Integrating SUSTAINABILITY THROUGHOUT Polymetal International plc Sustainability Report 2018 OVERVIEW HEALTH AND SAFETY EMPLOYEES ENVIRONMENT SOCIO-ECONOMIC APPENDICES Group CEO’s introduction
We believe responsible and efficient mining can be a force for good for society. We aspire to meet this challenge and to continue to be a responsible and efficient company, ensuring our business delivers benefits for all our stakeholders.
Successful year Investing for a sustainable future 2018 has been a successful year for Polymetal. We have In environmental stewardship, we continue to focus achieved our goals on production. We launched our on zero-harm principles when designing and operating flagship Kyzyl mine and advanced our project pipeline, while our mines. We have taken our first steps to introducing continuing to deliver shareholder value through dividends. renewable energy, especially in the regions that have no The reporting year saw equally important achievements access to the electricity grid. Welcome in sustainable development and excellent progress in integrating sustainability throughout our business. Increasingly, we’re shifting towards safer methods TO OUR SUSTAINABILITY REPORT 2018 of waste storage, such as the dry stack tailings In 2018, we were pleased to become the first and only management system. This significantly improves Russian company to join the Dow Jones Sustainability protection against the risk of dam failure, and eliminates This report covers Polymetal International’s Group-wide policies and Index. Our FTSE4Good ESG rating has improved and tailings runout. This has been implemented at Amursk activities at all our operations. It presents information on our performance we are now among the 7% most highly ranked listed POX, and we will further decrease Polymetal’s tailings for the reporting period 1 January 2018 to 31 December 2018, and provides companies in the sector. The Company was ranked footprint by implementing the system at Omolon, comparative data for previous years. 1st among its 47 peers worldwide in diversified metals, by Nezhda, Prognoz and Amursk POX-2. independent ESG research and ratings firm Sustainalytics. The report follows Global Reporting Initiative (GRI) Sustainability Reporting We have also become a top responder to the Carbon POX 2 will incorporate several important design Standards. PwC has assured the performance data relating to our most material Disclosure Project among Russian companies. features that will minimise environmental impact and economic, social and environmental impacts. mitigate against related risks. It will also expand the Safety first, always scope of our existing social partnership agreements, You can read more at www.polymetalinternational.com. Please do get in touch Safety continues to be our number one priority. create more than 400 new permanent jobs, and at [email protected] if you would like further information We are pleased that our Lost Time Injury Frequency Rate generate approximately $20 million per year in taxes for or to provide any feedback. We look forward to hearing from you. decreased this year among employees by 40%. However, all levels of government. we deeply regret the loss of one colleague in March 2018. We will continue to do everything possible to return to our Going forward previous record of zero fatalities across all our operations. In 2019, we will continue focusing on high-grade Strategically, we will invest in further developing our Health deposits to decrease our environmental footprint, and Safety and Critical Risks Management programmes, being stable economically and a socially responsible In this report and focusing on root causes of accidents. company, and engaging with stakeholders and being responsive to their needs. I look forward to reporting Overview Socio-economic development Employees back to you on our progress next year. Holistic approach to sustainability 02 Our approach 39 Our approach 57 At a glance 14 Headcount and turnover 39 Human rights 57 Where we operate 16 Diversity 40 Community engagement 58 Our business model 18 Human capital development 40 Assessing our impact 61 Safety and Sustainability Labour practices 43 Committee Chair’s statement 20 Appendices How we manage sustainability 22 Environment Independent assurance report 64 Chief Sustainability Our approach 47 Key sustainability figures 66 Officer’s summary 26 Water 48 GRI disclosures 70 Vitaly Nesis, Group CEO Stakeholder engagement 28 Waste and tailings storage 50 Other information 75 Material issues and priorities 30 Energy and carbon management 51 Air quality 53 Health and safety Protecting biodiversity 54 Our approach 33 Safety 34
Sustainability Report 2018 Polymetal International plc 01 OVERVIEW HEALTH AND SAFETY EMPLOYEES ENVIRONMENT SOCIO-ECONOMIC APPENDICES
HOLISTIC APPROACH TO sustainability
How we integrated sustainability in 2018 Recognition of our work
In the past year, we worked hard to integrate sustainability throughout Polymetal’s business functions and processes. 1st and only This means our people understand the importance of our most Russian member material issues, and it means working transparently and sharing best practices, particularly with our supply chain.
We have strong accountability systems in place, with Board oversight, clear policies, and regular performance reports. in top 7% of companies in sector As a result of our efforts, in 2018 we were recognised by 4.4/5.0 ESG score Robeco SAM as an Industry Mover, were the first Russian company to join the Dow Jones Sustainability Index, and 5/5 in Governance signed our first sustainability-linked loan agreement.
By integrating sustainability, we are improving our business resilience, making it more robust for the future. ESG rating BBB
Leader 1st among 47 peers worldwide
The inclusion of Polymetal international in any MSCI index, and the use of MSCI logos, trademarks, service marks 85/100 ESG score or index names herein, do not constitute a sponsorship, endorsement or promotion of Polymetal international by MSCI or any of its affiliates. The MSCI indexes are the exclusive property of MSCI. MSCI and the MSCI index names and logos are trademarks or service marks of MSCI or its affiliates.
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PRIORITISING health & safety Nothing is more important to our business than the safety of the people who work for us and with us. This applies in all our locations, and at every level of the business.
HEALTH & SAFETY Page 32
Approach Highlights
We are committed to achieving a zero-incident work environment and feel this is realistically achievable. Zero harm number one priority Safety in our industry is an absolute priority. Our work is geographically dispersed, working conditions vary, and our people work in a number of different – and often dangerous – fields. -40% LTIFR y-o-y To ensure people’s safety, there are three central points to our approach – leadership, culture and risk management. All are essential to maintaining our industry-leading record.
We work hard to ensure our compliance with external certification is reaffirmed each year for our Occupational Health and Safety Management System (OHSMS). In 2018, we switched from OHSAS 18001 standard to ISO 45001.
Sustainable development goals
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CHAMPIONING OUR employees Polymetal’s success, year after year, is fundamentally down to one thing – our employees. We strive to support everyone who works with us, and to develop talent for the future.
EMPLOYEES Page 38
Approach Highlights
We want to attract the best people. And it’s just as important to ensure they are motivated to stay and bring their commitment to work with 5.8% them every day. employee turnover
We strive to create a fair and inclusive environment, pay competitive salaries, offer equal employment terms, and reward performance. 12,140 employees We believe businesses do best when they reflect the diverse nature of society, and prohibit discrimination on any basis. 20% Through training, and skills and leadership development, we are female employees developing our managers and business leaders of the future. This is also important on a personal level, because our employees want to continually learn and progress. 1st female mine managing director 49 hours of training per employee
Sustainable development goals
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PROTECTING THE environment As a business, we want to have a positive impact on the environment. That means doing everything we can to prevent environmental incidents, protect natural resources, and use more renewable energy.
ENVIRONMENT Page 46
Approach Highlights
The mining industry impacts the environment and natural resources like land, air and water. Our stakeholders expect us to protect these 2 resources, and we also place high demands on ourselves. pilot projects on renewable energy (wind and solar) Our corporate policies focus on reducing risks, compliance, best practice and continuous improvement. These are supported by our Climate system development Environmental Management System (EMS), which was created to minimise and offset environmental impact and protect biodiversity and human health. -7% GHG emissions intensity reduction Our EMS helps us identify environmental risks and opportunities, driving resource and energy efficiency across the business. We use 83% modern, efficient equipment and technologies to minimise pollution, of water recycled and all our production sites are certified for compliance with ISO 14001. 27% waste reused (excluding Kyzyl) 2 mines underwent Cyanide Code audits Sustainable development goals
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SUPPORTING COMMUNITY development Partnering with our local communities is central to our business success. We improve livelihoods through employment, supporting local suppliers, contributing to local and national economies, and making social investments.
SOCIO-ECONOMIC DEVELOPMENT Page 56
Approach Highlights
We want to have a positive impact on all our local communities and economies. This reinforces our success, as it helps to protect our $10m reputation and keep our operations running smoothly. Our focus on community investments having a positive impact also helps ensure that all our sites respect human rights and the local environment. $181m taxes paid to governments Building long-term, strong and trusted relationships with our local stakeholders has been central to our business success. We do this through proactive, regular engagement, listening to feedback and 178 acting on it. We also employ local people and choose local suppliers anti-corruption training sessions including wherever possible. our supply chain
Ultimately, our goal is to ensure that our success is reflected in the local economies and societies wherever we operate. 96% local employees
Sustainable development goals
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BUILDING OPPORTUNITIES THROUGH innovations Investing in research and development today will ensure the success of Polymetal International tomorrow. By continually innovating, we will further strengthen our business in areas like efficiency, environmental performance and, most importantly, safety.
We continually seek to improve our operations. Our research and development department tests and then integrates the best innovations into our production processes. Since 2012, our Continuous Improvement System has helped foster a culture of operational efficiency to help lower our environmental impact. Airborne magnetic surveys Increasing digitalisation at Varvara In 2016, we started using airborne magnetic surveys in Our Varvara mine has been introducing digital exploration in the Karelia Region. These surveys are less technologies for years. An Automated Dispatch System labour-intensive than traditional surveying and allow us to (ADS) has been operating here since 2011, and we better protect forest resources. In addition, they enable us introduced a visualisation system in 2018. to generate a database of key site parameters, which helps us explore even more efficiently. The ADS provides real-time tracking of all relevant pit information, with four high-definition video cameras From 2016 to 2018, we invested more than $400,000 in surveilling all production areas. This helps prevent airborne magnetic surveys, and we surveyed more than equipment downtime and production losses. 400 km2 in 2018. We also use a satellite bucket positioning system in the pit. This enables shovel operators to more accurately follow the mining model developed by our Mine Planning Department, helping reduce mining losses and dilution.
In 2019, we will conduct pilot tests on decreasing energy consumption and increasing motor capacity. The pilot has shown that installation of new hardware and software will save 20–25% of power.
Sustainable development goals
12 Polymetal International plc Sustainability Report 2018 Sustainability Report 2018 Polymetal International plc 13 OVERVIEW HEALTH AND SAFETY EMPLOYEES ENVIRONMENT SOCIO-ECONOMIC APPENDICES At a glance
Polymetal International plc is a leading precious metals mining group, operating in Russia and Kazakhstan. We strive to be a sustainable and responsible company. What does this mean? As well as being a major employer in the region, it means we focus on minimising our environmental impact, and maximising our positive impact on local communities and the people with whom we work.
GEOGRAPHY OPERATIONS KEY FIGURES Our values Our strategic focus areas 17 9 Produced in 2018 STEWARDSHIP Our approach to sustainability is based on complying with international standards and best practice, rigorous territories of community operating mines We work to protect the environment, 1.6 Moz risk management, regular consultation with all our engagement maximise the health, safety and stakeholders, and responding to the most material of gold well‑being of employees, and respect issues for our business. 9 the rights of all stakeholders affected 7 processing plants $1,815m by our operations. time zones 1 Improving health and safety for our employees 3 generated revenue and contractors FAIRNESS HEALTH AND SAFETY growth projects We show fairness, equality Page 32 and respect to our employees and local communities. Maintaining positive working relationships with 2 local government, NGOs and the communities where we operate
ETHICAL CONDUCT SOCIO-ECONOMIC DEVELOPMENT We expect employees, contractors Page 56 and business partners to display the highest standards of ethical conduct, Attracting and retaining more high-quality people, with zero tolerance for corruption, 3 creating an even better place to work ENVIRONMENT COMMUNITIES PEOPLE bribery and fraud. EMPLOYEES Page 38 0 $10m 12,140 DIALOGUE 4 Continuously upgrading our technologies We promote stakeholder dialogue and approach to environmental protection major environment incidents community investment employees based on openness, honesty and transparency. ENVIRONMENT $20m 96% 40% Page 46 Enhancing transparency in our communications environmental investments of our employees come from of qualified personnel 5 COMPLIANCE with suppliers, contractors and partners the countries of operation are women We meet all legal obligations at local, national and international levels. OVERVIEW EMPLOYEES SOCIO-ECONOMIC 1st Page 22, 26 Page 39 DEVELOPMENT Page 62 miner in Russia generating 87% 5.8% renewable energy local suppliers in Kazakhstan staff turnover Further developing water and energy efficiency EFFECTIVENESS 6 programmes We aim to be effective in everything that we do. ENVIRONMENT Page 46
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E E M S O E Our operations are in Russia and Kazakhstan, with a centre of competence in St. Petersburg. We have nine operational gold and silver mines, OMO ON as well as three major development projects and further growth opportunities, which are often M N I S O NO located in remote regions. We’re investing in NE O O S sustainability across all our existing operations S S E O E and new developments. Amursk POX-2, for S E E S example, will incorporate several important design features that will minimise environmental SSI INO Operating mine NINO impact and mitigate against related risks. O O Development project M S O Further growth opportunities E E IN O S Competence centre + City/town OS N Seaport N O OS EMEN S N MENI
Asset and Of which Asset and Of which 2018 highlight Personnel female GHG Social projects Environmental projects 2018 highlight Personnel female GHG Social projects Environmental projects 1 VORO 795 26% 49Kt • Upgraded sport and • Water: installed additional purification 7 OMOLON 1,054 11% 72Kt • Focused support programmes • Rainwater projects: collected wellness centre facility for pit waters for indigenous peoples and rainwater at landfills to prevent pollution reindeer herding of surrounding area, used pit waters 1 2 KAPAN 937 16% 17Kt • Constructed kindergarten • Water: used underground water at for stockpiles dust suppression the plant, the rest is purified through 1 Sold in 2019. a new facility 8 DUKAT 1,916 20% 203Kt • Renovated educational • Air emissions: upgraded two institutions in all districts purification facilities for gas emissions 3 VARVARA 1,237 19% 143Kt • Supported programme • Biodiversity: protected birds from for children’s football electricity wires, reused 250 tonnes 9 OKHOTSK2+ 1,239 17% 48Kt • Constructed auto road in a • Launched solar farm and wind of waste ore for construction local village turbine, installed rainwater recycling SVETLOYE facility, remediated vegetation on 4 KYZYL 969 17% 72Kt • Completed landscaping • Water and air: installed biological disturbed land in the village wastewater treatment and efficient 2 Sold in 2018. irrigation systems in the areas of 10 ALBAZINO 1,632 17% 131Kt • Renovated local sport school • Biodiversity: released 1,090 young dust emission sturgeons into the Amur river, installed 11 AMURSK freshwater intake end-of-pipe fish 6 MAYSKOYE 1,023 13% 95Kt • Upgraded kindergarten • Energy: switched to LED lighting, which playground contains no harmful mercury and uses screen, introduced bird scarers at less energy tailing dams
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Our business model Shared value
Our strong financial discipline underpins our holistic approach to building a sustainable future. This will continue to strengthen our SHAREHOLDERS We deliver a sustainable business going forwards, and deliver value for all our stakeholders. dividend stream. $223m proposed for 2018
EMPLOYEES We provide competitive remuneration, which is above the regional average, and Our capitals What makes us different How we create value comfortable working conditions, as well as motivating career development opportunities. FINANCIAL Strong balance sheet and a large FOCUS ON HIGH-GRADE ASSETS HUB-BASED SYSTEM Process $1.5m portfolio of available undrawn credit Return on investment in the precious Our centralised hub-based Mine Transport invested in professional training facilities; access to international metals industry is reliant on grades system handles ores from different equity markets and use of shares and mining conditions. We achieve sources, achieving economies of as acquisition currency. better returns and lower risks from scale by minimising processing Develop Sell LOCAL COMMUNITIES our project portfolio by setting and logistics costs, as well as We invest in our local communities, appropriate thresholds on head capital spending per ounce. This HUMAN providing employment opportunities grades and largely focusing on facilitates production at otherwise 12,140 employees; attracting and and improving infrastructure, and retaining high-potential employees open-pit mines. uneconomical medium- and small- e 2 Close/ engage with them to achieve across Russia and Kazakhstan, sized near-plant deposits. Explore anc . De rm liv reclaim their support for the projects nurturing young leaders to manage fo er er in that we undertake. p g further growth. t g s r u o $10m b w o t invested in social projects h NATURAL R
. Portfolio of high-grade reserves; water, STRONG CAPITAL DISCIPLINE EXEMPLARY GOVERNANCE 1 energy and fuel to run our operations. We engender a strong focus on We believe that good corporate OUR capital discipline throughout the governance is key to the ongoing STRATEGY OTHER CAPITAL PROVIDERS
4 e business; maximising risk-adjusted success of the business and value a r We have an excellent credit history BUSINESS . n G u return on capital is our priority in all creation for our shareholders. d t and strong partnerships within Key competencies in refractory o u s v f investment decisions. We do not We are compliant with all regulatory u e e financial markets. gold concentrate trading; sustainable s rn h t a t relationships with contractors retain excess cash and return free requirements and are recognised as ai n g na ce in 4.19% and suppliers. cash flow to shareholders through sustainability leaders in the countries b r ilit cu average cost of debt in 2018 substantial dividend payments while in which we operate, adopting best y 3. Se INTELLECTUAL retaining a safe leverage level. practice in nurturing relationships with all our stakeholders in government, Investment in skills and expertise; use industry and the communities. of leading technologies in refractory SUPPLIERS gold processing (POX); selective We provide fair terms and have mining; development of know-how. established long-term and mutually beneficial partnerships, while INVESTING IN EXPLORATION OPERATIONAL EXCELLENCE ensuring suppliers’ integrity and SOCIAL AND RELATIONSHIPS Investment in both greenfield and We pride ourselves on our ESG compliance. Constructive relationships with near-mine exploration provides us operational excellence and delivering local governments and communities; with a cost-effective increase in on our promises to shareholders. Risk management Governance 3,000 transparent and productive dialogue our reserve base and, along with Despite difficult trading conditions, We have in place a robust risk We are committed to maintaining potential contractors audited with stakeholders. successful acquisitions, is the key we beat our production guidance for management system, which is world-class ethical standards and for ethical principles and anti- source of our long-term growth. the seventh consecutive year. designed to mitigate potential risks behaviour across every aspect of corruption policies to the sustainability and success of our business. the business. GOVERNANCE RISK MANAGEMENT Page 22 STATE AUTHORITIES Page 24 We contribute to the national wealth and are a significant tax payer in the regions of operation, supporting local government’s social projects. $181m taxes paid
18 Polymetal International plc Sustainability Report 2018 Sustainability Report 2018 Polymetal International plc 19 OVERVIEW HEALTH AND SAFETY EMPLOYEES ENVIRONMENT SOCIO-ECONOMIC APPENDICES Safety and Sustainability Committee Chair’s statement Dear stakeholders In 2019 we will focus on embedding a culture of leading by Since becoming a Board Director in January 2018, example (from middle manager to the Board), increasing Polymetal’s corporate culture bringing 30 years’ experience in the international mining employee engagement and promoting a safety-first approach. Our corporate culture is pivotal industry, I have been extremely impressed with Polymetal’s Our Company’s purpose, values and strategy underpin absolute focus on safety and sustainability. Quite rightly, How we raised standards in 2018 our culture, which is recognised and supported by the to delivering the long-term keeping people safe comes first, in everything we do. In the past year, the Safety and Sustainability Committee Board. All Directors are expected to act with integrity, success of the Company. Environmental sustainability also plays a huge role in the has looked at several issues to raise standards even further. lead by example and promote our ethical culture Company, benefiting our business, local communities and These include investigating the circumstances surrounding throughout the business. Tracey Kerr our planet. all accidents that have taken place, no matter how small, Chair of the Safety and Sustainability Committee as well as monitoring how effectively our Health and Safety What is our corporate culture? A year of firsts Plan is being implemented, and its impact on overall Our focus on safety and sustainability – This is our I’m delighted to have joined Polymetal’s Board at such a safety performance. absolute priority. Responsibility and accountability are historic time in the Company’s history. 2018 is the year key to ensuring strong governance and ethics, from the Polymetal became the first Russian company to join the Dow We examined our Sustainability Strategy progress and plans, Board of Directors to the Group as a whole, down to Jones Sustainability Index, and Polymetal was also ranked with in-depth reviews of the Company’s use of renewable individual subsidiaries and to the employees. first among its 47 peers worldwide by independent ESG energy, and the results of our tailing storage facilities audit. research and ratings firm Sustainalytics. We also looked at our approach to prevent modern slavery Our people – We believe our success is due to our and how we are reporting on sustainability, and we held people, with employees taking pride in and responsibility Polymetal’s long-standing good record on safety and a joint meeting with the Audit and Risk Committees on for their work. In 2018, the rate of absenteeism was sustainability was instrumental to both of these achievements, significant risks and internal audit results. 0.012. We all have a vital role to play in reinforcing our and I congratulate my predecessor, Len Homeniuk, and all the corporate values, both at work and in our everyday lives. employees at Polymetal. It’s because of their hard work and Continued focus on governance dedication that we were able to achieve these ‘firsts’. Strong governance and an efficient sustainability Our innovation – We think creatively and are not afraid of governance framework are essential to achieve our safety turning challenging situations to our advantage in order to I’m proud to now lead the Company’s Safety and and sustainability vision. We have a comprehensive plan of progress towards our goals. Over the last three years, our Sustainability Committee and to work towards building on action for the coming year, including carrying out in-depth employees have suggested more than 275 improvement this excellent record going forwards. Our role is to monitor reviews of the safety and sustainability plans of each of proposals, and 165 of them have been implemented, the social, ethical, environmental and safety performance, our operations. which has helped us save more than $20 million. and oversee all sustainable development issues on behalf of the Board. We will engage more with our stakeholders on our safety Our learning – We encourage continuous learning and sustainability progress and plans and will conduct a and self-development among all our employees. Our ultimate vision is to grow the Company while positively survey on materiality to discover which issues matter most This is critical to improving skills, motivating employees impacting the people who work with us, the communities to them. In 2018, we held an Environmental, Social and and ensuring our ongoing success. Given our vast where we operate, as well as the environment. Governance (ESG) day in November, as well as face-to- geography, we’ve developed distance learning to face meetings throughout the year. We are also planning For us, safety must come first complement our training centres and facilities. In 2018, TOPICS REVIEWED IN 2017-2018 to increase engagement between our Board members and Safety for all the people who work at, or with, Polymetal is we provided over 20,000 training sessions for our • Circumstances of all accidents that Polymetal employees. our absolute priority. Since we switched to our Critical Risks employees (2017: 14,974), investing $1.5 million. took place Management (CRM) system, we learned how to manage and • H&S plan implementation and impact 2018 has been a successful year, but that will not make us As a result of this corporate culture, we’re proud that respond to our critical risks, with particular focus on rock mass on overall safety complacent, as we strive to achieve more ‘firsts’ in 2019. employees value working with us: employee turnover is falls and fires. In 2018, we had no serious accidents related to • Sustainability strategy, progress and plans; low at 5.8% (2017: 5.4%). In an employee survey, 82% rock mass falls. During 2018, we also identified critical risks in • Use of renewable energy said they were satisfied working at Polymetal. the areas of transport safety and contractor safety. So, in the • Tailing storage facilities audit results last quarter of 2018, we conducted inspections to investigate • Modern Slavery causes and plan response measures accordingly. • Sustainability reports • Joint meeting with the Audit and Risk Our safety strategic goals for 2019 are as follows: RESPONSIBILITY AT ALL LEVELS Committees on significant risks and internal Board of Directors Employees audit results • Zero fatalities • Control of the financial • Consolidation of goals • Effective operation of our CRM system; and and economic activities • Allocation of functional C • Personnel engagement and development of a strong • Risk management duties O safety culture • Enforcement of the • Timely result shareholders’ rights E To achieve this, we have developed a plan of action: Me M Company as a whole • Personal health • Further development of our geomechanical control system; • Elaboration of a common • Level of professional • Increased focus on critical risks strategy and tactics knowledge and • Implementation of our programmes to improve transport/ • Control at all levels qualifications • Compliance with safety road traffic safety and contractor safety Operations requirements • Development of safety leadership behaviours Elaboration of a local strategy • Implementation of our communications programme aimed Environment protection at improving our safety culture Labour safety
20 Polymetal International plc Sustainability Report 2018 Sustainability Report 2018 Polymetal International plc 21 OVERVIEW HEALTH AND SAFETY EMPLOYEES ENVIRONMENT SOCIO-ECONOMIC APPENDICES How we manage sustainability
Our Safety and Sustainability Committee met three times in 2018. Meetings covered: safety performance analysis of Governance framework Our sustainability leaders incidents and risk assessment; safety plan implementation; Polymetal’s senior management and Board-level deep-dive analysis of H&S risks: rock fall, transport and committees take responsibility for the Company’s flame burns; the H&S report for 2018 and team work plan sustainability policies, programme and progress. This for 2019; Critical Risk Management System focus in 2019 Board reflects the importance given to the subject across our and safety plan; sustainability strategy and gap analysis, The Board defines business strategy, entire operations. progress and plans and priority projects for 2019–2020 assesses risks and monitors performance. including key focus areas; review of the Company’s first Overall responsibility rests with our Board of Directors. Modern Slavery Act Statement and recommendation for Vitaly Nesis, our Group CEO, oversees local management Board approval; review of the Tailings Management and decisions and processes. During the year, our Board H&S Policies and recommendation for Board approval; and conducts several sustainability performance reviews, review of the implementation report on Human Rights and Safety and Audit and Risk Carbon Policies. Remuneration Committee Nomination Committee approves sustainability strategy initiatives and has final Sustainability Committee Committee sign‑off on our sustainability reports. Remuneration Committee The Remuneration Committee is The Safety and Sustainability The Nomination Committee The Audit and Risk Committee helps The Company fully complies with the UK Corporate Taking into account safety performance responsible for Group remuneration Committee monitors the Group’s ensures a balance of skills, the Board to monitor the integrity of policy, and for setting pay levels and social, ethical, environmental and knowledge, independence, the Group’s financial statements, Governance Code. As of this report’s publishing date, our Our Remuneration Committee sets the framework and bonuses for senior management safety performance, and oversees experience and diversity on the and reviews the effectiveness of the Board is made up of a non-executive Chair, one executive broad remuneration policy for the positions of Chair, Group in line with individual performance. all sustainable development issues Board and its committees. Group’s system of internal controls Director and seven non-executive Directors. Excluding CEO and the executive management team. Its guiding Ensures safety KPIs are included on behalf of the Board. and risk management systems. principle is sustainable shareholder value creation, taking in remuneration packages. the Chair, five members of the Board are independent non-executive Directors. As part of our Board succession into account interests of all stakeholders. programme, Messrs Godsell and Best will not be offering themselves for re-election at the upcoming AGM. The new The Committee ensures that senior managers and Board Chair will be nominated subject to AGM approval and Directors are compensated fairly for their work, with pay levels and bonuses set in line with the Company’s overall Group CEO will be considered independent on his appointment. The Chair and non-executive Directors evaluate the Company’s health and safety performance. Senior management management and performance, review financial information remuneration – including that of the Group CEO and COO – The Group CEO takes ultimate takes into account safety key performance indicators. This is Chief Sustainability Officer and monitor internal risk management procedures and responsibility for delivering on strategy also reflected in our remuneration structure throughout the and operating performance. controls. Directors disclose any interests they have each year, and the Company Secretary is alerted to any changes to Group, and reflects the importance we place on safety. The Chief Sustainability Officer coordinates these interests. We have included additional information on sustainability initiatives and activities to ensure transparency and long-term value our Board in the Governance section of our Annual Report. Nomination Committee for investors and other stakeholders. Evaluating leadership skills Safety and Sustainability Committee Polymetal’s Nomination Committee has responsibility Define and review strategy Agree priorities and actions Overseeing our approach to sustainability for recommending the makeup of our Board and its We established our Safety and Sustainability Committee committees. Its role is to ensure that a balance of skills, back in 2015. The goal of the committee is to provide support knowledge, independence, experience and diversity are to the Board on the Group’s safety record, sustainability reflected. This helps sustain and develop our healthy performance and ethical conduct. It oversees Polymetal’s corporate culture. The Committee regularly reviews Human Resources Communications Health and Safety Environment approach and implementation of our short and long-term executive leadership needs and priorities, assesses policies and standards. The Committee also makes sure that performance of the Board and non-executive Directors, we work ethically, transparently and responsibly, engaging and ensures our continued success in the marketplace. The Human Resources Director The Communications and PR Director The Chief Operating Officer, The Chief Operating Officer together defines and monitors employment is responsible for identifying and supported by our HSE department, with our HSE department sets with key stakeholders and local communities. contracts and employee engaging with the majority of external sets targets for maintaining health targets and is responsible for Audit and Risk Committee performance. stakeholders, including government and safety performance. performance in this area. On safety, this year the Committee oversaw the Minimising risks and regional authorities, local implementation of major improvements to risk management communities, and NGOs. The Audit and Risk Committee is independent and consists procedures, evaluated the impact of our initiatives, and of non-executive Directors who are highly experienced in worked with the Audit and Risk Committee to identify, financial reporting and risk management. The Committee, manage and prevent sustainability risks (see page 16). as well as Polymetal’s overall approach to governance, promotes discipline across the Group. The Committee’s work ensures consistent quality in reporting, internal control and risk management processes, and transparency of the Operations Company’s financial statements.
Our operating mines and development properties have heads of Operations, Human Resources, Environment, and Health and Safety, who implement and monitor corporate systems, supported by specialist PR and engineering teams.
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How we manage sustainability continued
This ensures all employees are engaged in the process, while our Board and executive management ensure Minimising risk alignment with our Company strategy. Sustainable Development Goals (SDGs) We have developed our Risk Management System (RMS) The United Nations’ Sustainable Development Goals to the SDGs. We have identified risks that relate to to help minimise risks across the business, help us achieve Polymetal’s management is collectively responsible for aim to tackle the world’s biggest challenges. 17 Goals, achieving the Goals and incorporated them into our risk our strategic objectives, and create sustainable value for our identifying business risks. It is the job of the Board to then comprising 169 targets, were established in 2016 management system. We have also evaluated our impact stakeholders. We look at potential risks to our employees, monitor these risks and make sure they are effectively and expected to be achieved by 2030. The Goals on these target areas, and are working to maximise our as well as local residents and the environment. We do this mitigated. The Audit and Risk Committee develops risk call upon every part of society – from governments to positive, and minimise any negative, impact. Finally, we by regularly and accurately identifying risks and taking steps management strategies and oversees their implementation. organisations, businesses and citizens – to play a part have set targets to measure our progress. See more on to mitigate them. Finally, stakeholders feedback on these strategies through in achieving them. pages 30 and 31. engagement activities – involving government agencies, Our robust risk management framework takes into account employees, local communities, NGOs, and the financial We are playing our part and have identified 73 targets Some of the ways in which Polymetal is contributing sustainability matters, ensuring that risks are appropriately community, as well as our suppliers and customers. that are relevant to our business and to which we can to tackling the Sustainable Development Goals are identified, assessed against tolerance levels and managed contribute. We have aligned our sustainability focus outlined below. Group-wide. Our risk management is supported by a bottom-up approach and reviewed from the top down. Risk management responsibilities MOST RELEVANT BOARD OF DIRECTORS, GROUP CEO INTERNAL AUDIT OPERATIONAL AUDIT AND RISK COMMITTEE DEPARTMENT MANAGERS Quality Education OF THE BOARD Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all Monitor and control risk Identify risks to the business Define and monitor the risk Identify and evaluate everyday We believe that the key to healthier communities and economic growth is education. Wherever we operate, management efficiency, and associated management management process and risks and report them, access to education is a top priority for local communities and governments. For over 20 years, we have approve risk management operations mitigation tools and actions, implement risk mitigation partnered a number of educational initiatives – for example, partnering with colleges and universities, investing policies and guidelines, review prepare risk reports programmes in local school infrastructure, and providing training and career development opportunities for our employees, risk management strategy and increasing access to education for thousands of people. risk reports, take responsibility for key risk identification Decent Work and Economic Growth Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent Our key sustainability risks work for all Managing sustainability risks is part of our overall RMS. Our priority is to identify and mitigate our most critical risks, which include safety and environmental risks. We have a positive socio-economic impact on the communities and countries where we operate. For example, we improve lives through local employment opportunities, buying services and goods from local businesses, paying local taxes, and partnering with local organisations and local government on community issues. ENVIRONMENTAL RISKS SAFETY RISKS SOCIAL RISKS ECONOMIC RISKS Environmental risks include Our goal is for zero fatalities and Management of social risks is We depend on suppliers Sustainable Cities and Communities Make cities and human settlements inclusive, safe, resilient and sustainable technological risks (exceeding we work hard to reduce injuries. important. These include risks and contractors, who can emissions, contamination, Through risk assessment cards, related to communities, delay deliveries of essential We contribute, through income tax, to public infrastructure projects, helping to make communities more spillages or releases into the we continually estimate risks employees and supply chains. components and affect sustainable. To have the greatest impact, we consult with local stakeholders to find out about their top environment, and fails in and record measures taken by Building positive relationships production terms. We have priority needs. Wherever we operate a mine, we also identify and manage any social, environmental and processes); natural risks management to manage them. with local residents and groups developed measures to economic impacts of our work, to strengthen local communities. (temperature change, floods, Polymetal has a dedicated is critical for our licence to respond to these risks. storms); and regulatory risks in-house Audit Department to operate when implementing (compliance and changes to monitor safety. This has been large-scale investment projects. For more information, Life on Land regulations, complying with certified as compliant with We need to demonstrate see Socio‑Economic Development. Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, regulatory bodies, over-limit international standards by shared value and deliver combat desertification, and halt and reverse land degradation and halt biodiversity loss penalties, violation of waste external independent auditors. on our commitments. disposal rules, and non- The mining industry has an impact on the physical environment. We strongly believe in environmental compliance with For more information, For more information, stewardship based on diligent planning, careful implementation and thorough assessment. Our culture is to other conditions). see Health and Safety. see Socio‑Economic Development. continually seek to do better, and this drives our commitment to responsible mining, complying with all legal requirements wherever we work. For more information, see Environment. Peace, Justice and Strong Institutions Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and You can also read more about our risk factors and management approach in our Annual Report 2018. build effective, accountable and inclusive institutions at all levels
At Polymetal, all of our interactions, by all of our people, must be conducted with integrity, in an ethical manner. Accountability is crucial, and we fundamentally oppose bribery or corruption of any kind. We believe that bribery and corruption are not only bad for business, but also have a negative impact on the whole of society. Furthermore, we strive to ensure that bribery and corruption have no place in our value chain, and work with suppliers and contractors, as well as our employees, to ensure honest conduct.
24 Polymetal International plc Sustainability Report 2018 Sustainability Report 2018 Polymetal International plc 25 OVERVIEW HEALTH AND SAFETY EMPLOYEES ENVIRONMENT SOCIO-ECONOMIC APPENDICES Chief Sustainability Officer’s summary
Dear stakeholders I am pleased to present Polymetal’s Sustainability Report Sustainability highlights 2018, a year in which we’ve achieved a lot across every area of sustainability, creating value for all stakeholders. As a result As a result of integrating of integrating sustainability throughout our business, we’re sustainability throughout our now eligible for green financing and have signed our first 1st Human rights training business, we’re now eligible for sustainability-linked loan. IN RUSSIA TO ENTER DJSI and first Modern Slavery green financing and have signed Safety is an absolute priority and we’re committed to achieving Act statement our first sustainability-linked loan a zero-incident work environment. In 2018, we upgraded from the OHSAS 18001 to the ISO 45001 standard and saw a 40% Daria Goncharova decrease in our year-on-year LTIFR, with zero injuries in Q4. Chief Sustainability Officer Looking after employees is important to attract – and retain – the best people. We believe businesses do best when employees are diverse. In 2018, 20% of our employees were female and we appointed our first female managing director INDUSTRY MOVER Improved H&S risks at Svetloye. We also continued to focus on employee training, AWARD providing an average of 49 hours of training per employee. management and decreased LTIFR by 40% We recognise potential risks relating to human rights and corruption. In addition to our existing Code of Conduct, Supplier Code of Conduct and Human Rights Policy, we’re further developing our due diligence process. In 2018, we conducted 178 anti-corruption training sessions, including with contractors, and we published our first public statement in compliance with the UK Modern Slavery Act. By 2021, we will implement a group-wide supply chain risk assessment Signed partnership system and further engage our partners on these issues. 1st agreement with Yakutia On energy and climate change, we’ve launched pilot solar IN CIS TO SIGN and wind energy projects. These are helping us explore SUSTAINABILITY region with intention how we can further minimise our carbon footprint, despite LINKED LOAN to employ locals challenging locations, lack of infrastructure and grid power access. We also decreased our GHG emissions intensity FOCUS DURING 2019 by 7% as a result of our group-wide energy efficiency • Safety programme. This is part of our newly implemented • Climate change system implementation Energy Management System. • Target-setting and long-term plan • Social impact measurement Building long-term, strong and trusted relationships with our • Supply chain management – Embedded sustainability Launched pilot projects local stakeholders has been central to our business success. in our supply chain We do this through proactive, regular engagement, listening on solar and wind to feedback and acting on it. This year, we continued to – Audited two mines and energy resources contribute to local communities and economies in all regions supply chains against of operation. We do this through sourcing from local suppliers, Cyanide Code standards social and infrastructure investments, and providing local employment opportunities and employee benefits. In 2018, for example, we signed a partnership agreement with the Yakutia region, confirming our commitment to employing locals.
We also contribute to national economies and welcome fiscal transparency. In 2018, we published our second report on payments to governments, as required by UK regulations. We also support the EITI standard in Kazakhstan.
This report sets out how we are strengthening our business through sustainability innovation, often leading the way in our industry. It details our achievements in 2018 and our plans for 2019. Please do not hesitate to get in touch if you have any questions.
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Engagement is important to update stakeholders on our We identify a range of social, economic and environmental Each topic is assessed on a matrix, reflecting its impact issues that are important to our stakeholders and our on stakeholder perceptions, as well as its socio-economic, priorities and progress, and to hear their views. It’s also a key business. We also analyse industry and societal trends, environmental, or business impact. We then prioritise aspect of sustainability reporting. We report according to the investor and ESG analyst requests, peer companies, and group the issues in terms of low, medium, and community grievances, risks identified, and issues high importance. GRI Standards: Core option. As part of this, we ask stakeholders reported to our Board. When reporting on our most about the issues they care about most. material issues, we look at our full value-chain impacts. Ten issues of high priority were identified through our most recent poll. We report on high- and medium-priority issues, and partially report on low-priority issues, in accordance with reporting requirements and audience expectations. Stakeholders Why they are important to us Channels of engagement Material issues As a company, Polymetal exists to create sustainable • AGM/GM • Financial, operational and sustainability performance value for shareholders. • Annual and Sustainability Reports • Dividends • Investor conferences and one-to-one meetings • Regulation, economics and politics In turn, our shareholders and investors provide us with the • Presentations/conference calls • Mergers and acquisitions capital we need to develop and expand our operations. • Site visits • Compliance with relevant ESG standards Shareholders • Direct correspondence • Health and safety • ESG day
Our people are one of our core strengths and assets; the • Employee opinion polls and questionnaires • Wages, benefits and social packages success of our business depends upon their expertise, • Workers’ councils • Working and living conditions dedication and skill. • Internal hotline, website, suggestion boxes and • Health and safety grievance mechanisms • Career progression and opportunities We hire the most talented staff and invest significantly • Meetings and face-to-face communication with management • Social needs Employees • Performance reviews • Training, development and education in their training and development. We also work hard • Annual direct line with the Group CEO to provide a safe environment for them. • Annual direct line with the Board
Our suppliers and contractors make a significant • Direct correspondence • Financial performance contribution to our business. We build stable, long-term • Contractual relationships • Open and fair relations relationships with them, enabling us to achieve mutually • Meetings and trainings • Health and safety beneficial terms of contract and uninterrupted supply. • Compliance audits with Polymetal’s requirements with • Full compliance Suppliers and focus on safety • Impact on environment, human rights and society contractors In collaboration with our contract partners, we work to ensure compliance with ethical, environmental and safety standards across the Polymetal supply chain.
We maintain good relations with the national and local • Working groups • Regulatory compliance governments in the jurisdictions in which we operate. • Meetings • Taxes • Direct correspondence • Labour issues Government We abide by all laws and regulations that apply to • Industry conferences • Health and safety our business, and we enter into open and transparent • Environmental responsibility and industry • Infrastructure and local development dialogue with industry authorities. In particular, we engage authorities • Local employment with authorities on issues relating to improvements in mining legislation.
Polymetal depends upon communities and NGOs for • Opinion polls and questionnaires • Investment its licence to operate in specific localities and regions. • Public and face-to-face meetings • Employment • Communication with Company managers • Infrastructure development We work with these stakeholders to create mutually • Press conferences • Environmental and health impacts Communities beneficial conditions. We also respect the rights of local • Working groups (for NGOs) • Local culture, lifestyle, language and traditions • Grievance mechanisms and NGOs and indigenous communities and invest in those areas • Email and telephone that are important to them.
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The following table outlines our top ten material issues of high priority, how each issue fits into our sustainability priorities, and our progress in 2018.
Material aspects Sustainability priorities Progress in 2018 Material aspects Sustainability priorities Progress in 2018 • Support local and national • $181m taxes paid READ MORE • Reduce water consumption • 54% reduction in fresh water READ MORE economies through tax • 49% of local suppliers in Russia Page 61 and water discharge by at withdrawal compared to 2016 Page 48 transparency, hiring local and 87% in Kazakhstan least 1% • 9% reduction in water disposal Economic employees and using • 3,000 suppliers audited compared to 2016 Water efficiency local suppliers • 83% of water reused/recycled
• Zero fatalities • 1 fatality READ MORE • No major or catastrophic • Zero environmental incidents READ MORE • Continuous 10% LTIFR • -40% LTIFR Page 33 environmental incidents • 27% of waste reused at sites Page 47 reduction compared to • Reuse at least 20% included in target scope Health and previous periods Environmental of annual volumes of (16% of waste reused across all safety management overburden/waste rock production sites including our • Reduce direct impacts on newly launched Kyzyl mine, which biodiversity has large volumes of stripping and therefore waste produced) • 12 programmes on biodiversity • No community conflicts • Zero conflicts READ MORE • Good relationships • 153 letters of gratitude Pages 59, 61 • Decrease GHG emissions by • 7% reduction in GHG READ MORE Page 52 • Support local populations at least 1% emissions intensity Local communities Energy efficiency
• Full compliance and • $4,323 in fines for 10 minor cases READ MORE zero penalties of environmental non-compliance Page 47 • Ongoing engagement with • All suppliers are obliged to sign READ MORE partners and interested Suppliers Code of Conduct as a Page 61 stakeholders on responsible part of new contracts Compliance Suppliers supply chain • Suppliers grievance mechanism is and partners available online
• Low turnover rate • 5.8% employee turnover READ MORE • Equality and diversity • Zero reportable strikes and lockouts Page 39 • Zero corruption cases • 5,000 people trained READ MORE • Prevented damage of $596,000 Page 26, 62
People Anti-corruption
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Our OHSMS guides us in detecting, assessing and WHAT GUIDELINES DO WE FOLLOW? mitigating risks, safeguarding employee health and International: UN Global Compact, ISO Our safety first approach workplace safety, and making sure equipment, buildings 45001, OHSAS 18001, EBRD Environmental Our aim is for a zero-harm work culture. We invest heavily and other structures are used safely. It also ensures that When we say that safety is our top and Social Policy, Cyanide Code in proactively identifying and mitigating risks, providing supervision measures are carefully controlled, and that priority, it applies to every department safety training for our employees, and maintaining the most we conduct internal audits effectively. Additionally, we Corporate: Group Code of Conduct, Health and every employee, regardless of stringent international health and safety standards. conduct monthly meetings of the Employee Council at and Safety Policy, Corporate Occupational our operations, where management discuss production position. We want all our people to Health and Safety Management System, Because our work is geographically dispersed, working and H&S issues together with workers. All corporate H&S understand that we do not risk life and and national occupational safety standards conditions vary, and our people work in a number of priorities, procedures and management processes are part health for the sake of implementing our different – and often dangerous – fields, we need a holistic of collective agreements. production plans. If an employee thinks TOPICS DISCLOSED approach to safety. Three points are central to our safety the workplace is unsafe, then he or she • Types of injury practices: leadership, culture and risk management. All are How we manage risks • Rates of injury We recognise risks associated with each of our sites. should immediately stop working. Short- essential to maintaining our strong track record. • Occupational diseases Individual units across our production facilities, plants term production plans can be adjusted – • Lost days and absenteeism Firstly, safety leadership must come from the very top. and mines that have been classified as ‘hazardous’ are people are more important. • Total number of work-related accidents 2018 saw a step-change improvement in safety leadership fully insured. That is why our primary focus is on reducing • Risk assessment and management and engagement through our safety communication the level of the most significant risks at our operations. We Vitaly Savchenko • Emergency preparedness programme. As a result, the quality of employee interactions carry out an annual qualitative hazardous risk assessment, Chief Operating Officer greatly improved and we received positive feedback from all and inform employees of the results through a range of PRIORITIES employee groups. communication channels. • Achieve zero fatalities and continuously improve LTIFR Secondly, we work hard to create a ‘zero harm’ mindset Under our Critical Risks Management (CRM) system, • Reduce and effectively manage critical and culture. This means every employee taking personal we identified critical risks for 2019. While the greatest risks, and maintain a safe working responsibility not only for their own safety, but also for that hazards at our sites are from falling rock and road environment for all employees of the people around them. We continually promote safety transportation accidents, we have seen reduced exposure • Promote safe conduct behaviours to ensure all our people and contractors work in in the past year from these categories. Other risks include • Prevent workplace accidents and work- a safe environment. release of energy, slipping and tripping, gas poisoning, related illnesses burns by fire, electricity, and flying objects. • Comply with relevant regulations Thirdly, risk management is – and must stay – at the very and standards heart of our approach. Each year, we identify and assess To reduce the potential impact of critical risks at all our • Embed responsible safety behaviour H&S risks across the Group and create risk maps for all our operations, our CRM includes developing a health and across every aspect of our operations working processes and locations. We then develop detailed safety action plan for all critical risks (see Safety plan programmes to help us reduce these risks. We comply implementation below). And to raise employee awareness of workplace dangers, manage risks promptly, and control WHO IS RESPONSIBLE? fully with Health and Safety (H&S) legislation wherever we operate, and strive to meet all relevant international the accuracy of our risk assessments, we follow a shift- requirements. We communicate our Health and Safety by-shift risk assessment (SBS) model. We implement SBS Policy (available at www.polymetalinternational.com) to our most rigorously in hazardous operational areas, for example GROUP CEO employees and stakeholders through information boards, automobile transport, mines, and plant and power supply. our internal newspaper, and weekly Safety Day meetings. We work hard to ensure that our compliance with external certification is reaffirmed each year for our Occupational Health and Safety Management System (OHSMS). In 2018, HR DIRECTORS OF COO we switched from OHSAS 18001 standard to ISO 45001. DIRECTOR OPERATIONS
New safety hotline to report hazards promptly
HR MANAGERS In the underground mining industry, we know that “Through the hotline, all employees have been given AT OPERATION HSE DIRECTOR some safety incidents could be avoided if potential an opportunity to report any safety concerns in order SITES risks are reported on time. Since January 2018, our to eliminate hazards in the shortest possible time,” new safety hotline has been operating across all our explains Aleksey Alekseev, HSE Manager, Polymetal sites so that employees can provide early warnings if Management Company in Magadan. “Any hazard they see any hazard. Our office in St. Petersburg and can be quickly remediated, and so accidents can H&S all subsidiaries provide support for the system and be prevented.” MANAGERS HEAD OF H&S regularly assess messages to understand the risks that AT OPERATION SITES line managers must address every day. There is clearly a need for this – during the first two months alone, the hotline received 109 calls.
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Health and safety continued
Analysis and response Safety Whenever there is a workplace accident, we investigate SWOT ANALYSIS OF SAFETY AT POLYMETAL and analyse what happened to help us understand any weaknesses in our safety operations. We apply the Strengths Weaknesses Strong performance • Main focus on safety • High level of risk occurrence and one case ‘5 Whys’ principle to internal investigations, which we Over the past few years, our underground mining of fatality is still evident undertake in addition to investigations by state authorities. • The safety message (policy and goals) operations have increased, with more complex and • Some divisions still lag behind overall This process involves assessing all possible H&S risks – is communicated well to all employees challenging geomechanical conditions. Despite more safety dynamics from technological and technical liabilities to employees’ • Good ‘vertical’ and ‘horizontal’ relationships employees working in these conditions, and the increased • Insufficient acceptance of personal psychological and emotional influences. • Positive dynamics due to ongoing efforts to number of production sites, we are encouraged that our Lost responsibility for safety Time Injury Frequency Rate (LTIFR) has declined to 0.09 in improve safety S W 2018 from 0.15 in 2017. The level of exposure to risks has After thorough research and analysis, we draw also decreased, showing that our safety efforts are having comprehensive conclusions and implement measures to Opportunities O T Threats a positive impact. help prevent reoccurrence. We inform all employees and • High level of positive feedback among • Increasing volumes of underground mining contractors of our findings, and incorporate new measures all employees with higher risks into our H&S action plan. In addition, we implement all Our CRM system detected an increase in the number • Positive trends at mines with best safety • Shift and growth of risk management problem recommendations by state authorities. (See our SWOT of near-miss occurrences. This demonstrates that our dynamics can be spread to all others areas to new assets diagram analysing accidents in 2018 on the opposite page.) employees are getting better at recognising and reporting • Automation and new safety tools usage can • New safety approaches will make new their workplace conditions, as well as situations that could improve safety performance demands on staff competencies and skills potentially lead to serious incidents. By implementing our H&S action plan, we have been able to successfully transfer to our new CRM system. Overall, The overall number of fatalities in our operations has again this new system has reduced injury risk and we hope it reduced by 50% in the past year. However, we are deeply will prevent a repeat of past accidents in the future. Engaging and training employees on safety concerned by the loss of one colleague in March 2018, Arthur Training and engaging employees and contractors is Improving production processes – Martirosyan, due to poisoning by a dangerous gas. At only 24 Safety plan implementation essential to achieving our zero-harm goal. Polymetal’s years of age, Arthur had been with us for three years and we To reduce the potential impact of critical risks at all our Human Resources Management System sets out our learning from our colleagues pay sincere tribute to his hard work during that time. We will operations, our CRM includes a health and safety action procedures for recruitment and assigning employees with Seeing the success of cable anchors in use at our do everything possible to return to our previous record of zero plan for all critical risks. For each risk, our frontline team specific skills, as well as for providing training. We clarify operations in other regions, our Albazino miners fatalities across all our operations. members must ensure that controls are in place before competence requirements for each relevant job description, starting a job. and heads of business units identify training needs. We decided to follow suit. There, cable anchors are now used to support underground mines, improving the As a response, we have reviewed our internal safety provide training in occupational health, and industrial, safety of underground mining. Anchor bolts hold the guidelines and procedures regarding access for working In 2018, we continued updating geomechanical models for electric and fire safety. We also provide refresher training, rock mass, so they also prevent waste from mixing in underground confined spaces and provided more gas use in mining works design, completing models for Kyzyl as well as training for specific purposes. with ore. Using this method, four stopes have been analysers for our underground mines to ensure no further and Albazino. We implemented our interlock and equipment successfully mined out in only eight to 12 days. The faults. We are helping our employees to better identify risks isolation procedure across all divisions. Finally, we installed In 2018, our employees and contractors attended most important thing is that the wall is stable and the and effectively prevent any incidents in the future. additional lighting or special mirrors for areas with limited refresher safety courses, and those involved in dangerous visibility for personnel. works underwent mandatory safety training. To motivate waste rock does not fall into the stope. The cable bracing helps minimise dilution. In 2018, there were also 10 other accidents in total across employees about the importance of safety, we hold contests the Group. This compares to 14 accidents in 2017, and 15 in and reward departments that achieve zero occurrences 2016. In addition, contractors had 15 accidents. Our goal is and incidents. We also publish our ‘safety barometer’ in our for a zero-harm work culture and we will implement additional corporate newspaper, and on information desks and portals. measures and devote significant resources to do all we can to Moreover, we conducted more than 8,000 safety checks prevent future accidents. including 1,337 among our contractors.
E N S E E O M NCE GROUP CONTRACTORS Occupational diseases In 2018, three cases of occupational diseases 20 0.4 20 0.5 were recorded at the Dukat mine: one employee got silicosis and hearing loss, second employee got silicosis. Both employees had around 20 years’ experience 15 0.3 15 0.37 0.4 working in hazardous underground mining conditions including chemicals, cold climate, noise, vibration, dust 0.19 0.28 10 0.2 10 0.27 0.3 and hard physical work. Following these cases, both 0.15 decided to leave their jobs. 0.09 5 0.1 5 0.2
2016 2017 2018 2016 2017 2018 atalities Se ere in uries inor in uries R atalities i ents R
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Health and safety continued
Our progress in 2018
PLANS FOR 2018 STATUS PROGRESS We would pay extra attention to working On track While the greatest hazards at our sites are from falling rock and areas with critical risks. road transportation accidents, we have seen reduced exposure in the past year from these categories. We would ensure a safer environment at our On track We certified new mines in accordance with ISO 45001. newly acquired mines. We would develop our Geomechanical On track We are updating geomechanical models for use in mining works Management System. design. We have completed our Kyzyl and Albazino models. We would adjust OHSMS with respect Delivered We implemented SBS most rigorously in hazardous operational to risk assessment improvement areas, for example automobile transport, mines, and plant and at auxiliary departments. power supply. We would further enhance safety training, Delivered We experienced a step-change improvement in safety behaviours and a safety mindset in all leadership and engagement through our safety communication employees and contractors. programme. As a result, the quality of employee interactions greatly improved, and we received positive feedback among all employee groups.
Plans for 2019
We will be working on decreasing the number of incidents and promoting additional safety measures, with a focus on transport safety. Priorities include:
• Providing a daily assessment of rock mass stability • Effectively controlling the speed limits Locating each and every underground worker in underground and open-pit mining We’re using technology to improve safety in our In addition, at Dukat, five loaders and a dump truck • Isolating spaces for working with and storing underground mining operations. have been equipped with a software package that • Using more equipment at mining operations in order flammable and explosive substances, avoiding use provides remote monitoring of the equipment condition to remove personnel from the risk zones of open flames In 2018, for example, we implemented a radius- and operating parameters. This is part of a pilot scan positioning system at our Dukat mine. Now fully project, which is helping to assess machine safety and • Continuously applying tools for the observation and • Ensuring safety at pedestrian walkways, landing operational, through a simple screen, the dispatcher can productivity. The software shows up all operating errors modelling of rock stability areas for transport, workplaces and stairways see the location of every single miner in the underground and inappropriate actions on the part of the operator mine. The technology was tested at coal mines in during the shift. This information can then be used to • Reducing the number of road accidents by 10%, • Communicating our safety programme effectively the Kuznetsk Basin in Russia. Sensors are arranged identify safety risks and maintenance requirements. for both Polymetal and our contractors throughout the stall inside the underground mine. Red • Certifying OHSMS against ISO 45001 lights in each adit transmit signals showing the location “This pilot enables me to monitor key operating • Maintaining the safe condition of roads of any people. parameters of the Dukat equipment from my work station in Omsukchan,” says Sergey Pavlov, Chief “Safety comes first for us at our production site,” Mechanic. “For the time being, six machines are sharing explains our mining dispatcher, Svetlana Tagieva. this information. However, we are planning to incorporate “Using the system, we can effectively account for every all other equipment into the system.” single person in our underground operations.” Mikhail Egorov, Managing Director of the operation, added, “All the Company’s mines have been equipped with these systems.”
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on any grounds, including gender, race, skin colour, religion, WHAT GUIDELINES DO WE FOLLOW? nationality, social origin or political opinions. International: UNDHR, UN Global Our approach Compact, ILO, national labour codes We work hard to ensure a healthy and safe environment Our success each year is down to We want to attract the best people. And it’s just as important to ensure they are motivated to stay and bring for employees and address any AIDS/HIV-related problems Corporate: Human Rights Policy, Code of our employees. This year, we have their commitment to work with them every day. So we strive in a responsible manner. We do not allow discrimination Conduct, Employment and labour standard, particularly focused on developing to create a fair and inclusive environment, pay competitive or infringing the rights of candidates or employees with Human Resources management policy, salaries that benchmark well within the industry, offer equal AIDS/HIV. talent, meeting international standards Diversity policy, Standard Regulation on terms of employment, and reward performance. Through and supporting gender diversity. If you Social Conditions and Service Quality Control, training, and skills and leadership development, we are We also fully comply with international and government collective agreements, Recruitment Standard work at Polymetal and are talented, creating our business leaders of the future. policies on employing people with disabilities. This includes nothing should hold you back from striving to create adequate working conditions for any fulfilling your potential. TOPICS DISCLOSED We believe that businesses do best when they reflect the employee who becomes disabled during their time working • Employment and social benefits diverse nature of society, and prohibit discrimination on any at Polymetal, especially if it’s as a result of an industrial Dmitry Razumov • Training and education basis. Our Company has zero tolerance for sexual, racial, accident. We help them to perform their job functions, as Deputy CEO, Human Resources • Diversity and equal opportunities or any form of workplace harassment. Across the Group, far as is reasonable and practicable, with due regard for their • Equal remuneration for women and men we protect fundamental human rights, treating people fairly, interests and the Company’s interests. In 2018, we employed • Labour practices and grievance with dignity and respect. 11 people with disabilities or health conditions, and no mechanisms cases of discrimination were reported within the Group. • Freedom of association and We comply with the UN’s Global Compact and the collective bargaining International Labor Organization’s Declaration on • Occupational health and safety Fundamental Principles and Rights at Work. This involves • Human rights paying our people a fair wage and supporting their job Headcount and turnover • Mine closure security and development within the Company. It also means upholding their rights to collective representation, In 2018, we employed 12,140 people compared to PRIORITIES freedom of association and a safe work environment. 11,553 in 2017. 93% of our personnel are employed on • Provide safe environment and equal a permanent basis. opportunities Business ethics • Ensure equal remuneration All employees must comply with our Corporate Each year on average approximately half of our employees • Promote diversity Code of Conduct. The Code offers guidance on ethical work shifts on a fly-in/fly-out basis rather than permanently • Ensure protection of human rights behaviour – towards colleagues, customers, business relocating, because of the demanding nature of the work • Recruit and retain engaged and motivated partners, state authorities and society. It covers numerous and our remote site locations. employees and interns subjects such as equality, health and safety, government and • Develop career pathways community relations, environmental protection, transparency, • Improve communications with employees WHO IS RESPONSIBLE? competition, and data protection. It also sets out our zero- E CO N N NO E • Enhance training programmes tolerance approach to drug use, conflicts of interest, bribery and bullying. The Code is supported by our policies, which GROUP CEO cover a similarly broad range of issues. 15,000 10% 12,140 In 2018, there were 374 recorded violations of the Code; 96% 11,553 10,954 of these were related to consumption of alcohol or drugs. The 12,000 8%
employees identified were dismissed, and employees of our 5.8 contractors were removed from our operations with no right to 9,000 5.5 5.4 6% HR DIRECTORS OF COO DIRECTOR OPERATIONS return. We also made claims to those contractors, who were required to pay a penalty pursuant to the agreements in force. 6,000 4%
3,000 2% Labour rights and equal opportunities Polymetal recognises the importance of preventing 2016 2017 human trafficking and modern slavery. We also engage HR MANAGERS ale e ale urno er AT OPERATION HSE DIRECTOR with stakeholders to promote human rights, and seek to SITES influence partners, contractors and suppliers. We do this through our Suppliers Code of Conduct to ensure rigorous Targeted employment high standards. We want to attract talented young students to join our Group. So we collaborate with recruitment websites to promote the At our operations, we have processes in place to ensure Company, as well as with leading universities and technical H&S that we do not employ any underage or forced labour, colleges, whose students apply for internships. In 2018, MANAGERS HEAD OF H&S 170 students undertook internships at Polymetal (including AT OPERATION and no incidents of these were reported in 2018. We are SITES committed to equal opportunities and terms of employment, 44 female students), and we subsequently employed 19% and recruit people based on merit. We won’t discriminate of the interns.
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Employees continued
Encouraging continuous improvement Diversity Human capital development As a company, we never stand still and continually master Expanding training for new technologies and innovations. Likewise, we encourage Mining has traditionally been made up of a predominantly Group-wide training and development are critical to our employees to think out of the box when doing their job, remote employees male workforce. However, in recent years there has been improving skills, keeping employees motivated and in order to find opportunities for improvement. To this end, In 2018, Polymetal’s Mining Information Technologies a growing proportion of women in the industry. We actively ensuring the future success of the Company. we organise discussion platforms like roundtables, training Centre (CMIT) greatly expanded our online training promote the inclusion of women in our workforce and workshops and forums of thinkers. capabilities. With more electronic textbooks, more of our leadership teams. We have established a range of diversity We go beyond mandatory compliance and induction training. training is now accessible to employees in even the most targets, and diversity is discussed at every meeting of our From the moment people join Polymetal, employees are We regularly receive proposals with ideas for improvement remote regions where Polymetal operates. Nomination Committee, across all our operations. appraised and a personal training programme is agreed, and select the best ones, awarding the best innovator from including general operational and technical training. At each each region every year. Winners receive valuable prizes, Every student has the opportunity to communicate We have procedures in place to prevent gender subsequent appraisal, we agree further training – both such as a trip to the FIA Formula One World Championships directly with a CMIT consultant. Students can ask discrimination when recruiting. For each open position, we professional and managerial – through our network of in Sochi. questions and receive answers by telephone. Following must specify qualification requirements, carry out interviews corporate training centres and guest trainers. tests, the consultant organises a feedback session and to assess competencies, and use a pool of assessors to Over the last three years, our employees have suggested offers follow-up suggestions and recommendations. ensure non-biased selection of candidates. Our training takes several forms. Employees can receive more than 275 improvement proposals, and 165 of them on-the-job training at one or different operations. They have been implemented, which has helped us save more “About 400 people took face-to-face and remote training In 2018, women represented 20% of our total workforce, can receive training from visiting leading companies using than $20 million. courses in 2017, while over 1,500 applied for training 22% of our management roles, and 18% of our Board. innovative technologies or upgrading systems. We also host in 2018,” said Konstantin Bortsov, Head of the CMIT. For the first time, we appointed a female managing director teams of other mining and engineering companies at some 360 Degrees assessment and Talent Pool “Of all of our students, last year about 30% took a at our Svetloye mine. of our training, which helps to broaden horizons. Our in- To help develop our employees, we created 360 Degrees, remote training course, and this year that percentage house consultants and experts teach about our Company our annual evaluation programme. This helps identify increased to 60%. Increasing remote access is having best practices, and we also use third-party training any skills gaps in professional development, as well as an impact on training for the whole Company.” providers to develop leadership and professional skills. candidates for our Talent Pool – a select group of employees Diversity and Human Rights Training with the greatest potential to become the next generation In November 2018, we launched an interactive Distance-learning training complements the work of our of skilled managers at Polymetal. In addition, employees course to increase understanding of diversity issues training centres and on-site training facilities. This increases can nominate themselves for the Talent Pool through our and human rights. The course is mandatory for all productivity and efficiency and helps us provide training to corporate web portal. managers and focus groups engaged in working with employees in remote locations. In 2018, we developed new external stakeholders (including security services) distance-learning training courses, and we will continue to In 2018, we continued to provide all employees in our who deal directly with these issues. develop these further in 2019. Overall in 2018, we invested Talent Pool with personalised targets, assessments and $1.5 million in personnel training. development plans. As a result of comprehensive training, we were able to promote nine Talent Pool employees to key Professional development programmes positions within the Company. FEMALE MALE We offer a series of programmes, which enable our employees to progress in the Company. Training for the future – programmes for young people 20% TOTAL WORKFORCE 80% We conduct training for recent graduates of, and trainees in, Best-in-profession contest key mine planning software used at our operations. Every MID-LEVEL MANAGEMENT In addition to remuneration, we believe it’s important to year, we also support children of our employees to study 22% 78% TRAINING PER PERSON invest in rewarding employees. Every year, for example, at university to help them acquire a profession that will be QUALIFIED EMPLOYEES we hold ‘Best in profession’ competitions and award useful to the Company in the future. 40% 60% ceremonies. These are an important tool for identifying, encouraging and motivating employees with leadership In 2018, we provided training for those with high potential to WORKERS prepare them for leadership challenges of the future. This 49 hours 12% 88% potential, contributing to skills development and the dissemination of best practices. They also help increase included training on subjects such as occupational health Mid-level management includes employees who hold positions as the profile of particular trades, promote our workplace and safety, production control, construction, mine planning, heads of business units: directors, chiefs of divisions, managers, experts and labour relations. or supervisors, etc.; chief specialists, for example, chief accountant, culture and professional pride, and recognise employees chief dispatcher, chief engineer, chief mechanic, chief metallurgist, and creativity. The competitions test theory as well as chief geologist; and deputies to these positions. practical skills. Annual scientific and industrial conference for young professionals Qualified personnel are employees who are engaged in engineering and technical, economic, and other such positions. In particular Each year, we hold around 20 professional competitions We held conferences for 51 young professionals including accountants, geologists, dispatchers, engineers, inspectors, mechanics, at our sites. In 2018, 1,819 people took part (including geologists, miners and processing engineers, and the quantity surveyors, editors, economists, energy specialists, legal advisors, 182 women). In addition to traditional competitions (for 15 best professionals (including three females) received etc., and assistants to these positions. It also covers office workers in accounting and control and maintenance positions, who are not engaged in geologists and mineral surveyors, assayers, drivers, and an award. As a result, seven participants (including four manual labour, including clerks, concierge staff, controllers and secretaries. open-pit workers), we introduced competitions for welders, females) were included in our Talent Pool and will follow mineralogists and scalers. a career development plan. Workers include personnel who are directly engaged in the process of value creation, as well as those engaged in repair, moving goods, transporting passengers, providing material services, and so on.
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Employees continued
Adherence to best practice Social support Labour practices As well as paying fairly, we provide social support to Polymetal best practices to avoid Practices we try to eliminate our employees. discrimination Competitive salaries and benefits Qualification requirements in job description Job description preparation Use of too detailed requirements in the We ensure that employees are fairly compensated based For those in need, we offer financial aid. We provide housing prevent gender discrimination request, which reduces the number of support and cover interest payments on eligible employee potential candidates on merit. Our salaries are competitive, we offer benefits that exceed regional averages in our areas of operation, and our mortgages. We subsidise kindergarten, after-school activities Use of all available sources to search Search and selection Reject candidates at the CV review stage on and a holiday camp for the children of our employees. We for and select candidates based on the basis of superficial review and personal long-term incentives programme is linked to relative share request requirements perception of the HR manager price performance (see our Remuneration Report for more also pay holiday trip costs to health resorts once every details at www.polymetalinternational.com). It is critical two years for employees working in remote locations and Interview to assess competencies Candidate assessment Interview without checking competence, their families. For retiring employees, we provide additional conducted by several managers with by a narrow group of managers and with no that we provide appropriate remuneration to attract, retain results-based assessment results-based assessment and motivate the right calibre of employee in the regions in severance pay, and for parents we offer parental leave with which we operate. a paid period of up to three years. In 2018, 175 people took maternity (97%) and paternity (3%) leave. We implement a remuneration framework that is designed to reward our employees on the basis of their performance, Improving working and living conditions Encouraging professional excellence giving equal emphasis to delivery and behaviour through We strive to create good social and living conditions for our short-term incentives. Operational workers receive a time- employees. This not only impacts our work environment, but supports our people’s health and well-being, and In 2018 we recognised and rewarded many exceptional When it comes to operational excellence, Polymetal has paid salary, which is set according to the number of hours improves productivity and employee motivation. employees across the business. For example, Julia been encouraging employees to come up with ideas for worked and the amount of work completed. We also award Melnikova, power dispatcher at our Komar mine, many years. In 2018, winners who contributed the best performance-based monthly and annual bonuses, and in To measure employee satisfaction, we conduct a participated in the Best in Profession contest in 2018. ideas were awarded various prizes, with the grand prize 2018 we continued to sustain stable wage growth in line survey every two years, which helps to identify any Despite it being her first entry, she came away with being a trip to the FIA Formula One World Championship with inflation. areas for improvement. In 2017, over 6,000 people the first prize. in Sochi. Alexander Korneev, Polymetal’s Omsukchan through approximately 50 focus groups were asked to concentrator instrumentation manager, was named the Equal pay assess working conditions, occupational safety, labour Julia is the only woman to work in the Komar energy top contributor for operational excellence at our Magadan We ensure equality in pay and provide equal levels of remuneration, social conditions, team communication service. The fact that her competitors were experienced operations. Alexander has been working on improving remuneration for positions with the same competence and the corporate environment. The survey also revealed electricians did not stop her. In fact, she was the only our automation process over the past eight years. requirements for both male and female employees. Within potential areas for improvement. competitor who correctly answered all 25 questions in the Group, the difference in remuneration ratio for men and the profession and industrial safety contest. In the winter of 2017, he suggested an idea to women is 1.32. At Polymetal, women are well represented in As a result, in 2018 we implemented 300 corrective actions improve efficiency of the drying ovens, reducing fuel senior positions, with the biggest share of female managers to introduce changes aimed at improving working and living Meanwhile, at the WorldSkills Hi-Tech Eurasion consumption for drying silver concentrate. The result in administrative, social and communication professions, conditions for employees, particularly those engaged in shift Competition 2018, 77 professionals from 11 countries was a reduction in fuel use from 10kg to 5–6kg per although the number of female seniors is much lower in work in remote locations. Our efforts included infrastructure competed to demonstrate vocational skills in high-tech tonne of finished product. operations, construction and geology due to the challenging development at our mines. See our map on page 16 for industries. Among the competitors were employees from nature of the work. further details. Polymetal’s Kazakh operations, who represented the Kazakh team. Viktor Reydikh, Equipment Mechanic at Varvara, came away with the second prize in Industrial O ME S IES COM E O E ION ES Mechanics and Assembly. Mayskoye employees head to the gym!
Our team at the Mayskoye gold mine wanted to create new fitness opportunities for employees at the camp. So we bought new, state-of-the-art fitness equipment, including a Smith machine and three incline bench press machines.
“Now we have two separate zones: a strength zone and a zone for cardio,” says Natalia Gilimkhanova, Administrative Service Manager. “We hope our workers will enjoy using the new equipment in our renovated gym.” Russia Kazakhstan Re ional ini u Re ional a era e oly etal ini u en inin in ustry a era e We’ve received positive feedback from employees oly etal ini u o en oly etal a era e en there. Anton Luchkin, Mayskoye Services Purchase oly etal a era e o en and Control Department Manager, noted the “Excellent Polymetal minimum salaries are 241% (241% for men, 259% for women) higher than the machines. It is so good to see that the Company takes regional minimum. care of its workers. Sport is important for healthy living, especially in our environment.”
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Employees continued
Regulated and fair employee relations In 2018, 89% of all our employees worldwide and 100% of We have an excellent track record in regulating employee personnel at our operating sites were covered by collective Our progress in 2018 relations based on equality, consideration of mutual bargaining agreements. interests, strict compliance with local social and labour regulations, and constructive dialogue between partners on Internal communications all social and labour issues. Our internal communication systems enable employees to engage with each other, at all levels. For example, PLANS FOR 2018 STATUS PROGRESS We acknowledge the right of our employees to join employees can contact their manager directly through organisations focused on protecting and supporting their meetings or an electronic system. We would attract and motivate young On track We trained a group of five intern-students from the Mining specialists through targeted actions, career University. They completed our professional competence interests. And we support the right of employees to elect development programmes and training. management development programme, studied standards and their representatives, in accordance with the laws and All issues raised by employees are considered and policies, and were employed at different Polymetal sites. practices of the countries where we operate. investigated promptly, involving dedicated experts and, if We would implement our geological Delivered We ensured our professional development programme covers necessary, site management. They are regularly analysed engineering education programme (covering identifying hazards and risks related to rock mass stability. We also protect our employees’ rights to freedom of to identify potential risks and so we can take adequate rock mass stability and identifying safety We implemented this for technical and engineering employees association and collective agreements. We understand the remediation measures. The most complex, or Group-wide risks) at our mining operations. and representatives of labour protection and industrial safety importance of collective agreements in defining contractual issues, are submitted to a special committee. The employee services. We ensured these issues are covered by our existing training for operations staff. terms of employment and in regulating relations between is always notified of progress and resolution, and a dedicated Polymetal’s management and employee representatives. manager ensures that all issues or queries are resolved. We would increase the amount of in-house Delivered We slightly decreased the amount of internal training by 1% In addition, we strive to create the necessary conditions to training provided. compared to 2017 due to intensive induction trainings at our newly launched project Kyzyl. help employee representatives conduct their activities. We are proud of our frequent and efficient internal communications. In 2018, we received 1,458 enquiries We would develop e-learning. Delivered We introduced five new e-courses at our CMIT. We also At each site, employees have set up Workers’ Councils to implemented a new e-learning system for employees, which (1,001 in 2017). So far, we have responded to 100% of includes multimedia materials for occupational health and represent their interests. Employee representatives have these, mostly at meetings and through our hotline. In 2019, safety training. also been elected to Commissions for Regulation of Social we aim to organise our first direct communication session We will continue to automate our Delivered We launched software at all our production sites and and Labour Relations to facilitate discussions between between the Board of Directors and our employees, to HR processes in order to improve the training centres which will help us to better plan courses employees and the Company. further enhance employee engagement. quality of analytics, staff training and for our employees. development processes. We will evolve our approach to diversity and On track We have established a range of diversity targets. PROPORTION OF ENQUIRIES BY TOPIC prepare an action plan to introduce our % updated policy.
Enquiries from employees Plans for 2019 Social benefits 22 Internal Polymetal communications responded to Living conditions 21 EMAIL department • We will develop direct communication between • We will engage young employees using motivation, Remuneration 17 received management and employees, and enhance targeted events, career development programmes 100% frequency and effectiveness of communications. and training. Labour practices and TELEPHONE working conditions 11 of enquiries 1,458 • We will implement our HSE communications • We will continue our training programme on Production processes 9 SURVEYS enquiries programme, addressing key issues of safety geomechanics (rock mass stability) in mining Health and safety 4 leadership and culture. operations, especially on identifying safety risks. Employees and 4 management relations INTRANET Training and development 3
Corporate events, 2 CORPORATE MEETINGS professional contests and sport Other 6
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WHAT GUIDELINES DO WE FOLLOW? International: UN Global Compact, ISO Our approach Engaging with our stakeholders 14001, ISO 15001, EBRD Environmental and To manage a sustainable business, we need to be mindful Suppliers and contractors Protecting natural resources, Social Policy, Cyanide Code moving towards renewable energy of our environmental responsibility. The systems we have We work with our suppliers and contractors to control in place have been created to offset any environmental and minimise risks externally. In addition, we carry out Corporate: Code of Conduct, Environmental and preventing environmental impact and protect biodiversity and human health. We are selective formal assessments and audits for environmental Policy, Carbon Management Policy, Energy continually learning, and adapt our systems as a result. compliance and best practice. incidents all serve to minimise Policy, Tailings and hydraulic facilities We ensure that environmental considerations are taken our environmental impact, and management policy, Mine closure policy into account when designing, constructing and operating For suppliers, we integrate the environmental improve efficiencies across our mines and processing facilities. requirements into our Supplier Code of Conduct. the business. TOPICS DISCLOSED Our contractual agreements stipulate the need for • Tailings management and emergency The work of the mining industry involves a number of compliance with applicable laws and regulations, our EMS, preparedness Andrey Savchenko environmental risks. So our corporate policies focus on and all requirements surrounding issues like packaging, • Energy and carbon emissions HSE Director reducing risks, compliance, best practice and continuous noise, pollution and emergency preparedness. Equipment • Water improvement. They also cover the management of key suppliers must provide guarantees that their hardware • Air emissions environmental issues, including incident and emergency operates within established limits. • Biodiversity control and the use of environmentally friendly materials. In • Land reclamation 2018, we updated our Environmental Policy and approved We explain the EMS environmental procedures • Effluents and waste a new Energy Policy and Tailings and Hydraulic Facilities to our contractors and require them to be responsible for • Supplier environmental assessment Management Policy. environmental safety and avoiding significant environmental • Environmental grievance mechanisms impact. Our contractors must continually work to Our Group-wide Environmental Management System (EMS) improve their environmental risk management, as well PRIORITIES helps us to identify environmental risks and opportunities, as their Environment, Health and Safety performance. • Maintain legal and ISO compliance driving resource and energy efficiency across the business. In 2018, we audited 285 contractors, with no significant • Ensure tailing dams safety We use modern, efficient equipment and technologies to violations revealed. • Assess climate risks and opportunities minimise pollution, and all our production sites are certified • Expand application of Cyanide for compliance with ISO 14001. Environmental grievance mechanism Management Code guidelines at all Our stakeholders are able to express any concerns relevant operations We also engage our employees on environmental issues, or grievances they may have through our rigorous • Implement detailed management and training is an essential part of this. We encourage environmental impact assessment procedures, for example standards, including tailing storage facilities our environmental teams to participate in courses on public hearings and other mechanisms. At all of our sites, management, cyanide management, topics such as environmental management, water quality we make a record of feedback received from the public mine closure, climate strategy and carbon assessment, hazardous waste, environmental security and in a log book. We also organise a range of engagement footprint management WHO IS RESPONSIBLE? land reclamation. activities to listen to stakeholder comments. In 2018, we received 14 enquiries about the environmental impacts of our development projects, which were resolved by GROUP CEO Auditing and compliance providing additional information about our approach to environmental responsibility. We focus on improving controls to prevent potential environmental incidents, and on integrating environmental COO CSO consciousness into our core business processes. We comply with all relevant legislation and are regularly audited by state authorities. We also hire external service providers to further improve our environmental performance.
HSE OPERATIONS In 2018, eight of our mines were inspected 12 times DIRECTOR DIRECTORS by government commissions, and minor cases of non- compliance with environmental regulations were revealed at our Voro and Varvara mines. This related to errors in documents for waste treatment, which resulted in a fine of $4,323. We corrected documents after the inspection and REGIONAL will ensure mistakes will not be repeated. HEAD OF ENVIRONMENT ENVIRONMENT MANAGERS We received no other significant fines or non-monetary sanctions for breaches or infringements. Since Polymetal was founded, we are extremely proud to have had no major or catastrophic environmental incidents. ENVIRONMENTAL TEAMS AT OUR OPERATION
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Environment continued
Water projects 2018 At Amursk, our Process Water Cycle project involved ENVIRONMENTAL INVESTMENTS 2018 Water During the year, we implemented several projects. For replacing around 40,000 m3 of fresh water for the process (%) example, at Kapan we carried out a project for waste water water recycle system with storm water from our retention Focus on water from an underground mine to be used in technological pond. We also constructed a water diversion collector. One of the key issues that stakeholders talk to us about is processes at the plant (see infographic below). This involved At Dukat, we introduced a truck washing system using the future availability of water. Their concern over security upgrading mine water treatment facilities and our water recycled water. At Kyzyl, we installed a facility for mine waters $20m of supply comes as a result of demographics and climate supply system, replacing fresh water in the process circuit to be used in processing at the plant. And at Albazino, we change. 2018 was the Year of Water for Polymetal, with a with treated discharge water. ENVIRONMENTAL INVESTMENTS cleaned storm waters with phytoremediation technology, major focus on water resource management. We use water At Omolon, our work involved open-pit de-watering and a using living plants to clean up pit water. Finally, at our Varvara for industrial use, drinking and irrigation, and focus strongly Waste 38% water supply project at our Birkachan mine. This included plant we optimised water recycling, achieving our target on on efficient water management. Our processing plants using pit water for shotcrete production and replenishing recycled water consumption by the flotation circuit. Air and climate 22% consume the most amount of water during ore processing. recycled water at our Birkachan ore stockpile, instead of Water 12% We take water quality and security seriously, continually using fresh water. It also included upgrading pit water from Land 11% monitoring any impacts of our work on surface and our settling pond. Other 17% ground water, and taking action to minimise negative impacts where necessary. We work in partnership with local governments and stakeholders to protect water security in MINE WASTE WATER IN TECHNOLOGICAL PROCESSES AT THE PLANT the communities where we operate, often providing water Change in water treatment processes from 2017 to 2018 and infrastructure through our operations.
We have improved our metering and recording procedures, MINE 2017 audited water sources, and reviewed our water balance scheme. We have also implemented projects, including 100% SEDIMENT constructing or updating water facilities at our production 2018 POND
sites and nearest settlements for communities. RIVER 70% PURIFY Water consumption Our production sites are generally situated in regions where there is sufficient water supply. Despite this, we use PLANT a closed water supply system. This means we work to use 2018 only recycled purified water from the tailings dam and our Environmental protection sediment ponds. As well as minimising offtake of fresh 30% During 2018, our overall investment in environmental water, this also means that we reduce the risk of releasing protection was $19.9 million, down from $24.8 million in 2017, unsafe water into the surrounding area. as we have completed reconstruction of tailing facilities at Water quality is checked for compliance with relevant Mayskoye and Albazino and launched the Kyzyl project. Our requirements before discharge. Discharged water then investments include construction of environmental facilities passes through sewage treatment plants and is cleaned WATER at our development projects and upgrading existing facilities by various mechanical, physico-chemical and biological (CUBIC METRES) at operating mines. Above that, we also make quarterly processes. In addition, water measurement is carried out by TARGET 2020: CONTINUOUSLY REDUCE WATER CONSUMPTION payments to governments through environmental taxation meters, flowmeters, and by indirect estimation when using AND WATER DISCHARGE BY EFFECTIVELY USING WATER RESOURCES in the regions where we operate, to offset any negative meters is not possible. environmental impact caused by our business. These are governed by environmental law and defined by audits Every year, local and state authorities grant us permission conducted at our sites by government agencies. to withdraw water. Due to the fact that our operations are 6.6m 39.4m spread geographically across a wide area, we do not over- FRESH WATER WITHDRAWAL WATER CONSUMED exploit any single source, and we ensure that at all times our water use stays within permitted limits. We do not withdraw water from surface sources in environmentally sensitive areas, or where water is of great importance to local or indigenous communities. We actively source water for our operations. For example, 4.5m 83% we take water that naturally seeps down and collects in 28.3m WASTE WATER our underground mines. We use this water underground, WATER RECYCLED and we also pump it to the surface to be used in our gold AND REUSED processing operations. When extra water is needed, we may purchase it from utility suppliers. As a last resort, we
are also allowed a certain level of take-off from rivers, dams, Share of recycled water equals the ratio of water recycled and water withdrawn and groundwater aquifers.
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Environment continued
Tailings storage facilities The employment of a dry stack tailings management system Convention 2, Annex I, II, III and VIII. In total, we produced Waste In the countries where we operate, environmental legislation at our Amursk POX demonstrated a tangible approach 15.6 Kt of hazardous waste, compared to 13.5 Kt in 2017. sets out strict requirements to prevent soil and water to sustainable water management. It offers a number of The mining industry generates significant quantities of mineral contamination. All our tailings storage facilities (TSF) undergo advantages over other surface tailings storage options, and regular audits for compliance with these requirements as well is a significant safety improvement, eliminating the risk of waste. It also produces some non-mineral and hazardous S E IN ENSI substance waste. Both have an impact on land by causing as safety examinations. TSFs are also regularly monitored by dam failure and tailings runouts. We are now switching to (TONNES O STE ER OUNCE O E) the establishment of tailings dams and waste rock dumps. If our on-site environmental and engineering teams, with daily dry storage at Omolon and will use this technology at the these aren’t managed effectively, they can also pollute water. observation of pipelines, pump stations, water levels and the new operations of Nezhda, Prognoz and POX-2, decreasing dam body itself. We ensure emergency preparedness and Polymetal’s tailings footprint. 100 In our operations, we use large quantities of ore and energy response procedures at all stages of TSF life, from design to 90 89 to produce products such as Doré bars, zinc precipitate, and operation to closure. Cyanide management flotation and gravity concentrates. Overburden and tailings Our operations involve several hazardous consumables, the 80 are the most significant waste streams associated with our In 2018, we developed a corporate TSF management largest of which is cyanide. For example, when recovering processes, accounting for more than 99% of the total waste system, which allows us to enhance control, prevent gold from the ore we process, cyanide produces hazardous 60 50 volume. Overburden is the material that is extracted to accidents and prepare emergency response plans. We waste. Cyanide can also exist as a chemical compound uncover ore deposits, while tailings are a by-product of thereby eliminate causes of dam failure, such as poor found in gas, water and solids, which we later purify. ore processing. management and readiness for heavy precipitation, which 40 often increase the probability of accidents. We now operate Due to its hazardous potential, we are extremely careful Minimising our use of materials and waste nine tailings dams, and in 2018 there were no environmental when handling, managing and monitoring cyanide at all 2016 2017 2018 We are committed to responsibly managing our waste accidents involving tailings facilities at our operations. times. Our approach involves identifying all associated hazards, strictly controlling cyanide levels in our tailings, and materials. In order to do this, we focus on efficient use of The waste intensity increase is associated with the start of monitoring air, soil, surface and ground waters. We share materials. We identify those in our operational processes that operations at Kyzyl. This resulted in a growth in stripping WASTE environmental monitoring results with public authorities. We have the biggest impact – such as explosives, drilling parts (TONNES) volumes and therefore a one-off increase in waste rock. and mill balls for grinding – and strive to reduce volumes of also implement environmental protection measures, such as these materials without impacting quality. Our audit teams TARGET 2020: REUSE AT LEAST 20% designing, constructing and monitoring tailings dams, and carry out regular internal checks and assess our compliance OF ANNUAL VOLUMES OF WASTE ROCK monitoring water sources and quality, riverbed changes, and with national and regional standards, and government associated drainage. Energy and carbon management agencies conduct regular environmental performance spot- checks at our facilities. Having signed up to the International Cyanide Management Climate change Code in 2016, in 2018 we conducted audits to check Climate change is an issue that might affect our business and We now operate nine tailings dams, and in 2018 there compliance with standards set by the Code. We tested create both opportunities and challenges. We strive to provide were no significant or major environmental accidents compliance at our Amursk POX plant and Voro mine, a comprehensive response to these challenges. In 2018, we involving tailings facilities at our operations. During 27% including our supply chains by sea, rail and road. We are started to develop our Climate Management System, which the year, we mined 14 Kt of ore and 127 Mt of waste, expecting to receive certification in 1H 2019, confirming that comprises three aspects: processed 15.2 Kt of ore, and generated 139 Mt of WASTE REUSED Amursk and Voro are fully compliant. waste. (While this is an increase compared to 2017, of total waste • greenhouse gas (GHG) management; when we generated 128 Mt of waste, the volume of generated We always use 100% of the volumes of cyanide we purchase, • climate-related risks and opportunities assessment; our mining has increased.) (excluding Kyzyl) and take a cautious approach to transporting hazardous • carbon footprint management. materials. In 2018, we used 8.9 thousand tonnes of cyanide Reusing and recycling our waste in our operations. We did not transport, import or export We plan to implement all three aspects of the new system We aim for a circular economy, reusing waste generated any waste deemed hazardous under the terms of the Base in 2019. wherever we can within our operations. Our systems and procedures enable us to maximise the amounts we recycle 139m and minimise waste to landfill. In 2017, we set a target to TOTAL WASTE GENERATED Focus on recycling reuse at least 20% of total waste generated at our operations during the year, and in 2018 we were able to reuse 27% for A pilot project for collecting used batteries is our first the sites included in target scope. However, due to large phase towards separate waste collections at Auezov volumes of stripping and therefore waste produced at our 127m 12.5m 117m Village and our Bakyrchik mine. newly launched mine Kyzyl, the total reuse share was 16% WASTE ROCK TAILINGS DISPOSED across all of Polymetal’s mines. Denis Nekrylov, Chief Geologist of the mine, commented: “The Company has made a formal waste Where we can’t use waste materials in our own operations, 22.6m list. A decision was made: everything that can be recycled – paper, carton, glass, plastic and, of course, we find uses for them outside of Polymetal. For example, REUSED we have contracts with waste recycling companies to provide batteries – shall not be thrown in the garbage dump.” them with waste for incineration and energy production. We’ve established 21 recycling drop-off points on the And where we can’t recycle or reuse materials, we dispose mine site and in camps. of them at our own waste facilities or outsource waste disposal to external companies. In 2018, we disposed We expanded this practice to our Mayskoye and Pevek of 117 Mt of waste. camps, where it has been welcomed by residents.
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Environment continued
The transition to a low-carbon economy, and its associated Energy efficiency We also continued to upgrade and install new cogeneration public policy developments, represents opportunities as well We want to decrease the amount of energy used in systems for diesel power plants at sites with their own Air quality as risks for our Company. Finding renewable energy sources our operations, and this is a key focus for our business. power generation. These systems supply the required is a priority if we are to lower our GHG emissions and manage We are increasing energy efficiency through our Energy amount of heat for our operations without additional Many of our core activities, such as stripping, mined carbon emissions (see our Carbon Management Policy). Management System (EMS), which has been introduced heating equipment (e.g. boiler plants). waste storage, ore processing and energy use, generate air across all our operations, in accordance with International emissions. These include carbon dioxide, nitrogen, sulphur Heat and electricity from our diesel generators, as well as Standard ISO 50001. In 2018, energy audits showed that our Energy Efficiency oxides and inorganic dust. To reduce dust emissions, we our mining fleet operations, produce GHG emissions. The Programme has been successful in decreasing energy now use irrigation systems in open areas together with burning of natural gas and coal and the use of landfill also In 2018, we also worked on implementing our site action consumption. We successfully reduced energy used in ore dust separation equipment and shields. contribute to our GHG footprint. plans, which were developed following independent audits processing by 0.4%. in 2018. Our goal is to reduce energy consumption, ensure Between 2015 and 2018, we saw an increase in pollutant To effectively manage our GHG emissions, we conduct efficient use of energy resources, and implement energy- Renewable energy generation emissions as a result of the expansion of our mining an inventory assessment each year and report both efficient equipment and technologies. At the same time as decreasing our energy use, we activities and energy use. In order to minimise future direct and indirect emissions. In 2018, we introduced a want to increase our use of renewable energy. In 2018, emissions, we will continue to ensure that our vehicles number of measures to reduce GHG emissions, including We are carefully and effectively planning our energy we implemented two pilot projects: a solar power plant and mining equipment are modern and compliant with converting all lighting to LED, which consumes less resources, and improving energy metering and recording with a capacity of 1 MW at our Svetloye field; and a wind European quality standards, and feature the most up-to- electricity, and equipping diesel-powered generators to ensure we meet energy efficiency targets at each site. turbine for 100 kW at the seaport of Unchi. As a result, we date technology. with a heat recovery system. When developing projects and modernising equipment, expect to generate 1,500 kW*h of environmentally friendly only energy-efficient equipment is used. For example, electricity each year, equivalent to saving 250 tonnes of When implementing GHG emissions reduction projects, frequency converters have been installed on our main diesel or 640 tonnes of GHG. O N S IN I we also reduced our sulphur emissions coming from diesel technological equipment. (TONNES) burn. In addition, we measure, monitor and report our CO2 In 2019, we will conduct a second feasibility study into the emissions using an established international methodology. use of alternative energy sources at other Company sites. 5,000 10
8.0 EMISSIONS ENERGY CONSUMPTION ENE IN ENSI 4,000 7.2 7.3 8 (%) 3,000 6
1,000,000 1,000 8,000 8 2,000 4 7,000 800,000 800 6,640TJ 1,000 2 6,000 5.5 6 638 ENERGY CONSUMPTION 592 4.9 600,000 549 600 5,000 4.3 2016 2017 2018
Electricity purchased 32% 4,000 4 Sulp ur io i e S 2 arbon ono i e 400,000 400 itro en o i e io i e o Soli parti les inor ani ust Diesel for transport and 3,000 ntensity tonnes o pollutants mobile machinery 30% 2,000 2 per o o 200,000 200 Coal for heat 18% 1,000
2016 2017 2018 Electricity generated (diesel/ 2016 2017 2018 t solar/wind power plants) 15% onsu ption GHG EMISSIONS e issions intensity e ui alent tonnes per 10 t o ore pro esse ntensity per o o 2 Natural gas for heat 3% Diesel for heat 1% Our energy supply To run our operations, we use electricity (32% purchased), Petrol for transport and 7% diesel fuel, natural gas and coal (used for heating industrial mobile machinery 1% and service facilities). Diesel accounts for 46% of our Waste oils for heat 0.3% Reduction in GHG emissions intensity total energy consumption and is used for mobile mining equipment, heating and processing operations. We use our own electricity generators to ensure security of supply (15% generated), due to the remoteness of our sites from industrial centres and centralised power supplies.
In 2018, our diesel consumption slightly decreased because our Kyzyl plant in Kazakhstan connected to the grid. In total, we consumed 6,640 TJ across all our sites, compared with 7,010 TJ in 2017.
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Environment continued
In 2018, we implemented the following measures:
Planning for mine closures and land • We installed bird deterrents at waste polygons and tailing Our progress in 2018 rehabilitation storage facilities to stop birds coming into contact with harmful chemicals and waste; It is well known that open-pit mining distorts the natural • We built a wall from waste rock around our open pits to landscape. While this is less significant when it comes to prevent animals from falling in; underground mining, infrastructure such as tailings storage • We established feeding places and salt licks for deer and PLANS FOR 2018 STATUS PROGRESS facilities, waste dumps, process plants and roads do have hares; and We would focus on minimising volumes of On track We have maintained the level of recycled water at 83% an impact. So we view plant decommissioning and land • We planted perennial herbs around our Amursk plant. withdrawn fresh water by changing and (2017: 83%) and decreased fresh water use by 37% restoration as key priorities. All sites will eventually deplete improving existing technologies, increasing compared to 2016. use of recycled water, ensuring better their mineral resource and ore reserves, and it is essential We carried out monitoring and efficiency assessments purification, and using a system to collect We implemented a system to collect and use pit water that we plan responsibly for the end of each mine’s of measures taken in 2017. These showed that birds had and use open-pit water for irrigation of for irrigation of ore stockpiles at Omolon. operational life. not been recorded where bird scarers were put in place, ore stockpiles. and that road warning signs had proved effective in raising We would use the backfill method in Delivered We use the waste backfill in our underground mines at Luna, We begin by relocating workers to our other mines. awareness of animal migration routes. underground mines to decrease volumes Albazino, Mayskoye, Omolon, Avlayakan and Kapan. This is generally easy to do, given the fly-in/fly-out nature of waste rock brought to the surface and stored as stockpiles. of many operations. Our long-term remediation obligations Our employees are involved in our biodiversity conservation include fulfilling decommissioning and restoration liabilities programme and help with biodiversity monitoring. In addition, We would plant forests to offset impacts On track We planted trees as part of our diversity programme. on ecosystems and communities. as stipulated by licences. We cover suspension or all site staff, including contractors, take part in environmental, abandonment costs in compliance with national regulations health and safety awareness training to ensure they We would install biodiversity protection Delivered We installed bird-friendly electricity cables at Varvara and fish and legislation. We conduct geological, surveying and repair understand their responsibilities to protect biodiversity. tools, such as anti-fish filters for water screens for the water intake pumps at Albazino. works to ensure that underground operations, drilling sites pumps, bird-friendly electricity cables, and increasing bird populations. and buildings are not hazardous or dangerous. We also carry out any environmental rehabilitation necessary.
As of 31 December 2018, Polymetal Group manages Plans for 2019 and beyond 19.9 thousand hectares of land. Of this, 557 hectares have Giving pink salmon fry a chance been altered either for mineral extraction activities, or other of survival • Implement a climate management system to assess • Reduce solid emissions coming from the coal boiler industrial or commercial purposes. 232 hectares of the the carbon footprint of our products and create at Kyzyl altered land have been fully rehabilitated and approved by Thanks to Polymetal’s environmental programme, adaptation scenarios the relevant regulatory authorities (please see more in the 12,000 pink salmon fry were released into the Arman • Install additional water treatment facilities at our Key sustainability figures appendix on page 67). River at the Arman fish factory (Magadan Region). • Construct drainage water sediment ponds at Voro, Albazino, Komar and Dukat mines Grown at a fish hatchery, the hope is that they will help Amursk POX and Albazino In Q1 2019, we will focus on rehabilitating land in the to replenish wild populations. These fry are several southern area of our Voro open pit, which is to be closed. millimetres bigger than their fellow wild creatures, We will also implement our new Corporate Mine Closure giving them a higher chance of surviving the harsh Standard in 2019. arctic environment.
Going forwards, we hope such events will become a tradition. To facilitate this, in 2018 our Omolon hub Protecting biodiversity allocated $383,000 for environmental impact mitigation We work hard to minimise our impact on local biodiversity and biodiversity conservation measures. and are committed to treading lightly in the regions where we operate. We do not operate in or adjacent to protected or vulnerable areas. We respect, and will not encroach upon, land that has particular value for Indigenous Minorities of the North (IMN) – whether that value is natural, historical or cultural.
We are proud that our production sites do not have a significant impact on biodiversity in or around the sites. Due to the extreme northern location of most of our operations, the surrounding territory is low in conservational value. However, some sites are situated in the forest and tundra areas of Russia’s Far East. These provide natural habitats for some rare, threatened or vulnerable plant and animal species. This means we must take action to support flora, fauna, and invertebrates.
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WHAT GUIDELINES DO WE FOLLOW? International: UN Global Compact, UK Our approach Human rights Corporate Governance Code, EITI, Tax Code As well as delivering value to our Building long-term, strong and trusted relationships with We adopted our policy on human rights back in 2016 and our local stakeholders has been central to our business updated it in 2018. Together with our Indigenous Minorities Corporate: Code of Conduct, Supplier’s shareholders, we have a positive impact success. This has a roll-on effect, as our projects Engagement Standard, this sets out our commitment to Code of Conduct, Anti-bribery policy, on the people and communities around help improve local economies, local development and respecting human rights and preserving the cultural heritage Human Rights Policy, Social Investment and communities, as well as providing employment and public of the indigenous communities in the areas where we operate. us. This involves working in partnership, Donation Policy, Community Engagement welfare support wherever we operate. keeping up a continuous conversation Policy, Environmental Policy, Community In 2018, following development of our human rights risk Engagement System, Procurement Policy with locals, and supporting social This reinforces our success, as it helps to protect our assessment, we began providing training to our employees and Guidelines investments. It also means paying taxes reputation and keep our operations running smoothly, and on human rights issues. There were no recorded violations ensures all our sites respect human rights and the local of the rights of minority groups or any human rights transparently, and hiring local employees TOPICS DISCLOSED and suppliers. We benefit, the economy environment. Our goal is to ensure that our success is breaches in relation to Polymetal’s employees and our • Local communities reflected in the local economies and societies wherever contractors during the year. benefits, and local residents benefit. • Formal agreements with indigenous we operate. people and local communities For the first time, we also issued a Modern Slavery Statement, Yulia Pivovarova • Grievance mechanisms for impacts Our operations have a major positive impact on the which was signed by our Board. This sets out the Company’s Director, Public Relations and Local Governments on society economy. We contribute to regional sustainable economic commitment to zero tolerance towards child and slave labour • Rights of indigenous people progress by paying national and local taxes, employing within our organisation and supply chain. Modern slavery • Resettlement local people wherever possible, finding local or regional (including slavery, bonded labour, forced labour and human • Economic performance suppliers to buy from as well as local service providers, and trafficking) is a global concern with long-lasting impacts on • Market presence facilitating the development of related industries. This helps affected individuals and communities. We reject any form of • Social investments improve standards of living for residents and further boosts slavery, and our annual statement sets out our approach and • Indirect economic impact local economies. steps taken to prevent it. For example, we have worked on • Procurement practices engaging our suppliers, contractors and clients (off-takers) • Product responsibility Our Community Engagement System (CES) ensures a to improve their anti-slavery practices by implementing our universal approach to all our community engagement and Suppliers Code of Conduct. We have also added clauses PRIORITIES feedback from locals. We make sure we are aware of social to our contracts with them, which are dedicated to modern • Improving quality of life of local risks and impacts, strive to minimise them, and actually turn slavery reporting and labour law compliance. communities them into a positive. We establish and maintain good and • Building relations in new regions constructive relations with local communities, consider their of operation real needs, and promote public welfare. In addition, our CES • Improving interaction with stakeholders helps ensure we promote environmentally friendly practices • Providing transparency and openness in WHO IS RESPONSIBLE? and respect for human rights. We interact with indigenous our social activities minorities, considering their special status in the regions • Promoting sports and cultural activities where we operate, and share our achievements with the • Investing in healthcare and local communities. GROUP CEO infrastructure projects • Considering the opinion of local communities when planning STAKEHOLDER ENGAGEMENT AT ALL STAGES OF MINE LIFE social activities DEPUTY CEO FOR DIRECTOR OF • Supporting Indigenous Minorities of the COMMUNITIES PUBLIC RELATIONS North (IMN) AND AND LOCAL • Improving our social policy INFORMATION GOVERNMENTS Exploration Design and construction Operation Mine closure • Complying with international standards • We define and • We engage • We develop cooperation • We consult and inform • Creating socio-economic value estimate risks representatives of agreements communities • Maintaining all relevant tax payments • We inspect communities stakeholder groups • We deliver value, • We carefully monitor • Ensuring local employment in the region • We meet communities providing help and our impacts • Supporting local business • We identify and open dialogue assistance and communities’ • We plan long-term fulfilling agreed social HEAD expectations and needs cooperation tools HEAD OF INTERNAL obligations OF EXTERNAL COMMUNICATIONS • We agree on • We implement feedback COMMUNICATIONS communication systems and respond to channels, plan social any concerns investments, and • We consider analyse their needs communities’ needs • We develop plans with when carrying out work minimum negative COMMUNICATION TEAMS IN OUR OPERATIONS • We pay taxes impact • We continuously • We employ local monitor our impacts residents
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Socio-economic development continued
Our commitment to social investment Feedback from local communities Community engagement We invest in local communities, implementing our social Feedback from local communities is important to us at FEEDBACK MECHANISM investment programme to improve living standards for every stage of our social projects. We continually seek to Our dedicated teams maintain an efficient Community local people and facilitate regional economic development. improve our Community Engagement System to enhance Engagement System at all our sites and throughout all We discuss community needs and decide investment opportunities for dialogue and feedback. We regularly STAKEHOLDER projects. Each time we invest in a new mining site or project, priorities with local stakeholders. Our Board of Directors and organise events to continue conversations with local we first identify stakeholders, including local authorities, management team review our annual community investments communities, in particular in remote areas. These include communities and groups, non-governmental organisations, and targets to ensure they deliver meaningful change field trips and face-to-face consultations. Enquiry/Proposal and any indigenous minorities. We take into account all for communities. stakeholders’ interests and opinions when planning and To date, communication channels have been organised in implementing projects. In 2018, we invested more than $10 million in local all regions of our operations and all stakeholders have been communities. And over the past five years, our investment provided with access to feedback mechanisms. Stakeholders ANNUAL It is important to assess the social and economic risks and exceeded $30 million. We have focused particularly on can reach us easily and are guaranteed to receive a detailed EMAIL RESULTS impacts that our activities may have at local and regional projects involving sport and a healthy lifestyle, healthcare response within 14 days. MEETINGS level. Throughout projects, we interact with local communities and education, infrastructure, culture, and Indigenous at every stage – engineering, construction, operation and Minorities of the North (IMN). We also made charitable In 2018, we received 755 enquiries from local communities, donations worth $601,000. mostly relating to financial support and employment winding up – in line with national legal requirements and REGULAR opportunities. FEEDBACK applicable international standards. BOXES ON MEETINGS TELEPHONE In addition to financial contributions, we make ‘in-kind’ INFORMATION WITH LOCAL We develop long-term strategies and engage with local donations, including humanitarian aid to reindeer herders, During the year, we held 50 meetings, site visits and public STANDS POPULATION communities, institutions, authorities and organisations with donations of food, fuel and medicines; delivery of food gatherings, including 16 hearings for local community to ensure we deliver maximum value to local people. and medicines to remote communities and indigenous members and indigenous people (37 in 2017). This includes maintaining a feedback system, which has minorities; and construction and maintenance of roads in remote areas. COMMUNICATIONS a grievance procedure, and processing all information to DEPARTMENT take any corrective measures.
Our feedback channels include: SOCIAL INVESTMENTS IN 2018 Celebrating the Holiday of the North (%) FEEDBACK • Feedback tools (email, telephone and face-to- Supporting Indigenous Minorities of the North is a REGISTRATION face communications) real privilege, and during the Holiday of the North • Polls, focus groups and questionnaires it is particularly memorable. Polymetal supported in local communities $10m the celebrations in Arka Village, the northernmost ADDRESSING • Meetings and direct conversations indigenous community in the Khabarovsk Region. ENQUIRIES with Company management SOCIAL INVESTMENTS Here, reindeer breeders from the entire Okhotsk District • General meetings, one-to-one meetings and gathered, with some travelling over 200km. Healthcare and education 40 public events, with Company and community Answer/Explanation members participating Sport 31 Men competed in a national hunting contest, and • Working groups (with NGOs) women demonstrated their culinary abilities and Social infrastructure 12 • Mass media needlework skills, singing songs and reciting poetry. Culture and art 8 There was reindeer riding and racing, lasso throwing, ANNUAL We plan and make social investments, and carry out Charitable donations 6 and jumping competitions over sleighs. EMAIL RESULTS charity work as part of cooperation agreements, with due MEETINGS IMN support 3 consideration for public opinion. Finally, we report the Group’s Local hostesses greeted guests in traditional sustainability achievements on a regular basis. tabernacles, whose decorations were judged in a separate competition. Guests enjoyed national dishes Resettlement in communities of venison, fish and game, and heard stories of their REGULAR MEETINGS TELEPHONE MEDIA Since resettlement at Kyzyl in 2015 and 2017, we have ancestry, relics and traditions in Evenki. WITH LOCAL monitored those affected and continue to apply best POPULATION practices. In July 2018, independent social and environmental experts conducted an audit here and confirmed compliance of our approach with the European Bank for Reconstruction and Development’s (EBRD) Social and Environmental Policy.
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Socio-economic development continued
KEY SOCIAL INVESTMENTS Assessing our impact Helping people with disabilities KEY NUMBERS INVESTMENTS KEY PROJECTS ($M) Designated departments at each of our operations regularly to succeed collect data relating to our social projects. They conduct SPORTS Our team at Varvarinskoye has been involved in special community polls, organise focus groups and hold annual work again this year, helping students at the Kostanay Over 90 projects The Company: performance review meetings with stakeholders to evaluate Regional Special Boarding School. The school is in and events our impact. This helps us respond flexibly to changing 3.1 need of new equipment to help their students reach • Funded children’s sports teams, Sverdlovsk Region, Russia situations, adjust investments, and eliminate any possibility • Renovated a gym in the Kaisar sports school, Taranovsky District, their full potential. Kostanay Region, Kazakhstan of funds being inappropriately diverted. We also provide local communities with the opportunity to participate directly in the • Supported the Amursk City sports event, Khabarovsk Territory, Russia Having helped to equip hairdressing and culinary art development and monitoring of our social programmes. classrooms back in 2016, and sewing classrooms and, HEALTHCARE shoemakers’ and carpenters’ workshops in 2017, we In 2018, we conducted community polls in 17 districts, were keen to identify where we could make a difference Over 20 projects • Replaced windows and renovated Paediatrics Department of the North Evensk District involving 851 people, and we received 153 letters from Hospital in the Magadan Region, Russia this year. 2.3 • Purchased an ambulance for the medical office of the village of Prirechnoye, Zhitikar District community groups expressing gratitude for our efforts. of the Kostanay Region, Kazakhstan Our assessments showed several positive impacts and “Handicraft lessons are important for the students,” • Purchased two haemodialysis apparatuses for the Haemodialysis Department of the Kapan no adverse impacts from our operations. Medical Centre, Syunik Region, Armenia believes Serik Daniyarov, School Principal. “These are the fundamentals of their future professions.” So we Positive impacts included tax payments to the state and provided new equipment for their handicraft classroom. EDUCATION local authorities. In 2018 alone, our tax payments across “With the new equipment, we will be able to send our the Group amounted to $181 million, compared to $188 Over 100 projects • Purchased PCs under the computer competence enhancement project, village of Dzhuen, students to colleges well-trained and capable of working Amursky District of the Khabarovsk Territory, Russia million in 2017. These payments include mandatory 1.8 with modern technology.” • Renovated the school building in the Seymchan settlement, Omsukchan District of Magadan contributions to state social funds, including pension funds Region, Russia of the countries of operation. Additionally, as a part of • Funded the Menin Mektebim Action under the Tugan Zher Programme (to provide Biology, In addition, we provided a van with a wheelchair lift, our collective agreements, we hold pension liabilities for Chemistry, Physics and Robot Techniques classes at the schools of the East Kazakhstan to help the 150 members of a sports club who are Region with modern specialised equipment) retired employees. We do not consider these liabilities to wheelchair users. be material and disclose them in the ‘other non-current INFRASTRUCTURE liabilities’ category of our Financial report. “The greatest problem was with wheelchair users getting to our club,” says Natalia Sukhacheva, Deputy Over 40 projects • Renovated the fire station, village of Kherpuchi, Polina Osipenko District, Our positive impacts also include support for infrastructure Khabarovsk Territory, Russia Director of the club. “A person in a wheelchair cannot 1.2 and related industries, regional population increases due • Purchased a bus for the town bus station under the programme of free transportation for use public transport. Many young people have potential, residents, town of Pevek, Chaunsky District, Chukotka, Russia to industrial growth, local employment opportunities, and but they experience difficulties with commuting to the • Repaired a water supply system in the village of Tokhtarovo, Zhitikar District, Kostanay environmental protection and ecological projects. Region, Kazakhstan club. Our new van with a wheelchair lift means people who use wheelchairs can now be driven to the club and A major element of our positive impacts are our back for training.” CULTURE social investments and community support. In 2018, we Over 80 projects, • Refurbished the Garpana Ethnic and Culture Centre in the village of Topolinoye, Tomponsky continued to construct, upgrade or equip, and support events and actions 0.8 District, Yakutia community institutions. These include kindergartens, schools, • Arranged a creativity competition in remembrance of Tursynkhan Abdrakhmanova (folk poet) health centres, sport and culture centres, and infrastructure in the village of Kalbatay, East Kazakhstan Region facilities in host communities in new and remote areas. Our • Supported the children and youth ‘Stars of Hope’ art festival, Polina Osipenko District, Khabarovsk Region support provides targeted assistance to vulnerable people, including children from poor families and the elderly. CHARITY Local employment 110 events • Purchased neurofeedback complexes for the Infantile Cerebral Palsy Rehabilitation By employing local people, we benefit and our local and targeted Department, Kostanay, Kazakhstan assistance actions 0.6 • Arranged free charity culture events, in which Kapan dancing and singing groups communities benefit. This helps to strengthen ties between participated, Kapan, Syunik Region, Armenia our business and communities, and lowers costs and our • Supported charity events for older people, veterans, school students, vulnerable families and environmental impact, by not having to fly employees in orphans in all regions where we operate and out from other areas. It means employees are already dedicated to the well-being of the local community, and it INDIGENOUS MINORITIES OF THE NORTH helps us increase our positive impact on local economies. managers, and the share of locally employed women was 2.4% higher in our total Polymetal headcount. Over 60 projects • Supported the Mergenken Project aimed at promoting health among youngsters and and events developing national sports, Amursk District, Khabarovsk Territory, Russia We actively recruit from local communities, creating 0.3 • Arranged the Interregional Ethnic Festival Dzyalbu, Magadan, Russia employment opportunities at our major operational sites. In Local suppliers • Supported reindeer herders in the Far East regions where the Company operates, Russia 2018, 96% of our employees were local nationals (Russian, In our supply chain management, we ensure that our Armenian and Kazakh, depending on the location of the procedures are transparent, conditions are competitive, site). We make efforts to promote women and support partnerships are fair, goods and services are delivered female leadership. As a result, in 2018 the share of locally on time, suppliers are reliable, and all parties are in full employed female managers was 7% higher than male compliance with applicable regulations.
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Socio-economic development continued
To ensure efficiency in our supply chain, we use a business- corruption and fraud among our employees, contractors to-business e-procurement system, which enables us to and suppliers. expand our list of contractors and make our processes more Our progress in 2018 transparent and safe. We aim for long-term partnerships with In 2018, we continued our anti-corruption training. As well suppliers, who are selected in an open tender process. as induction and refresher training for Polymetal employees and contractors, we held more than 145 seminars and 33 Our suppliers – for example those providing construction briefings for high-risk groups, which were attended by over material and equipment for our operations – are often large, 5,000 people. PLANS FOR 2018 STATUS PROGRESS global manufacturers, which helps us lower risk and cost. We would update our Social Projects On track We began reviewing and updating our Social Projects However, wherever we can, we engage local and regional The 46 instances of corruption identified within our Assessment System. Assessment System. suppliers, helping to stimulate regional and national supply business in the past year were limited to minor fraud We would implement our Stakeholder Delivered We started a dialogue with local communities in Sakha chains and economies. and theft. Identifying these cases led to no financial Engagement System at newly acquired (Yakutia), a new region of operation. Stakeholders from local operations. As part of this, we would identify communities, public organisations and authorities were identified, loss, and avoided damage worth $596,000. Employees stakeholders, establish stakeholder communication channels were created, and access was granted In 2018, on average around 49% of our supplier purchases were sanctioned for fraudulent activities and some were relations, assess their needs, implement a to all stakeholders. in Russia were officially registered in or adjacent to the dismissed. None of these cases had a material impact on stakeholder feedback system and carry out region, territory or city where Polymetal is also registered our operations or financial position, and no court cases regular opinion surveys. and operates, compared to a rate of 47% the previous year. relating to corruption were brought against Polymetal or We would support special projects and On track We support ongoing projects in each Far Eastern region of our In Kazakhstan and Armenia, they accounted for 88% and any of our employees. campaigns aimed at preserving the operations. 64 projects were implemented in 2018. 75% respectively. languages, cultural heritage and traditional crafts of Indigenous Minorities of the North. Financial assistance and payments to governments Relations with regional suppliers are critical, due to the We issue a separate annual report on payments to We would involve our employees and local On track In 2018 we held more than 95 volunteering initiatives involving remoteness of many of our sites and their extreme weather communities in volunteering activities, around 250 employees, and 2,150 employees participated in governments by Polymetal International plc and its and encourage their participation in our charity project, Mandarin, making gifts for children from conditions. Equipment is often delivered by sea to remote subsidiary undertakings. This report is required by the UK’s the Company’s environmental and vulnerable families. locations during the navigation season, and we are Report on Payments to Governments Regulations 2014 (as charity projects. dependent on regional suppliers. amended in December 2015). These regulations are in line Review and update formal policies Delivered We developed and implemented our Community Engagement with EU Accounting Directive 2013/34/EU. They apply to and standards. Policy, Stakeholder Engagement and Consultation Standard The largest proportions of local procurement were achieved large extractive companies whose securities are publicly and Indigenous Minorities Engagement Standard as part of our at Kyzyl (84% compared to 74% in 2017), Okhotsk (83% listed on a UK-regulated stock market – companies that Community Engagement System. compared to 42% in 2017), Omolon and Voro (58% in 2018). are involved in the exploration, prospection, discovery, development and extraction of minerals, oil, natural gas Assessing our suppliers deposits or other materials. This report is also intended to Plans for 2019 and beyond We conduct audits to ensure we work only with ethical satisfy the requirements of the Disclosure and Transparency suppliers. In 2018, we audited over 3,000 potential Rules of the UK’s Financial Conduct Authority. • To maintain and develop stable constructive • To develop programmes aimed at supporting contractors and rejected partnerships with some of them, relationships with external stakeholders from Indigenous Minorities of the North and preserving as they did not fit our corporate governance principles or Customers and markets served local communities their cultural heritage anti-corruption policies. Our products are sold both inside and outside their country of manufacture. We sell gold and silver bars mainly • To maintain the quality of the feedback mechanisms • To develop and implement cooperation programmes We want to work with suppliers who share our concern to Russian banks, while our concentrate is purchased by for stakeholders from local communities with local communities in our new areas of operation for important issues, like protecting the environment and off-takers including smelters and manufacturers throughout respecting human rights. In 2018, we introduced a Supplier the global market. • To continue social investments in the regions where • To implement a new system for social Code. All our suppliers must comply with this. The Code we operate, focusing on priority goals related to impact evaluation specifies that suppliers must take steps to prevent child, In 2018, 62% of our total sales were bullion and 38% education, healthcare, sport and culture forced and slave labour, and check for violations. If any are concentrate. The four regions with the largest proportion identified, they must be reported. To date, we are not aware of sales were Russia (61%), Kazakhstan (18%), East Asia of any violations by any of our suppliers. (14%) and Europe (7%).
We ensure that all our suppliers are familiar with the Code. When selecting partners, Polymetal considers the And going forwards, our contracts with suppliers will state potential risks associated with facilities for concentrate that any violation will mean that we will end the contract. off-take. Bars are usually sold to large refineries and banks, In addition, suppliers and carriers of cyanide must operate and all processes comply with applicable national and in line with the International Cyanide Management Code. international regulations. Cargoes of hazardous materials must be transported only using carriers with special permits for hazardous cargo Together with our sales and marketing experts, we ensure transportation. full compliance with international regulations in product quality, shipment and transportation. Since 1998, we have Anti-corruption not received any significant fines for non-compliance with We raise awareness of bribery and corruption risks, and laws and regulations relating to the use and provision of their potential impact on our business. Across the Group, products and services. we have implemented a variety of measures to help prevent
62 Polymetal International plc Sustainability Report 2018 Sustainability Report 2018 Polymetal International plc 63 OVERVIEW HEALTH AND SAFETY EMPLOYEES ENVIRONMENT SOCIO-ECONOMIC APPENDICES Independent limited assurance report to the shareholders of Polymetal International plc This report, including our conclusions, has been prepared Work done Reporting and measurement methodologies solely for the management of the Company in accordance We are required to plan and perform our work in order to There are no globally recognised and established with the agreement between us, to assist management consider the risk of material misstatement of the Selected practices for evaluating and measuring the Selected in reporting on the Company’s sustainability performance Information. In doing so, we: Information. The range of different, but acceptable, and activities. We permit this report to be disclosed in techniques can result in materially different reporting the Company’s Sustainability Report for the year ended • made enquiries of the Company’s management, outcomes that may affect comparability with other 31 December 2018, to assist management in responding Introduction including the Sustainability Reporting team and organisations. The reporting criteria used as a basis of the to their governance responsibilities by obtaining an those with responsibility for sustainability reporting Company’s sustainability reporting should therefore be read We have been engaged by management of Polymetal independent assurance report in connection with the management and sustainability reporting; in conjunction with the Selected Information and associated International plc (hereinafter – the “Company”) to Selected Information. To the fullest extent permitted by law, • conducted interviews of personnel responsible for statements reported on the Company’s website1. provide limited assurance on the Selected Information we do not accept or assume responsibility to anyone other sustainability reporting data collection (interviews were described below and included in the Sustainability Report than management of the Company for our work or this held in Saint Petersburg); for the year ended 31 December 2018 (hereinafter – Limited assurance conclusion report except where terms are expressly agreed between • performed analysis of the relevant policies and basic the “Sustainability Report”). Based on the procedures we have performed and the us in writing and our prior consent in writing is obtained. reporting principles, gaining an understanding and evidence we have obtained: evaluating the design of the key structures, systems, Selected Information Professional standards applied and level of assurance processes and controls for managing, recording and • nothing has come to our attention that causes us to We assessed the qualitative and quantitative We performed a limited assurance engagement in reporting the Selected Information; believe that the Selected Information for the year ended information that is disclosed in the Sustainability Report accordance with International Standard on Assurance • performed limited substantive testing on a selective 31 December 2018 has not been prepared, in all material and included in the Tables of the Global Reporting Initiative Engagements 3000 (Revised) “Assurance Engagements basis of the Selected Information to check that data had respects, in accordance with the requirements of the GRI for standard disclosures in environmental, workforce, other than Audits and Reviews of Historical Financial been appropriately measured, recorded, collated and Standards; and safety and socio‑economic areas in the reporting scope Information’’, issued by the International Auditing and reported; and • nothing has come to our attention that causes us to of the Sustainability Report (hereinafter – the “Selected Assurance Standards Board. A limited assurance • reviewed the Selected Information for compliance of the believe that the Selected Information does not meet the Information”). The scope of our assurance procedures engagement is substantially less in scope than a disclosures with the requirements of the GRI Standards. Core requirements in accordance with the Guidelines of was limited to Selected Information for year ended reasonable assurance engagement in relation to the GRI Standards. 31 December 2018. both the risk assessment procedures, including an understanding of internal control, and the procedures 1 The maintenance and integrity of the Company’s website is the responsibility Reporting Criteria performed in response to the assessed risks. of management; the work carried out by us does not involve consideration of We assessed the Selected Information using the these matters and, accordingly, we accept no responsibility for any changes Sustainability Reporting Guidelines of the Global Reporting that may have occurred to the reported Selected Information or Reporting Our Independence and Quality Control Criteria when presented on the Company’s website. Initiative (GRI, 2016) (hereinafter – the “GRI Standards”). We have complied with the independence and other We believe that these reporting criteria are appropriate ethical requirements of the Code of Ethics for Professional given the purpose of our limited assurance engagement. Accountants issued by the International Ethics Standards Board for Accountants, which is founded on fundamental Polymetal International plc responsibilities principles of integrity, objectivity, professional competence Management of the Company is responsible for: and due care, confidentiality and professional behaviour, together with the ethical requirements of the Auditor’s • designing, implementing and maintaining internal Professional Ethics Code and Auditor’s Independence controls over information relevant to the preparation Rules that are relevant to our assurance procedures over of the Selected Information that is free from material Selected Information in the Russian Federation. misstatement, whether due to fraud or error; • establishing objective Reporting Criteria for preparing the Our firm applies International Standard on Quality Selected Information; Control 1 and accordingly maintains a comprehensive • measuring and reporting the Selected Information based system of quality control including documented policies on the Reporting Criteria; and and procedures regarding compliance with ethical • accuracy, completeness and fair presentation of the requirements, professional standards and applicable Selected Information. legal and regulatory requirements. Our responsibilities We are responsible for:
• 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; • forming an independent conclusion, based on the procedures we have performed and the evidence we have obtained; and • reporting our conclusion to the management of the Company.
64 Polymetal International plc Sustainability Report 2018 Sustainability Report 2018 Polymetal International plc 65 OVERVIEW HEALTH AND SAFETY EMPLOYEES ENVIRONMENT SOCIO-ECONOMIC APPENDICES Key sustainability figures
FINANCIAL RESULTS Units 2018 2017 WATER Units 2018 2017 Revenue $m 1,882 1,815 Ground water thousand m3 1,395 1,328 Cash operating costs (excluding depreciation, labour costs and mining tax) $m 728 639 Surface water thousand m3 4,736 3,771 Wages and salaries; other payments and benefits for employees $m 315 285 External water supply thousand m3 475 524 Payments to capital providers $m 79 65 Waste water thousand m3 4,496 2,627 Payments to shareholders $m 223 196 Recycled water thousand m3 28,317 26,407 Taxes (excluding payroll taxes included in labour costs) $m 181 188 Water percentage recycled and reused % 83 83 3 Income tax and excess profit tax $m 71 89 Total water consumed thousand m 39,419 34,657 Taxes, other than income tax $m 13 11 Discharge Mining tax $m 97 88 Watercourses thousand m3 10,407 8,792 Social payments $m 16 15 Collecting ponds thousand m3 247 825 Undistributed economic value retained $m 340 427 Landscape thousand m3 0 252 Sewage thousand m3 187 713 OPERATION Units 2018 2017 Total water discharge thousand m3 10,841 11,339 Waste mined Kt 126,696 114,008 Water sources significantly affected by withdrawal of water number 0 0 Underground development m 130,000 115,352 Ore mined Kt 13,979 12,589 LANDS Units 2018 2017 Open-pit Kt 8,241 9,319 Total managed land area hectares 20,118 20,101 Underground Kt 4,347 4,660 Land disturbed during year hectares 560 1271 Ore processed Kt 13,037 15,162 Land reclaimed during year hectares 228 471 Production Total land disturbed and not yet rehabilitated hectares 12,653 11,995 Gold Koz 1,216 1,075 Silver Moz 25.3 26.8 AIR POLLUTANT EMISSIONS Units 2018 2017 Copper Kt 3.9 2.7 Direct GHG emissions (scope 1) t 311,830 280,851 Zinc Kt 5.4 4.8 Indirect GHG emissions (scope 2) t 520,663 490,468 Gold equivalent1 Koz 1,562 1,433 Total greenhouse gas emissions t 832,493 771,320 Sales Sulphur dioxide (SO ) t 1,030 983 Gold Koz 1,198 1,099 2 Oxides of nitrogen t 2,919 2,500 Silver Moz 25.7 26.5 Carbon monoxide t 3,037 2,983 Copper Kt 3.3 2.6 Inorganic dust (solid particles) t 4,458 4,973 Zinc Kt 5.6 4.7 Ozone depleting (CFC-11 equivalents) substances emitted t 0 0 Total waste generated, including t 139,160,407 128,263,798 PRINCIPAL CONSUMABLES Units 2018 2017 Waste rock t 126,616,404 117,666,813 Quicklime t 69,272 53,898 Tailings t 12,520,295 10,575,864 Grinding body t 15,871 15,343 Total waste generated by categories Sodium cyanide t 9,537 8,918 Non-hazardous t 139,144,579 128,250,317 Concrete t 8,054 10,292 Hazardous t 15,828 13,481 Perhydrol t 5,567 5,732 Total waste disposed during the year 139,251,961 128,185,671 Flotation reagents t 3,747 3,410 Waste disposed t 116,631,253 99,726,341 Soda t 3,489 79 Waste neutralised t 9,616 9,751 Caustic soda t 1,426 951 Waste reused t 22,611,092 28,449,579 Flocculant t 213 214 Percentage of waste reused of total waste generated % 16 22 Zinc powder t 370 342
ENVIRONMENTAL EXPENDITURES Units 2018 2017 ENERGY Units 2018 2017 $ thousand 19,945 24,758 Electricity generated (diesel/solar/wind power plants) GJ 1,005,752 944,285 Electricity purchased GJ 2,124,366 1,863,211 BIODIVERSITY Units 2018 2017 Transport and mobile machinery by sources: Petrol GJ 34,973 33,395 Total number of IUCN red list species and national conservation list species with habitats Diesel GJ 1,990,645 1,870,004 in areas affected by operations number 0 1 Heat generated by sources: Operational sites owned, leased, managed in, or adjacent to, protected areas and areas Diesel GJ 72,906 3,943,432 of high biodiversity value outside protected areas number 0 0 Coal GJ 1,216,270 401,420 Natural gas GJ 172,445 164,984 SOCIAL Units 2018 2017 Waste oils GJ 22,801 – Total workforce as of 31 December number 12,348 11,919 Total energy GJ 6,640,157 7,009,970 Average headcount number 12,140 11,553 Percentage of employees covered by collective bargaining agreements % 89 89 1 Based on 80:1 Ag/Au, 5:1 Cu/Au and 2:1 Zn/Au conversion ratios. Turnover rate % 5.8 5.4
66 Polymetal International plc Sustainability Report 2018 Sustainability Report 2018 Polymetal International plc 67 OVERVIEW HEALTH AND SAFETY EMPLOYEES ENVIRONMENT SOCIO-ECONOMIC APPENDICES
Key sustainability figures continued
WORKFORCE DIVERSITY Units 2018 2017 COMMUNICATION Units 2018 2017 Percentage of female employees % 20 22 Enquiries from employees number 1,458 1,001 Percentage of female managers % 22 24 Employee enquiries responded to number 1,458 1,001 Percentage of female qualified personnel % 40 42 Enquiries from communities number 755 516 Total young personnel (under 30) number 2,564 2,407 Public meetings and gatherings number 50 37 Female young personnel (under 30) number 521 509 Site visits by external stakeholders number 9 20 Male young personnel (under 30) number 2,043 1,898 Percentage of young personnel (under 30) % 21 20 COMPLIANCE Units 2018 2017 Percentage of female young personnel (under 30) % 20 21 Significant fines $ thousand 0 0 Percentage of male young personnel (under 30) % 80 79 Non-monetary sanctions $ thousand 0 0 Disabled personnel number 11 12 Cases brought number 0 0 Taken parental leave number 175 228 Male employees on parental leave % 3 3 PRODUCT RESPONSIBILITY Units 2018 2017 Female employees on parental leave % 97 97 Return to work and retention rates after parental leave % 100 100 Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data. $ thousand 0 0 TRAINING Units 2018 2017 Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services. $ thousand 0 0 Trained personnel number 20,158 14,974 Total number of incidents of non-compliance with regulations and voluntary codes Percentage of employees trained in-house of total trained % 62 63 concerning health and safety impacts of products and services $ thousand 0 0 Percentage of employees trained by external services % 38 37 Average number of training hours per employee (per year) number 49 66 Average number of training hours per female employee (per year) number 51 68 Average number of training hours per male employee (per year) number 49 60 Total investments in training $ thousand 1,494 1,474
SAFETY Units 2018 2017 Polymetal Accidents, including: number 11 16 Fatalities number 1 2 LTIFR rate 0.09 0.15 Occupational diseases and health difficulties number 3 3 Contractors Accidents, including: number 15 9 Fatalities number 0 1 LTIFR rate 0.27 0.28
ETHICS Units 2018 2017 Code of conduct violations1 number 374 12 Cases of corruption – losses prevented1 $ thousand 596 21
COMMUNITY INVESTMENT Units 2018 2017 Sport $ thousand 3,111 3,215 Healthcare and education $ thousand 4,060 4,671 Culture and art $ thousand 810 939 Infrastructure of social importance $ thousand 1,223 2,323 IMN support $ thousand 288 272 Environmental awareness and education $ thousand – 84 Charitable donations $ thousand 601 269 Total community investment $ thousand 10,092 11,772 Number of partnership agreements number 34 30 Total value of financial contributions to political parties, politicians, and political action committees $ thousand 0 0
1 Increase due to changes in classification and reporting methodology.
68 Polymetal International plc Sustainability Report 2018 Sustainability Report 2018 Polymetal International plc 69 OVERVIEW HEALTH AND SAFETY EMPLOYEES ENVIRONMENT SOCIO-ECONOMIC APPENDICES GRI disclosure table
General disclosures GENERAL DISCLOSURE DISCLOSURE TITLE PAGE SCOPE AND GENERAL DISCLOSURE DISCLOSURE TITLE PAGE SCOPE AND DISCLOSURE NUMBER COMMENTS DISCLOSURE NUMBER COMMENTS STANDARD STANDARD GRI 102-31 Review of economic, environmental, and social topics p.22–23 1 Organisation GRI 102-32 Highest governance body’s role in sustainability reporting p.23–24 1 profile GRI 102-33 Communicating critical concerns p.29 1 GRI 102-1 The name of the organisation Cover 1 GRI 102-34 Nature and total number of critical concerns p.44, 58 1 GRI 102-2 Activities, brands, products, and services p.14–15, 18–19 1 GRI 102-35 Remuneration policies Annual Report 2018, 1 GRI 102-3 Location of headquarters p.16 –17 1 Remuneration policy report, GRI 102-4 Report the number of countries where the organisation p.16 –17 1 https://www. operates, and names of countries where either the polymetalinternational.com organisation has significant operations or that are specifically GRI 102-36 Process for determining remuneration Annual Report 2018 1 relevant to the sustainability topics covered in the report GRI 102-37 Stakeholders’ involvement in remuneration Annual Report 2018 1 GRI 102-5 Ownership and legal form Annual Report 2018 1 GRI 102-38 Annual total compensation ratio Annual Report 2018 Without GRI 102-6 Markets served (including geographic breakdown, sectors p.16 –17, 62 1 breakdown served, and types of customers and beneficiaries) by countries GRI 102-7 Scale of the organisation p.2–17 3 Stakeholder GRI 102-8 Information on employees and other workers p.39–40 3 engagement GRI 102-9 Supply chain p.19, 28–29, 61–62 1 GRI 102-40 List of stakeholder groups p.28–29 1 GRI 102-10 Significant changes to the organisation and its supply chain p.1, 20–21, 16–17, 1 GRI 102-41 Collective bargaining agreements p.44 3 Annual Report 2018 GRI 102-42 Identifying and selecting stakeholders p.28–29, 57 1 GRI 102-11 Precautionary Principle or approach p.15, https://www. 1 GRI 102-43 Approach to stakeholder engagement p.28–29, 57 1 polymetalinternational.com GRI 102-44 Key topics and concerns raised p.28–29 1 GRI 102-12 External initiatives p.2, 32, 38, 46, 56 1 Identified GRI 102-13 Membership of associations p.32, 38, 46, 56 1 Material Strategy Aspects and and analysis Boundaries GRI 102-14 Statement from senior decision-maker p.1 1 GRI 102-45 Entities included in the consolidated financial statements Annual Report 2018 1 GRI 102-15 Key impacts, risks, and opportunities p.24, 28–31 1 GRI 102-46 Defining report content and topic boundaries p.2–12, 29 1 Ethics GRI 102-47 List of material topics p.15 1 and integrity GRI 102-48 Restatements of information In footnotes 1 GRI 102-16 Organisation’s values, principles, standards, and norms p.15, 20–21, 39 1 GRI 102-49 Changes in reporting p.15 1 of behaviour Report GRI 102-17 Mechanisms for advice and concerns about ethics p.44, 58 1 profile Governance GRI 102-50 Reporting period Inside front cover 1 GRI 102-18 Governance structure p.22–24 1 GRI 102-51 Date of most recent report March 2018 for FY 2017 1 GRI 102-19 Delegating authority p.20–24 1 GRI 102-52 Reporting cycle Annual reporting cycle 1 GRI 102-20 Executive-level responsibility for economic, environmental, p.22 1 GRI 102-53 Contact point for questions regarding the report Inside front cover 1 and social topics GRI 102-54 Accordance with the GRI Standards This report has been 1 GRI 102-21 Consulting stakeholders on economic, environmental, and p.28–29 1 prepared in accordance social topics with the GRI Standards: GRI 102-22 Composition of the highest governance body and its p.22 1 Core option committees GRI 102-55 GRI disclosure table p.70 1 GRI 102-23 Chair of the highest governance body p.22 1 GRI 102-56 External assurance p.64–65 1 GRI 102-24 Nominating and selecting the highest governance body Annual Report 2018 1 Management GRI 102-25 Conflict of Interest p.23–34, Annual Report 2018 1 approach GRI 102-26 Role of highest governance body in setting purpose, values, p.23–24 1 GRI 103-1 Report the material aspect boundary within the organisation p.28–29, 75 1 and strategy GRI 103-2 The management approach and its components In each section of the 1 GRI 102-27 Collective knowledge of highest governance body Annual Report 2018 1 Sustainability report GRI 102-28 Evaluating the highest governance body’s performance Annual Report 2018 1 GRI 103-3 Evaluation of the management approach p.28–29 1 GRI 102-29 Identifying and managing economic, environmental, and p.23–24 1 social impacts GRI 102-30 Effectiveness of risk management processes p.24 1
70 Polymetal International plc Sustainability Report 2018 Sustainability Report 2018 Polymetal International plc 71 OVERVIEW HEALTH AND SAFETY EMPLOYEES ENVIRONMENT SOCIO-ECONOMIC APPENDICES
GRI disclosure table continued
Specific standard disclosures STANDARD DISCLOSURE DISCLOSURE TITLE PAGE SCOPE AND COMMENTS STANDARD DISCLOSURE DISCLOSURE TITLE PAGE SCOPE AND COMMENTS NUMBER NUMBER Effluents and GRI 306-2 Total weight of waste by type and disposal method p.50 2. Disclosure of hazardous Economic Waste and non-hazardous waste without a breakdown by Economic GRI 201-1 Direct economic value generated and distributed p.60–63 1 disposal methods Performance GRI 201-3 Defined benefit plan obligations and other retirement plans p.61 1 GRI 306-3 Total number and volume of significant spills p.50 1 GRI 201-4 Financial assistance received from government p.62 1 GRI 306-4 Weight of transported, imported, exported, or treated waste p.50 2 deemed hazardous Market GRI 202-1 Ratios of standard entry level wage by gender compared to p.43 4 Presence local minimum wage G4-MM3 Total amounts of overburden, rock, tailings, and sludges p.50 2 GRI 202-2 Proportion of senior management hired from the p.61 3 Environmental GRI 307-1 Non-compliance with environmental laws and regulations p.47 1 local community compliance Indirect GRI 203-1 Infrastructure investments and services supported p.60 1 Supplier GRI 308-1 New suppliers that were screened using environmental criteria p.47, p.61–62 1 Economic Environmental Impacts Assessment Procurement GRI 204-1 Proportion of spending on local suppliers p.63 2 Social Practices Employment GRI 401-1 New employee hires and employee turnover p.39 3 Anti- GRI 205-2 Communication and training on anti-corruption policies p.62 5 GRI 401-3 Parental leave p.43 3 Corruption and procedures Labour/ G4-MM4 Number of strikes and lock-outs exceeding one p.30 1 GRI 205-3 Confirmed incidents of corruption and actions taken p.62 1 Management week’s duration Environment Relations GRI 402-1 Minimum notice periods regarding operational changes 1. Employment and Labour Materials GRI 301-1 Materials used by weight or volume p.50 2 Corporate Standard GRI 301-2 Recycled input materials used p.50 2 Occupational GRI 403-1 Workers representation in formal joint management–worker p.33 2. Disclosure without a Energy GRI 302-1 Energy consumption within the organisation p.52 2 Health and health and safety committees. percentage of workers Safety whose work is controlled GRI 302-3 Energy intensity p.53 2 by the organisation. GRI 302-4 Reduction of energy consumption p.52–53 2 GRI 403-2 Types of injury and rates of injury, occupational diseases, lost p.34 2. Disclosure without days, and absenteeism, and number of work-related fatalities a breakdown by gender GRI 302-5 Reductions in energy requirements of products and services p.52–53 2 and region Water GRI 303-1 Interactions with water as a shared resource p.49 2 GRI 403-3 Workers with high incidence or high risk of diseases related to p.34 1 GRI 303-2 Management of water discharge related impacts p.49 2 their occupation GRI 303-3 Water withdrawal p.49 2 GRI 403-4 Health and safety topics covered in formal agreements with p.33 1 trade unions GRI 303-4 Water discharge p.49 2 GRI 403-5 Worker training on occupational health and safety p.35 1 GRI 303-5 Water consumption p.49 2 GRI 403-8 Workers covered by an occupational health and safety p.39 1 Biodiversity GRI 304-1 Operational sites owned, leased, managed in, or adjacent to, p.54 2 management system protected areas and areas of high biodiversity value outside protected areas GRI 403-9 Work-related injuries p.34 1 GRI 304-2 Significant impacts of activities, products, and services p.54 1 GRI 403-10 Work-related ill health p.35 1 on biodiversity Training and GRI 404-1 Average hours of training per year per employee p.41 1 G4-MM1 Amount of land disturbed or rehabilitated p.54 2 Education GRI 404-2 Programmes for upgrading employee skills and transition p.40–42 1 Emissions GRI 305-1 Direct (Scope 1) GHG emissions p.52 2 assistance programmes GRI 305-2 Energy indirect (Scope 2) GHG emissions p.52 2 Diversity and GRI 405-1 Diversity of governance bodies and employees p.40 3. Disclosure without a GRI 305-4 GHG emissions intensity p.53 2 Equal breakdown by the following Opportunity age groups: under GRI 305-5 Reduction of GHG emissions p.53 2 30 years old, 30–50 years GRI 305-7 Nitrogen oxides (NOX), sulphur oxides (SOX), and other p.30 2 old, over 50 years old significant air emissions GRI 405-2 Ratio of basic salary and remuneration of women to men p.43 3 Non- GRI 406-1 Incidents of discrimination and corrective actions taken p.39 1 discrimination Freedom of GRI 407-1 Freedom of association and collective bargaining p.39, 44 1 Association and Collective Bargaining Child Labour GRI 408-1 Operations and suppliers at significant risk for incidents Zero 1 of child labour operations and suppliers
72 Polymetal International plc Sustainability Report 2018 Sustainability Report 2018 Polymetal International plc 73 OVERVIEW HEALTH AND SAFETY EMPLOYEES ENVIRONMENT SOCIO-ECONOMIC APPENDICES GRI disclosure table continued Other information
STANDARD DISCLOSURE DISCLOSURE TITLE PAGE SCOPE AND COMMENTS REPORTABLE SEGMENT COMPANY NAME SCOPES NUMBER 1 2 3 4 5 Social continued Polymetal Group Forced or GRI 409-1 Operations and suppliers at significant risk for incidents Zero 1 Voro Gold of Northern Urals CJSC Compulsory of forced or compulsory labour operations and Okhotsk Okhotskaya Mining and Exploration Company LLC1 Labour suppliers Svetloye Svetloye LLC Security GRI 410-1 Security personnel trained in human rights policies 1. All security personnel Practices or procedures are outsourced and Amursk-Albazino Albazino Resources Ltd receive training on the Amursk-Albazino Amur Hydrometallurgical Plant LLC human rights principles under relevant national Dukat Magadan Silver JSC regulations Omolon Omolon Gold Mining Company LLC Rights of GRI 411-1 Incidents of violations involving rights of indigenous peoples p.57 1 Mayskoye Mayskoye Gold Mining Company LLC Indigenous Peoples Varvara Varvarinskoye JSC Human rights GRI 412-2 Employee training on human rights policies or procedures p.57 1 Varvara Komarovskoye Mining Company LLC Local G4-MM5 Total number of operations taking place in or adjacent to p.54 1 Kyzyl Bakyrchik Mining Venture LLP Communities indigenous peoples’ territories and formal agreements made Kyzyl Inter Gold Capital LLC GRI 413-1 Operations with implemented local community engagement, p.16–17, 59–61 3 Kapan Kapan Mining and Processing Company CJSC2 impact assessments, and development programmes Kapan Lichkvaz CJSC GRI 413-2 Operations with significant actual and potential negative Zero 1 impacts on local communities operations Viksha Industry Ltd Human rights G4-MM9 Sites where resettlement took place, the number of p.58 1 Polymetal offices Polymetal Management JSC assessment households resettled in each, and how their livelihoods were affected in the process Polymetal offices Polymetal Engineering JSC Closure G4-MM10 Number and percentage of operations with closure plans p.54 1 Polymetal offices Polymetal Trading Ltd Planning 1 Sold in 2018. Public Policy GRI 415-1 Political contributions p.32, 38, 46, 1 2 Sold in January 2019. 56 Socio- GRI 419-1 Non-compliance with laws and regulations in the social and p.62 1 Abbreviations Units of measurement economic economic area Compliance CIS Commonwealth of Independent States GJ gigajoules (one billion joules) GE gold equivalent TJ terajoules (one trillion joules) IMN Indigenous Minorities of the North km kilometres NGO non-governmental organisation Koz thousand ounces POX pressure oxidation Kt thousand tonnes Ktpa thousand tonnes per annum m metres Moz million ounces Mt million tonnes MWh megawatt-hour Oz or oz troy ounce (31.1035 g) t tonne (1,000 kg) tpd tonnes per day
74 Polymetal International plc Sustainability Report 2018 Sustainability Report 2018 Polymetal International plc 75 Notes
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