only to watch, but also to feed and pet wild animals — inhabitants of the spacious paddocks.

Sergey Simonov 12,133 number of audits of PJSC ALROSA business partners in relation to corruption risks

11 top priority UN Sustainable Development Goals SUSTAINABILITY REPORT 2019 RESPONSIBLE BUSINESS CONDUCT

ALROSA's sustainability management system RESPONSIBLE General Meeting of BUSINESS CONDUCT Shareholders Supervisory Board Strategic Planning Committee APPROACH TO SUSTAINABILITY Chief Executive Officer Chairman of the Executive GRI 102-12 Committee Audit Committee

Being one of the largest diamond-producing companies in economic conditions and healthy environment in the Executive Committee the world, ALROSA has a significant impact on the socio- regions of operations, creating jobs and improving living economic development of its regions of operations, and conditions of local communities, as well as providing HR & Remunerations actively participates in the development and promotion of the significant tax revenues to the budgets at all levels, building Committee global sustainability agenda. the social infrastructure and protecting environment, which also contributes to achievement of the UN Sustainable Top Management Specific nature of ALROSA's operations is defined by the Development Goals. At the same time, the Company is location of the most of its key mining assets in the Republic of committed to prevent and mitigate the negative impacts of its Sakha (Yakutia), a hard-to-reach and one of the most remote operations. from the central part of Russia region with severe climate. This factor has a significant impact on the Company's approach to Sustainability is in the core of ALROSA's activities, and Business and Functional Units sustainability. integrated in the Company's Mission and Strategy for 2018- 2024, as well as the other corporate documents. In 2020, the ALROSA contributes to sustainable development by Company plans to define sustainability strategic priorities and providing and maintaining long-term favorable socio- the ESG key performance indicators for the medium term.. KEY DOCUMENTS

— ALROSA ALLIANCE Guidelines on Responsible ALROSA has a number of corporate documents Business Practices regulating the Company's sustainability activities. SUSTAINABILITY MANAGEMENT — Environmental Policy Key documents are as follows: — Occupational Health and Safety Policy GRI 102-18, 102-19, 102-20, 102-22, 102-23, 102-26 — Code of Corporate Ethics — Social Policy — Policy on sustainable development and corporate — Policy for Countering Corruption and Bribery. social responsibility Sustainable development management is embedded in to the Company's overall management, including key all levels of the Group's corporate governance system. sustainability issues. PJSC ALROSA's supreme governing body is the General Meeting of Shareholders responsible for approving internal The Chief Executive Officer — Chairman of the Executive documents on the Company's corporate governance Committee and the Executive Committee exercise bodies’ competences, and key reporting documents, operational management, control and monitoring of PJSC ALROSA Policy on sustainable development and meets the high standards of environmental and industrial making decisions on the Company's participation in the the Company's sustainability activities. The Company’s corporate social responsibility is the Company's key safety, social responsibility and corporate governance. financial and industry groups, associations and other joint business units (departments) are responsible for goal document regulating its sustainability approach, principles business entities, as well as for issuing equity securities and setting and execution of tasks and initiatives in the field of and areas of activity, which was adopted in 2014 and then The Policy was developed in line with the current considering other issues in accordance with the Charter. sustainable development in accordance with their areas of revised in 2018. The document is aligned with the Company's international and Russian laws and takes into account responsibility and report to the relevant Deputy CEO. development strategy and is aimed to support its execution. the requirements and recommendations of international The Supervisory Board and its committees establish Furthermore, it helps implement the mission of ALROSA — standards in the area of corporate social responsibility and strategic business goals and make resolutions related being the world's leader in the diamond mining industry who sustainable development, as well as internal regulatory

28 29 SUSTAINABILITY REPORT 2019 RESPONSIBLE BUSINESS CONDUCT

KEY AREAS OF ALROSA ACTIVITIES IN THE FIELD OF SUSTAINABLE DEVELOPMENT documents determining the Company's approaches to The revised ALROSA ALLIANCE Guidelines on Responsible socially responsible business conduct. Business Practices were adopted on January 30, 2020. Key Key areas Highlights in 2019 Related SDG amendments throughout the document relate to the World The ALROSA ALLIANCE Guidelines on Responsible Business Diamond Council’s System of warranties section, sub- 1. Responsible Business Conduct Practices is an important document establishing principles sections on anti-bribery and anti-corruption, responsible — interacting with key international industry — 100 % of operations with rough 9, 12, 17 of responsible business conduct for the ALROSA ALLIANCE supply chains and information disclosure, sub-section on organizations and polished diamond products participants — PJSC ALROSA and its long-term customers. protection and promotion of natural diamonds/polished — ensuring compliance with international standards for complied with the WDC guarantee diamonds; significant changes were made to the section on responsible business conduct and their promotion system and were certified for These Guidelines are based on the world's best practices of social responsibility of the ALROSA ALLIANCE members, as — improving corporate governance and risk conformity with RJC Code of management systems Responsible Practice business conduct, corporate governance standards, industry well as the environmental management and non-financial — improving operational efficiency and implementing — No confirmed cases of corruption self-regulation standards and key international documents reporting sections were adjusted. innovation development programs — NRCG rating 8 Best Corporate on financial transparency, human rights, health and safety, Governance Practices socio-economic development and environmental protection. 2. Health and Safety

— ensuring safe working conditions — accident severity rate 3, 8 — complete elimination of accidents and emergencies decreased 28.6% — staff participation in OHS management — 12,704 employees of PJSC — staff training in OHS ALROSA — risk assessment, control and monitoring — were trained on OHS — liability insurance disciplines — 5,108 managers and specialists certified in accordance with requirements of the Federal Environmental, Industrial and Nuclear Supervision Service (Rostekhnadzor)

3. People

— ensuring equal and decent working conditions for — 34.5 thousand employees 4, 5, 8, 10 employees — The average salary of ALROSA — respecting human rights and preventing all forms of employees exceeds 3 times the discrimination national average — ensuring decent remuneration for work and — 32% of employees at ALROSA improving the quality of life for employees are women — one of the best — promoting professional development, training and industry indicators in the world skills development — implementing social support programs for employees

4. Environment

— ensuring compliance with legislative and — CO2 emissions decreased by 6, 12, 13, 15 international requirements and standards 50% between 2014 and 2019 — reducing negative environmental impact — 85.5% of electricity consumed — ensuring efficient use of energy resources and using by PJSC ALROSA comes from energy from renewable sources renewable sources — ensuring effective waste management and safety of — 3.2% of revenue is allocated tailings dams to environmental protection — carrying out land reclamation and biodiversity measures conservation in areas of presence KEY SUSTAINABILITY PRIORITIES 5. Regional development — economic development of areas of presence through — RUB 100 bln in taxes and 3, 4, 8, 9, 10 job creation, tax and dividend contributions dividends was paid to the — development of infrastructure in areas of presence federal budget and regional (including single-industry towns) budgets — support for indigenous peoples and national — 3.6% of consolidated revenue In determining the approach and key areas of activity in Sustainable Development Goals for the period until 2030, as communities goes to social expenses the field of sustainable development, ALROSA is guided well as the provisions of other international standards and — implementation of charitable projects and initiatives — over 500 projects and by the norms of applicable Russian and international law, initiatives in this field initiatives to support local the principles of the UN Global Compact and the UN communities and charities

1 According to the National Rating of Corporate Governance (NRCG), conducted by the Russian Institute of Directors. 2 Industry leadership for this indicator according to PwC report "Sustainability benchmark report, 2016–2018" http://eng.alrosa.ru/alrosa-remains-the-industry-leader-in-social- investments/

30 31 SUSTAINABILITY REPORT 2019 RESPONSIBLE BUSINESS CONDUCT

ALROSA CONTRIBUTION TO THE ACHIEVEMENT OF THE UN SDGS IN 2019

Priority UN SDGs ALROSA contribution to the achievement of Results and UN SDGs achievements of 2019

SDG 3 Maintaining the health and healthy lifestyle of Subsections employees and population in areas of presence, as “Social programs”, Ensure healthy lives and well as creating safe working conditions “Occupational promote well-being for all at — implementing corporate programs to maintain the health and safety”, all ages health and provide medical care to employees and “Contribution to their families; regional infrastructure and economy” — investing in the construction and development of the medical infrastructure; pp. 73, 82, 131 — implementing the occupational safety and industrial safety projects.

SDG 4 Promoting professional development, training and Subsection "Personnel advanced training of employees and population in building and Ensure inclusive and areas of presence development " equitable quality education — Providing opportunities for training and professional for all and promote lifelong development of employees with the use of own р. 67 learning opportunities for all corporate training base: the Personnel Training Center of PJSC ALROSA and its training centers, as well as training centers of the Russian Federation; — training of local population in trade jobs on the basis of educational institutions of the Republic of Sakha (Yakutia) and the Personnel Training Center of PJSC ALROSA; CONTRIBUTION TO THE UN — implementing a comprehensive career guidance program in Mirninsky District of the Republic of Sakha SUSTAINABLE DEVELOPMENT GOALS (Yakutia); — cooperating with the leading national universities to provide the opportunity for students to do practical GRI 102-12, 102-15 training at the Company's facilities.

SDG 5 Providing equal opportunities for professional growth Subsections “Human rights”, “Remuneration In 2015, Member States of the United Nations Organization When determining the priorities and respective tasks in the — equal remuneration for men and women for work of Achieve gender equality and equal value; and motivation system” approved the Agenda in the field of sustainable field of sustainable development, ALROSA is guided by the empower all women and girls — providing career opportunities for women and development for the period until 2030 including 17 UN Sustainable Development Goals approved by the UN рр. 43, 64 maintaining gender balance in personnel structure sustainable development goals (SDG) and 169 tasks to General Assembly in 2015. Starting from 2018, the Company and governance bodies achieve them. Monitoring the SDGs provides for a global conducts an annual assessment of its contribution to the set of indicators to perform the quantitative assessment SDGs and discloses its performance and achievements per of the outcomes of tasks for each respective SDG. In each goal in socio-environmental reports. accordance with the principles that underpin the Agenda, SDG 6 Ensuring the sustainable use of water resources Subsections “Water management, UN Member States set their own targets and indicators, In 2019, ALROSA initiated the analysis and identification of — supplying clean drinking water to population of the Ensure access to water and “Contribution to guided by global wishes, but taking into account national UN Sustainable Development Goals being of top priority districts of the Republic of Sakha (Yakutia); sanitation for all regional infrastructure — using a closed water circulation system at most conditions. and relevance for its activities, to which ALROSA can make and economy” the most significant contribution. industrial sites of ALROSA; At the same time, the SDGs cannot be achieved solely by — reducing the impact on surface water bodies through рр. 111, 131 the efforts of the states and public organizations. The UN The table below presents the 11 UN Sustainable consistent reduction of water intake and improving encourages businesses, especially large and multinational Development Goals being of top priority for ALROSA, as the wastewater treatment efficiency; companies, to adopt sustainable production methods and well as a brief summary of the Company's contribution — ensuring integrated water resources management; to reflect information on resources conservation in their to their achievement. The description of the projects and — protecting and restoring water-related ecosystems. reports. initiatives implemented in 2019 for each goal is provided in the Report’s subsections.

32 33 SUSTAINABILITY REPORT 2019 RESPONSIBLE BUSINESS CONDUCT

Priority UN SDGs ALROSA contribution to the achievement of Results and Priority UN SDGs ALROSA contribution to the achievement of Results and UN SDGs achievements of 2019 UN SDGs achievements of 2019

SDG 7 Improving energy efficiency of the production process Subsection "Energy SDG 13 Reducing the impact on climate change Subsection "Air — introducing modern energy-saving technologies efficiency and power — reducing greenhouse gas emissions through the protection and climate Ensure access to affordable, in production and improving the energy consumption" Take urgent action to combat partial transfer of motor vehicles to natural gas, as change prevention" reliable, sustainable and infrastructure within the framework of the set of climate change and its well as other activities of the Innovation Development modern energy measures implemented under the Energy Efficiency р. 121 impacts and Technological Upgrade Program of PJSC р. 118 Improvement Program; ALROSA until 2024 and the Concept of Energy — prior use of renewable energy sources wherever Saving and of Energy Efficiency Improvement of PJSC possible. ALROSA until 2021; — improving energy efficiency. SDG 8 Providing decent working conditions and sustainable Section “ALROSA’s economic growth in areas of presence economic contribution”, SDG 15 Recovery of reserves damaged in the course of Subsections “Protection Promote inclusive and — job creation in areas of presence; and subsections production activities and conservation of biodiversity of land resources”, sustainable economic growth, “Creation of jobs in Sustainably manage forests, in areas of presence “Biodiversity — ensuring safe and decent working conditions; employment and decent regions”, “Support for combat desertification, — reclamation of land used and disturbed in the course conservation” — respect for the human rights of employees; work for all indigenous peoples”, halt and reverse land of production activities and restoration of the life — implementing the partnership program with small “Occupational health degradation, halt biodiversity environment typical for the area prior to diamond рр. 123, 125 and medium enterprises. and safety” loss mining; — implementing joint projects and activities under рр. 48, 136, 137 cooperation agreements on biodiversity conservation with public authorities and local self-government SDG 9 Providing areas of presence with the required Section "Regional bodies; infrastructure. Introducing advanced scientific and development" Build resilient infrastructure, technical developments and innovations. — implementing biodiversity conservation programs in areas of presence. promote sustainable — implementing programs and projects as part of р. 126 industrialization and foster partnership with public authorities and local self- SDG 17 Cooperation to achieve sustainable development goals Subsections innovation government bodies; Annual Report 2019, Section “Improving — improving the effectiveness of international “Engagement in — creating and developing modern infrastructure for Efficiency” Revitalize the global regulatory mechanisms and sectoral self-regulation industry organizations the population of areas of presence; partnership for sustainable system; and initiatives”, — introducing innovative technologies and solutions, development “Responsible supply р. 46 — promoting high standards of responsible supply which ensure the competitiveness of the Company. chains”, “Stakeholder chains and business conduct; engagement” SDG 12 Careful attitude towards natural resources Section "Environmental — strengthening bilateral interaction on sectoral protection" cooperation with major national organizations in the рр. 24, 41, 45 — taking measures to reduce the resource intensity and global rough and polished diamond community; Ensure sustainable improve the efficiency of use of natural resources consumption and production throughout the value chain of mined rough р. 94 — interacting with public authorities of the Republic patterns diamonds under the Innovation Development and of Sakha (Yakutia), local communities and Technological Upgrade Program of PJSC ALROSA representatives of various stakeholders; until 2024; — providing transparent public statements on the — responsible approach to waste management; Company's activities on sustainable development. — improving the environmental awareness of employees.

34 35 SUSTAINABILITY REPORT 2019 RESPONSIBLE BUSINESS CONDUCT

RISK MANAGEMENT Categories of risk management participants: — management and control bodies (the Supervisory Board and the Audit Commission), the Audit GRI 102-11, 102-15, 102-30, 201-2 — risk owners and supervising managers (members of Committee of the Supervisory Board, and the Internal the Executive Committee, Deputy CEOs, heads of Audit Department; departments/functional services); — employees of the Company's standalone divisions ALROSA Group strives to effectively manage risks and to processes and aimed at improving the quality of management — decision-making center (CEO – Chairman of the and functional services. ensure the Company's sustainable development under decisions. ALROSA continuously performs risk identification, Executive Committee and the Executive Committee conditions of uncertainty and changes in the external monitoring, analysis, assessment and response, including itself); In 2019, the risk management participants were involved in environment. systematic planning of risk mitigation measures and ensuring the identification, monitoring, analysis, and consideration of control over their implementation. — center for coordination of the risk management risks on an ongoing basis, guided by adopted procedures and Risk management is a continuous and systematic process that process (risk management owner); approaches. The priority of risks and opportunities was decided runs at all the Company’s levels, integrated with key business based on their impact on the key financial, environmental, and — center for aggregation of risk information and risk social aspects of ALROSA Group's activities, taking into account management system improvement (the Financial already established strategic objectives, development priorities, Controlling and Risk Management Departments); and mission of the Company. KEY INTERNAL REGULATORY DOCUMENTS ON RISK MANAGEMENT PROCESSES IN ALROSA:

— Risk Management Policy1; — Risk assessment methodology, risk classifier, risk passport template3. KEY IMPACTS AND RISKS IN THE AREA OF — Regulation on Risk Management2; ALROSA'S SUSTAINABLE DEVELOPMENT

Risk groups Key risk factors General risk management instruments

Internal regulatory documents define the structure and terminology, key elements, functions and roles of participants organization of the risk management system (RMS), in in the risk management process, as well as the main stages of Economic impact particular, principles, goals and objectives, common the risk management process and tasks of the participants. ALROSA's economic efficiency has a primary influence on the economy of major Company’s shareholders — the Russian Federation and the Republic of Sakha (Yakutia). The Company is listed among Russia's strategic enterprises, as well as it is one of key taxpayers and employers in the Republic of Sakha (Yakutia). As the largest producer of natural rough diamonds, ALROSA has a significant impact on the stability of the global diamond market and the diamond industry as a whole.

RISK MANAGEMENT PRINCIPLES Industry-wide — Limited reserves of rough diamonds across — Prospecting and exploration work, the globe; development of deposits with lower diamond content; — changes in the macroeconomic environment that affect consumer welfare; — preparation and implementation of programs aimed at mitigating the impact of a possible Consistency and — fluctuations in product demand; drop in prices for diamond products on Integration Integrity the Company's activities, including the continuity — reduced final demand for polished introduction of flexible customer policies; diamonds. — building a sales system based on long-term contracts;

— preparation and implementation of marketing programs for the promotion of diamond as a consumption item along with ALROSA products; Economic expediency Responsibility — implementation of a cost cutting program;

— introduction of resource-saving technology.

1 According to the Supervisory Board's decision of March 21, 2019, Minutes No. 01/293-PR-NS. 2 According to the Supervisory Board's decision of March 21, 2019, Minutes No. 01/293-PR-NS. 3 Order No. A01/131-P of May 5, 2017 "On approval of internal regulatory documents in risk management of the Company".

36 37 SUSTAINABILITY REPORT 2019 RESPONSIBLE BUSINESS CONDUCT

Risk groups Key risk factors General risk management instruments Risk groups Key risk factors General risk management instruments

Country- and region-wide — PJSC ALROSA's economic operations — As long as the Company is included in the list Social impact in the Russian Federation against the of systemic enterprises who are guaranteed Most of ALROSA Group’s employees work in divisions located in Yakutia, where industrial single-industry towns are established. backdrop of the country's overall economic support in receiving state loans, and in the Therefore, the Company significantly affects the employment situation and local infrastructure development as well as plays a environment; face of existing risks and uncertainties in role in solving social problems of the region. ALROSA is a major benefactor who participates in scientific, medical, educational, lending, some of these risks were undertaken cultural and sports projects. — geographical remoteness and harsh by the state; climatic conditions in the Republic of Sakha (Yakutia), a region where the bulk of — planning and carrying out activities taking into Regulatory — PJSC ALROSA's responsibilities towards — Strict compliance with the Russian labor Company’s assets are located. account the actual (expected) fluctuations in its employees and residents in the regions legislation and the Collective Bargaining exchange rates; of presence stipulated by the legislation, Agreement between PJSC ALROSA and and volunteer initiatives enshrined in the Profalmaz Interregional Trade Union of PJSC — amid general geopolitical tension, the Collective Employment Contract and the ALROSA employees; Company actively takes part in international Sustainable Development and Corporate consolidation of rough and polished diamond Social Responsibility Policy. — work of the commission on regulation of producers for the purpose of developing and social and labor relations, which includes supporting the entire industry; authorized representatives of the parties on a parity basis; — Yakutia belongs to Russia's regions with stable political, economic and social environment. — implementation of a set of social policy Despite its geography, Yakutia has a reliable measures that contribute to attracting and transport infrastructure for imports and retaining qualified employees. backup sources of electricity and heat supply. Regional — Remoteness of the regions, working in — The Company's employees are mainly local Environmental impact severe climate conditions; residents; ALROSA and its diamond-producing subsidiaries inevitably have an impact on the environment, including water and energy — a minimum number of other developed — implementation of social targeted programs resources. economy sectors besides the diamond that promote healthy lifestyles, organization industry. of cultural leisure activities for the population; Environmental — Open and underground mining — Implementation of measures of the support to local communities; provision of operations; environmental policy aimed at reducing chef and sponsorship assistance; charity. negative impact on the environment, rational — production facilities that are classified as and sustainable use of natural resources; dangerous in accordance with Russian regulations. — corporate environmental monitoring system;

— preliminary assessment of possible consequences;

— development of environmental protection activities at the design stage;

— an integrated system of industrial and occupational safety management that provides for civil liability insurance programs for environmental damage in the event of accidents at hazardous production facilities.

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EVENT AFTER THE REPORTING PERIOD RESPONSIBLE

In 2020, the outbreak of COVID-19 affected various industries, to remote production sites and to protect the indigenous SUPPLY CHAINS including the activities of the Company. peoples of the North, ALROSA created observation facilities for shift personnel, providing them with everything necessary GRI 102-9 The lockdown measures taken and drop in demand for jewelry during isolation. For its own Medical Center, ALROSA in mainland China and Hong Kong, which account for 14% purchased six mini-laboratories of express diagnostics, 17 of the global demand, led to decrease in sales of certain thermal imagers, allocated funds for additional payment to polished diamond categories, which is reflected in the sales of medical personnel for work during the pandemic and funded Building a responsible supply chain from on Responsible Diamond Supply Chain rough diamonds. a number of other measures aimed at combating the spread the rough diamond production to the sale Management, which reflect the requirements of coronavirus. of polished diamond jewelry is an important of the new Code of Practices of the At the same time, the global diamond industry entered element to ensure transparency of the Responsible Jewelry Council (RJC) and ensure the year 2020 being much more sustainable and prepared A large sponsorship package was allocated to the regional rough and polished diamond industry and that ALROSA Group meets the OECD Due to handle the shocks than before the industry crisis of the health system. Since announcement of the high-alert regime strengthening consumer trust. Diligence Guidance for Responsible Supply previous year; and the sales policy of diamond-producing in March, ALROSA has provided substantial assistance Chains of Minerals from conflict-affected areas companies has already adapted to the market volatility. to the state medical institutions of the Republic of Sakha In order to improve efficiency of this work and and high-risk areas. ALROSA has taken various measures to support its customers (Yakutia) — hospitals in Mirny, Aikhal, Lensk, Udachny and introduce the world's best practices, ALROSA and plans to follow a flexible sales policy in the future. Yakutsk, where the main production sites of the Company are launched an intra-corporate supply chain Since the end of 2020, ALROSA plans to located. ALROSA allocates funds to hospitals for artificial lung management system for rough and polished implement regular due diligence procedures Prioritizing the welfare of the staff during the pandemic, ventilators, medicines, disinfectants and personal protective diamond products at the end of 2019. The for the whole rough and polished diamond ALROSA has taken a range of measures to protect and equipment, consumables and reagents for detection of system will be based on the Regulations products supply chain in the Company. support its employees. Namely, a part of the office staff COVID-19. The company donated several tens of thousands of works remotely, the employees are provided with personal tests of the new COVID-19 Isoterm SARS-CoV-2 RNA — Screen protective equipment for mandatory use outdoors and testing system as charity aid to laboratories in Yakutsk and disinfectants to use during the day, body temperature of Mirny. Mirny Airport is equipped with everything necessary employees is measured a few times a day and free antibody for checking incoming passengers. tests for COVID-19 are available. Strict control and quarantine for shift sites were introduced, and the number of rotations As of June 22, 2020, ALROSA allocated more than RUB 500 BUSINESS ETHICS By personal was reduced. In order to prevent transmission of infection mln for various measures to reduce the spread of coronavirus. AND ANTI-CORRUPTION example, ALROSA tries

GRI 102-12, 102-16, 102-17 to show that modern rough diamond mining ALROSA's activities are based on its corporate achievements are based on social responsibility is a transparent values, which allow to conduct business in and commitment to moral and ethical norms accordance with the highest ethical standards. and rules. and responsible The Company realizes that its reputation business that depends not only on strict compliance with By personal example, ALROSA tries to show that the requirements of Russian and international modern rough diamond mining is a transparent corresponds to legislation and respect for human rights. and responsible business that corresponds to the world's best To a large extent, ALROSA's reputation and the world's best practices. practices.

KEY DOCUMENTS

— Corporate Ethics Code; — ALROSA ALLIANCE Guidelines on Responsible Business Practices. — Policy for Countering Corruption and Bribery;

40 41 SUSTAINABILITY REPORT 2019 RESPONSIBLE BUSINESS CONDUCT

Key anti-corruption indicators Since 2013, PJSC ALROSA has a Corporate Ethics Code which enshrines the key values, principles, rules and norms that guide all employees Indicator 2017 2018 2019 of the Company in their activities both in strategic decisions and in Number of audits of PJSC ALROSA business everyday situations. 4,262 233 12,133 partners in relation to corruption risks

Total number of administrative measures taken on the facts of detected violations among 242 1 7 ALROSA CORPORATE VALUES employees

Number of employees dismissed in connection 10 1 6 with detected corruption violations Social Life and health of personnel Eco-friendliness are our priority responsibility Furthermore, the Company has a Hotline, through which its employees and third parties can report (including anonymously) cases of abuse or other negative events.

Efficiency Morals Partnership

HUMAN RIGHTS ALROSA strives

GRI 102-41, 402-1, 405-1, 410-1, 412-2 to provide its employees Profitability and efficiency with fair and Legal compliance guarantee ALROSA Group is committed to respecting The Company does not tolerate any form decent working universally recognized human rights and of discrimination. Each employee has equal conditions, freedoms and to operating in line with opportunities to exercise his or her labor ensuring the applicable international and national legislation rights irrespective of sex, race, nationality, standards, as well as the UN Guiding Principles language, origin, property, social status, official protection of on Business and Human Rights based on the position, age, place of residence, attitude to human rights COUNTERING BRIBERY AND CORRUPTION International Bill of Human Rights (including religion, political opinions, affiliation with public the Universal Declaration of Human Rights, the associations, or other circumstances unrelated and freedoms GRI 205-1, 205-2, 205-3 International Covenant on Economic, Social to the business qualities of the employee. The and recognizing and Cultural Rights, and the International process of recruiting and hiring employees at their Covenant on Civil and Political Rights) and the ALROSA is guided solely by the professional In the process of conducting its economic activities, In 2019, a total of 12,1331 inspections were carried out in PJSC International Labor Organization Declaration on qualities of candidates and also does not permit importance and implementing projects and interacting with public authorities, ALROSA, including inspections in 11 structural divisions of the Fundamental Principles and Rights at Work. any form of discrimination. inclusiveness. officials, politicians, investors, customers, partners and third Company and three subsidiaries. The inspections were aimed parties, ALROSA adheres to the principle of rejection of all at identifying corruption violations not only among employees ALROSA strives to provide its employees with Despite the traditionally male-dominated forms and manifestations of bribery and corruption. but also among the Company's business partners. fair and decent working conditions, ensuring personnel structure of mining companies, the protection of human rights and freedoms ALROSA strives to create conditions for The Anti-Corruption and Bribery Policy of PJSC ALROSA, Nine employees of the Company were trained in anti- and recognizing their importance and increasing the number of women among the approved in 2013, is a main document that establishes key corruption policies and procedures in 2019, representing 0.1% inclusiveness. Company specialists and management. In goals, principles and requirements adopted in the Company of the total number of managers, specialists and employees. 2019, the number of women employed at PJSC in relation to anti-corruption and compliance with the According to the ALROSA PJSC Policy on ALROSA totaled 32%, which is quite high for the requirements of the applicable anti-corruption legislation of sustainable development and corporate social industry. the Russian Federation and other applicable norms of anti- responsibility, respect for human rights is corruption legislation of other jurisdictions. recognized as one of the core principles of the The Company does not use the labor of For more information on gender equality Company's activity. PJSC ALROSA declares persons under 16 years of age; forced labor issues, see the Personnel respect for human rights and understands their is prohibited; the regulations on preventing structure section on page 59 importance and inclusiveness. women and persons under 18 years of age 1 The indicator includes participants of procurement activities and describes compliance with the “due diligence” principle requiring inspection activities for the legal entity (sole proprietor), wishing to enter into business relations with the Company, in order to prevent corruption risks in them.

42 43 SUSTAINABILITY REPORT 2019 RESPONSIBLE BUSINESS CONDUCT

from working jobs in the mining industry with harmful or inform hereon the Profalmaz trade union in writing no later dangerous working conditions are strictly observed. than two months before the beginning of the dismissal and to STAKEHOLDER inform the Profalmaz trade union and territorial employment Social partnership is the basis for stable and efficient work services of the expected mass layoff of personnel no later than of PJSC ALROSA and its long-term development. The three months in advance. ENGAGEMENT Company respects the right of employees to associate in an organization of their choice, which is an integral part of the ALROSA and Profalmaz together develop measures for the GRI 102-40, 102-43, 102-44 right to freedom of association and freedom of negotiation. employment of laid-off employees. The Company arranges retraining of personnel dismissed due to staff redundancy The Interregional Trade Union of ALROSA employees – through the structure of internal personnel training. Profalmaz – is an authorized representative of the Company's ALROSA Group strives to balance the interests disclosure of information relevant to them. employees. In 2019, the trade union organization comprised In ALROSA, the main body of social partnership in the field of of all stakeholders. The Company is constantly This approach allows a timely response to the 72.5% of the total number of employees. labor is the Commission for the Regulation of Social and Labor working with its stakeholders and systematizes, probability of risks associated with stakeholder Relations, which is formed from authorized representatives of analyzes and takes into account their requests, engagement. Relations between the Company and its employees in the the parties on a parity basis. ensuring the most complete and timely social and labor sphere are based on the principles of social partnership and stipulated by the Collective Agreement, In 2019, the Profalmaz trade union received 19 complaints which applies to all employees of PJSC ALROSA (including from 22 employees of the Company who reported violations temporary or part-time ones). Territorially, the Collective of their labor rights by the employer. All complaints were ALROSA key stakeholders Agreement governs all business units of the Company. reviewed and resolved by the parties at the level of trade union committees and labor dispute commissions. In the event of significant changes in the Company's activities, Stakeholders Stakeholder interests Key interaction formats in particular when making a decision to reduce the number or ALROSA plans to regularly assess the risks of human rights pool of employees and terminate employment contracts, the violations against the Group's employees, arrange specialized Collective Agreement stipulates the obligation of ALROSA to training, and improve its feedback mechanisms. Shareholders and — high shareholder return — disclosure of information on the Investors Company’s website — information transparency and timely information disclosure — investor days

— improving the corporate governance — road shows system — conference calls Detailed information on the results of — one-on-one meetings interaction in the reporting period — visits to production sites can be found in the sections of the 2019 Annual — Provision of GMS materials Report: Corporate about Company’s location Governance, and Investors and (Moscow, Mirny) Shareholders.

Employees and — decent and safe working conditions — communicating with employees the profalmaz through immediate supervisors interregional Trade — respect for human rights and non- and management Union of ALROSA discrimination — consultation with the union and — social programs collective bargaining

— fulfillment of the terms of the collective — corporate web portal employment agreement — corporate sports and — fulfillment of obligations to the trade cultural events, professional Detailed information on the results of union organization competitions interaction in the reporting period — Khozaktiv annual forum can be found in the sections: Occupational — corporate media, brochures, Health and Safety, and information screens Human Rights.

— confidential feedback boxes

44 45 SUSTAINABILITY REPORT 2019 RESPONSIBLE BUSINESS CONDUCT

Stakeholders Stakeholder interests Key interaction formats Stakeholders Stakeholder interests Key interaction formats

Government — compliance with regulatory — working and expert groups, authorities requirements and recommendations commissions, committees Customers — product quality and price, as well as — satisfaction surveys supply and payment conditions — amendments to the legal and — official requests — meetings and negotiations regulatory framework in order to — guarantees of conformity of rough — public events ensure effective development and diamond mining with Russian and — exhibitions and conferences Detailed information on maintenance of the Company's — cooperation agreements with international legislation the results of interaction resource base regional authorities in the reporting period Public environmental — minimizing negative industrial impact — conferences, seminars, round can be found in the — timely receipt of tax and dividend section of the 2019 Detailed information organizations on the environment tables on the results of payments Annual Report: Company interaction in the Performance. reporting period — environmental protection — compliance with international — participation in environmental can be found in environmental standards ratings Detailed information the sections of on the results of the 2019 Annual Local communities — organization of jobs — corporate programs, projects — responses to queries and interaction in the Report: Company and cooperation agreements reporting period Performance, and — development of transport, energy and suggestions can be found in the Development of Areas social infrastructure of regions — community liaison offices section: Environmental of Presence. protection. Analysts, expert — information transparency and timely — conferences, seminars, round — charitable assistance to schools, — tours to production facilities community disclosure of key information tables Detailed information kindergartens, health, science and Detailed information — joint on-site surveys on the results of educational institutions and other non- on the results of interaction in the — compliance with regulations and — participation in ratings interaction in the reporting period profit organizations — parallel laboratory control requirements reporting period can be found in the — responses to queries and can be found in the section: Regional — industrial and environmental safety section: Key ESG development. suggestions indices and ratings. Business partners — equal conditions for participation in — meetings and negotiations Media — information transparency and timely — publication of press releases on Detailed information competitive bidding on the results of — exhibitions and conferences disclosure of key information the website interaction in the — timely fulfillment of mutual obligations reporting period — competitive bidding can be found in the — regular interaction and information — responses to information sections: Responsible — anti-corruption activities exchange requests supply chains, — compliance with business ethics Business ethics and — interviews with the management anti-corruption. International industry — maintaining and enhancing the — participating in compiling the — media tours organizations consumer value of polished diamonds agenda and work of industry Detailed information organizations on the results of — building consumer trust in diamond interaction in the products — cooperation with national and reporting period international industry and other is provided on the — developing and promoting standards Company's corporate relevant organizations for responsible business conduct, website at http://eng. alrosa.ru/media/ including ensuring responsible rough/ — organizing and participating in polished diamond supply chains, sectoral agenda and sustainable social and economic development development activities of areas of presence, environmental — developing and promoting protection, respect for human and standards for responsible labor rights, and occupational safety business conduct — implementing and improving — conducting research the effectiveness of international regulatory mechanisms and sectoral — improving corporate procedures self-regulation systems, including and control mechanisms Detailed information on ensuring the "conflict-free" origin the results of interaction of rough/polished diamonds in the in the reporting period can be found in the global market section: Engagement in industry organizations — differentiating the markets for natural and initiatives. and synthetic rough and polished diamonds

46 47 CHAPTER 03 61.3 ALROSA'S ECONOMIC RUB bln CONTRIBUTION Taxes and mandatory payments Every year, the number of our wildlife sanctuary's dwellers grows. There were only two animal species at the beginning, but now there are nine of them. Apart from the wildlife representatives of Yakutia, bird species of tropical countries live there too. Besides, herbivores alone consume 40 tons of hay per year. Purchasing feedstuff, diversifying species composition, repairing enclosures and roads, all that is possible thanks to ALROSA's support.

Sergey Simonov

136.4 57.5 RUB thous. RUB bln per month dividends paid average salary SUSTAINABILITY REPORT 2019 ALROSA'S ECONOMIC CONTRIBUTION

ALROSA'S ECONOMIC CREATION AND DISTRIBUTION CONTRIBUTION OF ECONOMIC VALUE GRI 201-1, 201-4

KEY ECONOMIC INDICATORS Indicators of the direct economic value generated and distributed in 2019, RUB mln

Indicator 2019

Economic value generated 259,090 Rough diamond mining has been successfully carried out in ALROSA contributes significantly to the social and economic ALROSA Group consolidated financial the Republic of Sakha (Yakutia) for over 50 years, and for over development and well-being of the areas where it operates Revenue from core sales 215,422 statement prepared 15 years in the Arkhangelsk Region. Knowing that the long- and the country as a whole by paying taxes to federal and under IFRS for 2019 Revenue from other sales 17,434 is available at: http:// term success of the business depends on the well-being of regional budgets, employing local residents, purchasing eng.alrosa.ru/ its employees and their quality of life, ALROSA has strived to and using the services of local and regional suppliers, and documents/financial- Profit (loss) from disposal of subsidiaries and assets held for sale 179 results/ develop and maintain mutually beneficial partnerships with accelerating the development of related industries. This representatives of state and municipal authorities, to improve contributes to improving the living conditions of the local Other operating income 6,734 population and stimulating economic growth. the living conditions of employees and their families, and Income from subsidies 5,330 to maintain the social and economic stability of the single- industry towns and areas where the Company operates. Share of results of associates and joint ventures 3,485

Interest income 2,311

Foreign exchange gain 9,404 Key indicators of ALROSA economic contribution to the regional development Royalty 1,209

Indicator 2017 2018 2019 Economic value distributed (excluding sands, taking into account depreciation) 251,031

Taxes and mandatory payments paid, RUB bln 69.4 69.7 61.3 Operating costs, including 77,015

including Cost of sales 48,671

To the federal budget, RUB bln 2.2 1.8 –1.0 Selling expenses 1,006

To regional budgets, RUB bln 53.6 54.9 48.3 Administrative expenses 5,738

To extrabudgetary funds, RUB bln 13.6 13.0 14.0 Losses from depreciation of fixed assets 2,525

1 Dividends paid, RUB bln 67.4 80.7 57.5 Other operating expenses 11,394

including Exploration costs 7,681 To the federal budget, RUB bln 21.7 27.2 19.3 Salaries, payroll contributions and other employee benefits 57,343 To regional budgets, RUB bln 23.1 27.1 19.3 Payments to providers of capital, including 65,626 Share of taxes and dividends of ALROSA Group in tax and non-tax income of the consolidated budget of the Republic 51.8 46.7 40.2 Dividends 57,524 of Sakha (Yakutia), % Interest costs attributed to use of borrowed funds, net of capitalized costs 8,102 New jobs created in the regions of operations, ea. 3,897 4,309 3,044 Payments to the government1 Average salary of PJSC ALROSA employees, RUB thousand/month 124.3 126.7 136.4 Mineral production tax and other mandatory payments (included in cost) 21,937 Ratio of the average salary of PJSC ALROSA employees 2.0 1.8 1.9 Taxes excluding mineral production tax and income tax (included into to the average salary in the Republic of Sakha (Yakutia) 3,043 administrative expenses) Ratio of the average salary of PJSC ALROSA employees 3.2 2.9 2.9 to the average salary in the Russian Federation Income tax expenses 18,726

Social expenses and investments, RUB mln 8,698 9,530 8,626 Community investments 7,341

Share of social expenses in revenue, % 3.2 3.2 3.6 Economic value retained (including depreciation) 8,059

1 Including dividends paid to non-controlling shareholders by subsidiaries of the Group. 1 The table reflects the amounts of accrued taxes.

50 51 SUSTAINABILITY REPORT 2019 ALROSA'S ECONOMIC CONTRIBUTION

APPROACHES TO ECONOMIC TAXES SOCIAL INVESTMENTS

Tax contributions of PJSC ALROSA to budgets of different Investments of PJSC ALROSA in the community are VALUE DISTRIBUTION levels and extrabudgetary funds of the Russian Federation represented by contributions to charitable efforts and in 2019 amounted to RUB 40.2 billion. The company is the maintenance of social infrastructure facilities1. largest taxpayer in the main region of operations: payments to the budget of the Republic of Sakha, Yakutia for 2019 DIVIDEND POLICY amounted to RUB 27.2 billion.

Dividend policy of PJSC ALROSA is based on the dividend pay-out amounts to 50% of net legislation of the Russian Federation in the field of profit according to IFRS. Dividends are paid Indicator, RUB mln 2017 2018 2019 Regulation dividend policy development, the Charter of the semiannually. The calculation of dividend is to be on the Dividend Policy is posted on the Company, the Dividend Policy Regulations and the based on free cash flow, deemed to be the cash Maintenance of local infrastructure 1,993 1,787 2,265 website in the section Regulation on Remuneration of Members of the flow from operating activities net of cash flow Investors Supervisory Board. The calculation and payment to finance capital investments. When preparing Charitable expenses 3,260 3,248 3,878 of dividends shall be carried out by the decision of recommendations on dividend payments, the the General Meeting of Shareholders. management takes into account the level of the Health expenses 289 231 247 Company's leverage. Detailed information on dividend policy In accordance with the Regulations on the Educational expenses 114 97 112 is provided in the Dividend Policy of the Company1, the minimum 2019 Annual Report (section "For Investors Other expenses 317 664 839 and Shareholders", subsection "Dividend Policy", p. 116) Total social expenses 5,973 6,027 7,341 SALARIES AND OTHER PAYMENTS TO STAFF

Mandatory payments to the Russian Federation Since 2018, the corporate pension program State Pension Fund consist of pension plan operates in the subsidiaries of the Company's PROCUREMENT with fixed contributions for the benefit of diamond mining subsidiaries, PJSC Severalmaz employees. and JSC Almazy Anabara. The supply chain of material and technical resources in PJSC control and instrumentation, inventory and tools, spare parts, ALROSA is a complex process which is defined by the fact that work clothes and personal protective equipment, etc.) are Since July 1, 2017, PJSC ALROSA has a parity Among the most significant forms of targeted the main production sites of the Company are located in Yakutia delivered during the shipping period (from May to October) by corporate pension program in place that support are financial assistance to employees, regions. All large lots of goods (fuel and lubricants, mining, water transport along the Lena river. provides Company's employees with an payment in the amount of 70% of the cost of process and construction equipment, automotive equipment, See Procurement section for more details. additional pension complementing the state recovery and recreation vouchers to employees one. The contributions are invested in a and members of their families, payment for travel

For more information, non-state pension fund — JSC NPF Almaznaya and transportation of luggage to workers and see section Social Osen — and additionally grows due to annual their families to and from the place of leisure, Programs. income. payment for medical services and medical travel, GOVERNMENT SUPPORT and other forms of support. GRI 201-4

Indicator, RUB bln 2017 2018 2019 In 2019, ALROSA has received government subsidies for the Federation dated July 13, 2015. In 2019, the amount of the construction of infrastructure, reimbursement of lost income, subsidy was RUB 694 million. Salaries and other payments2 52.1 52.5 57.3 compensation for tariff regulation effects and other purposes. In addition, in 2019, ALROSA Group received government including regular payments to social The Company is developing the Verkhne-Munskoye deposit subsidies in the amount of RUB 5.3 billion from the federal 10.6 10.5 10.8 funds with the use of government support funds provided by the and local authorities to compensate for the loss of income in Federal Target Program for the Development of the Far East connection with the reduction of electricity tariffs to planned of them to the Russian Pension Fund 7.1 7.5 9.2 and Baikal region. Government support is provided in the form base levels of prices in the territory of the Far Eastern Federal of compensation for the construction of the infrastructure District, reimbursement of lost revenues for the delivery of facility — temporary technological road from Udachny to a preferential category of consumers of utilities, as well as Verkhne-Munskoye deposit in the amount which is defined received reimbursement income related to the implementation in the Decree No. 1339-r of the Government of the Russian of air transportation of passengers, etc.

1 A new version approved by the Supervisory Board on June 24, 2019. 1 Social investments in the table are presented based on IFRS calculation, which classify a significant proportion of social expenses regarding 2 The data are presented in accordance with the consolidated financial statement of PJSC ALROSA under IFRS for 2017–2019, para. "Cost of CSR to other categories of expenditure. More information on ALROSA's social investments is provided in the Regional Development and sales", para. "General and administrative expenses", para. "Commercial expenses". Social Programs sections.

52 53 SUSTAINABILITY REPORT 2019 ALROSA'S ECONOMIC CONTRIBUTION

PROCUREMENT the Partnership Program between PJSC ALROSA and small and medium enterprises, which establishes information and organizational support and other forms of assistance to actors GRI 102-9 of SMEs on procurement activities of the Company.

The main purpose of procurement is timely, efficient and In addition, work for the centralization of procurement transparent provision of the Company with required inventory, activities continued in 2019. On the basis of the Shared equipment, work and services of the proper quality in the Service Centre (SSC) in Novosibirsk, a project was launched Procurement structure of PJSC ALROSA in 2019 required quantity on the best possible conditions. to support medium-sized decentralized procurement of the Company's business units. The main objective of this project is PROCUREMENT Procurement activity of PJSC ALROSA is regulated by Federal to remove non-core load from production assets, improve the OF INNOVATIVE SOLUTIONS 3 Law No. 223-FZ of July 18, 2011. "On Procurement of Goods, quality of procurement and competitiveness of participating Work, Services by Certain Types of Legal Entities” dated July companies in procurement. During the reporting period, the 18, 2011 (Law No. 223-FZ), as well as regulatory legal acts Office for the Support of Procurement Procedures of the SSC As part of the development of interaction with actors of of the Government of the Russian Federation issued in the carried out 630 purchases in the amount of RUB 330 million. the external innovation environment, ALROSA Group development of this law, the Regulations on procurement has implemented a number of activities and initiatives, 43 activities1, and other internal documents of the Company. including PROCUREMENT STRUCTURE Procurement principles of PJSC ALROSA: improvement of procurement mechanisms for 54 OF ALROSA PJSC IN 2019 innovative solutions and interaction with Russian — information openness and transparency; suppliers of innovative technologies and products, In 2019, most purchases were made from product including small and medium-sized enterprises: — equality and fairness, with no discrimination or manufacturers and authorized dealers, accounting for 97% in unreasonable restrictions on competition among total procurement value of material and technical resources, — Since 2015, the Company has a Regulation on participants; as in the previous year. the procedure and rules of implementation of Indicator % innovative solutions in PJSC ALROSA in place, Official dealers 43 — targeted and efficient expenditure of monetary The Company has high requirements for potential suppliers: which allows actors of SMEs to interact with the assets for purchase of products; thorough inspection of the documents provided (certificates, Company through a so-called Single Channel Manufacturers 54 licenses, SROs) is carried out; participants of procurement System. This system is designed to inform potential Other 3 — establishment of measurable requirements for activities must meet all the mandatory requirements of a given suppliers of innovative solutions of the Company's participants; procurement, have the necessary production capacity and current and future needs in the field of innovative qualified personnel to work or supply material and technical solutions, acceptance of offers and primary filter, — expertise of individuals carrying out procurement resources (MTR). organizing applications' review process by means activities. of operational services of the Company and their PJSC ALROSA does not allow illegal actions (corruption, listing in the range of innovative and/or high-tech In its procurement activities, PJSC ALROSA gives preference collusion, unfair competition) on the part of potential products for possible further implementation in to open forms of competitive procedures. Any company suppliers and does not use the services of unfair contractors. PJSC ALROSA; that meets the requirements and has submitted a properly For more information, see sections Business Ethics and executed application can participate in the procurement. Anti-Corruption. implementation of cooperation programs between Competitive procedures are carried out with the use of PJSC ALROSA and Russian suppliers of innovative electronic trading platforms approved by the Government of The basic criteria for selecting contractors are cost, quality, products. In the reporting year, the following the Russian Federation. terms of manufacture and delivery/performance of works/ agreements were reached: provision of services, availability of relevant technical and staff In 2019, the Company carried out extensive work on setting up pool, necessary experience in the performance of relevant — as part of the agreement with the RUSNANO the procurement process to the requirements of the amended works/provision of relevant services. portfolio company Liotech the International legislation: developed a new Regulation on Procurement, underground mine is undergoing industrial trials forms of procurement documentation, training for staff, as In 2019, the Company carried out 7,825 procurement of a unique battery-operated mining electric well as seminars with small and medium-sized enterprises procedures for goods, works and services, as a result of which locomotive; (SMEs). The transition to Electronic Trading Facilities (ETFs) 8,192 contracts for a total of RUB 67.6 billion were concluded. was carried out: Sberbank-Automated Trading System CJSC — The Company continued cooperating with the and JSC Unified Electronic Market Place, internal automated ALROSA Group puts into effect a set of measures aimed at the following organizations: ROSATOM, Technopark procurement system on SAP SRM platform was integrated implementation of the government policy on development of Yakutia, the FSBEI of Higher Education "Bauman with external ETFs. small and medium enterprises. The Company has adopted Moscow State Technical University", NUST MISIS, JSC RVC, JSC Schneider Electric.

1 Adopted by the Supervisory Board on November 15, 2018 (Minutes No. A01/283-PR-NS 15).

54 55 CHAPTER 04 HUMAN RESOURCES MANAGEMENT

People say learning is not always that easy, but it is. Children are our regular guests. They forget about their cellphones and spend weeks chasing animals and exploring flora and fauna along with medical plants. Then they take prizes in republican and all- Russian competitions. It is so great to see how they learn and develop new skills!

Sergey Simonov

34,533 22,475 RUB 2 ,774 .6 people employees mln ALROSA Group's received training PJSC ALROSA's average headcount at the Personnel social investments Training Center in personnel SUSTAINABILITY REPORT 2019 HUMAN RESOURCES MANAGEMENT

HUMAN RESOURCES Human Capital Management Structure of PJSC ALROSA

PERSONNEL MANAGEMENT MANAGEMENT SUPERVISORY EXECUTIVE HUMAN SERVICES BOARD RESOURCES UNIT COMMITTEE OF THE COMPANY’S BUSINESS UNITS MANAGEMENT APPROACH

HR & Remunerations Deputy CEO — Committee HR Director The Company's personnel is a core value and one of the main a single unique human capital that needs to be maintained factors for ALROSA Group's successful development. and developed.

The Company recognizes that the operational excellence of ALROSA's HR policy is aimed at increasing labor productivity, Management Monitoring Strategic planning its employees, their work experience, mainly in harsh climate improving the social protection of workers and creating a and operational the HR policy and control: corporate and underground diamond mines, continuity of generations, favorable social and psychological environment. administration: Determining strategic documents, incentive implementation of the professional dynasties and special corporate spirit constitute goals and objectives Control of purposes, management, labor HR and social policies motivation, relations and number of taking into account social policy employees regional specifics

KEY DOCUMENTS PERSONNEL STRUCTURE — Social Policy — Collective Agreement between PJSC ALROSA GRI 102-8, 202-2, 401-1, 405-1 and Profalmaz Interregional Trade Union of — Internal Labor Rules PJSC ALROSA employees for 2020–2022

— Local internal regulations PJSC ALROSA's Share of PJSC ALROSA's personnel working in divisions average headcount located in the Republic of Sakha (Yakutia) 21,866 93.97 % people Goals of PJSC ALROSA's HR policy: — improvement of the personnel recruitment, deployment and retention system; — development of well qualified and competent personnel; — development of an internal corporate training system; Share of vocational Share of employees working under indefinite-term professionals employment agreements — effective use of the employee pool; — recruitment and retention of indigenous workers; — providing employees with favorable working — improvement and development of the personnel 94.8 % conditions and equal opportunities to manifest and assessment system; 63.2 % fulfill their professional capabilities and potential. — improvement of the system of rewards, social benefits Share of employees involved Share of indigenous Average age of PJSC Main objectives of PJSC ALROSA's HR policy: and compensations; in the mining complex employees ALROSA's employees — retention and reproduction of the qualified talent — improvement of the employee pool formation, career pool; development and promotion of young professionals. 59.1 % 41.5 11.6 % years

58 59 SUSTAINABILITY REPORT 2019 HUMAN RESOURCES MANAGEMENT

The average headcount of ALROSA Group in 2019 amounted Dynamics of the average headcount Dynamics of the average headcount to 34,533 people, the majority of which (63.3%) of ALROSA Group of PJSC ALROSA are PJSC ALROSA employees. 36,887 34,579 26,543 34,533 24,435 ALROSA Group's average headcount in 2019 21,866 99.9 96.8 93.7 92.1 5,221 92.6 89.5

1,549 2017 2018 2019 2017 2018 2019

1,041 Average headcount, Dynamics of the headcount Average headcount, Dynamics of the headcount pers. against the previous year, % pers. against the previous year, % 1,400 21,866 50 Personnel structure of PJSC ALROSA by age in 2019, % Personnel structure of PJSC ALROSA in 2019, % 1,685 17 14.8 1,721 21

21.0 Indicator people 63.2 PJSC ALROSA 21,866

PJSC Severalmaz 1,721 1.0 62 JSC Almazy Anabara 1,685

PJSC ALROSA-Nyurba 50 Indicator % LLC ALROSA-Okhrana 1,400 Indicator % Workers 63.2 LLC PTVS 1,041 under 30 years old 17 Employees 1.0 Almazdortrans LLC 1,549 30−50 years old 62 Specialists 21.0 Other 5,221 over 50 years old 21 Executive staff 14.8

PJSC ALROSA's average headcount in 20191 was — reorganization of the Company's exploration The majority of employees (93.97%) of ALROSA Group to work on a rotation basis and accounted for 29.2% of the 21,866 people. The 10.5% decrease in the number complex; work in the business units located in the Republic of Sakha total number of new employees in the reporting period. of personnel compared to 20182 is due to structural (Yakutia), which houses the main production facilities of For more information on job creation in the regions changes in the Company and the reorganization of several — cessation of the processing plant No. 8 at the the Company. The proportion of indigenous people in the and involvement of the local population, see “Regional subsidiaries, in particular: Aikhal MPD; number of PJSC ALROSA employees in 2019 was 11.6%. In Development”. 2019, 1,438 workers from the Russian regions were invited — withdrawal of the Novy state farm;

— incorporation of LLC ALROSA Business Service 1 Based on actual number of employees. subsidiary and transfer of employees to the newly 2 Based on actual number of employees. established company.

60 61 SUSTAINABILITY REPORT 2019 HUMAN RESOURCES MANAGEMENT

PJSC ALROSA's personnel structure in 20191, % Geographical distribution of PJSC ALROSA employees in 2019, %

5.2 3.3 4.6 2.1 1.3 2.0 18.0 7.0 3.9

22.4 8.6 0.2 1.1 35.6 0.6 3.9 12.3 24.5 5.3

9.2

7.2 21.6 92.8

Indicator % Indicator % Indicator %

Administration and management divisions 3.3 Western Yakutia districts 92.8 Mirny (Western Yakutia) 35.6

Aikhal Mining and Processing Division 18.0 Moscow 5.3 Udachny (Western Yakutia) 24.5

Mirny Mining and Processing Division 12.3 Irkutsk region 0.6 Aikhal (Western Yakutia) 22.4 Nyurba (Western Yakutia) 7.0 Udachny Mining and Processing Division 21.6 Yakutsk and other districts of the 1.1 Nyurba Mining and Processing Division 7.2 Republic of Sakha (Yakutia) Lensk (Western Yakutia) 1.3

Transport and procurement complex 9.2 Other 0.2 Olenyok (Western Yakutia) 2.0

Exploration complex 3.9

Capital Construction Division 8.6

Specialized repair facilities 3.9 The age structure of PJSC ALROSA personnel consists mainly of Research facilities 2.1 employees belonging to the group of 30–50 years, their share Social facilities 4.6 in 2019 was 61.9%. The share of young professionals among Rough and polished diamonds complex 5.2 managers increased by 1.2 p.p., to 8%. Women accounted for 31.5% of all employees and 27.2% of managers.

1 Based on actual number of employees.

62 63 SUSTAINABILITY REPORT 2019 HUMAN RESOURCES MANAGEMENT

Composition of PJSC ALROSA's governing bodies, people Since July 2019, ALROSA has introduced a new system of basic bonus system has also been introduced, in which the bonus Indicator 2017 2018 2019 pay in accordance with the “Regulation on evaluation of positions earned by employees directly depends on the performance of in PJSC ALROSA”. The categories were replaced with grades both the entire business unit and each employee individually. PJSC ALROSA Supervisory Board and tariff rates were changed to new salary ranges developed In the new system, it is possible to differentiate the size of for each grade based on the current level of payment in the the bonus between shops and services, as well as between Total number of the Supervisory Board members, including: 15 15 15 Company and market data on the remuneration level. A new employees depending on their effectiveness. women 4 3 3

members in the 30—50 age group 10 11 8

members in the age group above 50 5 4 7 OBJECTIVES AND PRINCIPLES OF IMPLEMENTATION Executive Director 1 1 1 OF THE NEW REMUNERATION SYSTEM: Non-Executive Director 14 14 14

including Independent Director 4 4 3 — maintaining the current income level of employees; — internal fairness: differentiation of the remuneration PJSC ALROSA Executive Committee level depending on the position importance in the — uniform principles of objective assessment of all Company's structure; Total number of Executive Committee members, including: 8 8 6 positions by clear and transparent criteria; women 0 0 0 — the possibility for the manager to be flexible in setting — through pay ranges for the entire Company; the salary of subordinates. members in the 30—50 age group 6 6 4

members in the age group above 50 2 2 2 — competitive compliance with market practices: setting the salary range based on targeted positioning in the market; PJSC ALROSA ensures the equal right of men The average turnover rate in PJSC ALROSA and women to maternity/paternity leave. In has tended to decrease in recent years and, 2019, 232 employees of PJSC ALROSA were in 2019, amounted to 7.6% (in 2018 — 8.3%, granted partially paid leave to attend to a in 2017 — 8.7%). The employee turnover ratio child aged under three, including 221 women at the mining and processing complex also (95.3%) and 11 men (4.7%). decreased to 5.1% in the reporting year In addition, PJSC ALROSA Supervisory Board also approved of an employee who has fully worked the standard working ALROSA the long-term motivation program for ALROSA Group hours and met the standards of work, cannot be lower than Group management. The program based on the shareholder return the subsistence wage of the worker, taking into account the will be extended to members of the Executive Committee, family load. As of the end of 2019, the ratio of the minimum respects the heads of subsidiaries, divisions and other employees, whose salary in PJSC ALROSA to the established minimum wage principle RENUMERATION professional activities have a key impact on the Company's in the main area of presence being the Republic of Sakha of equal operating and financial performance. (Yakutia) was 2.8 times. remuneration AND MOTIVATION SYSTEM ALROSA Group has a leading position among mining for men and companies in Russia in terms of salaries. GRI 202-1 women for In addition to territorial regulation, which takes into account Average salary, RUB thousand work of equal differences in the cost of living of employees of the Company's value (ILO business units located in different natural climatic and 136.4 The Personnel Renumeration and Motivation The Personnel Motivation System includes various economic zones, individual motivating coefficients are applied 124.3 126.7 117.8 124.0 Convention System of ALROSA Group is linked to the types of employee bonuses, compensatory, for their salary calculation. 115.6 No. 100). Company's strategy and aimed at ensuring incentive surcharges and allowances, including for competitiveness in the labor market, retaining work in the Far North areas, and other payments In 2019, the average salary of employees of ALROSA Employees and developing qualified personnel, supporting made to the employees due to their work specifics Group increased by 5.3% compared to the previous year in the same career and professional growth of employees. and the assessment specifics of their labor and amounted to RUB 124,000 per month; the salary in contribution in order to increase the motivation PJSC ALROSA increased by 7.7%, to RUB 136,400 per month. specialty, who The amount of remuneration depends on the and maximize the achievement of the professional have the same complexity of labor (employee qualification), potential of each employee. Salaries of ALROSA Group employees in Russia are 2.6 times tariff rates, established labor standards, working conditions higher than the average salary in the country in general and at the workplace based on the results of their ALROSA Group respects the principle of equal 1.7 times higher than those in the Republic of Sakha (Yakutia). 2017 2018 2019 receive the special assessment, local living conditions of remuneration for men and women for work of same pay. the worker, importance of work performed, equal value (ILO Convention No. 100). Employees In accordance with the Collective Agreement between complexity of job functions related to the in the same specialty, who have the same tariff PJSC ALROSA and Profalmaz trade union, the monthly salary ALROSA Group PJSC ALROSA specialty and position. rates, receive the same pay.

64 65 SUSTAINABILITY REPORT 2019 HUMAN RESOURCES MANAGEMENT

Change in the purchasing power of salaries of PJSC ALROSA employees compared to the indicators for the Russian Federation and the Republic of Sakha (Yakutia) in 2013–2019, number of subsistence wage sets1 PERSONNEL BUILDING

7.1 6.9 AND DEVELOPMENT 6.6 6.6 6.5 6.6 6.0 GRI 404-1, 404-2, 404-3

4.0 The professional excellence of employees is one of the main replenishment and development of its talent pool. The 3.8 3.8 3.7 3.7 3.6 3.9 3.9 3.8 3.3 3.4 3.5 3.5 3.5 competitive advantages of ALROSA Group and a key factor in Company pays great attention to the training of workers the implementation of the Company's strategy. Funds for the and young professionals from the regions of the “Diamond personnel development are considered as investments in the Province”. human capital. HR-related matters are resolved in the Company on the basis Due to the fact that the production infrastructure of of a system approach to the organization of the personnel ALROSA Group is mainly located in single-industry training process, enabling to develop key categories of 2013 2014 2015 2016 2017 2018 2019 towns, the Company is focused on internal reserves for qualified personnel for the Company.

PJSC ALROSA Russian Federation Republic of Sakha (Yakutia)

Approaches to personnel building and development In addition to financial incentives for the personnel, Pictures, biographic summary, characteristics of merit PJSC ALROSA operates a system of non-financial of persons awarded the honorary title “Honored Key areas of the HR policy Building sources and mechanisms incentives for employees, including corporate awards Worker of PJSC ALROSA” and the Certificate of Honor The Company timely meets the current and additional requirements for skilled labor (honorary titles, honorary certificate) and encouragement of PJSC ALROSA, are inscribed in the Company's Book Planning and meeting the staffing in accordance with the current, medium-term, and strategic development plans of (letter of gratitude, “Best in Profession”, “Best Rationalizer”, of Honor. Pictures of the awardees are displayed on the requirements ALROSA Group with the use of both internal and external sources. “Best Inventor” titles). Honorary Board. The Certificates of Honor and Certificates to Honorary Titles are awarded by the top officials of the Training of local population in industrial jobs on the basis of the State Autonomous Company in a solemn ceremony. Professional Educational Institution of the Republic of Sakha (Yakutia) “Regional Technical College in Mirny Town” and its branches in Udachny town (Training College No. 28) and Aikhal (Training College No. 30). Recruitment Employees awarded federal and republican production awards, honorary titles and certificates of PJSC ALROSA for 2019 Recruitment of secondary vocational school graduates.

Invitation of highly skilled workers to work on a rotation basis in case of absence of the Name of award, title Number of employees, people required specialty and/or qualification in the key area of presence.

Total 634 Recruitment of graduates from higher educational institutions. Holding events aimed at Recruitment of skilled professionals familiarizing graduates of specialized universities of Russia with PJSC ALROSA business, State awards of the Russian Federation 60 for production attracting the best of them to work for the Company. Republic awards of the Republic of Sakha (Yakutia) 35 Invitation of highly qualified specialists to work for the Company.

Corporate awards, including: 539 Training of future staff It starts with career guidance of schoolchildren.

Certificate of Honor of PJSC ALROSA 20 PJSC ALROSA holds career guidance events in cooperation with the Mirny District Department of Education in order to raise the interest of general education school Certificate of Honor of ALROSA Group 5 students to the professions and specialties being in demand in the Company. In 2019, RUB 1.2 mln were allocated to finance career guidance activities. Honored Worker of PJSC ALROSA 3 Career guidance of schoolchildren A corporate project of ALROSA is being implemented on the base of the Mirny Honored Employee of ALROSA Group 1 Polytechnic Lyceum, which includes career guidance and training of schoolchildren to enter specialized universities. Upon graduation, they gain the opportunity to work for Veteran of PJSC ALROSA 500 the Company.

L. L. Soldatov Award 6 Targeted training of students in leading universities of Russia enables PJSC ALROSA to attract promising and talented students for employment in the Company's business Best Innovator of PJSC ALROSA 3 Targeted training of students units. At that, the students have the opportunity to receive a corporate scholarship and do an internship at the Company's industrial facilities. Best Inventor of PJSC ALROSA 1

1 The subsistence minimum set for the working population in the areas of ALROSA Group presence is used for calculation pursuant to the data of the Federal State Statistics Service.

66 67 SUSTAINABILITY REPORT 2019 HUMAN RESOURCES MANAGEMENT

The corporate training system includes a institutions. ALROSA Group's personnel complex of interrelated processes for the training and development system provides CORPORATE UNIVERSITY organization and conduct of the personnel for training for all categories of employees, as training on a constant basis at the Personnel well as target groups of potential employees, The Corporate University offers more — Competence Interview for HR Training Center, the Company's specialized including schoolchildren and students. than 70 educational programs. In 2019, — Business Simulation for HR “TIME educational division, as well as in educational 480 managers and experts took part in MENTOR” the management programs and activities held by the Corporate University. — Conference for the FEB "Our Iceberg Melts"

Key projects of the Corporate University: — TOP 25 “Industry 4.0" — ALROSA Leaders KEY AREAS OF ALROSA GROUP CORPORATE — TOP 25 “Management Mentoring” — ALROSA Wealth PERSONNEL DEVELOPMENT SYSTEM — TOP 27 "Altai Krai" — ALROSA Asset (pilot) — TOP 25 “Collection and Discussion of Feedback on the Corporate — HR DIAMOND Competencies” — “Development of Diamond Mining professional training additional vocational professional Industry Leaders” (Skolkovo) and retraining training development

In 2019, PJSC ALROSA invested RUB 290.9 previous year. The expenses for training of million in various personnel training and one manager/specialist in 2019 amounted to corporate managerial development programs. RUB 22.9 thousand. The expenses for training In 2019, of one employee totaled RUB 8.2 thousand, PJSC ALROSA and professional instructions internships The average number of training hours per while the average number of training hours programs manager/specialist of PJSC ALROSA was per employee was 49.5. invested 70.4, an increase of 34.4% compared to the RUB 290.9 million in Information on personnel training at PJSC ALROSA1 various personnel career guidance 70.4 training and 61.0 52.4 development 49.0 49.5 programs

29.8 The Personnel Training Center of PJSC ALROSA The full list of the Personnel Training Center's 22.9 The full list of is responsible for the organization, selection of training programs numbers more than optimal training formats and methods, quality 80 professions and targeted courses. 10.5 10.8 10.5 the Personnel of training programs, and also interacts with 8.8 8.2 Training the Company's business units in part of the Four training centers provide training of personnel training. The Personnel Training employees at the Personnel Training Center Center's training Center uses both an in-house educational base of PJSC ALROSA: in Aikhal settlement, Mirny 2017 2018 2019 2017 2018 2019 programs and educational reserves of the Mirny District town, Udachny town, and Lensk town. Staff numbers of the Republic of Sakha (Yakutia) and other training is carried out on a regular basis, based educational institutions of secondary and higher on the demand of the Company's business Average number Expenses on the Average number Expenses on of training hours the training of more than 80 vocational education. Company employees also units for personnel of respective qualification, of training hours training of one per one manager/ manager/specialist, per one worker one worker, complete their internships and professional determined pursuant to the strategy and long- professions and specialist RUB thousand RUB thousand development in training centers of Russia and term development plans. targeted courses. foreign countries.

1 The data on employee training by gender are not consolidated.

68 69 SUSTAINABILITY REPORT 2019 HUMAN RESOURCES MANAGEMENT

Number of employees trained in underground professions, Number of graduates recruited to work at PJSC ALROSA, In the year under review, over 13,700 managers and specialists work at hazardous production facilities. 3,882 people got people people of PJSC ALROSA (more than 60% of the headcount) completed various types of instructions. 1,589 employees increased their various training programs. The number of staff trained grew qualifications, and 3,270 employees underwent vocational 690 by 57.7% against 2018. 46 managers and specialists were training and retraining. trained and retrained. Indicator 2017 2018 2019 The training of Company employees in various professions Blue-collar employees of PJSC ALROSA are trained in and permits to underground works is ensured in the premises 386 accordance with the approved plan for training, retraining and of three training centers of the PJSC ALROSA Personnel From higher education 223 49 75 42 advanced training at the Personnel Training Center. In 2019, Training Center: Mirny, Udachny, and Aikhal. In 2019, 390 208 169 173 institutions 4,859 people took training in the main professions required people were trained there. 118 122 95 by the Company, as well as in certain types of permits to From technical and 72 65 63 vocational schools

2017 2018 2019

Aikhal Training Mirny Training Udachny Training Level of education of PJSC ALROSA’s employees in 2019, % Center Center Center

3 2019 HIGHLIGHTS IN THE FIELD 19 OF CAREER GUIDANCE 39 Indicator % ProfiClub project for students of 8–10 grades. the Research Geological Enterprise, the Museum Higher 39 The project incorporates different career guidance of Kimberlites, and the Historical and Production classes regarding the following modules: "Exploration Museum, as well as meetings with PJSC ALROSA 20 Secondary vocational 20 Complex", "Mining Complex", "Rough and Polished experts, were organized for the ProfiClub Primary vocational 20 Diamond Complex", "Transport and Procurement participants. Divisions", and "Industrial Safety". Excursions to Secondary 19

20 Primary 3

IV Regional Career Guidance Team Game "My Choice". Prepared together with the Mirny District Education Department in order to represent professions required by the Company.

Number of managers and specialists of PJSC ALROSA who In addition, ALROSA actively engages young promising completed the training in 2019, pers. experts as part of the cooperation with higher and secondary specialized educational institutions. 13,734 In the course of the reporting year, 71 students from Corporate Class of PJSC ALROSA. Various meetings meetings with the top management of the Company specialized universities continued their education under with the Company's young specialists, the "Class and the "TOP Class" intracorporate project were held, contracts for the targeted training of specialists for Account in the Social Network" master class, video as well as visits to ALROSA Business Service in Mirny 8,710 PJSC ALROSA. 105 graduates of higher and secondary lectures of the Mineralogical Museum of Moscow, were organized. 6,528 vocational educational institutions were hired.

2017 2018 2019

70 71 SUSTAINABILITY REPORT 2019 HUMAN RESOURCES MANAGEMENT

PARTICIPATION IN THE CASE-IN INTERNATIONAL SOCIAL PROGRAMS ENGINEERING CHAMPIONSHIP GRI 401-2

In 2019, ALROSA took part in the VII season of the CASE International Engineering Championship's student league PJSC ALROSA's social investments Examination and treatment of the employees and retirees of PJSC ALROSA (https://case-in.ru/) as a strategic partner. The topic of the season was "Digital Transformation". The qualifying stages in personnel in the leading medical centers of the Russian Federation were held in 56 universities of Russia, Belarus, Kazakhstan, Kyrgyz Republic, and Tajikistan. More than 5,000 students participated in the championship. Case championships are a tool for attracting promising and talented students to ALROSA enterprises for internship and 2,774.6 1,617 further employment after their graduation, since they get acquainted with the specific aspects when solving different RUB mln people cases. The Company is looking for a new generation of engineers having not only a solid technical background, but also practical skills in addressing various engineering issues using advanced technologies. Implementation of the programs to preserve health Cultural and Sports Complex of For the championship, ALROSA prepared case studies in two areas: "Mining" and "Exploration"; the Company was and maintain healthy lifestyle of all employees PJSC ALROSA held represented by Evgeny Goncharov, Chief Geophysicist of ALROSA's Vilyui Exploration Expedition. 18 representatives of the Company participated in the selection stages as experts: geologists, mining surveyors, engineers, geophysicists, heads of the laboratories of the Yakutniproalmaz Institute, as well as the heads of departments for mining and underground operations. 1,177.4 5,497 RUB mln events The participants and winners of the league in the areas of "Mining" and "Geological Exploration" were awarded certificates guaranteeing their further internship in ALROSA. 11 people completed an internship in the Company. Staying in sanatoriums (health care centers) and health Monthly corporate pension under the Parity According to the survey of the championship finalists, ALROSA took the second place among the most demanded resorts of the Black Sea region and Altai Krai with Pension Program of PJSC ALROSA amounted to employers. vouchers at discount prices 10,474 31,459.0 people RUB

PROFESSIONAL SKILLS COMPETITIONS ALROSA strives to provide its employees with an attractive corporate social programs of PJSC ALROSA aimed at social package and a high level of social guarantees. All creating competitive advantages for the Company as a The PJSC ALROSA Personnel Training Center Processing Division, Nyurba Mining and Processing categories of the employees of PJSC ALROSA, regardless of socially-oriented organization and an attractive employer, and Profalmaz Interregional Trade Union have Division, Udachny Mining and Processing Division, their professional status, as well as the type of employment including various employee support programs: “Wellness been organizers of numerous professional skills Almazdortrans LLC, specialized Almaztekhmontazh contracts, are provided with social payments, including any and Recreation of Employees and Their Family Members”, competitions since 2015. trust and LLC ALROSA-Spetsbureniye. compensations and benefits under the labor legislation of "Health", "Culture and Sports", "Housing", and “Private the Russian Federation. Additional benefits, guarantees and Pension Plans”. In 2019, the following competitions were held: — "Best Load Haul Dump Operator". The compensations in excess of the regulations established by competition was attended by the employees of the legislation of the Russian Federation are provided to In 2019, the total social expenses of ALROSA Group amounted — "Best Drilling Rig Operator". It was held in the Aikhal Mining and Processing Division, Nyurba the Company's employees under the Collective Agreement to RUB 8,626.1 mln, including personnel investments in the premises of Mirny Training Center. Mining and Processing Division, Udacnhy Mining and Processing Division, and Mirny Specialized between PJSC ALROSA and Profalmaz trade union for amount of RUB 2,774.6 mln. — "Best Operator of PJSC ALROSA – 2019". Mine Capital Construction Division. 2020–2022. For more details on any social expenses under the Regional 22 operators of the Company's business units Development, Charity and Sponsorship Program, see the participated in the competition. — "Best Welder". For the first time, all marks were The Company's regular employees are provided with Regional Development section. given according to the criteria of the WorldSkills additional benefits and guarantees as part of the Competition: they checked the correctness of — "Best Crane Operator". The competition was assembly, quality, tightness, absence of any defects, attended by the employees of Aikhal Mining and as well as the period required to complete the task.

72 73 SUSTAINABILITY REPORT 2019 HUMAN RESOURCES MANAGEMENT

ALROSA Group social expenses, RUB mln Wellness areas: Results for 2019:

Indicator 2017 2018 2019 — On-site recreation in different health — ALROSA Group allocated RUB 809.9 mln to Personnel-related social expenses 3,525.4 3,300.7 2,774.6 resorts of the Black Sea region, implement the program.

including — Wellness and rehabilitation treatment — Corporate vouchers for wellness and in the sanatoriums and health resorts of recreation were used by 10,474 people, Implementation of the “Culture and Sports” Program 1,616.6 1,516.7 1,470.6 ALROSA Medical Center, including all employees, their children, and veteran retirees of the Company. — Recreation in other sanatoriums for Implementation of the “Housing” Program 544.2 435.2 96.7 specialized treatment, — 3,773 people (36.0% of the total number of the participants in the program) visited Implementation of the “Health” Program 428.3 412.7 367.5 — Additional recreation organized by health resorts in the Black Sea region. Profalmaz trade union, Implementation of the "Health Resort Treatment — 434 employees underwent specialized and Recreation of Employees and Their Family 906.9 904.8 809.9 Members" Program1 — Summer recreation of children in local recovery and treatment in the Belokurikha health camps and on city playgrounds, health resorts. Gifts for children 29.4 31.3 29.9 as well as leisure trips to different health camps in the Black Sea region. — 3,934 people underwent the relevant "Regional Development, Charity and Sponsorship" recovery and recreation in the sanatoriums 3,489.5 4,491.4 3,531.2 Social Program More than RUB 200 mln are annually allocated (health care centers) of ALROSA Medical on organizing the recreation of children. The Center. Other expenses2 1,682.8 1,737.7 2,320.3 Company provides air transportation services and accompanying children to the place of — 2,533 children underwent the recreation More than Total 8,697.7 9,529.8 8,626.1 recreation at its own expense. in children's health, sports and creative RUB 200 mln camps, including the recreation of 200 children organized by the Cultural and are annually In 2019, New Year's gifts and gifts for newborn children of the employees of Sports Complex of PJSC ALROSA. allocated on PJSC ALROSA were purchased (expenses of RUB 29.9 mln). New Year's gifts were organizing presented not only to children of the employees of PJSC ALROSA but also to Implementation indicators for the “Wellness and Recreation of Employees and Their Family Members” the recreation children of vulnerable groups in Yakutia. program of children. The Company 13,994 13,429 provides air RESULTS OF THE IMPLEMENTATION OF THE CORPORATE 10,474 transportation SOCIAL PROGRAMS OF PJSC ALROSA IN 2019 services and accompanying children to the place of “WELLNESS AND RECREATION 906.9 904.8 809.9 recreation at its OF EMPLOYEES AND THEIR FAMILY MEMBERS” 2017 2018 2019 own expense.

Taking into account any unfavorable climatic conditions for illnesses among all employees and the organization of the human life, as well as the presence of difficult and hazardous treatment and recreation of employees and their families in Number of vouchers for Expenses on vouchers, working conditions in the main production, a special place sanatoriums and health resorts. workers and their children RUB mln in the Company's social policy is taken by the prevention of

1 Including taxes on sanatoriums (health care centers). 1 Including taxes on sanatoriums (health care centers) in the amount of RUB 20.4 mln. 2 Contributions to Almazik Preschool Educational Establishment, losses from the Novy state farm operations.

74 75 SUSTAINABILITY REPORT 2019 HUMAN RESOURCES MANAGEMENT

"HEALTH" "CULTURE AND SPORTS"

The preservation and maintenance of the health of all employees Results for 2019: One of the key factors in increasing labor Results for 2019: and their family members are considered to be one of the productivity is the development of own corporate strategically important areas of the Company's social policy, — Funding for the program was RUB 367.5 mln. culture, as well as the formation of a favorable — Funding for the program was which qualitatively determines the conditions for increasing corporate spirit. Ensuring the conditions for RUB 1,470.6 mln.1 labor productivity at enterprises. — 1,617 people used various services provided by organizing the proper leisure of the Company's the leading medical centers for diagnostics and employees and the population in the regions of — Cultural and Sports Complex of PJSC The "Health" program is being implemented in the premises of treatment. operations contributes to the formation of healthy ALROSA held 5,497 events, including the business unit, ALROSA Medical Center, in cooperation with lifestyle, reduction of illnesses, preservation 595 sports and recreational and 4,902 the leading treatment and scientific and medical institutions — The strategy of ALROSA Medical Center was of working capacity, and raising a cultural and cultural events. of the Russian Federation and the Republic of Sakha (Yakutia). developed, aimed at improving the current educational level. Since 2018, ALROSA Medical Center has been implementing the system of medical support for the employees and — Employees of the Company and their project devoted to telemedicine consultations of doctors, aimed the population in the regions of PJSC ALROSA's The program is being implemented by the families participated in a number of at increasing the availability of medical services. operations. Cultural and Sports Complex of PJSC ALROSA. major sport events: Its structure includes 17 sports facilities, 7 cultural — First Winter International Sports Since 2015, under the Voluntary Health Insurance Schemes, the institutions and 6 summer recreation facilities Games "Children of Asia" Company has been cooperating with SOGAZ Insurance Group. for children and adolescents. In the premises (Ussuriysk, Yuzhno-Sakhalinsk), of the cultural and sports institutions of the — Russian Athletics Championships Cultural and Sports Complex, there are 25 sports: (Volgograd), 50 departments and 166 groups, 8 creative directions, 77 teams and 147 groups with 4,000 — Rhythmic Gymnastics Championship of the Republic of The uniqueness people engaged. MEDICAL SCREENING OF EMPLOYEES Sakha (Yakutia) (Khabarovsk), of the "Culture The uniqueness of the "Culture and Sports" — Ice Hockey Championship of and Sports" the Republic of Sakha (Yakutia) program is that all cultural and sports events (Yakutsk), program is that Since 2017, PJSC ALROSA has organized a series underwent such examinations. According to the organized and financed by the Company have of free screening programs aimed at the timely screening results, 102 employees were referred for a great impact on creating a favorable social — Open 17th International Judo all cultural and Tournament for the prizes of identification and further reduction of illnesses. In the specialized and surgical treatment. environment not only for the employees but also Mongolia-Japan Corporation sports events implementation of the program, 10,604 employees for the local population. (Ulaanbaatar). organized and financed by the Company have a great impact Employees who participated in the medical screening in 2017–2019 on creating a favorable social 1,112 environment Indicator people not only for

1,537 Preventive treatment of the digestion system 4,964 the employees 4,964 Female-specific treatment 2,866 but also for the local Male-specific treatment 1,237 population. 1,237 Preventive treatment of the cardiovascular 1,537 system – cardiac screening

Hearing screening 1,112 2,866

1 Including: maintenance of cultural, sports and other facilities — RUB 1,194 mln, property tax on cultural and sports facilities — RUB 89 mln, holding events — RUB 187 mln.

76 77 SUSTAINABILITY REPORT 2019 HUMAN RESOURCES MANAGEMENT

"HOUSING"

The objectives of the program are to attract and retain all Results for 2019: qualified employees in the Company, as well as increase their — ALROSA Group allocated RUB 96.7 mln for the opportunities to improve own living conditions. All employees implementation of the Program. are given the opportunity to participate in the Mortgage Loan Program which provides preferential conditions for establishing — Number of participants in the Mortgage Loan the interest rate and reimbursement of interest payments on Program exceeded 400 people. mortgage loans. — ALROSA Group employees were reimbursed for interest payments on the mortgage loans in the In addition, new dormitories and residential buildings for the amount of RUB 57 mln. Company's employees are under construction. — Program for the Resettlement of Retired Veterans of PJSC ALROSA has been completed.

RESETTLEMENT OF RETIRED VETERANS

Under the "Housing" program, the Company has been resettling its retired veterans to Oryol and Oryol Region since 2001. Results for 2019:

Throughout the program implementation, 15 multi-apartment residential buildings with 1,892 apartments and — Contributions of ALROSA Group to NPF Almaznaya — Amount of the average monthly non-state pension 30 cottages have been constructed. About 2,000 families left the regions of the Far North. Total construction Osen under the "Non-State Pension Provision" for the retirees of PJSC ALROSA increased by 2.6% in expenses amounted to RUB 3.0 bln. program amounted to RUB 3.4 bln. comparison with the previous year and amounted to RUB 5,907. — Number of participants receiving non-state pensions under their pension agreements was 20,689 people — 252 employees of PJSC Severalmaz (15% of the total with 105 participants receiving non-state pensions as number) joined the program. per the loss of breadwinner. — The Expert RA Rating Agency (RAEX) confirmed NON-STATE PENSION PROVISION the ruAА financial accountability rating of NPF Almaznaya Osen with a stable outlook.

For over 20 years, the Company has had the "Non-State implies regular contributions (deductions) of the Company to Pension Provision" program in place for its employees the non-state pension fund. Starting from 2017, the principle ensuring not only a decent living standard for all employees of parity financing of corporate pensions is being applied. Average corporate pension in PJSC ALROSA as of the end of the year, after their retirement but also the attraction, retention and The Company makes contributions to it together with each RUB motivation of the employees for the long-term and efficient employee in equal shares, thus, all total contributions are work in the Company. doubled. 31,459 The program is being implemented through NPF Almaznaya Starting from 2018, PJSC Severalmaz and JSC Almazy Anabara Osen (http://npfao.ru/). Additional pensions of the employees got the opportunity to become the participants of the Parity are established under the Corporate Pension Plan, which Pension Plan. 17,510

5,760 5,907 2018 2019

under the non-parity under the parity program program

78 79 CHAPTER 05 OCCUPATIONAL HEALTH ↓28.6 % PJSC ALROSA's AND SAFETY reduction of accident severity rate

The park's animals are under our due control, and veterinary physicians vaccinate them and take samples. It is not only personnel who love their RUB 777.2 job and animals, but also our visitors million who have their favorites. Children love rabbits, while adults first go to bears. Recently, we got a new enclosure for PJSC ALROSA's them with the Company's funding. expenses on occupational health Sergey Simonov and safety

12 ,70 4 employees of PJSC ALROSA were trained on OHS disciplines SUSTAINABILITY REPORT 2019 OCCUPATIONAL HEALTH AND SAFETY

OCCUPATIONAL ALROSA's Occupational Health and Safety Guidelines

Ensuring safety of the task's implementation must be considered for every HEALTH Safety priority production task. If safety issues collide with the production tasks, such production tasks should be revised or cancelled. AND SAFETY

Managers (of the Company and facilities) are in charge of organizing and Management ensuring safe working conditions. Each employee is accountable for his MANAGEMENT APPROACH responsibility or her personal safety. GRI 403-1, 403-2, 403-3, 403-4, 403-5, 403-6, 403-7

Preventing accidents and emergencies at work is one of ALROSA conducts consistent work and directs significant We treat each injury and accident as an emergency in the Company as Preventing injuries ALROSA's strategic priorities. The wide-reaching geography resources to identify and minimize risks associated with it shows the flaws of its management system and organization of the safe of the Company's production assets in the Republic of Sakha OHS in a timely manner, implement modern management and accidents (Yakutia), difficult climatic conditions, as well as the presence standards and technologies in the field, as well as train and working environment. of work areas with hazardous production factors require a certify its employees. comprehensive approach to the management of occupational health and safety issues (hereinafter referred to as OHS).

Openness Dishonesty and withholding information related to OHS issues are not and integrity tolerated in the Company and are considered to be a serious violation.

KEY DOCUMENTS

— Strategy for the development of occupational — Regulation on industrial control over compliance health and safety management system with industrial safety requirements at hazardous production facilities Each employee, from a director to a worker, should be engaged in solving — Occupational Health and Safety Policy Engagement — Priority Action Plan (approved on an annual basis) the occupational health and safety issues. — Regulation on the occupational health and safety management system — PJSC ALROSA's Social Support Standard for Workers in Case of Industrial Accidents (industrial injury/fatality)

As part of improving the occupational health and safety — a system was implemented for collecting and management system in 2019, a number of organizational and analyzing statistics based on the results of internal administrative documents were approved: investigation of any unusual production events, accidents or incidents affecting occupational safety; — the pilot version of the Standard "Three-Level ALROSA applies the five key principles of the Occupational Control of Occupational Health and Safety at the — the Standard “Internal Investigation of Incident and Health and Safety Policy, which are mandatory for every Facilities of PJSC ALROSA" was implemented; Accident Reasons” was developed based on the Company’s employee, regardless of his or her position. results of 2018 testing of investigative methods — the "Piecework System" Standard has been aimed at identifying root causes of emergency prepared for use in divisions on a temporary basis; situations.

82 83 SUSTAINABILITY REPORT 2019 OCCUPATIONAL HEALTH AND SAFETY

At the level of the Company's top management, the hierarchy Industrial control services have been established as separate PJSC ALROSA's system of standing industrial safety committees of industrial safety begins at the level of the CEO — Chairman divisions in the structure of services. The Occupational Health of the Executive Committee of PJSC ALROSA. The First and Safety Department operates a division of industrial Deputy CEO — Executive Director is subordinate to the control, the point of which is to collect information and Occupational Health and Safety Department, which manages further analyze the work of the industrial control services of Committee Primary tasks Frequency and monitors the OHS of all Group companies. Production the Company's business units. The Industrial Safety Division of meeting security services at enterprises are subordinate to the Director conducts field inspections of industrial safety. of the MPD. The positions of the Deputy Head for Industrial The Central Committee — Creating strategic decisions on the functioning of occupational Quarterly (in 2019 — Safety are active in the MPDs and the Capital Construction for Occupational Health health and safety at PJSC ALROSA. 4 meetings) Department of PJSC ALROSA. and Safety under the Chief Executive Officer — Chairman of PJSC ALROSA's Executive Committee1

Committee for Occupational — Approving current and prospective plans for the development of Monthly and as required (in 2019 — Structure of occupational health and safety management of PJSC ALROSA Health and Safety under the First the occupational health and safety management system; Deputy CEO — Executive Director 10 meetings) of PJSC ALROSA2 — reviewing and approving the Company's corporate standards, and measures aimed at perfecting the occupational health and safety management system; Chief Executive Officer and Central Committee — reviewing and analyzing industrial injuries, accidents and Chairman of the Executive Committee incidents, as well as safety-related incidents at the Company's Committee under production sites, subsidiaries and affiliates; supervision — reviewing violations of legal requirements in the field of of Executive Director occupational health and safety that have led to or created a significant risk of causing a negative event; Business unit’s Committee First Deputy CEO — — setting tasks in the field of occupational safety to the heads of Executive Director Chief Engineer business units, subsidiaries and affiliates.

Committee for Occupational — Reviewing and analyzing violations of the industrial safety rules; Weekly Health and Safety under the head of the business unit of PJSC — developing measures to eliminate them. Occupational Health ALROSA/the enterprise Director of an MPD Deputy Executive Director and Safety Service (of Industrial Safety) Occupational Health Director of an MPD and Safety Service

Occupational Health In order to improve the Goal Setting System (KPIs) for on occupational health issues, media coverage, as well Occupational Health Director of an MPD and Safety Department (OHS) and Safety Service managers at all levels in 2019, personal plans in the as organizing and holding meetings of industrial safety area of OHS were developed, instead of the previously committees. The assessment of personal plans is carried approved LTIFR. Personal plans include conducting out quarterly; results are submitted to the committee under and organizing trainings, participating in routine and the Executive Director. For line personnel, there are various unscheduled inspections, conducting independent types of both material and intangible motivation in the field inspections and communicating with staff at production of OHS (competitions for the best division, the title "Leader facilities, conducting general meetings with employees in the field of security").

1 Order of the CEO — Chairman of the Executive Committee No. A01/167-P dated June 25, 2018. 2 Order of PJSC ALROSA No. A02-200/19-P.

84 85 SUSTAINABILITY REPORT 2019 OCCUPATIONAL HEALTH AND SAFETY

EXPENSES ON OHS PJSC ALROSA expenses on occupational health and safety, KEY MEASURES IN THE FIELD RUB mln OF OCCUPATIONAL HEALTH AND SAFETY Financing of PJSC ALROSA's measures for occupational 988 health and safety in 2019 amounted to RUB 777.2 million, 888 which is RUB 35.5 thousand per employee. Most of 777 the investment (54.1%) was devoted to curative and rehabilitation activities1. Ensuring safe working Staff engagement Liability insurance conditions in OHS management

2017 2018 2019

Staff training Risk assessment, PJSC ALROSA expense structure in the field of occupational health and safety in the field of OHS control and monitoring in 2019, %

2.1 5.7 Indicator %

Сurative and rehabilitation activities 54.1 ENSURING SAFE WORKING CONDITIONS

Organizational and technical support 38.1 of OHS Several measures are aimed at developing a culture of safety at Mirny Mining and Processing Division. It includes: ALROSA Group: training and control of knowledge, informing special assessment of working conditions (SAWC), 38.1 54.1 Industrial hygiene measures 2.1 and activism among Company employees and employees of medical examinations, accounting for providing Other 5.7 contracting organizations, strengthening commitment to safety personal protection equipment (PPE) and washing values. and/or detoxifying substances (WDS), and investigation of industrial accidents. In the future, The use of innovative technologies enables us to reduce the the "Occupational Health and Safety" system will be general industrial injury rate, preserve workers' labor potential, implemented in all of PJSC ALROSA's mining and and minimize the number of accidents and incidents at processing divisions. production sites. — Tracking fatigue and loss of concentration by Within the framework of the Program of Innovative drivers. The "Dunobil insomnia" driver fatigue MAJOR EVENTS Development and Technological Modernization, in order to control system is a new pupil detection and carry out measures to achieve a high level of occupational identification technology that determines a driver's health and safety at PJSC ALROSA, the following projects are fatigue level based on motion analysis of eyes being implemented until 2024: and blink frequency. If signs of fatigue or loss of Measures in the field of occupational health and safety Safety Department for 2019 in the areas of occupational concentration in the driver are detected, the device were implemented in accordance with the tasks outlined health and safety and civil defense under emergency — Comprehensive automation of the safety of will issue a warning signal. in the program of PJSC ALROSA's Occupational Health and circumstances. PJSC ALROSA's production activity: "1 C: Production safety". In 2019, one of the subsystems of this project, — Use of medical terminals. ВThe Company's divisions "Occupational Health and Safety", was introduced at have medical terminals equipped with blood

1 Information on the costs of the programs entitled "Health" and “Wellness and Recreation of Employees and Their Family Members” as well as on VHI are disclosed in the section "Human Resources Management", subsection "Social Programs".

86 87 SUSTAINABILITY REPORT 2019 OCCUPATIONAL HEALTH AND SAFETY

pressure measurement devices, breathalyzers and electronic journal. Depending on compliance The trade union "Profalmaz," its member trade on workplace compliance with optimal and body temperature sensors. The project is primarily or non-compliance with all medical parameters, union committees of primary trade union permissible working conditions (1 and 2 classes aimed at those who work in hazardous production the employee receives a work permit or refusal; organizations, and the authorized (trusted) of working conditions) with the standards and facilities and manage motor transport. Thanks to the the relevant information appears on the terminal occupational health and safety persons of the requirements of OHS legislation. pupillometer, the device is able to detect the use of monitor. If the equipment records any health-related trade union organization, together exercise narcotic substances in a few seconds. All information impairments, the worker will be advised to see a control over work safety and occupational In accordance with the framework agreement about the medical examination is recorded in the paramedic. hygiene, and the performance of the Company's with the Klinsk Institute of Safety and Working obligations in this field. They participate in Conditions for 2017–2019, unscheduled special commissions of investigation of on-the-job assessments of the working conditions of 3,250 injuries and occupational diseases. of PJSC ALROSA's workplaces took place.

Every case of occupational injury with a Any Company’s employee and employees of possible permanent disability, group or fatal contracting organizations can report violations AGREEMENT WITH ROSTEKHNADZOR accident is taken as an extraordinary accident detected by them on the production site, ask a and is considered at the joint meetings of the question or share their proposals to ensure safe Company’s management and the Trade Union working conditions by sending an anonymous In April 2019, ALROSA concluded an agreement with of Rostekhnadzor. The transition to a remote system will "Profalmaz." When trade union representatives message to [email protected]. the Federal Environmental, Industrial and Nuclear allow self-control and independent assessment of the deal with each accident, public control is Supervision Service (Rostekhnadzor) in the field of situation at the production site. The joint work will also exercised in respect to the fulfillment of occupational health and safety. In particular, the focus on the development of measures for assessing, obligations under the terms of the Collective STAFF TRAINING agreement involves the creation and use of remote monitoring and managing risk during operation of Agreement in the area of occupational health control mechanisms for implementing federal state facilities, and improving management systems in the and safety. PJSC ALROSA must consider the IN OHS supervision in the field of occupational health and safety field of safe work. As part of the cooperation, ALROSA decisions of the trade union "Profalmaz" on of hazardous production facilities, as well as other types also plans to participate in the development of relevant occupational health and safety issues. This is As part of the new standards, all managers, of control and supervision falling within the competence federal rules and regulations. mandatory. including at the linear level, are required to be trained in the correct application of One of the main tools for the prevention of requirements within the framework of approved accidents, incidents, on-the-job injuries and internal normative documents. Newsletters on occupational diseases, compliance with rules potential injuries, incidents and accidents are In accordance and instructions on occupational health, is sent to the heads of the Company's business with the preventive control in the area of occupational units in order to inform all employees. health and industrial safety, carried out by framework LIABILITY STAFF PARTICIPATION promptly identifying violations and taking Training on occupational health and safety at agreement INSURANCE IN OHS MANAGEMENT measures to address them. The main element PJSC ALROSA's Personnel Training Center is of prompt control is regular inspections in accredited by the Ministry of Health and Social with the Klinsk the Company's business units, where special Institute of Safety In 2019, the Supervisory Board of PJSC ALROSA approved PJSC ALROSA considers instilling safe behavior skills in its authorized (trusted) persons of the "Profalmaz" and Working the social support standard for workers in case of staff a vital step, as well as creating a labor-oriented culture, to union are actively engaged. industrial accidents. According to the provisions of the ensure that employees and contractors value and protect their Conditions for standard, employee death and temporary incapacity health and lives. This is why ALROSA is also fully involving In the business units of PJSC ALROSA, work on Number of PJSC ALROSA employees and 2017–2019, insurance will replace the Company's salary-based managers in monitoring and addressing OHS issues on a unscheduled special assessment of working managers who received training in the field of payments. The new payment mechanism will allow daily basis. Only with the involvement of each employee and conditions is being carried out. Together with energy security, OHS, persons unscheduled families of affected workers to receive compensation constant control of risk factors can injuries and occupational the trade union "Profalmaz," dissenting opinions special in a shorter time than when carried out by an insurance illnesses be minimized. arising in the Company's business units on timely assessments company. The Company's annual budget for social assignment of guarantees and compensation 5,464 support will increase significantly under the new One of the key tools of personnel participation in the for work in harmful working conditions are of the working standard. industrial safety and occupational health management being considered. Based on the results of the 3,115 conditions system is PJSC ALROSA's Institute of Authorized (Trusted) conciliation commission's efforts, amendments 2,886 Another new provision of the standard was intangible Occupational Health and Safety Persons. Authorized (trusted) were made to the Collective Agreement of 3,250 of guarantees in the event that the injured worker could occupational health and safety persons, as well as other establishing the possibility of accruing additional PJSC ALROSA's no longer work in the previous capacity. Until the time representatives of trade union bodies, may be part of the payments and compensation for work under workplaces took an employee is able to obtain employment in another OHS committees (commissions) of the Company's business harmful conditions for the preceding period organization, ALROSA will retain his or her VHI policy, or units. OHS committees (commissions) are established on (6 months). Work has been organized in the place. arrange retraining for transfer to another division. a parity basis depending on the number of members of Company's divisions on preparing declarations 2017 2018 2019 the management of the Company's business units and representatives of the trade union "Profalmaz."

88 89 SUSTAINABILITY REPORT 2019 OCCUPATIONAL HEALTH AND SAFETY

Development of Russia. In 2019, 5,464 people were trained business units. 3 928 of PJSC ALROSA's managers and In 2019, new training programs in the field of industrial safety the Russian Federation on the "fire and technical minimum" at the Personnel Training Center in the areas of industrial, specialists were certified in accordance with the requirements and occupational health were developed at PJSC ALROSA's programs; 541 people were trained. 109 people were trained energy and occupational health safety, which is 71.5% of the of Rostekhnadzor; 1,536 employees underwent testing of their Training Center: "Three-level control of occupational health on the maintenance of fire extinguishers; 45 people learned total number of managers and specialists of the Company's knowledge on occupational health issues. and safety at the facilities of PJSC ALROSA," "Methane Hazard to ensure the efficiency and organization of fire detection and in Mining," and "Spasibo" ("Thank you"). 2,957 employees extinguishing systems, and 23 people learned to organize of the Company's business units underwent these training and manage forest fire extinguishing. programs. Practical trainings on the "First Aid" program also took place, in which 401 workers took part. 147 people underwent training for managers and specialists under the program entitled "Training in the field of civil Training of PJSC ALROSA employees was held in order to fulfill defense and protection in emergencies." Number of PJSC ALROSA employees who received precertification the requirements of the rules of the fire protection regime in training in the field of industrial safety in accordance with the Rostekhnadzor requirements, persons

RISK ASSESSMENT, CONTROL AND MONITORING 482 The project entitled "On identification and assessment of Following the results of the work, risk passports were drawn 1,516 operational (production) risks of PJSC ALROSA" has been up for each site that include any potential risk, the percentage launched. To that end, Willis Towers Watson, one of the of possibility of its realization, the number of potential victims, largest international insurance brokers with specialists and the costs of risk and potential damage mitigation. This 246 in identifying scenarios leading to insurance cases, was will allow for assessing risks at different sites in a single and hired in 2019. In the reporting year, the WTW team visited consistent system. sites, ran a diagnostic of the production assets, generated scenarios that can potentially lead to destruction or trauma, The Company is considering the possibility of developing calculated possible damages for the realization of each risk and implementing a system for assessing critical controls in and suggested measures to mitigate them. Site production production according to the International Council on Mining 3,928 workers decide whether the suggested adjustments are and Metals (ICMM). 461 required, and the management committee, headed by the Executive Director of ALROSA, makes the final decision.

396

827

Indicator people

Operation of production and mining facilities 1,516

Operation of hazardous facilities for storage and use of harmful materials 396

Operation of lifting structures 827

Operation of pressure equipment 461

Operation of hazardous facilities for gas distribution and gas consumption 246

Energy safety 482

90 91 SUSTAINABILITY REPORT 2019 OCCUPATIONAL HEALTH AND SAFETY

PREVENTION OF OCCUPATIONAL INJURIES

GRI 403-9, 403-10

OCCUPATIONAL INJURIES IN THE PJSC ALROSA

One fatal accident occurred at PJSC ALROSA's Capital machines must undergo verification of OHS knowledge Construction Department at the Udachny mine of Udachny instructions and verification of compliance with the MPD. The main cause of the accident, according to the requirements of regulations. Unplanned evaluations must results of the investigation, is a recognized violation also take place. of the safety requirements of the vehicles’ operation. According to the results of the accident inspection, the list Information on each accident was communicated to all of necessary measures for eliminating the causes of the employees of PJSC ALROSA through the available corporate incident was determined: unscheduled briefings on OHS media, investigated, causes identified, and all circumstances for employees of the underground groups must be carried were analyzed in order to prevent the recurrence of such out; operators who work underground and handling incidents in the future.

Injury indicators at PJSC ALROSA Total number of registered injuries across PJSC ALROSA LTIFR Indicator 2017 2018 2019

0.33 Total number of industrial accidents 30 51 57 1 3 54 0.28 0.23 2019 58 Number of group accidents 3 1 1 3 8 43 Total number of reported injuries (casualties) 46 54 58 2018 54 Number of minor injuries 32 43 54 9 5 32 Number of severe injuries 5 8 3 2017 46 Number of fatal injuries 9 3 1 2017 2018 2019 Number of casualties linked to occupational illnesses 34 32 21 Fatal Severe Minor LTIFR1 0.23 0.28 0.33

FIFR2 0.05 0.02 0.01

In 2019, at PJSC ALROSA 57 accidents took place in the In order to better control and take the necessary steps to Number of hours worked 39,434,291 38,750,340 35,037,302 workplace, as a result of which 58 people were injured, improve the OHS system, cases that do not result in injury including 9 women; 54 victims suffered minor injuries, (e.g. fall on a slippery surface) and do not involve production 3 severe, and one fatal injury occurred. One group accident are included in the reports as well; as a result, an increase in was recorded. the total number of injuries (casualties) is observed, while the severity of injuries decreases.

1 Frequency of injuries resulting in disability per 200,000 hours worked. 2 Frequency of fatalities per 200,000 hours worked.

92 93 CHAPTER 06

On the park's territory, no more no less over 32,000 ha, illegal shooting of ENVIRONMENTAL animals stopped. Even the wildest of them feel protected here: on a self-grazing, herds of deer and moose do not leave the park's area. They have settled down and adapted, and feel free. PROTECTION Sergey Simonov 7.7 RUB million 16.6 environmental RUB million expenses funding for the restoration of flora and fauna

55 % share of circulating water supply and reused water in PJSC ALROSA SUSTAINABILITY REPORT 2019 ENVIRONMENTAL PROTECTION

The ALROSA Group Long-term Development — use of waste in secondary production; ENVIRONMENTAL Program for 2018–2024 targets the following measures of environmental protection: — introduction of satellite-based monitoring of reindeer migration; PROTECTION — construction and upgrade of sewage treatment plants; — use of geoinformation systems for monitoring; — expansion of facilities for wastewater injection into underground aquifers; — reproduction of aquatic biological resources; MANAGEMENT APPROACH — conversion to natural gas motor fuel; — increase in the reclamation area and — use of mining machines with high biological recovery. Environmental management at PJSC ALROSA ALROSA is committed to environmental emission standard; is in conformity with environmental and legal safety and combating climate change, the The Company's highest governing body in the principles that provide for innovative approaches company consistently reduces its impact, — block caving underground mining; system of environmental management is the to development of natural resources and introduces innovative energy- and resource- Executive Committee of PJSC ALROSA. improvement of environmental friendliness of saving developments and technologies, — introduction of a circulating water production processes at the Company’s facilities. and improves the system of environmental supply system and a tailings thickening Environmental safety of production is a priority training for Company’s employees in line with system; for ALROSA. evolving production practices and changing requirements of the external environment. The Company's ALROSA's strategic goal in the field of highest environmental protection is to ensure environmentally balanced and safe production governing body activity by reducing its footprint. in the system of ALROSA's environmental strategic goal management is in the field of the Executive environmental STRATEGY PAPERS IN THE AREA Committee of protection OF ENVIRONMENTAL MANAGEMENT: PJSC ALROSA.

is to ensure environmentally External: Internal: balanced and — Constitution of the Russian Federation; — Long-term Development Program for 2018–2024; — Regulations of the Russian Federation safe production and the Republic of Sakha (Yakutia); — Integrated Environmental Protection Program for 2019–2023; activity by — Environmental Safety Strategy of the reducing its Russian Federation until 20251; — PJSC ALROSA's Policy on Sustainable Development and Corporate Social — Environmental Doctrine of the Republic footprint. Responsibility; of Sakha (Yakutia)2; — PJSC ALROSA's Environmental Policy; — Concept of foreign policy of the Russian Federation (international environmental — PJSC ALROSA's Program for Innovation cooperation). Development and Technological Upgrade until 2024;

— PJSC ALROSA's Concept of Energy Saving and Energy Efficiency Improvement until 2021.

1 Approved by Decree of the President of Russia No. 176 dated April 19, 2017. 2 Approved by Resolution of the State Assembly (Il Tumen) of the Republic of Sakha (Yakutia) dated December 20, 2016. SA No. 982-V.

96 97 SUSTAINABILITY REPORT 2019 ENVIRONMENTAL PROTECTION

System of management, control and implementation of environmental activities Since 2018, PJSC ALROSA has been operating It provides for full engagement with Company’s the Environmental Center. It was established by divisions that are responsible for environmental It provides for — Monitoring of the implementation of the the management with a view to adopt a common management as well as for introduction of full engagement Supervisory Board environmental safety and pro-environmental behavior approach to environmental protection, sustainable new technology and innovation in production strategy and setting out strategic objectives. use of natural resources and environmental safety. processes. with Company’s 28 environmental experts work at the center. Its divisions — Approval of the environmental management policy. head who reports directly to the Company’s Chief Objectives of the Environmental Center: that are Executive Committee — Monitoring of progress in the environmental Engineer oversees the Environmental Center’s management and environmental safety strategy activity. — enhancing the quality of environmental responsible for implementation. protection measures and production environmental The center is responsible for consolidated culture; — Development of measures and control over management of the environmental protection management compliance with the environmental protection law, First Deputy CEO — Executive Director submission of reports to the Supervisory Board, and activities’ quality carried out by business units, — developing and incorporating as well as for evaluation of the environmental management system as well as systematization of all environmental standards of environmental protection; introduction of effectiveness. protection measures, from industrial control to development of environmental strategies and their — implementing risk-oriented new technology — Ensuring that the Company's activities are in line with integration in the Company's overall development environmental control of production; and innovation the environmental protection law, the Environmental strategy. Chief Engineer Policy, and standard ISO 14001:2007; prevention — expanding the monitoring network; in production of administrative and financial risks in the area of In 2019, the Environmental Center set up its own processes. environmental management. Instagram account at https://www.instagram. — monitoring the adherence to existing com/ecology_alrosa, where its followers are regulations of the Russian Federation — Preparation of standards, informed on environmental management and and the subject of the Russian comprehensive programs, regulations safety efforts taken by ALROSA and may ask their Federation in the field of natural and plans aimed at environmental questions. resources management. protection and safety. — Provision of EP regulatory and permitting documentation for Company’s operations. — Preparation and submission of reports and other information related to environmental protection measures to Chief Specialist of Land — Matters of land Environmental Center state supervisory authorities. Reclamation and Resources reclamation and use ENVIRONMENTAL MANAGEMENT SYSTEM — Organization of activities to ensure Use of resources. environmental protection. The Company adopted the system of The existing system is focused on continuous — In-process environmental environmental management in 2013. It meets the improvement and emphasizes preventive control and audit as part of the requirements of the international standard ISO measures, rather than mitigating ones. environmental management practice; implementation of environmental 14001:2015 and the national standard GOST R ISO monitoring activities. 14001–2016. In June 2019, ALROSA underwent an annual inspection of the environmental — Execution of environmental protection and social and environmental management system. measures.

98 99 SUSTAINABILITY REPORT 2019 ENVIRONMENTAL PROTECTION

TARGETS OF ALROSA'S ASSESSMENT OF ENVIRONMENTAL RISKS ENVIRONMENTAL MONITORING

In 2019, ALROSA invited an independent insurance passed the necessary inspection and received approval. broker Willis Towers Watson to conduct an integrated All the projects include the Declaration of Safety and Soil study of hydraulic structures and other similar Calculation of Possible Damage sections. Environmental Surface and ground water production facilities of the Company with the aim of components identifying potential risks there. According to analysis of the facility monitoring Air system, the Company's system of risk management Flora and fauna 126 scenarios of potential environmental risks were activities (including environmental ones) corresponds evaluated as part of the integrated study of Mirny, to the degree of exposure of hydraulic structures Udachny, Aikhal, and Nyurba MPDs. and other plants to risks; the Company improves and enhances this system on an ongoing basis, which Natural ecosystems The field study showed that these facilities were results in lower risk and higher safety levels across all Natural objects designed in accordance with the projects that, in turn, facilities. Natural landscapes and their elements

Noise Vibration Sources of human impact Electromagnetic and radioactive POLLUTION LEGAL LIABILITY INSURANCE radiation

On October 1, 2019, PJSC ALROSA, its subsidiaries and affiliates insured with JSC Sogaz their legal liability to third parties It is an for environmental pollution. ALROSA monitors the quality of environment — for medium- and long-term forecast of integral part where its production facilities are located, on the changes in the quality of environment; border of sanitary protection zone, and in adjacent of ALROSA's areas. — for evaluation of environmental risks and Policy on calculation of potential damage to the As for the digitalization of environmental aspects, environment. Sustainable the Analytics System of Environmental Monitoring Development Monitoring the quality of environment Key goals of environmental monitoring: was approved in 2019. Its implementation will and Corporate allow: ENVIRONMENTAL For the purpose of assessing and forecasting environmental — evaluating indicators of condition and functional Social changes in the area of ALROSA's operation, a comprehensive integrity of ecosystems and human habitat; — for gathering, storage, processing and POLICY Responsibility observation system — environmental monitoring — is analysis of data on environmental aspects implemented. It is a system for regular and long observation — identifying drivers of change in these indicators and and their condition (air, surface and The PJSC ALROSA Environmental Policy is a and ALROSA in space and time, which provides information about the evaluating the impact of such changes, as well as ground waters, soil, bottom deposits, key instrument that reflects the Company's ALLIANCE environmental situation in order to assess previous, current and choosing remedial actions if environmental targets waste) in the area of ALROSA's operations approach to environmental management and Guidelines on future forecasts, as well as parameters of environmental quality are not achieved; and adjacent territories, obtained environmental safety. The Policy emphasizes the that are important for humans and for environment protection. as the result of laboratory analytical reduction of the company’s operations impact Responsible — creating a prerequisite for the determination of tests performed by the Company's on the environment. Business measures to address a negative situation before Environmental Center; there is any damage. It is an integral part of ALROSA's Policy on Practices. — for evaluation of the impact and Sustainable Development and Corporate Social impact tolerance in respect of the Responsibility and ALROSA ALLIANCE Guidelines environment and maximum permissible on Responsible Business Practices. concentrations, background concentration, and provisionally-allowed concentrations;

100 101 SUSTAINABILITY REPORT 2019 ENVIRONMENTAL PROTECTION

PRINCIPLES OF ALROSA’S ENVIRONMENTAL POLICY The comprehensive program makes provision for: uniform approach to waste treatment and reducing the quantity of waste to be sent for disposal. The Company will proceed — air protection and climate change prevention; to increase the amount of waste used for the production Reduction of the negative — collection and treatment of waste water; of secondary energy resources. This will have not only environmental impact by means environmental, but also economic effects. Respect of national and international of managerial and technological — management of production and consumption waste; environmental legislation. decisions and taking into account — protection and rehabilitation of land, surface and To minimize the volume of water withdrawn from natural significant environmental aspects of ground waters; sources, ALROSA embeds circulating water supply systems and the Company's operations. tailings thickening systems at its production facilities. — protection of the environment from noise, vibration or other physical impacts; Starting from 2019, the program of environmental monitoring — conservation of biodiversity and protection of natural at production facilities includes an examination of wastewater Introduction of advanced technologies Continuous improvement of the areas; quality at all mining assets that are connected to central sewage in order to achieve a high level of functioning of the environmental networks. environmental safety in all areas of the — radiation safety of the environment; management system. Company's operations. — research and development activities on the The comprehensive program provides for social and reduction of negative anthropogenic impacts on the environment-related activities such as signing agreements environment. with the Ministry of Ecology of the Republic of Sakha (Yakutia), the National Fund "Bargaryy (Vozrozhdenie)", and the Increase of employee environmental Openness and availability of For each area, ALROSA creates short- and/or long-term Directorate of Biological Resources and Specially Protected awareness and engagement in environmental information along with programs focused on the achievement of target environmental Natural Areas of the Ministry of Ecology of the Republic of mitigation actions related to reporting on the Company's environmental indicators. Sakha (Yakutia). environmental risks. protection activities to all stakeholders. With a view to reducing emissions to the atmosphere and ALROSA continues to support the unique Living Diamonds the amount of greenhouse gases, PJSC ALROSA implements of Yakutia Natural Park and enhances its contribution to the Program for Innovation Development and Technological biodiversity preservation. Programs to protect wild reindeer Upgrade up to 2024 and the Concept of Energy Saving and and regenerate aquatic biological resources were successfully Objectives of the Environmental Policy: COMPREHENSIVE PROGRAM Energy Efficiency Improvement up to 2021. implemented. Since 2019, FOR ENVIRONMENTAL — minimization of the negative impact Concerning waste treatment, ALROSA carries out activities The Company also continues to organize contests, campaigns, PJSC ALROSA on the environment in all areas of PROTECTION AND under centralized contracts for utilization and processing of excursions and other events to promote the protection and has operated the environment-related activity; ENVIRONMENTAL SAFETY hazardous waste, thus allowing the Company to establish a safety of the environment.

new long-term — comprehensive and rational use of Comprehensive mineral resources; In 2019, the PJSC ALROSA Environmental Center Program for started work on the new Comprehensive Program — risk management and adherence for Environmental Protection and Environmental ECO-LEADER 2019 CONTEST Environmental to Russian and international law on Safety of PJSC ALROSA for 2019–2023. The Ministry Protection and environmental protection; of Ecology of the Republic of Sakha (Yakutia) has approved this program. It provides for the The Eco-Leader 2019 Contest is designed to identify the five criteria: treatment of production and consumption Environmental — development of the environmental implementation of environmental protection Company's most environmentally compliant unit and waste, protection of air, water bodies, soils and plants, Safety for the management system; measures aimed at preserving and restoring the most responsible producer. including timely response to and elimination of period from nature and covers all environmental aspects, as identified violations. — raising of stakeholders' awareness and well as ensures environmental protection of the In 2019, experts of the Environment Center's industrial 2019 through work culture in the field of environment; population in the area of PJSC ALROSA business control group evaluated the level of environmental All PJSC ALROSA divisions located in Aikhal, Udacnhy, 2023. Planned units' activities. safety and procedures at production sites. The subject Mirny, Lensk, Ust-Kut, Irkutsk, and at the Nakyn site took — development and implementation of of the analysis was the possible impact of Company’s part in the contest. According to the results, the Nyurba investment in comprehensive programs to improve the Since 2019, PJSC ALROSA has operated the units on all environmental aspects: air, water, soil, Mining and Processing Division was recognized as the the program environmental situation in the regions of new long-term Comprehensive Program for and plants. The units' mining assets and document most environmentally friendly division: it earned 4.66 totals RUB 29.4 the Company's presence. Environmental Protection and Environmental Safety management activities were inspected according to points out of 5. for the period from 2019 through 2023. Planned billion. investment in the program totals RUB 29.4 billion.

102 103 SUSTAINABILITY REPORT 2019 ENVIRONMENTAL PROTECTION

In 2019, the agreement on cooperation between investor, on implementation of the comprehensive PJSC ALROSA INNOVATIONS CONTEST the Government of the Republic of Sakha environmental research of the Vilyuy ulus group In 2019, the (Yakutia), ALROSA and NGO Fund for Future and population health, for 2019–2021 in the agreement on In the year under review, a special contest of innovative ideas "Innovation in the Service of the Environment: Efficient Generations where ALROSA acts as a 100% amount of RUB 138 million. Resource Utilization, Low-Waste and Energy Efficient Processes, Processing of Production Waste and Reclamation of cooperation Land, and Treatment of Emissions and Discharges" took place. between the Government of 56 representatives of the Company's six business units participated in it: Aikhal MPD, Mirny MPD, Udachny MPD, Nyurba MPD, and Vilyuy Exploration Expedition, including two subsidiaries Almazdortrans LLC and JSC Almazy Anabara; and 33 the Republic technical solutions were presented. of Sakha (Yakutia), ALROSA and NGO Fund for Future Generations ENVIRONMENTAL INITIATIVES AND EVENTS IN 2019 where ALROSA AND PARTICIPATION OF EXTERNAL STAKEHOLDERS acts as a 100% investor, on

Large-scale campaigns for city cleaning "Let's Do In 2019, the Environmental Center was an organizer implementation It", cleaning of water protection zones "Be a Coast of the regular meeting of environmentalists that took of the Guardian!", landscaping the Ecological Alley in the place at Olonkho Land in Mirny. Specialists in the field of comprehensive recreational park in the town of Mirny, and planting trees environmental protection discussed the most pressing and shrubs were conducted in cooperation with public issues of our time and presented their reports on environmental representatives in the course of the reporting year. different environmental aspects. research of

The "Say NO to Plastic" campaign — that provided for A round table dedicated to environmental safety was the Vilyuy ulus distribution of recycled paper bags in exchange for held as part of the opening of the first oil and gas forum PUBLIC AWARENESS IN TERMS group and plastic ones — was held in shopping centers to draw in Mirny. Representatives of federal and republican population attention to the problems of pollution with household authorities, supervisory bodies, industrial enterprises, OF NATURE PROTECTION plastic products. scientific institutions, public organizations, and health, for municipal regions attended it. The round table showed In 2019, PJSC ALROSA took 1st place (out PJSC ALROSA took 8th place out of 41 2019–2021 in As part of these enlightenment activities, secondary that the environmental community of Mirny District of 206) in the industry group "Production participants and was recognized as the schools were provided with express laboratories so was ready to address environmental management and of ores and chemical raw materials", 3rd best in the category "For constructive the amount that schoolchildren will have the opportunity to run enhance environmental safety. place in the rating of ecological and interaction in calculating the rating". of RUB 138 environmental quality tests, and a full-scale laboratory energy efficiency of Russia's 150 largest million. complex was purchased for a boarding school. A group of representatives of the Association of companies "Interfax-ERA", and 42nd In 2019, as a merit of environmental Independent Environmental Experts of the Republic of place (out of 5,899) in the fundamental management efforts, individual Supporting and guiding the younger generation in Sakha (Yakutia) visited the PJSC ALROSA production efficiency rating of companies in Russia contribution to the implementation of terms of environmental protection is an important sites in Mirny District. Environmental experts have and Kazakhstan (Interfax-ERA, 2019). the state environmental policy of the aspect for the promotion of environmental issues in personally come to testify for the completion of Republic of Sakha (Yakutia), the ALROSA society by the Company's Environmental Center. For restoration works concerning water bodies that were In the Environmental Transparency Environmental Center was granted a letter the second year in a row, ALROSA sponsored the Green exposed to flooding in 2018. Rating of Mining and Metals Companies of gratitude and awarded with a badge of Pioneers of Yakutia movement. Operating in Russia, prepared by WWF the Ministry of Ecology of the Republic of Russia together with the European Union Sakha (Yakutia). and the UN Environmental Program,

104 105 SUSTAINABILITY REPORT 2019 ENVIRONMENTAL PROTECTION

TOTAL ENVIRONMENTAL COSTS Within the Program for Innovation Development and the reporting period: transfer of transport to natural Technological Upgrade of PJSC ALROSA until 2024, gas and recycling of used engine oil. AND INVESTMENTS the direction Energy Efficiency and Environmental Compatibility is in effect. The corresponding funding See sections Management of production and in 2019 amounted to RUB 56 million. Key projects of consumption waste and Air protection and climate change prevention for more details.

Current (operating) costs of PJSC ALROSA for Equity investment of PJSC ALROSA allocated to environmental protection, RUB mln environmental protection, RUB mln

4,597.0 2,061.8

2,931.9 2,779.6 1,354,5 1,130.8

2017 2018 2019 2017 2018 2019

ALROSA Group allocated RUB 7,668.7 mln (+47.3% y-o-y) to ALROSA Group environmental expenses, RUB mln Structure of current (operating) costs of PJSC ALROSA for environmental protection, % the implementation of environmental protection measures in 2019, RUB 6,658.8 mln of which were expenses of PJSC ALROSA. The share of environmental expenses in the Group's 7,669 consolidated revenue amounted to 3.2%, compared to 1.7% 2.0 2.4 in 2018. 13.6 5,112 5,220 13.8 According to PwC research1, ALROSA has the highest volume of environmental expenses in relation to the revenue among peers, indicating its unwavering commitment to the good of Indicator % the local community and to the protection of the territories where it operates. Air protection and climate change prevention 2.4 Waste water collection and treatment 13.8 2017 2018 2019 Waste management 68.2 Protection and rehabilitation of land, surface and 13.6 ground water In 2019, the current (operating) costs of PJSC ALROSA environmental protection and rational use of natural for environmental protection activities increased by resources increased by 82.3% in 2019 and amounted RUB 68.2 Other 2.0 65.4% and amounted to RUB 4,597.0 million. The bulk of 2,061.8 million. The bulk of the funds was allocated to the the funds (68.2%) was allocated to waste management. reconstruction of circulating water supply systems carried Investments of PJSC ALROSA in equity allocated to out at the Mirny site.

1 PwC Sustainability Benchmark Report, 2016–2018 http://eng.alrosa.ru/alrosa-remains-the-industry-leader-in-social-investments/.

106 107 SUSTAINABILITY REPORT 2019 ENVIRONMENTAL PROTECTION

Monetary value of material fines and total non-financial — 1 report with the assignment of an administrative WATER MANAGEMENT penalties imposed on PJSC ALROSA for non-observance penalty in the amount of RUB 10,000 to 20,000 of environmental laws and regulatory requirements concerning non-fulfillment of the order was terminated, due to the expiration of the period of GRI 303-1, 303-2, 303-3, 303-4, 303-5, 306-1 Following the results of the inspections carried out by the solicitation; Federal Service for Surveillance on Consumer Rights Protection and Human Wellbeing of the Republic of Sakha (Yakutia), Federal — 6 instructions, of which: Service for Supervision of Natural Resources of the Republic of Sakha (Yakutia), Federal Agency for Fishery of the Republic of — 3 — based on the results of the audit by the Water is an integral element of mining, including diamond The following measures for water source protection should be Sakha (Yakutia) in 2019, the Company was presented with: Federal Service for Surveillance on Consumer mining. It is used in processing, working with chemical paid attention to: Rights Protection and Human Wellbeing of reagents, as well as operating equipment and heating and — 4 administrative offense reports, of which: the Republic of Sakha (Yakutia), two were cooling systems. — injection of salt water (water produced from open pit implemented, the third one is planned in 2020; and underground mines) into the aquifer; — 1 report with the assignment of an administrative ALROSA Group business units manage water through penalty of RUB 200,000 concerning the use — 2 — based on the results of the audit by the sustainable water intake and care for water resources. — monitoring of water bodies and control of natural of the coastal protection area and designated Federal Service for Fishery of the Republic of The Company pays great attention to water management, and waste water quality. conservation area of a water body; Sakha (Yakutia) — implemented; improving the level of circulating water supply, its reuse and reducing losses in transit. According to PwC Funding for the management and protection of water bodies — 2 reports with the assignment of an administrative — 1 — based on the results of the audit by research1, ALROSA shows the lowest water consumption amounted to RUB 178.4 million in 2019, allocated to: penalty in the amount of RUB 10,000 to 20,000 the Federal Service for Supervision of per million dollars of revenue among producers of both concerning the subsurface use were terminated Natural Resources of the Republic of Sakha diamonds and gold. — recovery efforts after washout of the dam due to in court due to the absence of an administrative (Yakutia) — implemented. large water inflow along the river bed of the Irelyakh offense; Key areas that reduce the impact of the Company's River to the area of the Irelyakh placer development; activities on water bodies: — construction of stream diversion channels. Monetary value of material fines and total non-financial penalties imposed on PJSC ALROSA for non-observance of environmental — reduction in water intake from natural sources laws and regulatory requirements for production needs based on the application In the reporting year, the Company's Environmental Center of processing plants with a circulating water did a great work on the restoration of water bodies in the supply system and organization of dredges in Republic of Sakha (Yakutia) affected by abnormal weather Indicator 20171 20182 2019 closed pits; in summer 2018. Heavy rainfalls caused a significant rise in water levels of all lakes, reservoirs, rivers, channels and Number of penalties for non-compliance with environmental legislation 6 8 4 — monitoring of the condition and elimination streams of Mirny District as well as in critical water levels for and regulatory requirements of leaks in domestic water supply and heating the facilities located in the beds of the Irelyakh and Malaya pipelines. Botuobuya rivers. Total amount of penalties imposed for non-compliance with environmental 1 380 830 230 legislation, RUB thousand

Number of non-financial sanctions — instructions based on the results of the audit by the Federal Service for Supervision of Natural Resources, 11 5 6 including

Number of violations eliminated 9 0 5

1 According to the results of the audit carried out in October 2017 by the Federal Service for Supervision of Natural Resources of the Republic of Sakha (Yakutia), the following were received: 6 administrative offense reports, of which 2 — concerning environmental management (RUB 180,000), 4 — concerning subsurface use (RUB 1,200,000); 11 instructions, of which 5 — concerning of subsurface use (3 eliminated, 2 in progress), 6 — concerning environmental management (eliminated).

2 Following the results of audits carried out in August–October 2018 by the Federal Service for Supervision of Natural Resources of the Republic of Sakha (Yakutia), Federal Agency for Fishery of the Republic of Sakha (Yakutia), Ministry of Ecology of the Republic of Sakha (Yakutia) caused by negative consequences as a result of an emergency (due to the abnormal amount of atmospheric precipitation there was a flood followed by the destruction of the Company's production facilities), the Company was presented with: 8 administrative offense reports, of them: 6 reports — concerning environmental management, totaling RUB 230,000 (1 report was terminated by the Resolution of the Federal Service for Supervision of Natural Resources of the Republic of Sakha (Yakutia) independently, 2 reports canceled in trials; 3 reports are being challenged in courts); 2 reports — concerning subsurface use, totaling RUB 600,000 (both protocols are challenged in court); 5 instructions on elimination of the identified violations, of which 3 — concerning environmental management — were eliminated; 2 — in subsurface use — were eliminated. 1 PwC Sustainability Benchmark Report, 2016–2018: http://eng.alrosa.ru/alrosa-remains-the-industry-leader-in-social-investments/.

108 109 SUSTAINABILITY REPORT 2019 ENVIRONMENTAL PROTECTION

Water intake by PJSC ALROSA from Total water intake by PJSC ALROSA, mln m3 3 WATER SUPPLY natural sources, mln m OF THE VILYUI ULUSES 6.3 3.5 4.1 2019 In 2019, PJSC ALROSA signed an a capacity of 100 m3 per day, designated 7.6 agreement with the Republic of Sakha to purify water for drinking and 4.6 2.6 3.2 (Yakutia) to carry out the Development of household use. 3.5 Water Supply Systems in the Vilyui Uluses 2.6 2.6 2018 5.8 for 2019–2024. The bulk of funds for the For supplying clean water to the residents 2.1 program aimed at improving the water of Nyurba District, PJSC ALROSA funded 2.1 3.9 supply system for 14 settlements come the following types of work: construction from the Company. of water intake facilities, upgrade of intake 2017 6.0 structures, construction and modernization As part of the program implementation of water supply networks, repair of haul 2017 2018 2019 from natural sources from supplier in the Khoro settlement (Verkhnevilyuysk roads to water supply sources; and purchase Permitted Actual See also District), a modular plant was built, with of water transportation equipment. section Regional Development

Salt water intake by PJSC ALROSA from aquifer Volume of water in drainage pits of PJSC ALROSA, mln m3 and storage tanks, mln m3 WATER CONSUMPTION 7.6 25,1 6.1 Total water intake by PJSC ALROSA from natural PJSC ALROSA units are equipped with a system 22,7 21,1 sources and suppliers in 2019 amounted to of circulation of salt water produced without 4.5 7.6 million m3.1 The reasons for the increase in its use: drainage water from open pit and intake by 31% compared to 2018 were: underground mines flows to reinjection stations and returns unchanged into underground — filling in dredging pits of Irelyakh placer aquifers. All open pit, drainage and mining salt and Gornoye placer deposits (Mirny waters are pumped into Metegero-Ichersky Mining and Processing Division) with aquifer system, underground aquifers, fresh water; Levoberezhny fault line and production accumulator tanks. 2017 2018 2019 2017 2018 2019 — inclusion of indicators of the new Verkhne-Munskoye deposit for the Total volume of circulating water and water entire reporting year. reused in the process cycle in 2019 amounted to 222.4 million m3. The volume of water for Volume of circulating and reused water supply Share of circulating water supply and reused water in total water Water intake for production needs totaled circulation and reuse is 4.1 million m3, that of PJSC ALROSA, mln m3 consumption by PJSC ALROSA, % 5.84 million m3. The actual intake of water from accounts for 55% of total water consumption. natural sources in 2019 was cut in half compared According to PwC2, ALROSA ranks first among 69 to the allowed value and amounted to 3.5 million its peers in terms of this indicator. In the course 202.8 19.6 3 55 m . This was due to the upgrade of processing of three years, the total volume of circulating 2019 222.4 plants through the introduction of a system water supply in ALROSA saw a growth of 40.5%. 43 of circulation (reuse) water supply for service 157.2 69.3 needs. 2018 226.5 144.3 55.4 Natural water sources of ALROSA located in the Republic of Sakha (Yakutia) include a reservoir on the Markha River, the Chuonalyr River, the Malaya Botuobiya River, the Irelyakh River, a buffer water 2017 199.7 2017 2018 2019 storage reservoir on the Khannya River, the Bolshaya Botuobiya River, the Vilyuy River, a reservoir on the Bezymanny-1 stream, as well as underground artesian wells.3 Circulating Reused

1 Including 5.84 mln m3 to production needs, 1.73 mln m3 to household needs, 0.004 mln m3 to agricultural needs and 0.009 mln m3 to other needs. Transportation losses totaled 0.058 mln m3. 2 PwC Sustainability Benchmark Report, 2016–2018: http://eng.alrosa.ru/alrosa-remains-the-industry-leader-in-social-investments/. 3 At the end of 2019, there were 7 contracts for water use from natural sources.

110 111 SUSTAINABILITY REPORT 2019 ENVIRONMENTAL PROTECTION

Waste water discharge by PJSC ALROSA, thousand m3 Discharge by PJSC ALROSA of pollutants into surface water Water consumption for production needs by PJSC ALROSA, ALROSA Group does not use radioactive substances, 3 bodies mln m aggressive chemical reagents and materials in the mining 8.1 and processing of diamond ore at its facilities. Therefore, there are no pollutants with toxic, carcinogenic or radioactive 1,567.7 225.7 229.1 properties in its waste water. 1,297.2 193.7 5.8 1,179.2 4.9 1 Industrial and waste water treated at the waste water 975.0 treatment plants (WWTP) is discharged to the tailings of processing plants, sedimentation and storage tanks or to 624.3 569.1 be pumped into the strata. ALROSA regularly improves its wastewater treatment technology at all sites where Company operates to reduce the environmental impact. With the incorporation of advanced and less energy-intensive 2017 2018 2019 and green treatment technologies, the efficiency of water 2017 2018 2019 2017 2018 2019 treatment is improving.

WASTE WATER DISCHARGE The industrial sanitary laboratories of Company units Actual Permitted systematically monitor analytical data of the water bodies to Waste water, as a result of production and economic activities determine the chemical composition of surface, underground of PJSC ALROSA, is discharged into the surface water bodies and waste waters, as well as perform geophysical and after treatment, or is disposed through municipal facilities. permafrost monitoring of PJSC ALROSA's hydraulic Water discharge is carried out under the corresponding structures. permission for the use of a water body issued by Ministry of Ecology of the Republic of Sakha (Yakutia).

In the year under review, the Company could discharge waste water into four water bodies: the Sokhsolookh River (Aikhal settlement), the Irelyakh River (Mirny), a tributary of the Dyulyung Otuu stream (Nakyn site), and the Bezymyanny-3 stream (Verkhne-Munskoye deposit).

The actual volume of waste water discharged by PJSC for filtered waste water discharged from drainage pits at ALROSA in 2019 amounted to 975,000 m3. The amount of the Irelyakh and Gornoye placer deposits of Mirny MPD, in RENOVATION OF THE AIKHAL SETTLEMENT'S pollutants discharged with waste water by PJSC ALROSA accordance with the parameters given in the Engineering TREATMENT FACILITIES was 229.1 tons in 2019. Design of Joint Development of Placer Diamond Deposits by Sub-Surface and Separate Dredging. In addition, The volume of discharged waste water grew by 71.3%, while this was related to the full year of operation of the bio- In 2019, the renovation of wastewater treatment plants' water is decontaminated and then flows into the bed of the amount of pollutants was up by 18.1%. Such increase in treatment plant at the Verkhne-Munskoye deposit of biological treatment units in the Aikhal settlement the Sokhsolookh River. The capacity of treatment plants water disposal is due to changes in the calculation methods Udachny MPD. was completed. PJSC ALROSA costs amounted to ranges from 6,000 to 9,000 m3 per day. RUB 10 million. A modern system of aeration will saturate the water In the Aikhal settlement, a standard wastewater with oxygen by reducing the flow rate. Submersible treatment approach including mechanical and mixers and nitrate recycle pumps will be installed as biological treatment is applied. During treatment, waste part of the renovation process. Launching the new water first passes through mechanical screens, sans equipment, PJSC ALROSA will be able to treat 95% of traps, primary sedimentation tanks, etc. The purified water.

1 Waste water discharge only in surface water bodies.

112 113 SUSTAINABILITY REPORT 2019 ENVIRONMENTAL PROTECTION

MANAGEMENT Waste generation at PJSC ALROSA in 2019 OF PRODUCTION Hazard class Description Volume, t Change, % Reason of increase/decrease Disposal and use

AND CONSUMPTION WASTE Implementation of the Energy mercury-quartz lamps Efficiency Enhancement Class I GRI 306-2, 306-4 and fluorescent Program of PJSC ALROSA for (extremely 7,972  43.1 lamps that lost their 2017–2019, as part of which hazardous) usefulness fluorescent lamps are replaced with LED ones. Part of this waste is transferred to licensed waste lead batteries enterprises for further Class II containing electrolyte Part of this waste is classified as neutralization and (highly (undamaged) and 5,126  69.8 materials and sold according to disposal. hazardous) waste battery acid the contracts. Another part is disposed (sulfuric acid) of in house: waste oil products are used as Commissioning of the Verkhne- secondary energy or fuel Munskoye deposit where oil, and energy resources; diesel fuel and waste oils are sludge, oil and other used as energy resources. filters contaminated Expanding the fleet of Udachny Class III with oil products are Mining and Processing Division (moderately waste oils 1,123.7  43.5 neutralized in the modern to deliver ore from the Verkhne- hazardous) Forsazh-2M units. Munskoye deposit for further processing. Regrading of previously Production and consumption waste is generated as the result Waste volume of PJSC ALROSA, mln t purchased filters against the new of the Company's production activities.1 The process of vehicle fleet. handling each type of waste is strictly regulated based on its Part of this waste is hazard class, aggregate state and chemical characteristics. construction waste, 67.7 disposed of in house: Every year, biological tests of production and consumption scrap tires and air tires are used as structural waste are carried out to confirm the hazard class. 67.0 81.8 tubes, wood scrap, elements. weld slag, ash and Class IV slag waste from coal Reorganization of Another part is In 2019, the total amount of waste generated by PJSC ALROSA 7,608.28  2.6 (low hazard) combustion, waste PJSC ALROSA's business units neutralized in the modern had an increase of 22.1% y-o-y, to 81.8 million tons. Most of generated as the result Forsazh-2M units or this waste comes from the mining complex (99.99%) and falls 14.2 15.9 15.8 of mechanical and transferred to licensed into hazard class V (diamond mining waste). biological treatment of enterprises for further sewage water neutralization and In 2019, PJSC ALROSA units disposed of 15.8 million tons of disposal. production and consumption waste. 2017 2018 2019 Part of this waste is Disposed Generated disposed of in house: diamond waste from overburden rocks and mining and processing Expanding the scope of mining tailings are used for the Class V of rock mass operations at the Verkhne- establishment of dams (nearly non- (overburden rocks 81,804,355.5  22.1 Munskoye deposit of Udachny and embankments, hazardous) and waste (tailings) MPD. construction works, from diamond ore reclamation of disturbed processing) In 2019, PJSC ALROSA's business units prepared new data sheets for new types of waste in compliance with Order lands, riprap and road No. 792 of the Ministry of Natural Resources of the Russian Federation “On approval of the procedure for record-keeping maintenance. of the state waste inventory”, dated September 30, 2011, and Resolution No. 712 of the Government of the Russian Federation “On the procedure for carrying out the registration of waste of hazard classes I–IV”, dated August 16, 2013.

1 The Company does not transport, import, export or process waste that is hazardous according to Annexes I, II, III and VIII to the Basel Convention.

114 115 SUSTAINABILITY REPORT 2019 ENVIRONMENTAL PROTECTION

Structure of pollutant emissions by PJSC ALROSA zones of industrial enterprises. The share of transport and LAUNCH OF A PILOT PROJECT by division, % procurement divisions was down by 45.8% and amounted to 1.3% of the total mass of emissions. BY AIKHAL MPD TO RECYCLE WASTE MOTOR OIL 98.5 1.3 0.2 2019 In the reporting period, the number of emitters decreased by At the end of 2019, Aikhal Mining and Processing economic benefits thanks to lower consumption of 28.4% and totaled 905 sources, and the number of stationary Division launched a pilot project for the treatment of purchased diesel fuel and costs of waste disposal. 97.2 2.4 0.5 sources amounted to 363 (-23.4%). waste motor oils and partial replacement of diesel fuel in the production of emulsion explosives that are widely The payback period for the project is estimated to be 2018 used in mining operations. up to two years. If the project appears to be efficient in GHG EMISSIONS 2020 (from the economic point of view), it may also be 90.7 2.4 5.3 1.6 Reusing contaminated motor oils will reduce the implemented in Nyurba MPD. environmental footprint and provide significant 2017 Greenhouse gas (GHG) emissions have the most significant negative impact of diamond mining companies on the Minig complex environment. At the same time, the estimated amount of GHG Transportation and delivery complex emissions from the growing of synthetic polished diamonds is Exploration complex on average 3 times (1.8–4.6 times) higher than emissions from Other natural rough diamond mining.

ALROSA implements two major projects to reduce GHG into the atmosphere fell by 18% to 8,000 tons. Reduced emissions: AIR PROTECTION emissions against the previous year are connected with the transformation of Almazdortrans LLC into a subsidiary. — the Program for Innovation Development and AND CLIMATE CHANGE PREVENTION In the course of the reporting year, pollutants of Class I and Technological Upgrade of PJSC ALROSA until 2024, II (extremely hazardous and highly hazardous) amounted to and the Concept of Energy Saving and Energy 0.086% of the total mass of emissions. Efficiency Improvement of PJSC ALROSA until 2021; GRI 305-1, 305-4, 305-5 Mining divisions are the main source of emissions and — conversion of road transport from liquid fuel account for 98.5% in the total structure of emission volumes. (gasoline, diesel fuel) to natural gas. Therefore, emissions are localized in sanitary protection EMISSIONS

To improve air quality, the Company's business units take the In 2019, the reorganization of PJSC ALROSA enterprises following measures on an annual basis: continued. It significantly affected the quantitative indicators of emissions. The total amount of PJSC ALROSA's emissions CONVERSION OF ROAD TRANSPORT — carry out mandatory dust-suppression works on haul TO NATURAL GAS roads in summer;

— use hydraulic cyclones for ore processing at Structure of pollutant emissions by PJSC ALROSA, In 2019, as part of the project: discharge and accumulation of gas and to clean up gas processing plants; thousand t cylinders. Over 300 units of equipment running on natural — 71 units of road transport running on gas (methane) gas are used at the main production sites of ALROSA in 5.3 2.7 were purchased in the city of Mirny and the Aikhal — use the dust collection system on wood and metal settlement; Mirny, Udachny, and Aikhal working machines by means of sleeve and cyclone 2019 8.0 — 2 SHACMAN trucks were leased and put into pilot filters; In the course of the project implementation that started in operation in Mirny; 7.0 2.8 2015, fuel cost savings amounted to RUB 121.2 million. — use water injection and dry dust collection systems — 130 units of road transport in Mirny and 73 units in Aikhal switched to dual-fuel operation. on drilling rigs; 2018 9.8 Pilot testing of BelAZ-75476 running on gas fuel (liquefied In addition, ALROSA's filling stations were modified to natural gas) was conducted at Lomonosov MPD in order — take large-scale efforts for the conversion of vehicles 144.3 55.4 work with gas. There are automobile gas filling compressor to determine whether it is necessary to use dump trucks at and boiler units to gas fuel; stations in the city of Mirny and the Aikhal settlement, as northern sites of PJSC ALROSA and, therefore, construct 2017 7.5 well as two stations have been installed to monitor the an LNG plant (methane). — replace explosive mixtures based on diesel fuel with emulsion mixtures with low oxygen balance. Gaseous and liquid substances Solids

116 117 SUSTAINABILITY REPORT 2019 ENVIRONMENTAL PROTECTION

Type of activities on the identification of GHG emissions by PJSC ALROSA in CO2 equivalent, % The activities carried out by PJSC ALROSA, aimed at lowering emissions in the mining and processing complex are GHG emissions, ensured the necessary reduction to no more caused by the commissioning of the Verkhne-Munskoye 95.0 3.1 0.4 1.4 than 75% of the indicated emissions in 1990.1 deposit of Udachny MPD in 2018. As for the exploration and transport and supply complex, reduced emissions 2019

The total amount of greenhouse gas emissions in CO2 are mainly due to the reorganization of the Mirny and the equivalent amounted to 454,700 tons for 2019, of which 65.3% Vilyuy exploration expeditions, Almazdortrans' withdrawal 82.5 10.7 3.1 3.7 are emissions from mobile sources. from the Company's structure, as well as the conversion of vehicles to natural gas. 2018 In 2019, mining and processing divisions accounted for 95.0% of the total GHG emissions by business units. Higher 81.4 11.5 5.6 1.6

2017

Mining and processing divisions Exploration expeditions

Direct greenhouse gas emissions by PJSC ALROSA in CO2 Direct greenhouse gas emissions by ALROSA Group in CO2 Transportation and delivery complex Other equivalent, thousand t equivalent, thousand t

642.7 646.4 550.8 Processes related to the identification of GHG emissions by PJSC ALROSA in the CO equivalent, % 465.1 459.6 454.7 2

18.8 65.3 0.6 15.3

2019

19.9 62.3 1.4 15.0 0.3

2018

2017 2018 2019 2017 2018 2019 31.4 57.9 2.2 8.5

2017

Stationary fuel combustion Methane emissions during mining Greenhouse gas emissions by ALROSA Group in Greenhouse gas emissions by ALROSA Group in CO2 equivalent Internal combustion engine (ICE) Other CO2 equivalent per unit of product, CO2 t/carat per unit of processed rock mass, CO2 t/t Blasting operations

0.017 0.004 0.004 0.015 0.015 0.003 ENERGY EFFICIENCY AND POWER CONSUMPTION

GRI 302-1, 302-3, 302-4

2017 2018 2019 2017 2018 2019 In the past three years, ALROSA has significantly reduced the PJSC ALROSA's program to save energy and fuel resources was share of carbon-intensive fuels in total energy consumption. The fulfilled to a level of 118.8% according to the results of energy- volume of coal, diesel fuel and petroleum fuel was reduced in saving measures in the year under review. favor of less carbon-intensive natural gas and electricity from renewable sources (produced by the HPP). The total savings of fuel and energy resources as a result of the program's energy-saving measures under PJSC ALROSA in 2019 amounted to RUB 1,219.4 mln. The specific power consumption 1 In accordance with Order of the Russian Government No. 504-r dated April 2, 2014. amounted to 0.355 GJ per carat of produced products. 2 Data from PJSC ALROSA and its subsidiaries: JSC Almazy Anabara, PJSC Severalmaz and JSC Vilyuskaya GES-3.

118 119 SUSTAINABILITY REPORT 2019 ENVIRONMENTAL PROTECTION

Implementation of the program to save fuel and energy resources in 2019, RUB mln PROJECTS TO ENHANCE ENERGY EFFICIENCY

1,219.4 Gasification of Udachny town For three years, Nyurba MPD has been using 150 solar 1,026.1 panels with a total area of 300 m2 and considers this In 2019, PJSC ALROSA started preparing a large-scale experiment to be successful, taking into account its project aimed at switching the heating system and all positive environmental and economic impact. industrial facilities in Udachny to natural gas. Completion of all works and commissioning of equipment is scheduled The system of solar collectors is used in summer for 2023. in daylight and provides for water supply to the accommodation camp's heating system through storage tanks. The temperature of supplied water is 50°C. The Using solar panels at Nyurba MPD boiler room is in reserve. Prior to the installation of this Actual Target system, water is heated only by using a boiler powered The climate in the Republic of Sakha (Yakutia) — the by expensive imported oil. location of ALROSA's key units — is characterized by a long period of low temperatures as well as short and Solar collectors used for water heating in the hot summer. At the same time, the number of sunny accommodation camp's heating system enabled to Fuel consumption by PJSC ALROSA in 2019 days there in the republic is comparable to Krasnodar reduce GHG emissions by 271 tons of CO2 equivalent, Region. Average annual sunlight hours in the cities of consumption of expensive imported oil by 85 tons, and Type of energy resource Unit of measurement Consumption Consumption, the republic range between 1,700 and 2,000. water intake (water is in closed loop and has no impact in natural units RUB mln (excl. VAT) on water bodies).

Diesel fuel tons 113,497.0 6,135.1

Natural gas thousand cubic meters 28,976.3 147.5

Kerosene tons 4,849.0 199.0

Oil tons 4,160.9 94.3

Motor gasoline tons 952.0 45.1 PROTECTION OF LAND RESOURCES

Coke tons 17.8 0.5 GRI 304-3

Aviation fuel tons 8.0 0.8 ALROSA carries out mining, exploration and construction restoration of the environment as it was before diamond Other fuel tons 6.0 2.2 activities related to land disturbance in six districts of Yakutia. mining activities. Resources are recovered in several Upon the completion of commercial development at any directions: technical and biological reclamation of lands, production site, the Company has to restore and then return reservoirs, and land integrity after exploration. Company the area to its owner (a municipality or forestry). employees participate in these activities as well. They are In 2019, electricity consumption at PJSC ALROSA totaled involved in seeding, preparing topsoil, measuring plants, 1,075,628 thousand kWh and heat consumption totaled Since 2006, ALROSA has allocated money on an annual tying up of young trees, etc. 452,426 Gcal. basis for reclamation of land used in production and for

120 121 SUSTAINABILITY REPORT 2019 ENVIRONMENTAL PROTECTION

Dynamics of the total area of disturbed and reclaimed lands, ha BIODIVERSITY CONSERVATION

2,727.3 GRI 304-1, 304-3

1,691.2

893.4 883.4 ALROSA does not perform commercial development in the deposit, near which the migration takes place. Haul roads 570.7 496.4 areas of potential impact or special protection zones. At are closed when wild animals cross them. present, there is the Living Diamonds of Yakutia Natural Park located relatively near to the Company’s business units. It has Furthermore, ALROSA delivers a project in cooperation with 2017 2018 2019 been created upon the agreement between the Ministry of the Institute for Biological Problems of Cryolithozone of Natural Resources of the Republic of Sakha (Yakutia) and PJSC the Siberian Branch of the RAS, aimed at tracking reindeer Distrurbed Reclaimed ALROSA, who became the major investor in the project. Yaks, migration using special GLONASS collars. Under the contract bison, deer and other animals live in the protected territory concluded in the reporting period with the institute, RUB 4 of the park with an area of more than 32,000 hectares in million will be allocated for this purpose until March 31, 2022. conditions close to natural. In 2019, the Company invested In 2019, total costs amounted to RUB 1 million. RUB 4 million to maintain the Living Diamonds of Yakutia Disturbed lands by business unit, 2019 Natural Park. In February 2019, ALROSA signed a cooperation agreement with the Directorate of Biological Resources and Specially Protected ALROSA has been monitoring the population of the wild Natural Areas of the Republic of Sakha (Yakutia). The agreement reindeer for several years. The Company has arranged provides for evaluation of the current state of wild reindeer reindeer crossing places across infrastructure lines at its populations in Yakutia, as well as protection and restoration 34.8 mining assets. Convenient crossings with easier grades of the population in 2019–2022. According to the agreement, were made along the entire road at the Verkhne-Munskoye ALROSA's expenses will amount to RUB 1 million per year. Indicator %

47.0 Mining complex 34.8 Exploration complex 18.2 Construction complex 47.0 COMBATING POACHING 18.2 In winter 2019, as part of the first joint work of ALROSA and the Directorate for Biological Resources in the Nature Protection Ministry of the Republic of Sakha (Yakutia) supported by the WWF Russia, poachers were detained, who were transporting velvet antlers and carcasses of wild reindeer in Yakutia and Krasnoyarsk Region. Such activities are to be continued. In addition, a special unit Zapad was established to combat poaching, which also buys motorboats and snowmobiles for raids and In 2019, the area of lands disturbed by PJSC against 2018 and amounted to 833.4 ha. monitoring with the financial support of ALROSA. ALROSA was up by 61.2% and amounted to The Company's costs on restoration and In just 2,727 ha. This growth is caused by changes in reclamation of disturbed lands totaled five years, the mining method: from mainly underground RUB 68.2 mln in 2019. PJSC ALROSA in 2016–2017 to strip mining in 2018–2019 due to the commissioning of new deposits (Verkhne- In just five years, PJSC ALROSA reclaimed reclaimed Munskoye deposit, Zarya open pit mine). The 4 million m2 of disturbed lands. Since 2012, as part of cooperation with the State Unitary Total fish stocking costs amounted to RUB 9.6 million in 2019. 4 million m2 beginning of construction of a new airport Enterprise "Chernyshevsky Rybovodny Zavod" (fish factory), In the reporting period, the Environmental Center specialists complex led to increased amount of disturbed ALROSA will restore and reclaim 4,290 hectares ALROSA has been carrying out large-scale activities on fish released larvae of Siberian sardine cisco to the Lena River, and of disturbed lands at the construction enterprises. of land at exploration sites by 2029. It is planned stocking of rivers and lakes of Yakutia in order to preserve the peled larvae to the Vilyuy reservoir. In total, 1.5 million larvae was lands. to restore topsoil and plants on the territories of genetic pool of populations inhabiting water bio-resources of released. Thanks to the R&D, the Environmental Center received In 2019, PJSC ALROSA took a set of measures processing plants' tailings facilities in Mirny and local rivers. 96% of the total volume of stocking is carried out an opportunity to expand the fish stocking geography. In 2020, to restore the topsoil of disturbed lands. As a Aikhal and other lands once the development of at the Company's expense, and about 4% are funded through it is expected to release more than 4 million larvae of valuable result, the reclaimed area increased by 68% deposits ends. compensatory measures. In 2019, ALROSA paid an advance fish species (broad whitefish, sardine cisco, peled) and 65,000 of RUB 5.7 million to the Chernyshevsky fish factory to expand juvenile sturgeon in Lena and Vilyuy rivers, as well as in the Timir- production capacities and types of biological resources. Kyunde Lake and the Vilyuy reservoir.

122 123 CHAPTER 07

For over 10 years and in cooperation with ALROSA, not only we have taken care of the REGIONAL conservation of the populations of rare species and nature in its purest form, but also conducted environmental monitoring and scientific studies to restore the disturbed natural and historical cultural complexes. We have even more plans for the future. DEVELOPMENT Sergey Simonov

11.6 % of the Company's 8,626.1 employees RUB mln are indigenous ALROSA Group social expences

1,392 employed under the Local Workforce into Industry project SUSTAINABILITY REPORT 2019 REGIONAL DEVELOPMENT

REGIONAL ALROSA Group social expences, RUB mln Indicator 2017 2018 2019 DEVELOPMENT Staff-related social expences 3,525.4 3,300.7 2,774.6 Social program “Regional Development, Charity and Sponsorship” 3,489.5 4,491.4 3,531.2

GRI 203-1, 203-2, 411-1, 413-1 including

expenses associated with reforms 687.8 594.2 539.1 The Company's social responsibility programs received Social expenses of ALROSA Group, RUB mln multiple awards both in Russia and abroad. According to the regional development programs, of them 1,251.9 1,401.4 1,502.8 annual independent social responsibility assessment, ALROSA 9,529.8 Target financing of Trust Fund for Future Generations of the Republic confirms its leadership under the sustainability indexes 8,697.7 8,626.1 700.0 800.0 931.4 "Responsibility and Transparency" and "Sustainability Vector" of Sakha (Yakutia) of the Russian Union of Industrialists and Entrepreneurs. In addition, the Company is going through the certification agreements with nine uluses of Yakutia 83.2 114.5 83.3 process to confirm its support for the social responsibility management system in compliance with the requirements of target financing of the Nyurbinsky Municipal District1 - - 324.8 the RJC international standard. subsidiary expenses 468.7 486.9 163.3 In 2019, ALROSA Group allocated RUB 8,626.1 million to social expences, which comprises 3.7% of the consolidated revenue. charitable and sponsorship projects at the federal level 1,059.7 2,036.8 835.9 Of these, expenses on personnel-related social programs amounted to RUB 2,774.6 million. other contributions (charitable projects at the regional level) 490.1 459.0 653.4 For more information see section "Human resources 2017 2018 2019 management", subsection "Social Programs". Other expenses2 1,682.8 1,737.7 2,320.3

Expenses on the social program "Regional Development, Total 8,697.7 9,529.8 8,626.1 Charity and Sponsorship Program" amounted to RUB 3,531.2 Expenses of ALROSA Group for the Regional Development, million including RUB 3,344.4 in PJSC ALROSA.1 Charity and Sponsorship Program, RUB mln

One of the most important directions in ALROSA's social policy 4,491.4 is to promote the integrated social and economic development of the Company's areas of presence. The Company has KEY DOCUMENTS supported the social development of Yakutia since it began 3,489.5 3,531.2 operating in the region in 1954, and aims to provide employees — Agreement on mutual cooperation to implement — Cooperation agreement in the field of social and with decent working conditions, and residents of the territories the Local Workforce into Industry priority project of economic development of the Nyurbinsky District with access to social infrastructure and a comfortable urban the Republic of Sakha (Yakutia) in 2018–2022 of the Republic of Sakha (Yakutia) for 2019–2021 environment. — Target program "For the Future" of the Trust Fund — Agreement on social and economic cooperation for Future Generations of the Republic of Sakha with the Oleneksky Evenki National District in the Support to local communities is provided with the respect for (Yakutia) for 2016–2020 Republic of Sakha (Yakutia) for 2019–2023 the interests of all stakeholders: the government, shareholders, local communities. Priority areas of support are the economic development of the Arctic uluses, creation of favorable conditions for solving basic social problems, compliance with environmental requirements, and retraining and employment 2017 2018 2019 of the local population.

1 In 2017–2018, the financing of the Nyurbinsky Municipal District was performed by PJSC ALROSA-Nyurba which was under liquidation as of 2019. 2 Contributions to Almazik Preschool Educational Establishment, losses from the Novy state farm operations. 1 The information on the charity expenses is given in accordance with the List of Gratuitous Transactions of PJSC ALROSA for 2019.

126 127 SUSTAINABILITY REPORT 2019 REGIONAL DEVELOPMENT

DIAMOND MINING HAS A POSITIVE IMPACT AND CONTRIBUTION TO REGIONAL CONTRIBUTES TO THE DEVELOPMENT OF THE TERRITORIES

In 2019, the report of the world's first — creating high-paid workplaces, INFRASTRUCTURE comprehensive analysis of the impact of leading diamond miners on the socio-economic field — procuring local goods and services, AND ECONOMY and environment, conducted at the initiative of DPA, was published. Its results demonstrated — paying taxes and royalties, that DPA's contribution to global socio-economic and environmental development amounts to — implementing social programs, Most ALROSA's employees (82%) work in single- In 2019, thanks to ALROSA's financing, the more than USD 16 billion and falls mainly on local industry towns which are located at a significant Fund of Future Generations carried out several communities in the mining regions due to: — investing in infrastructure. distance from large settlements. Therefore, one significant projects for the development of social of the Company's objectives is to provide its infrastructure. employees, their families and other residents of cities and areas of the Company’s presence with modern urban infrastructure.

In accordance with the agreement on social and economic development of the Republic of Sakha Learn more information ALROSA'S CONTRIBUTION TO THE REGIONAL on the Fund's activities (Yakutia), ALROSA annually spends substantial ALROSA is a crucial on their website http:// DEVELOPMENT funds to the non-profit organization Trust Fund enterprise in several fondyakutia.ru/english/ In 2019, of Future Generations in the Republic of Sakha single-industry towns: ALROSA was (Yakutia). The Fund distributes targeted funding for the implementation of socially significant awarded by projects and programs in the region. the Diamond Dividend payments twice a year to the Republic of Empowerment ALROSA is currently implementing a Fund’s MIRNY Sakha (Yakutia) that holds targeted program "For the Future" for the period Fund (DEF) 33% of ALROSA’s shares 2016–2020, which consists of two subprograms: for the "Assistance" (funding the construction of social UDACHNY facilities) and "Development" (implementation implementation of social projects). Under the program, the of social The largest taxpayer Company helps to develop cultural activities, AIKHAL projects for provide decent education to children from 90% of all ALROSA’s Donations for social remote communities, and give young people residents in the taxes = 40% of the annual projects ─ RUB 9 billion/ access to education. In 2019, the Company regions where budget of the Republic of year allocated RUB 931.4 mln to the Trust Fund. the company Sakha (Yakutia) operates

Information on obligations under the Agreement on Social and Economic Development of the Republic of Sakha (Yakutia) until 2020, RUB million The Republic of Sakha (Yakutia) 2019 931.4

2018 800.0

2017 700.0

128 129 SUSTAINABILITY REPORT 2019 REGIONAL DEVELOPMENT

Key projects implemented by the Fund of Future Generations in 2019 CONSTRUCTION OF A NEW AIRPORT IN MIRNY

Project Summary Total amount of project financing by ALROSA One of the most important infrastructure projects ALROSA's expenses will amount to RUB 10.4 billion, Russian implemented by ALROSA is the construction of a new government expenses — RUB 10.4 billion as well; budgetary School for 90 pupils, with sports hall and necessary modern airport in the town of Mirny. The project is included in the expenses of the State Air Traffic Management Corporation of New school building Abyi village RUB 322.0 mln equipment comprehensive plan to modernize and expand the main the Russian Federation will amount to RUB 1.6 billion. infrastructure for the period up to 2024 approved by the Hall for adapted physical The first multifunctional sports hall in the republic. The 7th Government of the Russian Federation and will be financed With the Company's funds, in addition to the development of RUB 130.0 mln education Betyuntsy village Yakutia Sports Games were held there in July from both budgetary and extrabudgetary sources. PJSC the project itself, it is planned to build airport infrastructure facilities (RUB 8.2 billion), engineering networks (RUB Construction of a water treatment plant in Horo village fully Implementation of the Clean 1.4 billion) and an approach road (RUB 0.6 billion). The covers the local population's need for clean and good-quality Water Program for residents construction of the airport on behalf of ALROSA will be water; acquisition of 25 units of water equipment for the RUB 191.4 mln of the Vilyuysky uluses and the 22.4 managed by a specially established 100% subsidiary — Mirny Vilyuysky uluses; financing scientific research in ecology for the Scientific Research Program RUB bln Airport LLC. Vilyuysky uluses total investment The new modern gateway will appear in Mirny by the end of Student accomodation, Construction of the residence will provide 500 university m Ammosov North-eastern Federal RUB 23.9 mln 44 2023. students with accomodation wide University, Yakutsk 10.4 — The Resource Center was established to assist municipal regions in the improvement of territories in settlements as RUB bln part of the Creating a Comfortable Urban Environment priority ALROSA's investment Urban Environment Resource 18 project aircraft parking places 300 Center; RUB 68.0 mln passengers: Future Generations Park — Future Generations Park is a modern educational center with 150 people for arrivals, a focus on urban development projects in areas with harsh 150 people for departures — climate conditions 10.4 m terminal traffic per hour RUB bln 2,860 long runway The center includes an auditorium with 212 seats, a bandstand, investment from the budget Cultural and Sports Complex a choreography hall, and a library. Being the only one of its kind of the Russian Federation RUB 90.8 mln Zyryanka village in Zyryanka, the facility is of great importance for the district and 2 meets all modern requirements passenger boarding 3 km bridges Therapy and children's unit with 30 beds, with a polyclinic for 180 to the north-east from Hospital Batagai village RUB 236.1 mln 1.6 consultations per shift RUB bln the current airport terminal with a connecting gallery for arrivals and departures Khodulov Cultural and Leisure Khodulov multifunctional cultural and leisure complex in Maya investment from the State RUB 54.0 mln Air Traffic Management complex Maya village village in Megino-Kangalassky ulus Corporation of the Russian Federation 2020–2023 CT Scanner for District hospital, Due to the lack of modern X-ray equipment in Mirninsky district, RUB 40.0 mln planned construction period Mirny in Mirninsky district ALROSA donated a CT scanner to the hospital

ALROSA also cooperates with federal and state authorities to of the agreement will ensure stable electricity supply to the develop transport and engineering infrastructure in its areas local population and socially significant facilities, as well as the of presence. possibility of developing the districts of Yakutia by attracting investments. To this end, it is planned to modernize the power In 2019, the Company started repairing the Anabar route, line that has reached the end of its service life, which will allow SINGLE TERMINAL the only road connecting ALROSA's northern sites with the it to be connected to new housing stock, facilities of social for departing and arriving towns of Mirny and Lensk. The route is of great importance for and cultural significance and new production facilities. passengers with a comfortable ensuring the normal functioning of Udachny and Aikhal MPDs, baggage claim area and waiting area as products and materials are delivered via this route to the In 2019, under the dilapidated housing demolition and towns of Udachny and Aikhal. rehousing program, within the demolition schedule for m2 In December 2019, a positive Mirninsky district approved by the Government of the 8 000 opinion of Glavgosexpertiza of In addition, ALROSA and the Republic of Sakha (Yakutia) Republic of Sakha (Yakutia), ALROSA funded activities of the area of the airport terminal, Russia was given for the project which is almost 2 times larger signed a cooperation agreement in the field of electricity at Mirny, Aikhal and Udachny municipal regions in the amount of documentation developed by a than in the current one unified designer "Lenaeroproekt". the Eastern Economic Forum in 2019. The implementation RUB 418.9 million.

130 131 SUSTAINABILITY REPORT 2019 REGIONAL DEVELOPMENT

CHARITY PROJECTS AND SPONSORSHIP

Principles of the Policy on sustainable development and and provides financial and organizational support to those corporate social responsibility of PJSC ALROSA play a key role organizations that are most in need: in organizing charitable activities: — public youth organizations and associations aimed — high social significance of the sponsored projects; to promote moral and patriotic education of the younger generation; — targeted provision of material and sponsorship assistance; — public organizations of veterans of the Great Patriotic War and labor, veterans of other categories; — collective decision-making on the provision of material assistance or sponsorship; — public associations and initiatives supporting orphanages and foster homes. — priority of the interests of mass beneficiaries; In 2019, ALROSA's charity assistance in the regions of operations — transparency, accountability and targeted use of amounted to RUB 653.4 million. In particular, targeted assistance received funds. was provided to legal entities and individuals facing challenging circumstances. In 2019, the ALROSA commission on financial The Company strives to ensure that social investments are and sponsorship support approved over 500 applications and as targeted and effective as possible for the community provided assistance in the total amount of RUB 77 million. Of these, RUB 60 million were at the expense of PJSC ALROSA.

FEDERAL SOCIAL PROJECTS Intellectual volunteering

In 2019, ALROSA became a partner of the Friends foundation. This foundation creates links between non-profit organizations ALROSA has sponsored a number of federal-scale As part of the festival, "star" athletes and coaches, cultural and businesses. The Friends foundation created the ProCharity platform, through which specialists of various fields transfer their organizations and major events in the fields of culture, and artistic figures give open lessons, master classes and skills and professional experience to charitable foundations instead of money. ALROSA staff can now take part in this work. education, health and sports. In 2019, PJSC ALROSA demonstration performances for free in each city to anyone allocated RUB 835.9 mln for this purpose. The Company who wants to attend. The main aim of the festival is to supports the Eastern Economic Forum, the Russian Hockey promote and maintain a healthy lifestyle among adults and Federation, the Russian Wrestling Federation, the Russian children, to find talents and promote children's development, Union of Martial Arts, the Kiokushinkai Association of Russia, and ensure a positive future. the VTB United Basketball League and the Federation of RESPONSIBLE RESTRUCTURING DanceSport and Acrobatic Rock'n'Roll. Together with its partners, ALROSA has been holding the Cheer festival in In order to implement the principles of socially responsible In 2019, ALROSA's contribution to the Almazik Preschool Yakutia since 2017. restructuring, ALROSA provides assistance to non-profit Educational Establishment amounted to RUB 662.3 million. In associations that were previously part of the Company's addition, since 2019, the provision of services in kindergartens structure. is carried out at the tariffs for municipal kindergartens (lower than before). Until 2019, ALROSA was the sole founder of Almazik Preschool Educational Establishment. The structure of the organization Kindergartens located in Lensky district and previously CHEER FESTIVAL IN 2019: includes 30 preschool institutions located in the Mirny district, included in the structure of the Almazik Preschool which are attended by 5,000 children. Since 2019, based on the Educational Establishment, have been transferred to the — Mirny, Udachny, Aikhal and Yakutsk — 3 areas: basketball, acrobatic rock and roll, Agreement on the Procedure and Terms for Co-Founding with Lensky municipal district for financial support since 2019. and martial arts the Mirny Municipal District, financing of the Almazik Preschool To support and strengthen the material and technical base — 5th festival Educational Establishment is carried out on parity terms with of the kindergartens, ALROSA provided charitable financial — 191 master classes the Mirny Municipal District. assistance in the amount of RUB 37.8 million. — November 17–December 15 — 10,000 participants

132 133 SUSTAINABILITY REPORT 2019 REGIONAL DEVELOPMENT

CREATION OF JOBS IN REGIONS About 11.6% of ALROSA's staff are from indigenous the Argys project for local workers in 2019. It peoples, and this proportion has been increasing is intended to help workers from the uluses of About 11.6% GRI 202-2 steadily over the past few years. Yakutia to more quickly find their feet at the of ALROSA's Company's production sites and create a basis for The Company carries out comprehensive work in their professional growth. The project is based on staff are from the field of career guidance aimed at attracting the mentoring: there is always a companion ("argys") indigenous In 2019, 3,044 residents of Yakutia regions were hired under Nyurbinsky, Suntarsky, Mirninsky and Lensky). In total, 2,481 local workforce. Together with the Mirny District next to a new employee — this is a person who fixed-term and indefinite-term employment contracts, representatives of indigenous communities and minorities Education Department and the Almazik Preschool supports them and helps to join the team. "Argys" peoples, and including 2,510 people from uluses in the Diamond Province of Yakutia were working in the Company's units at the end of Educational Establishment, the activities are tells the new employee about the company, its this proportion (Anabarsky, Oleneksky, Vilyuysky, Verkhne-Vilyuysky, 2019. carried out on vocational guidance for children. programs, corporate rules, prospects and answers has been their questions. They also help the newcomer In order to reduce the time needed for the local navigate the production site, tell who and on what increasing Dynamics of hiring the local population, persons workforce to adapt and integrate smoothly issues to contact if necessary. As a result, socio- steadily over into production processes, ALROSA launched cultural adaptation is much faster and easier. the past few years. 6,727 6,335 6,157

4,926 4,309 3,897 3,517 3,604 SUPPORT FOR INDIGENOUS 3,044 2,510 PEOPLES 2,022 1,470 1,392 1,031 756 950 718 532 ALROSA strives to strike a balance between the agricultural activities each year, support and PJSC ALROSA 0 0 interests of the state, business and indigenous development of traditional methods of fishing was recognized peoples of the North in order to achieve and hunting, acquisition of all-terrain equipment, 2016 2017 2018 2019 sustainable economic development in the fishing gear and hunting equipment. as the best region, improve quality of life and develop employer in Indigenous peoples Hired as part Hired from uluses Hired from the Republic Total, pers. national culture. Priority areas of support are To ensure rational employment of the Yakutia as hired, pers of implementing the "Local (regions) in the of Sakha (Yakutia) the economic development of the Arctic uluses, indigenous local rural population and meet personnel - into Industry" Diamond Province, creation of favorable conditions for solving basic the needs of the Company and the region's of the end of project, pers. pers. social problems, compliance with environmental population for the main products, ALROSA 2018. In 2019, requirements, and retraining and employment of supports a subsidiary farm — the Novy state the local population. farm, for the maintenance of which in 2019 RUB the Company 1,658.0 million was allocated. employed The company implements projects to support the uluses of the "diamond province" aimed 4,926 people, LOCAL PERSONNEL INTO INDUSTRY at reviving national cultures and preserving including 3,044 historical values. Providing charitable assistance Target financing of the “diamond province” people from The priority republic project "Local personnel into Industry" under this program from the state budget of the Republic of to municipal regions, holding charitable events uluses, RUB mln has been underway since 2018 in accordance with the Sakha (Yakutia) with the Company's financial participation. for the children of sponsored uluses, ALROSA the regions of Agreement on Mutual Cooperation on the Implementation contributes to employment of the population the Republic of the Priority Project of the Republic of Sakha (Yakutia) for Within the Agreement, there are various employment and the growth of their incomes and thereby 114.5 2018–2022. The agreement establishes quotas according to activities targeted at unemployed citizens of the Republic of makes a significant contribution to increasing of Sakha which ALROSA jointly works with employment centers, and Sakha (Yakutia), including those from rural areas. Together the social stability of the entire diamond mining (Yakutia) and local residents receive referrals to work at the Company. with the State Employment Committee and Employment 83.2 83.2 Center, representatives of ALROSA held job fairs throughout region. 2,510 people Within this project, 1,392 residents of the Republic of Sakha 2019. They took place in Vilyuysk, Verkhnevilyuysk, and For more information on charitable assistance, (Yakutia) were employed in the Company in 2019, including Mirny, and attracted more than 2,000 locals. see the "Charitable Projects and Sponsorship" from the uluses 301 young specialists under the age of 30. section. (districts) of To perform certain and temporary work at the production In 2019, on the basis of the ALROSA Personnel Training facilities under construction, the Company engages the “diamond The Company's enterprises support ancestral Center, 13 people underwent vocational training and qualified workers on a rotational basis with the obligatory received additional vocational education, and 19 young involvement of local labor resources, including communities of reindeer herders and fishermen, province”. specialists completed internships in the Company's representatives of the indigenous peoples of Yakutia. providing them with financial assistance for structural divisions. More than RUB 1.5 million were spent 2017 2018 2019

134 135 SUSTAINABILITY REPORT 2019 REGIONAL DEVELOPMENT

AGREEMENTS WITH ULUSES THE NYURBINSKY DISTRICT

As part of the Regional Development, Charity and Sponsorship Program, there is an For the purposes of social and economic development, overhaul of social facilities (kindergartens, schools, sports Agreement on Mutual Cooperation for 2011–2021 with nine uluses of the “diamond when ALROSA exercises the right to use subsoil in the facilities, roads and bridges, water treatment facilities, province” in the Republic of Sakha (Yakutia) — Mirny, Verkhnevilyuisk, Olenyok, Anabar, territory of the Nyurbinsky district, the Agreement on hospitals, etc.). The list of objects is determined according Suntar, Vilyuisk, Lensk, Nyurba, and Kobyay. Key areas of assistance include: Cooperation in the Field of Socio-Economic Development to the development strategy of the Nyurbinsky district in of the Nyurbinsky District of the Republic of Sakha (Yakutia) agreement with the Government of the Republic of Sakha — construction and repair of social facilities; for the period 2019–2021 is in force. The company directs (Yakutia). In 2019, the targeted contribution of ALROSA — purchase of agricultural equipment for building materials; targeted financial assistance for the construction and amounted to RUB 324.8 million. — development of domestic reindeer husbandry and support of traditional hunting; — support of the indigenous peoples of the North.

In 2019, the Company allocated RUB 83.3 mln for these purposes. ALROSA annually organizes the traditional holiday of the indigenous peoples of the North — the Day of the Reindeer REPUBLICAN COMPETITION Breeder in the uluses of the Republic of Sakha (Yakutia). "LANGUAGE OF ANCESTORS" The program includes a show of national clothes, a competition of ice sculptures, a round dance yokharyo, and The activities national sports: throwing a lasso, jumping over sledges, In 2019, the Environmental Center of ALROSA held a Evenk football, a fair-sale of products and handicrafts. The children's republican competition “Language of Ancestors”. of ALROSA and THE OLENYOKSKY DISTRICT culmination of the holiday is a reindeer race with an annual The competition was included in the plan of the main its subsidiaries With the beginning of the development of prize fund of ALROSA for RUB 1.0 million. activities of the Federal Agency for Ethnic Affairs of the the Verkhne-Munskoye ore field in 2015, the As part of the project to develop the new Verkhne- Russian Federation, as part of the International Year of affect the Company expressed its interest in the industrial Munskoye diamond deposit, PJSC ALROSA takes Every year the republic celebrates a national holiday Indigenous Languages. interests of the and socio-economic development of the Olenyok part in measures to ensure the preservation — Ysyakh — a holiday of consolidation and good population of Evenki National District in the Republic of Sakha of the traditional way of life of the indigenous neighborliness. Landscape, architectural and ethnographic Children from 7 to 18 years old attended the competition; (Yakutia). The main population of the district are small-numbered peoples of the North and the complexes have been created for the celebration. At all of them live in the Republic of Sakha (Yakutia). The the Sadynsky Evenks, Yukaghirs and Nganasans (Mayats), who maintenance of the biological diversity of local various venues, meaningful cultural events are held: ritual performances of the contestants were dedicated to the national nasleg practice a nomadic way of life in connection with ecosystems. Part of these activities was the and ceremonial, exhibition and exposition, competition ethnic foundations of the primordial habitat and the the traditional craft — reindeer herding. implementation of a program for the protection of and festival, concert and festive, theatrical performances, traditional way of life of the indigenous peoples of the of the Mirny the reindeer population. sports, games and competitions. North and were held in various types of artistic, oratory and district, and During a meeting with local residents held For more details, see the section “Biodiversity performing arts: performing dances, songs, reading poetry the national by representatives of the Company, the conservation”. In July 2019, ALROSA and the Federal Agency for Ethnic and ballads. management of the Udachny Mining and Affairs (FAEA of Russia) signed a cooperation agreement Anabarsky Processing Division of PJSC ALROSA declared In December 2019, the Ilkit modern ethno-cultural on preserving the traditional way of life of indigenous The competition was held in two stages. A commission and Oleneksky their readiness to provide the population of the center was opened in the village of Olenyok. The peoples of the North, Siberia and Far East of Russia. The consisting of ALROSA’s employees, representatives of the national district with jobs in the mining industry, total costs of ALROSA for its construction in 2013– main goal is to develop cooperation between indigenous Ministry of Education and Science of the Republic of Sakha uluses, where and, therefore, provide them with a stable income 2019 amounted to RUB 248.4 million. This is the peoples associations, local governments and industrial (Yakutia), the Ministry for the Development of the Arctic and Dolgans, Evenks, and social guarantees. By filling the budget of next step for the Company in creating conditions companies. Moreover, FAEA of Russia and ALROSA agreed the Affairs of the Peoples of the North of the Republic of Evens and other Olenyok ulus with tax revenues, the company can to preserve the intangible cultural heritage of the to participate jointly in the public discussion of draft Sakha (Yakutia) and municipalities of the Republic of Sakha significantly increase the standard of living of the Evenky people. The main objective of the center is normative legal acts in the field of protecting the rights of (Yakutia) selected the participants for the final round. Three indigenous local population and give an impetus to the socio- to preserve the traditional culture, language and indigenous peoples. winners of the competition with diplomas of I, II, III degrees communities of economic development of the region. arts of the indigenous peoples of the North. were determined. The first place was taken by the group At the end of December 2019, JSC Almazy Anabara and the of readers "Dyuluskhan" of the Verkhnevilyui Republican the North live. The Company entered into the Agreement Arctic uluses of Yakutia signed a cooperation agreement Boarding School Named After M. A. Alekseev. on social and economic cooperation with the for 2020, according to which the ALROSA Group subsidiary OLENYOK EVENKI NATIONAL DISTRICT: Oleneksky Evenki National District in the Republic will allocate RUB 109.5 mln for the social and economic of Sakha (Yakutia) for 2019–2023. Targeted development of Bulun, Anabar, Olenyok, Zhigansk and financial assistance from ALROSA is directed to Eveno-Bytantay uluses. >700 28 the development of the district — the construction % and repair of social facilities, the development 10 northwest of Yakutia participants settlements of the Republic of of domestic reindeer husbandry, support for behind THE ARCTIC Sakha (Yakutia) the indigenous small-numbered peoples of CIRCLE the North, and support for traditional hunting. In 2019, the targeted contribution of ALROSA amounted to RUB 100 million. сenter of the district — 4 OLENYOK 208 18 thousand VILLAGE applications uluses Evenks

136 137 SUSTAINABILITY REPORT 2019

CONTACT INFORMATION

GRI 102-3, 102-5, 102-53

PJSC ALROSA Corporate website: Main headquarters: 6 Lenina St., Mirny, the Republic of http://eng.alrosa.ru/ Sakha (Yakutia), 678174, Russia Phone: +7 (41136) 99000 ext. 3-00-30, 3-01-80 Fax: +7 (41136) 3-04-51 Directorate of Social Services and Regional Development E-mail: [email protected] Phone: +7 (41136) 99000, ext. 4-24-06

Office: 24 Ozerkovskaya Naberezhnaya, Moscow, 115184, Marketing and Public Relations Russia Public Relations Department Phone: +7 (495) 620-92-50, +7 (495) 411-75-25 Phone: +7 (411-36) 99000, ext. 3-13-21 Fax: +7 (495) 411-75-15

E-mail: [email protected] Yakutniproalmaz Institute 39 Lenin St., Mirny, Republic of Sakha (Yakutia), 678174, Russia Office: 8 Ammosova St., Yakutsk, the Republic of Sakha Phone: +7 (41136) 99000 (Yakutia), 677018 Russia

Phone: +7 (411-2) 42-33-28 Laboratory of Socio-Economic Studies Fax: +7 (411-2) 42-18-15 Phone: +7 (41136) 99000, ext. 4-32-50 E-mail: [email protected] [email protected]

Office: 24 Maxim Gorky St., Orlovskaya oblast, 302028, Russia Contact person as to report content

Phone: +7 (4862) 43-71-13 Yana Yushina Fax: +7 (4862) 43-71-13 Marketing and Public Relations of PJSC ALROSA E-mail: [email protected] tel. +7 (495) 620-92-50 (ext. 3-1092) E-mail: [email protected]

Office: 17 Okeansky Ave., Vladivostok, Primorsky Krai, 690091, Russia

Phone: +7 (423) 249-18-70 E-mail: [email protected]

138 APPENDICES

Glossary and Abbreviations 140

Terms 140

Abbreviations 142

About the Report 143

Material Topics and Issues 144

Independent Certification of the Report 148

GRI Content Index 151

Effectiveness Indicators 160 SUSTAINABILITY REPORT 2019 APPENDICES

Mission means a reason for existence, the purpose of Social Policy means the activities of employers, managers and GLOSSARY AND the Company that makes it different from other similar employees aimed at retaining and/or changing their social status, organizations. meeting social needs, harmonizing social interests, implementing social rights and guarantees, providing social services and Motivation is a mechanism for enhancing labor efficiency protecting personnel from the social point of view. and productivity, as well as the incentive of an employee or ABBREVIATIONS group of employees who are engaged in activities aimed at Social programs refer to the Company’s voluntary efforts achieving the Company’s goals. or activity to develop and motivate personnel, create favorable workplaces conditions, develop corporate culture, Occupational disease is a disease that appears and develops and support local community and charity purposes; it has due to systematic and prolonged exposure of an employee a systemic nature and is related to the business strategy to workplace factors peculiar to such an occupation or to and aimed at meeting the balanced demands of different TERMS conditions peculiar only to a certain industry. stakeholders. From the managerial point of view, a social program is a set of measures providing an effective solution Occupational incident or accident is an event resulting in an for the internal (internal corporate program) or external injury or other health impairment or damage of an employee corporate tasks (external corporate program) that are aligned Certification means confirmation of compliance with quality Environmental and resource-saving activities refer to the in the course of performance of respective duties under an with each other in terms of resources, designated employees characteristics to the level required by a quality standard. area in which the Company initiates the implementation of employment contract within the territory of the Company’s or responsible persons and implementation time frame. programs aimed at reducing its environmental impact. production facilities or while traveling to or from the place Charity refers to voluntary activity taken by the Company of work by transport provided by the Company, entailing Staff turnover means the number of employees who leave the on a non-commercial basis (free of charge or on favorable Environmental expenses mean all expenses associated the transfer of such employee to another job, temporary or Company voluntarily (other than the retired employees) or are terms) such as transfer of assets to physical or legal entities, with environmental protection incurred by or on behalf of permanent occupational disability or death. dismissed for other reasons (violation of labor discipline or by including cash funds, and performance of work, provision of the Company to prevent, reduce, control and document agreement of the parties). services and other support at the company’s expense. environmental aspects, environmental impact and Occupational safety is a system for ensuring the safety of life environmental hazards. They also include costs of waste and health of employees at their workplaces, including legal, Stakeholder engagement refers to the Company’s activities Collective Agreement is a legal document that regulates handling, treatment, environmental improvement and social, economic, organizational, technical, sanitary, medical, aimed to understand the expectations and concerns of its social and labor relations at an enterprise, as well as secure remediation of environmental damage. rehabilitation and other activities. stakeholders and to involve them in the decision-making process. benefits and guarantees at the employer’s expense. Global Reporting Initiative (GRI) is an international Payments and benefits are direct payments made by the Stakeholders are physical and legal entities or groups Community development assistance programs refer to the organization headquartered in Amsterdam (the Netherlands). organization to its employees, as well as payment for services of persons who either influence or are influenced by the Company’s social programs implemented on a voluntary basis It was founded in 1997 by the Coalition for Environmentally rendered to or of expenses incurred by employees. Severance Company’s activities, as well as have the right in accordance and are designed to contribute to the development of the Responsible Economies in partnership with the United pay in excess of statutory minimum, payment for temporary with the law and international conventions to directly bring local community. Nations Environment Programme. business interruption, additional benefits related to work claims against the Company. Stakeholders are the Company’s injury, survivor benefits, and additional paid days off. shareholders, investors, employees, suppliers, contractors, Community development program means a detailed plan Greenfield is a mine developed from scratch. consumers, trade unions and other public organizations, of actions to minimize, mitigate and compensate for the Pupillometer is a device used in ophthalmology for government and local authorities, mass media, residents of adverse social and economic impacts, designed to identify HR management is an end-to-end integrated system for measuring pupil diameter and pupillary distance. the area where the Company operates, etc. opportunities and measures to enhance the positive effect of human resource management, which covers all stages of the project on the local community. interaction between employees and the Company, from Region of PJSC ALROSA’s main operations means the Sustainability Report (non-financial report, social and attraction, adaptation and retention of an employee in the Republic of Sakha (Yakutia) of the Russian Federation, where environmental report) means an available, reliable and Corporate social program is a type of activity voluntarily Company to their retirement. the Company is registered as a legal entity and its main balanced description of the Company’s core activities along carried out by the Company in the social, economic and production facilities are located, and where more than 90% of with results achieved in the areas related to values, goals, environmental spheres, which is of a systemic nature and Injury, injuries mean the damage inflicted to an employee’s its employees’ work. sustainable development policy, and issues of greatest aimed at meeting the needs of parties interested in the health caused by an occupational accident that resulted in interest to key stakeholders. It is a public document for Company’s operations. occupational disability. Responsible Jewellery Council (RJC) is an international informing shareholders, employees, partners and other non-profit organization created to strengthen consumer interested parties about how and at what pace the Company Corporate social responsibility refers to the philosophy of IUCN Red List is a list of endangered plant and animal species confidence in the jewelry supply chain, increase corporate achieves its mission or strategic development goals in behavior and concept for the business community, companies with their global conservation status, developed by the social responsibility, and promote ethical business conduct. It respect of economic sustainability, social wellbeing and and business representatives to build their activities aimed at International Union for Conservation of Nature. certifies members to meet its standards. environmental sustainability. meeting the expectations of stakeholders for the purpose of sustainable development. Kimberley Process (KP) is an interstate forum aimed at Risk is a threat of adverse impact of external and internal Sustainable development is a concept of development of the keeping conflict diamonds out of international trade. factors on the achievement of the Company’s corporate goals. world community that provides for considering the interests Defined benefit pension plans are retirement compensation of not only the present generations, but also the future ones. arrangements for the Company to pay fixed contributions Local community refers to entities or groups of local residents Rostekhnadzor is the Federal Service for the Supervision of to an independent organization (fund) and has no legal who live and/or work in all areas and exposed to economic, Environment, Technology and Nuclear Management. Sustainalytics is a company that evaluates the sustainability obligations or obligations arising out of the practice to pay social or environmental impact (both positive and negative) of of listed companies based on their environmental, social and additional contributions in case the fund does not have the Company’s divisions. The local community may comprise Safe working conditions refer to working environment in corporate governance performance. sufficient assets to pay employees all the benefits relating to people living in proximity to these divisions and remote which the impact of harmful and hazardous production performance of their duties in the current and prior periods. isolated settlements affected by them. factors is excluded or the level of such impact does not Ulus is an agricultural municipal district of the Republic of exceed hygienic standards. Sakha (Yakutia), where most of the people are locals. Defined payment pension plans are retirement compensation Local population is the population of a certain territory, plans, except for defined benefit pension plans. regardless of its ethnic composition or culture. Senior executives are the Company’s top managers Young specialist is a PJSC ALROSA employee up to holding senior managerial positions (President or CEO, vice the age of 30 who has a higher education or secondary Diamond Producers Association (DPA) is an organization that Local suppliers are an organization or entity that supplies presidents, heads of business units). vocational education based on training programs for mid- represents the interests of the world’s seven largest diamond products or services to the reporting organization and is level specialists, hired by the Company on the basis of an producers: ALROSA, De Beers Group, Dominion Diamond, located in the same geographical market as the reporting Social partnership is a system of relationships between employment contract concluded for an indefinite period or a Lucara Diamond, Murowa Diamonds, Petra Diamonds, and Rio organization (i.e. there are no cross-border payments to the employees (their representatives), employers (their fixed-term employment contract, regardless of employment Tinto. In June 2020, the Diamond Producers Association was supplier). The geographic definition of “local” in the context representatives), and public and local authorities aimed at history. renamed the Natural Diamond Council (NDC). of the Company’s procurement activities refers to the Russian ensuring the coordination of the interests of employees and Federation. employers with regard to regulation of labor relations and Young worker is a PJSC ALROSA employee up to the age of other relations directly related to them. 30, regardless of their educational background.

140 141 SUSTAINABILITY REPORT 2019 APPENDICES

ABBREVIATIONS ABOUT THE REPORT

GRI 102-46, 102-47, 102-49, 103-1

Aikhal MPD — Aikhal Mining and Processing Division. OECD — Organization for Economic Cooperation and Development. BCRA — Business Council Russia–Angola. OHS — Occupational Health and Safety. Standards of the Global Reporting Initiative for sustainability — the UN Guiding Principles on Business and Human DPA — Diamond Producers Association. (hereinafter, the GRI Standards) and GRI Mining and Metals Rights; PJSC ALROSA — Public Joint-Stock Company ALROSA. Sector Supplement are used as a methodological basis of this DTG — Diamond Terminology Guideline. Report (Core option). — the OECD Due Diligence Guidance for Responsible PPE — Personal Protective Equipment. Supply Chains of Minerals from Conflict-Affected EMEA — Europe, Middle East, Africa. At the same time, the following standards and guidelines were Areas and High-Risk Areas; PTC — Personnel Training Center. taken into account in preparing the Report: EP — Environmental Protection. — the International Integrated Reporting Framework (IR) R&D and TW — Research, Development and Technological — the UN Global Compact; prepared by the International Integrated Reporting ESG — Environmental. Social. Governance. Works. Council (IIRC); — the UN Sustainable Development Goals until 2030 ETF — Electronic Trading Facility. RF — Russian Federation. (SDGs); — International Standard ISO 26000:2010, Guidance on Social Responsibility. FAEA of Russia – Federal Agency for Ethnic Affairs of the RJC — Responsible Jewellery Council. Russian Federation. RMS — Risk Management System. FIFR — Fatal Injury Frequency Rate. RS (Ya) — Republic of Sakha (Yakutia). FTSE4Good Index — Series of Ethical Investment Stock Indices issued by the FTSE Group in 2001. RSA — Republic of South Africa.

GOST — All-Union State Standard. Russian CCI – Chamber of Commerce and Industry of Russia.

IFRS — International Financial Reporting Standards. S&A — Subsidiaries and Affiliates.

ILO — International Labour Organization. SAWC — Special Assessment of Working Conditions.

ISO — International Organization for Standardization. SB RAS — Siberian Branch of the Russian Academy of Sciences. IUCN — International Union for Conservation of Nature. SCMR — State Commission on Mineral Reserves. JSC — Joint-Stock Company. SDGs — Sustainable Development Goals. JV — Joint Venture. SME — Small and Medium Enterprises. KPIs — Key Performance Indicators. SSC — Shared Service Center. LTIFR — Lost Time Injury Frequency Rate. UAE — United Arab Emirates. MMPD — Mirny Mining and Processing Division. UMPD — Udachny Mining and Processing Division. MPD — Mining and Processing Division. USA — United States of America. MSCI ESG – International Sustainable Development Index. VHI — Voluntary Health Insurance. MTR — Material and Technical Resources. WDC — World Diamond Council. NMPD — Nyurba Mining and Processing Division. WDS — Washing and/or Detoxifying Substances. NPF — Non-State Pension Fund. WWF — World Wildlife Fund.

142 143 SUSTAINABILITY REPORT 2019 APPENDICES

Materiality matrix based on stakeholder survey MATERIAL TOPICS AND ISSUES 4.9

4.7 1

To comply with the GRI Standards in respect of content Economic performance (GRI 201): 4.5 11 definition, a preliminary analysis of material issues related 19 8 5 to ALROSA Group’s performance was made, subject to — ensuring economic and financial stability of the 16 disclosure in the Report. Company, and stable position in the Russian and 4.3 22 13 4 international markets. 15 18 Material topics and indicators are those that reflect the 20 9 23 3 10 Company’s significant economic, environmental and social 21 2 4.1 7 14 impacts, or can have a major influence on stakeholders’ Human resources management 17 assessments or decisions. (GRI 202, 401, 402, 403, 404, 405, 407, 410, 411, 412): 12

Significance for stakeholders 6 The following analytical procedures were conducted to — creating decent working conditions, promotion of 3.9 determine material issues: professional development of employees;

— survey of internal and external stakeholders; — ensuring safe working conditions and reducing 3.7 occupational injuries; — analysis of ESG reports prepared by rating and analytical agencies; — respecting human rights and preventing all forms of 3,5 discrimination. 3.5 3.7 3.9 4.1 4.3 4.5 4.7 4.9 — analysis of non-financial reports issued by peer companies; Significance for the Company Regional development (GRI 203, 411, 413): — analysis of the Company’s corporate media and news about the Company in mass media in the reporting — developing regions of operations (job creation, period. tax and dividend contributions; development of infrastructure); In the presented materiality matrix, the following topics are (GRI 405, 407, 410, 411, 412) According to the analyses, key topics were identified given under the numbers (bold indicates the most material): reflecting ALROSA Group’s main areas of activity that are — supporting local communities (in particular, 12. Energy efficiency and power consumption (GRI 302) significant for its stakeholders, as well as corresponding indigenous peoples and national communities). 1. Economic performance (GRI 201) material issues related to the Company’s operations. 13. Water consumption (GRI 303) 2. Responsible supply chain Environmental protection (GRI 302, 303, 304, 305, 306): 14. Biodiversity (GRI 304) Material Topics 3. Anti-corruption (GRI 205) — applying innovative technologies to reduce the 15. Emissions (GRI 305) Corporate governance negative environmental impact, including power 4. Compliance with legislative requirements (GRI 419) (GRI 103, 205, 419): and water consumption, and consistent reduction of climate change impact; 16. Effluents and waste (GRI 306) 5. Ensuring safe working conditions (GRI 401, 402, 405) — improving the efficiency and transparency of corporate governance and interaction with investors — implementing biodiversity conservation programs in 17. Greenhouse gas emissions and climate change (GRI 305) and shareholders; regions of operations. 6. Staff training and development (GRI 404) 18. Responsible business practices (GRI 205, 402, 419) — incorporating effective approaches to manage the 7. Diversity and inclusion (GRI 405) sustainable development; Additional Information Regarding Material Topics 19. Carrying out exploration works and deposit development 8. Occupational health and safety (GRI 403) — adhering to legislative requirements and Materiality analysis of the sustainable development topics 20. Innovative activity international standards for responsible business included a questionnaire survey of internal and external 9. Interaction with local communities and indigenous peoples conduct and their promotion inside the supply chain stakeholders. The survey was conducted on the topics and (GRI 413) 21. Digitalization of production (including compliance with business ethics and anti- issues of importance to the Company, analyzed by the Report corruption measures); Working Group. A total of 53 stakeholders took part in the 10. Social and economic impact on regions of operations survey, of which 9 internal and 44 external. A map of material 22. Mine closures (GRI 203, 411, 413) — participating in international industry associations topics (materiality matrix) was drawn up based on the results and initiatives as well as in the development of the survey of internal and external stakeholders. 23. Origin of rough and polished diamonds of standards of industry self-regulation on the 11. Respect for human rights and non-discrimination international market of rough and polished diamonds;

— providing effective interaction with state and municipal authorities.

144 145 SUSTAINABILITY REPORT 2019 APPENDICES

As part of the materiality defining process, inquiries from In the mining industry: Material issue Data source rating agencies and sustainable development and ESG indexes, industrial standards and guidelines, analytical — GRI, Defining WHAT MATTERS: DO companies and reviews, as well as peer companies’ reports were analyzed. investors agree on what is material? Mining, Metals Rating agencies Industrial stan- Peer companies' Survey of stakehol- and Electric Utilities, 2016 and indexes dards and guide- reports and analy- ders lines tical reviews Rating agencies and indexes involved in the analysis Companies whose annual and non-financial reports for Compliance with legislative — FTSE4Good + + 2018–2019 were involved in the analysis requirements — Robecosam In the field of diamond mining: — ISS ESG Economic performance — WWF — De Beers Economic performance + + — MSCI ESG — Lucara Diamond — Bloomberg Social performance — Murowa Diamonds — RAEX Human capital/employment + + + + — Gem Diamonds — Sustainalytics — Vigeo Eiris — Petra Diamonds Training and education + — CDP — Rio Tinto Occupational health and safety + + + +

Industrial standards and guidelines involved in the — Anglo American Human rights + + + analysis — Dominion — Responsible Jewellery Council (RJC), Code of Local communities + + + + Practices In the field of gold mining: Environmental performance — International Council on Mining and Metals, Mining — Polyus Principles Use of resources + + + — Polymetal

Analytical reviews involved in the analysis — Barrick Water + + + +

In the field of precious metals mining: — AngloGold Effluents and waste + + + +

— Sustainalytics, ESG Report for ALROSA — Newmont Energy + +

Emissions + + +

Biodiversity and use of land + + + Results of the materiality analysis Climate change + +

Material issue Data source Environmental Policy +

Rating agencies Industrial stan- Peer companies' Survey of stakehol- Specific issues and indexes dards and guide- reports and analy- ders lines tical reviews Mine closures +

Management Carrying out exploration works + and deposit development Corporate governance, + remuneration

Tax transparency +

Anti-corruption + + + +

Business ethics + + +

Supply chain + + +

146 147 SUSTAINABILITY REPORT 2019 APPENDICES INDEPENDENT CERTIFICATION OF THE REPORT GRI 102-56

• reporting our conclusion to the management of the Group. Independent Limited Assurance Report to the Management of 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 Public Joint Stock Company ALROSA sustainability performance and activities. We permit this report to be disclosed in the Sustainability i, to assist management in responding to Report, which may be published on the Company’s website their governance responsibilities by obtaining an independent limited assurance report in connection Introduction 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. We have been engaged by Management of Public Joint Stock Company ALROSA (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 2019 (hereinafter – the Professional standards applied and level of assurance “Sustainability Report”). The Sustainability Report represents information related to the Company and We performed a limited assurance engagement in accordance with International Standard on its subsidiaries (hereinafter together – the “Group”). Assurance Engagements 3000 (Revised) “Assurance Engagements other than Audits or Reviews of Historical Financial Information’’ issued by the International Auditing and Assurance Standards Board. Selected Information A limited assurance engagement is substantially less in scope than a reasonable assurance We assessed the qualitative and quantitative information, that is disclosed in the Sustainability Report engagement in relation to both the risk assessment procedures, including an understanding of internal and referred to or included in the GRI Indicators (hereinafter – the “Selected Information”). The control, and the procedures performed in response to the assessed risks. Selected Information has been prepared in accordance with GRI Sustainability Reporting Standards (Core option), including GRI G4 Mining and Metals Sector Disclosures, published by the Global Our Independence and Quality Control Reporting Initiative (hereinafter – the “GRI Standards”). We have complied with the independence and other ethical requirements of the Code of Ethics for The scope of our limited assurance procedures was limited to Selected Information for the year ended Professional Accountants issued by the International Ethics Standards Board for Accountants, which 31 December 2019. We have not performed any procedures with respect to earlier periods or any is founded on fundamental principles of integrity, objectivity, professional competence and due care, other items included in the Sustainability Report and, therefore, do not express any conclusion confidentiality and professional behaviour, together with the ethical requirements of the Auditor’s thereon. Professional Ethics Code and Auditor’s Independence Rules that are relevant to our limited assurance procedures in the Russian Federation. Reporting Criteria Our firm applies International Standard on Quality Control 1 and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding We assessed the Selected Information using relevant criteria, including reporting principles and compliance with ethical requirements, professional standards and applicable legal and regulatory requirements, in the GRI Standards (hereinafter – the “Reporting Criteria”). We believe that the requirements. Reporting Criteria are appropriate given the purpose of our limited assurance engagement. The Group’s responsibilities Work done Management of the Group is responsible for: 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: • 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; • made enquiries of the Group’s management, including the Sustainability Reporting (SR) team • establishing internal methodology, including objective reporting criteria, and guidelines for and those with responsibility for SR management and group reporting; preparing and reporting the Selected Information in accordance with the Reporting Criteria; • conducted interviews of personnel responsible for the preparation of the Sustainability Report • preparation, measuring and reporting of the Selected Information in accordance with the and collection of underlying data; Reporting Criteria; and • performed analysis of the relevant internal methodology and guidelines, gaining an • the accuracy, completeness and presentation of the Selected Information. understanding and evaluating 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 Our responsibilities that data had been appropriately measured, recorded, collated and reported; and We are responsible for: • reviewed the Selected Information for compliance of the disclosures with the relevant requirements of the Reporting Criteria. • 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; i The maintenance and integrity of the Company’s website is the responsibility of management; the work carried out by us does • forming an independent conclusion, based on the procedures we have performed and the not involve consideration of these matters and, accordingly, we accept no responsibility for any changes that may have occurred evidence we have obtained; and to the reported Selected Information or Reporting Criteria when presented on the Company’s website.

AO PricewaterhouseCoopers Audit

White Square Office Center 10 Butyrsky Val Moscow, Russian Federation, 125047 TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in Russian. All T: +7 (495) 967 6000, F:+7 (495) 967 6001, www.pwc.ru possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation. TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in Russian. All 2 possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation.

148 149 SUSTAINABILITY REPORT 2019 APPENDICES GRI CONTENT INDEX

GRI 102-55

Indicator Indicator content Page of the Report, External excluded information, assurance comments

GENERAL DISCLOSURES

GRI 101: Foundation (2016)

Reporting and measurement methodologies GRI 102: General Disclosures (2016) The range of different, but acceptable under the GRI Standards, measurement and reporting techniques can result in materially different reporting outcomes that may affect comparability with Organizational profile 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 which the Group is solely responsible for. 102-1 Name of the organization 1 +

Limited assurance conclusion 102-2 Activities, brands, products, and services 10 + 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 2019 has not been prepared, in all material respects, in accordance with the Reporting 102-3 Location of headquarters 138 + Criteria. 102-4 Location of operations 10 +

102-5 Ownership and legal form 138 + 28 August 2020 Moscow, Russian Federation 102-6 Markets served 10 +

102-7 Scale of the organization 10 + T. V. Sirotinskaya, certified auditor (licence No. 01-000527), AO PricewaterhouseCoopers Audit 102-8 Information on employees and other workers 59, 160 +

Engaging party: Public Joint Stock Company ALROSA Audit organization: 102-9 Supply chain 41, 54 + AO PricewaterhouseCoopers Audit Record made in the Unified State Register of Legal Entities on 17 July 2002 under State Registration Number 1021400967092 Registered by the Government Agency Moscow Registration Chamber on 28 February 1992 under Nо. 008.890 102-10 Significant changes to the organization and its supply chain 10 + Taxpayer Identification Number 1433000147 Record made in the Unified State Register of Legal Entities on 22 August 2002 6, Lenin Street, Mirny, 678175, Republic of Sakha (Yakutia), Russia under State Registration Number 1027700148431

Taxpayer Identification Number 7705051102 36

Member of Self-regulatory organization of auditors Association «Sodruzhestvo»

Principal Registration Number of the Record in the Register of Auditors and The Company is guided Audit Organizations – 12006020338 by the precautionary principle, especially in the 102-11 Precautionary Principle or approach area of health, industrial + safety and environmental impact. The principle is implemented in the course of risk management.

External economic, environmental and social charters,

TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in Russian. All 102-12 principles or other initiatives to which the organization 28, 32, 41 + possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation. subscribes or supports

3 102-13 Membership of associations 24 +

150 151 SUSTAINABILITY REPORT 2019 APPENDICES

Indicator Indicator content Page of the Report, External Indicator Indicator content Page of the Report, External excluded information, assurance excluded information, assurance comments comments

Strategy Reporting practice

102-14 Statement from senior decision-maker 2 + The Company's significant enterprises included in the consolidated financial 102-15 Key impacts, risks, and opportunities 32, 36 + 102-45 Entities included in the consolidated financial statements + statements are specified Ethics and integrity in the 2019 IFRS report, page 33. 102-16 Values, principles, standards, and norms of behavior 41 + 102-46 Defining report content and topic Boundaries 143 + 102-17 Mechanisms for advice and concerns about ethics 41 + 102-47 List of material topics 143 + Governance 102-48 Restatements of information Disclosed in the notes + 102-18 Governance structure 28 + 143, disclosed in the 102-49 Changes in reporting + notes Delegating authority to resolve economic, environmental 102-19 and social issues from the highest governance body to senior 28 + executives and other employees The fiscal year covers the 102-50 Reporting period period from January 1 to + December 31, 2019 Executive-level responsibility for economic, environmental, 102-20 28 + and social topics 102-51 Date of most recent report September 2019 + Composition of the highest governance body and its 102-22 28 + committees 102-52 Reporting cycle Annual +

102-23 Chair of the highest governance body 28 + 102-53 Contact point for questions regarding the report 138 +

Role of highest corporate governance body and senior 102-54 Claims of reporting in accordance with the GRI Standards Core + 102-26 28 + executives in setting purpose, values, and strategy 102-55 GRI content index 151 + 102-30 Effectiveness of risk management processes 36 + 102-56 External assurance 148 + Stakeholder engagement GRI 103: Management Approach (2016) 102-40 List of stakeholder groups 45 + 103-1 Explanation of the material topic and its Boundary 143 + 102-41 Collective bargaining agreements 43 + MATERIAL TOPICS The principles for identifying and selecting GRI 201: Economic Performance (2016) stakeholders have not changed since the 103-2 The management approach and its components 26, 48 + previous reporting 102-42 Identifying and selecting stakeholders period. For details on the + 103-3 Evaluation of the management approach 26, 48 + principles of identification and selection of 201-1 Direct economic value generated and distributed 51 + stakeholders, see ALROSA Social and Environmental Financial implications and other risks and opportunities due Report 2018, pp. 75-77 201-2 36 + to climate change

102-43 Approach to stakeholder engagement 45 +

102-44 Key topics and concerns raised 45 +

152 153 SUSTAINABILITY REPORT 2019 APPENDICES

Indicator Indicator content Page of the Report, External Indicator Indicator content Page of the Report, External excluded information, assurance excluded information, assurance comments comments

Note No. 17 to the GRI 302: Energy (2016) consolidated financial statements of PJSC 201-3 Defined benefit plan obligations and other retirement plans + 103-2 The management approach and its components 119 + ALROSA under IFRS for the year ended on 103-3 Evaluation of the management approach 119 + December 31, 2019 302-1 Energy consumption within the organization 119 + 51, 53 201-4 Financial assistance received from government + 302-3 Energy intensity 119 + Annual report of PJSC ALROSA 2019, page 278 302-4 Reduction of energy consumption 119 +

GRI 202: Market Presence (2016) GRI 303: Water and Effluents (2018)

103-2 The management approach and its components 28, 58, 134 + 103-2 The management approach and its components 109 +

103-3 Evaluation of the management approach 28, 58, 134 + 103-3 Evaluation of the management approach 109 +

Ratios of standard entry level wage by gender compared to 202-1 64 + 303-1 Interactions with water as a shared resource 109 + local minimum wage in significant regions of operation

303-2 Management of water discharge-related impacts 109 + Proportion of senior management hired from the local 59, 134, 160 202-2 + community 303-3 Water withdrawal 109 + GRI 203: Indirect Economic Impacts (2016) 303-4 Water discharge 109, 160 + 103-2 The management approach and its components 129 + 303-5 Water consumption 109, 160 + 103-3 Evaluation of the management approach 129 + GRI 304: Biodiversity (2016) 203-1 Infrastructure investments and services supported 126 + 103-2 The management approach and its components 123 + 203-2 Significant indirect economic impacts 126 + 103-3 Evaluation of the management approach 123 + GRI 205: Anti-corruption (2016) Operational sites owned, leased, managed in, or adjacent to, 304-1 protected areas and areas of high biodiversity value outside 123 + 103-2 The management approach and its components 41 + protected areas

103-3 Evaluation of the management approach 41 + 304-3 Habitats protected or restored 121, 123 +

205-1 Operations assessed for risks related to corruption 42 + GRI 305: Emissions (2016)

Communication and training about anti-corruption policies 205-2 42 + 103-2 The management approach and its components 116 + and procedures

103-3 Evaluation of the management approach 116 + 205-3 Confirmed incidents of corruption and actions taken 31, 42 +

305-1 Direct (Scope 1) GHG emissions 116 +

305-4 GHG emissions intensity 116 +

305-5 Reduction of GHG emissions 116 +

154 155 SUSTAINABILITY REPORT 2019 APPENDICES

Indicator Indicator content Page of the Report, External Indicator Indicator content Page of the Report, External excluded information, assurance excluded information, assurance comments comments

GRI 306: Effluents and Waste (2016) Hazard identification, risk assessment, and incident 403-2 82 + investigation 103-2 The management approach and its components 114 + 403-3 Occupational health services 82 + 103-3 Evaluation of the management approach 114 + Worker participation, consultation, and communication on 403-4 82 + 306-1 Water discharge by quality and destination 109, 160 + occupational health and safety

114 403-5 Worker training on occupational health and safety 82, 160 + No breakdown of waste 306-2 Waste by type and disposal method + volumes by treatment 403-6 Promotion of worker health 82 + method Prevention and mitigation of occupational health and safety 403-7 82 + 114 impacts directly linked by business relationships

The Company does Transported, imported, exported or treated waste deemed 92 not transport, import, hazardous under the terms of the Basel Convention Annex I, No disclosure of 306-4 export or treat waste + II, III, and VIII, and the percentage of hazardous waste shipped injuries statistics for the deemed hazardous under internationally contractors. the terms of the Basel No rate of recordable 403-9 Work-related injuries + Convention Annex I, II, III, work-related injuries. and VIII. In connection with the lack of an accounting GRI 401: Employment (2016) system, there is no gender split 103-2 The management approach and its components 58 + 92 103-3 Evaluation of the management approach 58 + In connection with the 403-10 Work-related ill health lack of an accounting + 401-1 New employee hires and employee turnover 59 + system, there is no gender split Benefits provided to full-time employees that are not 401-2 73 + provided to temporary or part-time employees GRI 404: Training and Education (2016)

GRI 402: Labor/Management Relations (2016) 103-2 The management approach and its components 67 +

103-2 The management approach and its components 58 + 103-3 Evaluation of the management approach 67 +

103-3 Evaluation of the management approach 58 + 404-1 Average hours of training per year per employee 67 +

402-1 Minimum notice periods regarding operational changes 43 + 404-2 Programs for upgrading employee skills and education 67 +

Percentage of employees receiving regular performance and GRI 403: Occupational Health and Safety (2018) 404-3 67 + career development reviews 103-2 The management approach and its components 82 + GRI 405: Diversity and Equal Opportunity (2016) 103-3 Evaluation of the management approach 82 + 103-2 The management approach and its components 43 + 403-1 Occupational health and safety management system 82 + 103-3 Evaluation of the management approach 43 +

The structure of the Company's personnel by category, 405-1 43, 59, 160 + gender and age

156 157 SUSTAINABILITY REPORT 2019 APPENDICES

Indicator Indicator content Page of the Report, External Indicator Indicator content Page of the Report, External excluded information, assurance excluded information, assurance comments comments

GRI 407: Freedom of Association and Collective Bargaining (2016) 126 Programs of interaction Operations with local community engagement, impact with local communities 103-2 The management approach and its components 43 + 413-1 + assessments, and development programs are implemented in all 103-3 Evaluation of the management approach 43 + key enterprises of the Company. Operations and suppliers in which the right to freedom of None identified during 407-1 + association and collective bargaining may be at risk the reporting period GRI 419: Socioeconomic Compliance (2016)

GRI 410: Security Practices (2016) 103-2 The management approach and its components 26 +

103-2 The management approach and its components 43 + 103-3 Evaluation of the management approach 26 +

103-3 Evaluation of the management approach 43 + Significant fines and non-financial sanctions for non- 419-1 compliance with laws and regulations in the social and None + economic area 43 Security personnel trained in human rights policies or Training was not 410-1 + procedures previously conducted Specific material topics relevant to ALROSA Group (planned). Responsible supply chain GRI 411: Rights of Indigenous Peoples (2016) 103-2 The management approach and its components 41 + 103-2 The management approach and its components 43, 135 + 103-3 Evaluation of the management approach 41 + 103-3 Evaluation of the management approach 43, 135 + Responsible business practices 411-1 Incidents of violations involving rights of indigenous peoples 126 + 103-2 The management approach and its components 26 + GRI 412: Human Rights Assessment (2016) 103-3 Evaluation of the management approach 26 + 103-2 The management approach and its components 43 + Exploration works and deposit development 103-3 Evaluation of the management approach 43 + 103-2 The management approach and its components 10 + 43 No data on the number 103-3 Evaluation of the management approach 10 + of hours of human 412-2 Employee training on human rights policies or procedures rights training and the + - Area of disturbed lands 122 + percentage of staff trained in human rights - Area of reclaimed lands 122 + procedures.

GRI 413: Local Communities (2016)

103-2 The management approach and its components 126 +

103-3 Evaluation of the management approach 126 +

158 159 SUSTAINABILITY REPORT 2019 APPENDICES EFFECTIVENESS Total number of employees by type of employment and employment contract1 as of December 31, 2019 Type of employment Employment contract Payroll External part- Freelance employees time workers workers Category of full-time part-time fixed-term permanent INDICATORS employees M F M F M F M F M F M F M F Management 2,296 863 2 0 69 21 2,229 842 2,298 863 3 0 0 0 GRI 102-8, 202-2, 303-4, 303-5, 306-1, 403-5, 405-1 Specialists 1,857 2,594 1 11 53 138 1,805 2,467 1,858 2,605 12 17 16 4 Workers 10,443 3,030 1 6 579 232 9,865 2,804 10,444 3,036 20 8 16 4 Personnel structure of PJSC ALROSA by category as of the end of 2019, people Employees 13 201 0 0 1 22 12 179 13 201 0 6 4 3 Total 14,609 6,688 4 17 702 413 13,911 6,292 14,613 6,705 35 31 36 11

Business unit Category Total Personnel structure of PJSC ALROSA, % Workers Employees Specialists Management

Indicators 2012 2013 2014 2015 2016 2017 2018 2019 Administration and management units 36 1 388 277 702 Total number at the end of the 31,373 30,525 30,043 29,400 27,556 25,653 22,768 21,351 reporting period, people Mining complex Age groups, share in the total number, %

Aikhal MPD 3,036 20 334 456 3,846 under 30 years 22.2 21.8 21.5 19.9 19.5 19.2 18.6 17.1

Mirny MPD 1,988 11 260 367 2,626 30–50 years 54.4 53.5 53.9 54.4 55.5 58.0 59.7 61.9

Udachny MPD 3,750 11 355 495 4,611 over 50 years 23.4 24.7 24.6 25.7 25.0 22.8 21.7 21.0

share of young people under 30 Nyurba MPD 1,118 12 199 212 1,541 9.3 10.0 9.3 8.5 8.1 7.5 6.8 8.0 among managers, %

Transportation and delivery complex 1,174 73 417 310 1,974 Gender, share in the total number, %

Men 61.2 64.2 64.7 65.0 65.6 65.9 65.5 68.5 Exploration complex 261 3 408 161 833 Women 38.8 35.8 35.3 35.0 34.4 34.1 34.5 31.5

Capital Construction Division 1,197 17 278 336 1,828 share of women among 32.1 31.9 32.5 31.0 31.6 32.2 30.5 27.2 managers, %

Specialized repair facility 266 11 415 145 837 Categories, share in the total number, %

Workers 66.5 66.8 65.8 65.3 64.9 64.4 63.8 63.2 Research facility 22 4 278 150 454 Managers, specialists, employees 33.5 33.2 34.2 34.7 35.1 35.6 36.2 36.8 Social complex 329 38 507 118 992 Education, share in the total number, %

Rough and polished diamond complex 323 13 633 138 1,107 Higher professional education of managers, specialists and 72.0 73.7 74.9 75.4 77.3 78.3 80.5 79.8 Total 13,500 214 4,472 3,165 21,351 employees

Higher and secondary vocational 30.0 27.6 29.3 29.3 31.1 32.1 35.0 37.8 education of workers

1 The total number refers to the number of employees on the payroll (taking into account employees on parental leave), external part-time workers and employees under civil law contracts at the end of the reporting period.

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Indicators 2012 2013 2014 2015 2016 2017 2018 2019 Indicators 2014 2015 2016 2017 2018 2019

Indigenous nationalities, share in the Distribution by gender 10.1 9.6 9.7 10.1 10.3 10.5 12.3 11.6 total number, % Share in the total number of newly hired, % share of representatives of indigenous nationalities among 6.7 6.7 7.0 7.6 8.0 8.6 9.8 11.1 Men 82.1 84.7 76.8 79.0 82.0 78.4 managers, % Women 17.9 15.3 23.2 21.0 18.0 21.6 Distribution of personnel by type of employment contract Distribution by age share of the total headcount at the end of the reporting year, % Share in the total number of newly hired, % fixed-term employment contracts 4.8 6.1 6.1 5.5 5.5 5.7 3.7 5.2 under 30 years 43.9 50.0 43.2 38.0 35.8 39.1 permanent employment contracts 95.2 93.9 93.9 94.5 94.5 94.3 96.3 94.8 from 30 to 50 years 49.4 45.3 52.2 55.0 53.8 53.2

Indicators of the turnover rate of PJSC ALROSA over 50 years 6.7 4.7 4.6 7.0 10.4 7.8

Indigenous nationalities, people 553 705 532 756 1,031 718 Indicators 2012 2013 2014 2015 2016 2017 2018 2019 Share in the total number of newly hired, % 8 10.6 8.4 12.3 15.3 14.6 Staff turnover rate of PJSC 10,5 10,3 9,8 9,0 8,6 8,7 8,4 7,6 ALROSA, % Distribution by region

Distribution by gender Share in the total number of newly hired, %

Men 12,5 12,3 11,5 11,6 10,8 9,7 9,4 7,5 The Republic of Sakha (Yakutia): 97.2 96.5 96.5 95.3 95.2 97.0

Women 5,7 6,8 5,8 5,5 5,6 4,9 7,0 7,2 Yakutsk 0.1 0.2 0.2 0.2 0.0 0.1

Distribution by age Mirny 66.8 68.9 63.1 66.7 52.0 65.8

under 30 years 16,1 14,6 15,8 14,9 12,2 14,0 12,5 13,8 Udachny 10.4 11.7 16 13.7 25.4 23.8

from 30 to 50 years 9,8 10,9 10,0 9,9 9,8 8,0 8,4 6,5 Aikhal 12.7 10.1 13.1 9.5 7.8 7.2

over 50 years 5,0 6,0 3,5 4,6 5,2 3,1 4,9 4,9 Lensk 7.1 5.6 4.2 5.3 9.9 0.0

Moscow 0.8 1.4 1.3 2.1 1.4 2.9

Other regions of Russia 2 2.1 2.2 2.6 3.3 0.1 Structure of newly hired employees, % Structure of newly hired employees by type of employment contract

Indicators 2014 2015 2016 2017 2018 2019 Share in the total number of newly hired, %

The total number of newly hired workers, 6,896 6,620 6,335 6,157 6,727 4,926 permanent employment contracts 27.3 20.6 16.3 16.7 23.7 23.8 people

Share of the total headcount at the end of the on fixed-term employment contracts (for the 23 22.5 23 24 29.5 23.1 reporting year, % period of the employee absence, internship, 72.7 79.4 83.7 83.3 76.3 76.2 vacations, work on a rotational basis)

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The average salary ratio of ALROSA Group employees to the average salary in Educational background of personnel as of the end of 2019, people the regions of presence

Educational background 2016 2017 2018 2019 Changes to 2018, %

Indicators 2017 2018 2019 Higher 9,699 9,325 8,726 8,311 95.2

Average salary, RUB Secondary vocational 5,008 4,549 4,221 4,230 100.2

ALROSA Group 115,642.1 117,780.2 123,974.0 Basic vocational training 5,841 5,471 4,671 4,151 88.9

RF 39,167.0 47,867.0 43,724.0 Secondary 6,313 5,568 4,344 4,012 92.4

Moscow 73,345.0 83,801.0 94,294.0 Elementary (incomplete secondary 695 740 806 647 80.3 education) St. Petersburg 53,740.0 60,421.0 65,872.0 Total 27,556 25,653 22,768 21,351 93.8 Arkhangelsk Region 42,949.7 48,307.0 52,434.0

Irkutsk Region 38,086.0 42,647.0 46,387.0 Additional vocational education in the field of industrial safety and supervision, people Krasnodar Territory 30,343.0 33,846.0 36,133.0

Moscow Region 46,836.0 51,938.0 55,555.0 Area of supervision 2017 2018 2019 Oryol Region 24,811.0 27,476.0 29,683.0 Operation of production and mining facilities 679 817 1 516 RS (Ya) 62,010.6 68,871.0 73,402.0 Operation of hazardous facilities for storage and use of harmful 223 115 396 materials Smolensk Region - - 31,269.0

Operation of lifting structures 521 460 Salary ratios 827

Operation of pressure equipment 160 238 ALROSA Group to the RF 3.0 2.7 2.6 461

Operation of hazardous facilities for gas distribution and gas ALROSA Group to Moscow 1.6 1.4 1.3 75 42 246 consumption

ALROSA Group to Saint Petersburg 2.2 1.9 1.9 Energy safety 201 190 482 ALROSA Group to Arkhangelsk Region 2.7 2.4 2.4 Total 1 859 1 862 3 928 ALROSA Group to Irkutsk Region 3.0 2.8 2.7

ALROSA Group to the Krasnodar Territory 3.8 3.5 3.4

ALROSA Group to Moscow Region 2.5 2.3 2.2

ALROSA Group to Oryol Region 4.7 4.3 4.2

ALROSA Group to the RS (Ya) 1.9 1.7 1.7

ALROSA Group to Smolensk Region - - 4.0

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3 Distribution of PJSC ALROSA’s expenses for environmental protection in 2019, RUB mln Water disposal in PJSC ALROSA, mln m

Indicator 2017 2018 2019 Direction of expenses 2019 Water disposal, including: Total 6,658.7 into surface water bodies 0.62 0.57 0.98 Waste management 5,128.0 contaminated (without treatment) 0.03 0 0 Protection and rehabilitation of land, surface and ground waters 692.6 contaminated (not sufficiently treated) 0.58 0.55 0.98 Collection and treatment of waste water 633.9 clean according to the standard (without treatment) 0.01 0.02 0 Air protection and climate change prevention 112.1 treated according to the standard 0 0 0 Research and development activities on the reduction of negative human impact on the 19.2 Discharge of industrial and waste water to storage tanks, tailings facilities, environment 2.00 1.93 2.29 sedimentation tanks and aquifer Conservation of biodiversity and protection of natural areas 9.8 Water discharge to the surface of the land1 0 0 0 Radiation safety 1.0 Water volume in dredging pits 6.1 4.5 7.6 Other environmental protection activities, including costs of training and advanced training of specialists, environmental monitoring, certification, environmental Salt water discharge to underground horizons and reservoirs 22.62 25.11 21.05 37.3 management and education, conclusion of agreements, arrangement of activities and payment of compensations

Discharge of pollutants in PJSC ALROSA, t Budget payments 24.8

Indicator 2017 2018 2019

Discharge of pollutants, including: 225.723 193.672 229.1 3 Water consumption in PJSC ALROSA, mln m Biochemical oxygen demand, full 1.055 2.421 2.392

oil products 0.067 0.059 0.056 Indicator 2017 2018 2019 suspended solids 2.402 1.438 8.347

Water consumption, including: 5.96229 5.78417 7.6407 dry residue 123.929 103.842 117.654

production needs 4.86 3.633 5.84 other pollutants 100.478 85.907 100.65

household (drinking) needs 1.037 1.406 1.73

agricultural needs 0 0.00646 0.0037

other needs 0.0077 0.686 0.009

transferred without using 0.0055 0.00971 0

losses in transit 0.05209 0.043 0.058

1 Water discharge to the surface of the land is prohibited.

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