SUEK CORPORATE SOCIAL RESPONSIBILITY REPORT 2014–2015

SIBERIAN COAL ENERGY COMPANY

CREATING VALUE SUEK corporate social responsibility report 2014–2015

About the Report

SUEK’s 2014–2015 Social Report is the sixth corporate social responsibility report for our Humanity’s need for accessible and reliable fuel is company. SUEK has been publishing reports since continuously growing. It increases as the world population 2006 that represent the main directions of the grows and as the global industry grows, and is particularly company and the results of solving its production relevant for remote and less developed regions, where there is still limited access to electricity. and economic issues, as well as social and environmental problems. By producing and supplying coal, the most accessible and cheapest energy source, to our customers in Russia and around the world, we make our contribution to this critical We think that it is fundamentally version). The GRI Content Index need. At the same time, we are constantly working to The report went through an important to regularly provide this is provided in Appendix 1 on page 173 external audit and received public improve the level of industrial and environmental safety of type of information to a wide range of the Report. The report presents assurance. To read more about this report and about our approach our operations. of stakeholders and all those who data on the SUEK Group (referred to reporting on corporate social would like to make an informed to in the Report as SUEK and the responsibility and sustainability, see We remain an important factor of social stability for our opinion about the results of our Company) for the calendar years page 40. activities in accordance with the of 2014–2015. (Referred to in the employees and for the regions of the Company’s presence. principles of corporate social Report as “SUEK,” “us,” “Company,” The information presented in the Report is presented in view of its SUEK’s sustained growth allows us to contribute to the responsibility and sustainable “Group” and applies to all companies significance for the company and development of the energy sector, contribute to the development objectives. consolidated under IFRS in the SUEK stakeholders. Our approach to the PLC financial statements, including assessment of the significance of country’s economy and improve the quality of life in regions the information is presented on In 2014–15, we made significant JSC SUEK and its subsidiaries, page 42. of our presence. progress in fulfilling our objectives. SUEK AG (Switzerland) and its In this Report you will find information subsidiaries, Russian lignite assets. Operating under difficult macroeconomic conditions, on how we solved strategic problems The consolidated data is presented we strive to improve the effectiveness of our economic, in areas of sustainable development in terms of assets, where SUEK PLC in accordance with the goals set for is the majority shareholder. The SUEK environmental and social activities, to continue to create the reporting period. group includes SUEK PLC (vertrtical value for all our stakeholders – from employees and integrated company, whose capital customers to society and humanity as a whole. In preparing this report, we asset is JSC SUEK, JSC SUEK has followed the recommendations overall charge of its affiliates activities. of the internationally recognized For more detailed information Sustainability Report Guidelines on the SUEK Group structure see of the Global Reporting Initiative in its he Corporate governance section latest version (GRI–G4, the basic of this report).

The report is published on sustainable paper, as well as on our corporate This report has been evaluated by the Internal Audit Department website in both Russian and English. of JSC SUEK and the external auditor Bureau Veritas Certification Rus; it has been approved by the SUEK PLC Board of Directors Audit Committee, and has received public assurance in the Council on Non-Financial Reporting of RSPP.

1 SUEK corporate social responsibility report 2014–2015

About the Report Contents

SUEK: sustained development Occupational safety and health 175 Appendix 1. Application of gri reporting and value creation 94 Main achievements for 2014–2015 principles 08 About the company 97 Following standards in the field of 177 09 SUEK assets occupational safety and health Appendix 2. Index of standard disclosures 10 SUEK’s Mission 102 Ensuring emergency response 12 Geography of presence 104 Ensuring aerological safety 192 Appendix 3. Structure of the company 14 SUEK strategy 108 Dust-explosion safety 15 Creating values for the company 109 Prevention and control of gas- 193 Appendix 4. Page 57 Page 64 Page 92 and society dynamic phenomena Dialogues with stakeholders 18 Coal and sustained development 110 Occupational injuries risk in 2014–2015: topics and results management awards Product Development, product Innovative technology Achievement of the advanced 22 Sustainable development: priorities and objectives 114 Culture of safety 196 Appendix 5. quality improvement. development and implementation. indicators of labor protection 116 Health protection and prevention of Information about company awards and workplace safety. Corporate governance occupational diseases 198 Appendix 6. 28 SUEK management groups 119 Areas of activity and objectives for Independent assurance 34 Ethics and anti-corruption the next reporting period of non-financial reporting measures Environmental performance: 203 Appendix 7. 36 Risk management safety and efficacy Fedback questionnaire 38 Management systems development 122 Main results of 2014–2015: 40 Social responsibility and 124 Our approach to ensuring accountability environmental safety 46 Cooperation with stakeholders 128 Reduction of negative impact on the environment Economic sustainability 130 Land reclamation and efficiency 131 Effiient use of water resources Page 68 Page 72 Page 120 52 Key indicators of economic 133 Reducing emissions of pollutants erriciency into atmosphere Increased productivity. Creation of human resources Conservation program 54 Investment program 136 Waste management and improving competence of development and implementation; 56 Developinc sales markets 138 Energy saving and energy employees to implement our development of management 57 Improving product quality efficiency business strategy. systems in environmental 60 Interacion with customers 141 Goals and objectives for the next reporting period protection. 62 Supply chain 64 Innovation activities SUEK and regions: partnership 66 Areas of activity and objectives for for sustainable development the next reporting period 144 Main results of 2014–2015 Social performance: company activities human capital 146 Our approach to social investments 153 Interaction with stakeholders 70 General results for 2014–2015 156 Main social projects and results 72 Our approach to human resource for 2014–2015 management 172 Public recognition 74 Characteristics of staff and types of employment 174 Areas of activity and odjectives for the next reporting period Page 146 Page 153 78 Motivation and remuneration 82 Cooperation with trede unions Report Legend: Creating a favorable social environment for SUEK’s efficient Development of constructive 84 Education and development development. Development of regional social and economic potential, interaction with stakeholders. 88 Corporate culture See more on website improving the quality of human potential, implementation of innovative 91 Directions and objectives for the social technologies. next reporting period See more on page

2 3 SUEK corporate social responsibility report 2014–2015

MESSAGE FROM THE CHAIRMAN 1.4 bln rubles OF THE BOARD OF DIRECTORS have been invested in SUEK’s social programmes AND THE CEO in 2014–2015

Investment projects comprehensively tracks the state of Our employees Corporate values security at enterprises in real time. The strategic priority during the As a result of our systematic efforts SUEK’s success is the result of hard and sustainable reporting period was the launch to improve safety, the Company’s and professional work of our team. development of the facility enrichment program. accident frequency rate decreased We work hard to attract and retain We continued to commission new by 18% over two years – from 1.50 talented and involved employees In 2015, the Code of Conduct was processing plants and modernize the LTIFR in 2013 to 1.23 LTIFR in 2015. who share our values. In order to updated to include a list of corporate existing enterprises. The Chegdomyn Unfortunately, we have not been able achieve that, we are developing the values: safety and effectiveness, enrichment plant at the Urgal coal to completely eliminate cases of fatal Company’s employees’ incentive professionalism and co-operation, deposit began its work, along with injuries. During the reporting period, system, training programs for stability and development, and the Taldinskaya-Zapadnaya-1 there were 13 fatalities as a result professional development and social responsibility. The code that enrichment facility in Kuzbass. of accidents. We deeply mourn our managerial personnel, and a social establishes corporate standards Considerable attention was paid to the deceased colleagues and are making support system. In 2014–2015, of conduct and ethical standards further development of our logistics every possible effort to prevent an improved training program for reaffirmed our commitment to the infrastructure, one of the Company’s such situations. The Company is operational staff was launched as principles of sustainable development, key competitive advantages. We implementing industry best practices, part of this effort, the number of which imply effective management worked on increasing the capacity techniques and technologies in the courses at our Corporate University of economic, environmental and social handing of our own railway and port field of occupational safety and health, was extended, and a talent pool of aspects of our activities. facilities. The transhipment capacity of and improving the culture of safety administrative head office employees, We believe that the inclusion one of the largest Russian terminals, amongst all employees. Achieving heads of regional production of sustainable development into the Vanino bulk terminal, amounted the highest safety standards will be associations and directors of corporate strategy, the ability to create to 18,3 million tons of coal in 2015. SUEK’s key priority in planning and production units was formed. value for all stakeholders meets Chairman of the Board of Directors Chief Executive Officer conducting all activities. The growth of our operating today’s requirements for the industry Andrey Melnichenko Vladimir Rashevsky Regional development performance and our stable position leaders and is important for the in the market became possible Environmental Safety support continuing successful development through technological modernization of our Company under difficult We are aware that the activities of our During the reporting period, and increase in productivity of mine market conditions. enterprises create a burden on the despite the challenging economic employees. During 2014–2015, environment, and feel responsible for environment, we maintained our productivity rose by 11% in preserving a favorable environment social investment at the same level, comparison with 2013, and a number Chairman of the Board of Directors for present and future generations. A providing about 1.4 billion rubles to of world and Russian records Andrey Melnichenko key principle of the Company in this support regional socio-economic for extraction were set at SUEK field is respect for natural resources, Dear Readers, development. The Company focused Chief Executive Officer enterprises. and minimization of the anthropogenic its efforts on improving the efficiency Vladimir Rashevsky The results of SUEK’s work in 2014–2015 confirmed impact on the atmosphere. We are Occupational Safety of its social actions. During the the effectiveness of our strategy, and the sustainability committed to reducing emissions reporting period, several new projects of the Company’s competitive advantages. Under difficult and Health of harmful substances and in aimed at development of the local particular greenhouse gases at SUEK communities initiativity and their social market conditions, we have managed to strengthen our Some of our key projects for the enterprises. To solve this problem, the entrepreneurship ability, as well as reporting period included efforts to market position. Coal sales in 2015 totaled 101.1 million Company is implementing a project support for social projects of residents improve the level of industrial safety tons, a 6% increase year-on-year and a 9.2% increase on coal mine methane recovery. At and organizations were set up. We and labor protection. The purpose of the Kuzbass enterprises, the coal also restructured some of SUEK’s since 2013. this work is to achieve the complete mine methane is used to generate social programs for the regions absence of accidents at work, and electricity and heat. This not only that have proven to be successful Maintaining our leadership position, SUEK continues safe working conditions for our reduces emissions, but also saves elsewhere. Among them are Youth to strive for sustainable growth. Thus, we contribute employees. In 2014, SUEK began natural resources. In 2014–2015, Entrepreneurship, School of Social integration of automated systems for 3 to meeting humanity’s global need for universal and SUEK recovered 13,19 million m of Entrepreneurship, and SUEK’s Little monitoring and control of industrial methane, which helped to produce Stars festival. All programs are accessible fuel, which plays and will continue to play safety and labor protection; located 19,17 thousand MWh of electricity and recipients of a number of awards and a vital role in the global energy balance. at the Company’s Moscow office, 29,54 thousand MWh of heat. winners of several competitions. the Dispatch Analytical Center

4 5 SUEK: IN THIS SECTION 08 About the company 09 SUEK assets SUSTAINED 10 SUEK’s Mission 12 Geography of presence DEVELOPMENT 14 SUEK strategy 15 Creating values for the company AND VALUE and society 18 Coal and sustained development CREATION 22 Sustainable development: priorities and objectives

“The years 2014–2015 have become complicated for the coal industry: the price decline in the world coal market continues, and the economic growth rate of countries, leading coal consumers, reduces. SUEK has maintained stability under these conditions. Production stability, supply to the domestic and foreign markets, the financial situation, implementation of social programs, the stability of our team, the stability of the professional development our employees. This stability is a natural result of our clear strategy, its disciplined implementation and the coordinated work of all members of our team.”

Vladimir Rashevsky, SUEK Chief Executive Officer SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy 5.5 bln tons 142 SUEK and regions: partnership proven coal reserves for sustainable development ABOUT THE COMPANY 175 Appendix

SUEK ASSETS

Mining Assets Enrichment plants

The development of our The company conducts operations Coal enrichment takes place assets: coal mining enterprises, in seven Russian regions (Kemerovo at eight concentrators and two enrichment facilities, efficient Region, the Republic of Buryatia enrichment plants to supply logistics infrastructure, our own and the Republic of Khakassia, customers with high quality and network of sales offices and Transbaikail Territory, Krasnoyarsk high value-added products. The our research and development Territory, Primorye Territory and enriched coal is mostly sold to the center provides us with significant Khabarovsk Territory) and mines for international market. In 2014, the competitive advantages and coal at 12 mines and 8 quarries; lignite share of enriched coal in the total ensures a reliable supply at 7 quarries. In 2014, 30,9 million coal mined by the Company was of safe high-quality products tons were produced by underground 49%, in 2015: 55%. to our consumers. working, and 60,8 million ton of coal by open-pit mining, In 2015, underground working produced 28,6 million tons, while open-pit produced The SUEK Group (Siberian Coal our customers worldwide. Our coal SUEK is one of the largest employers 69,2 million tons of coal. Energy Company) is one of the enrichment program enables us to in Russia. Over 32,000 people work leading coal mining companies in the provide customers with high quality at our enterprises. Their health and world and Russia’s largest producer products and meet the growing safety are our biggest priority. We of coal, which is the most accessible international demand for premium are constantly working on increasing and universal energy source in the grades of coal. production safety, aiming to reach the world. SUEK has 5.5 billion tons of industry leading results in this area. coal1 (in accordance with the JORC SUEK supplies coal to nearly 1,500 Code2) and by this indicator is one customers in the Russian market of the ten largest coal companies in and the markets in the Atlantic and the world. The vertically integrated Asia-Pacific regions through our own business model of the Group provides sales network. The Company is a Railway assets Ports Sales network control over the entire value chain – major supplier in the Russian market from coal mining and enrichment to of coal to the power generation sector: Most of the extracted coal is One of the competitive advantages SUEK makes direct deliveries to transporting using the railway and in 2015 SUEK provided 40% of the transported by rail. We operate of SUEK is the ability to ship coal Russian consumers. Exports are port infrastructure and sales through coal to Russian electricity generators. one of the largest car fleets in through our own port and ports made by SUEK AG, which has our trading subsidiary and branch The Company also supplies coal 1 Proven and probable reserves of the Group, Russia, sending coal to consumers in which we are one of the major branch offices and subsidiary offices network. to enterprises of housing and utility according to the April, 2011 SRK Consulting in the domestic market, as well shareholders. Our port facilities are in the countries and regions of the report amounted to 5.9 billion tons. Taking into as through ports to international located in the western and eastern world that are strategically important sector, federal customers and account the production from April, 2011 to The strategic location of our assets industrial enterprises. December, 2015 and the assessment by SRK markets. In 2014, we transported parts of Russia, which ensures to SUEK such as China, Indonesia, in Russia, the broad geographical Consulting of the Apsatskiy deposit acquired in 78,6 million tons of coal by rail, in reliable and efficient supply to Japan, Poland, South Korea, Taiwan 2015, these reserves amount to 5.5 billion tons 2015: 82,9 million tons. customers in 37 countries around and the United States. In 2014, presence in different regions of the To further increase our profitability, as of December 31, 2015. world, our own distribution network strengthen the leadership position the world. In 2014, the volume of coal sales to the Russian market and access to a well-developed of the Company and its sustainable 2 Code JORC – is the Australasian Code transshipment through the ports amounted to 49,7 million tons, in transport infrastructure provide a growth, we are constantly investing in for reporting of Exploration Results, Mineral was 41,7 million tons of coal, in 2015: 54,2 million tons. In 2014, the Resources and Ore Reserves, which significant competitive advantage improving the quality of our products, 2015: 43,8 million tons. company supplied 45,6 million tons of establishes standards for public reporting coal to the international market, and and allow us to effectively serve and labor productivity. of Mineral Resources and Ore Reserves. 46,9 million tons in 2015.

8 9 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership for sustainable development SUEK’s Mission 175 Appendix

Vision SUEK Values To maintain our position as one of the leading coal companies in the world Safety and results and the largest coal producer on the Russian market due to: Our work is historically linked with high production risks. The experience To promote energy needs of our Company, along with the experience of the world’s leading coal of the world community by coal • development of existing industry proves that these risks can be controlled and successfully achieve production assets, good results in a safe environment. We strive for the best production results mining in compliance with all with unconditional observance of safety rules. The responsibility for safety • investment into new quarries thus rests with each of us. safety requirements and principles and mines, of sustainable development Professionalism and cooperation. • development of transportation and taking into account the interests and logistics infrastructure. Individual skills in teamwork

of all stakeholders. We intend to increase production Our work is the highest responsibility: for ourselves, for a friend at work, for the volume at fields close to our target heat and light in homes of others. A miner is a special type of person. It is the markets, to stimulate innovation lack of indifference to the results of their work, the ability to lend a helping and positive changes in all areas hand. It is co-operation, a constant desire to learn and share secrets of the of our business. trade with others. We are working together on a common result. Stability and development Reliable supply of high-quality Stability is only possible under conditions of continuous development. coal products In order to keep a leading position and maintain stability in the future, to consumers we need to always develop and continuously meet the challenges of the Value creation and Building outside world. For us, stability and development are two sides of the same increase for all long-term coin. Every innovation that our Company introduces today, tomorrow will parties interested relationships with allow us to feel more confident and secure. in long-term suppliers and partnership consumers Social responsibility. Joint responsibility to society and the world

Mission Reliable partnership with the regions in which SUEK operates is the key to our mutual development for many years ahead. The interests of people Assistance in Maintenance who live in the cities and towns where our enterprises are located are socio-economic of employee important to us. At work and at home, we remain patriots of our profession, development professional part of a broad and recognized organization and support SUEK’s reputation in regions of development as a reliable community partner. presence Environmental protection and maintenance of environmental standards

10 11 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership for sustainable development GEOGRAPHY OF PRESENCE 175 Appendix

1 Kemerovo Murmansk • 9 underground mines • 3 open pits Murmansk • 3 washing plants Commercial Seaport 2 Krasnoyarsk Ust-Luga Port • 3 open pits St. Petersburg 3 Khakasia • 1 underground mine • 3 open pits • 1 washing plant

4 Мoscow Buryatia • 1 open pit • 1 washing plant

5 Zabaikalye • 3 open pits

6 Azov Port Khabarovsk • 1 underground mine • 2 open pits • 1 processing facility • 1 washing plant Vanino (under construction) Bulk Terminal 1 2 7 Primorye • 1 underground mine 6 3 4 • 2 open pits 5 • 1 processing facility

7 Rail assets and ports Rail Maly Port • Around 20,400 rail cars under operation Ports • 3 ports

Vostochny Port

Port facilities, where Washing plants and Head office Open-pit mining Underground mining Third-party ports the Group is one of processing facilities the major shareholders

12 13 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health CREATING VALUES 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership FOR THE COMPANY for sustainable development SUEK STRATEGY 175 Appendix AND SOCIETY

“During the reporting period, SUEK continued to demonstrate significant SUEK: Contribution to national progress in achieving its strategic objectives, despite the difficult competitiveness economic and market conditions. 7.7% The Company securely holds SUEK is a strategic company for the Russian fuel and energy sector and a leading position in the Russian coal SUEK’s share in freight the national economy. We are among the top 50 Russian companies by industry, and is one of the leading turnover of Russian revenues. In terms of coal production and supply to the domestic and foreign members of the international Railways markets, SUEK ranks first in the Russian coal industry. coal market.” We are increasing the volume of coal sales in the Asia-Pacific region, in line Andrey Melnichenko, with Russia’s state policy to expand the presence of Russian companies SUEK Board of Directors Chairman in the Asia-Pacific markets. During 2013–2015, the volume of supplies to the region has increased from 25,9 to 27,7 million tons of coal.

SUEK contributes to the development of the Russian coal industry by increasing productivity, development and innovation, and improvement in safety standards.

Our investment projects contribute to the socio-economic development of the regions of their implementation. Thus, in the reporting period, we began the Urgalugol JSC program of coal mining development and coal enrichment, which became one of the largest investment projects in the Far East SUEK’s development strategy of Russia. SUEK also contributes to regional development as a taxpayer consists of ensuring sustainable SUEK’S Strategic Advantages and social investor. In the regions of its presence, the Company provides long-term competitiveness on the 30–50% of the tax revenue to the regional budgets. Social programs allow basis of an efficient vertically- Significant Coal Deposits the company to improve the quality of life of local residents and expand integrated chain of production, Our large volume of coal reserves allows the Company to ensure stable their opportunities for self-realization. The amount of social investments transportation and sales of coal. supplies of a high quality product to the customers. in 2014–2015 amounted to about 1,4 billion rubles. By strengthening our position as Integrated business model The Company’s activities have a significant multiplier effect and promote industry leaders, we continue to work Our vertically integrated business model makes it possible to effectively the growth of partner company activity volumes at both the federal and on the possibility of strengthening control production processes, logistics and distribution, from production regional levels. SUEK’s share in freight turnover of Russian Railways the competitive advantages of the to sales of products to end consumers. (RZHD OJSC) reached 7.7% in 2015. SUEK actively cooperates with Company, seek to increase our leading Russian machine-building companies. In particular, the production market share, and provide a high High operational efficiency of innovative wagons with carrying capacity of 75–77 tons (by 5–7 tons level of social responsibility. The Investments in modern production equipment and into employee greater carrying capacity as compared to standard wagon) was launched at strategic business goals and the development increase productivity throughout the Company. the Tikhvin Railway Car Building Plant on the basis of the Wabtec technology Company objectives in the field of adapted to Russian conditions. In 2015, the Company operated a fleet of sustainable development are thus Advantageous asset location 9,160 innovative wagons, which amounted to 20.3% of the total wagon fleet inextricably linked, which ensures our Our assets are located closer to the key Asian markets than our used by the SUEK. long-term growth. competitors. This location and access to a developed transportation infrastructure allows us to reduce the cost of product delivery to these markets.

Solid reputation Our status as a reliable supplier is confirmed by 1,500 consumers on the Russian and international markets.

14 15 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health CREATING VALUES FOR 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership THE COMPANY AND SOCIETY for sustainable development Continuation 175 Appendix

SUEK Group is a vertically integrated Company. The integrated Every stage of our activities – local suppliers, and investment in the mining, enrichment, transportation, development of local communities. To improve quality of the coal business model allows us to constantly increase the effectiveness transshipment through ports and We understand that the coal industry we perform its beneficiation of the resources that we use – natural resources, financial and product sales is aimed at a steady, takes a toll on the environment and we at the factories. Treated coal long-term business value growth and strive to minimize this impact in mining has a higher combustion value. social. Achieving better results, while minimizing the cost of the creation of both economic and and coal processing and at every It means, that by using higher resources is the approach that allows us to provide sustainable social benefits for the stakeholders. stage of transportation and marketing. quality coal, an end consumer competitiveness, and to maintain our leading position in Russia By increasing the proportion of high- reduces emission rate. Our enterprises throughout the value quality coal, we are helping to reduce and one of the leading suppliers to the international markets. chain provide stable tax revenues to the environmental impact for end- budgets on all levels, employment and users of our products. employee social support, business for

Sustained development business model

Production Enrichment and Reprocessing Logistics Sales

The scale of activity and At our enrichment Coal enrichment is a factor in Due to the advantageous We have created a secure In the Russian market, the volume of available coal plants, we increase the sales growth in the international location of our coal mining trade and marketing the bulk of our production resources allow the Company quality of mined coal market: it ensures that our coal assets and access to key network for the supply of is sold under long-term to achieve one of the lowest and increase its calorific meets the highest international transportation infrastructure, coal to customers in various contracts to the local power production costs in the coal value by reducing ash standards. The demand for high we are able to efficiently deliver industries. Coal mined at the companies, the majority of industry. The program of new content. Consequently, quality coal is constantly growing, products to both Russian, as SUEK enterprises is supplied which are located in direct and development of existing transportation costs therefore we are actively building well as major international to more than 37 countries, proximity to our mining assets promotes further per unit of energy are new enrichment facilities and are markets. We invest in the while special attention is companies. growth of reserves and reduced. Enriched increasing the productivity of the development of infrastructure paid to the major markets contributes to the efficiency coal has improved existing plants. We also crush facilities near the coal-mining in the Asia-Pacific region of our operations. Ongoing environmental and sort coal, allowing SUEK to enterprises and are increasing and Europe. Over 80% of investments in improved characteristics. supply a product which is in full the transshipment capacity international sales are made productivity and lower compliance with the customer’s of the Vanino bulk terminal, directly to end-users. We are costs allow us to maintain requirements. of which SUEK is the sole expanding our presence on our leading position in shareholder. the international market, first the market. of all in Asia.

Dividends, debt servicing to financial institutions, tax revenue. Energy resources for the economy. Workplances, professional development and employe social sorvices. Enviromental Impact Reduction.

16 17 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital COAL AND 92 Occupational safety and health 120 Environmental performance: safety and efficacy SUSTAINED 142 SUEK and regions: partnership for sustainable development DEVELOPMENT 175 Appendix

The demand of mankind for energy Benefits of Coal is constantly increasing. The world’s population is increasing, people are aspiring to higher Coal – is the most common fuel, which will continue living standards, and emerging to play a key role in the human energy balance economies are demanding more Global Chalenge energy resources. At the same time, there are growing demands from society to minimize the energy By mining and supplying coal, impact on the environment. We are Coal reserves have been found in 106 countries around the world. we are contributing to the global convinced that coal will remain an At the current rates of mining the known reserves, there will be enough energy competitive source for the of this mineral to last over 100 years. task of providing for the growing long term, because it provides a balanced response to these two human demand for affordable challenges. and environmentally friendly Availability Low cost energy resources. Coal transporting does not require any Large reserves of coal, its high-pressure pipelines or high-cost accessibility, the ability for use security or expensive pre-processing. immediately after mining and Furthermore, coal is convenient to low transportation costs make store, which in combination with it a relatively inexpensive form the previously mentioned qualities, of energy. Industrial Coal consumption in 2015 makes it the most affordable source of Safety energy in the world. Coal is the most Convenience Coal is easier and safer to load, 1 1. Energy...... 58% accessible source to transport, to unload and store 2. Metallurgical sector...... 16% of energy, which, thanks The advantage of coal over other compared to alternative, combustible 3. Cement industry...... 5% sources of energy is that upon fossil fuels. 4 to modern technology removal from the subsoil, it is ready 4. Other industries It has been estimated that in the coming for use. Other fossil fuels require 3 (non-energy sector)...... 21% can meet the increasing decades generation from renewable lengthy and costly processing, and environmental sources can provide only about 40% generation of wave, wind and solar of the required growth, and excluding requirements. energy depends on weather patterns. HPP – only 15%. Huge investment and 2 Today, coal, along with two other Versatility technological breakthroughs in solar, wind, hydro will be required, so that they fossil fuels, oil and gas, is the most Coal is the most versatile energy can become economically appropriate important part of the global energy source. In addition to power sources. In the long term, coal can balance. generation, it is used as one of become a more environmentally friendly Source: SUEK estimate, the basic components for iron and WoodMackenzie&. fuel due to the introduction of high- steel smelting. Coal is needed in performance technologies at coal power various industrial and manufacturing plants, as well as the development of processes, including electrolysis CO capture and storage technologies of aluminum, paper and chemical 2 in the coal industry. production, and cement production.

18 19 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health COAL AND SUSTAINED 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership DEVELOPMENT for sustainable development Continuation 175 Appendix

Coal and Ecology The introduction of modern technologies into coal mining and coal power generation helps to reduce the negative impact on the environment.

Coal can be an eco-friendly choice: without increasing greenhouse gas emissions. Due to the gradual In 2014–2015, as a result • modern cost-adequate cleaning and replacement of old gas stations, of projects to reduce combustion technologies, which are carbon dioxide emissions will be greenhouse gases, we used at coal-fired plants, introduced reduced. recovered 13,19 million in the last 20 years, almost m3 of coal mine methane. completely capture impurities When comparing the environmental This methane was used for harmful to people and nature such cost of using coal with other energy generating heat as – sulfur, nitrogen, mercury and sources, it is important to analyze the and electricity. solid particles; environmental impacts of the entire production chain. If we estimate the • increasing the volume of enrichment impact on the greenhouse effect can significantly reduce the ash of coal and gas combustion, then content due to the removal of actually noticeably more carbon mineral impurities. This means dioxide is emitted by burning coal Power generation by sources % – share of coal that less waste is transported (by some estimates about twice in overall energy by rail or water transport. It also as much). However, if we evaluate production reduces the amount of ash after the impact of a full cycle, including coal combustion and improves production and transportation, the 2015 43% heat dissipation in the combustion difference is not as critical. Natural process; gas is methane, and the influence on the greenhouse effect of methane is 2020 37% • in underground coal mining about 18 times higher than the impact emissions with high concentrations of carbon dioxide, which is released Oil of methane (CH4) are captured when coal is generated. There is 2025 33.3% Nuclear fuel by the degassing systems that methane leakage during the extraction ensure removal of dangerous and transportation of natural gas. Hydrogeneration concentrations of this gas. The There is significantly less methane gas can then be used to generate leakage when coal is produced, and 2030 30.8% Renewable energy sources electricity or to heat facilities located there is no leakage at all during coal near the mining companies3; transportation. Natural gas 2035 29% • the efficiency of modern coal-fired At the same time, we strive to not only Coal power plants can reach 50% or make full use of existing competitive more in contrast to the average advantages of coal as a fuel, but 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 efficiency of conventional coal- also to develop them, by introducing fired stations being about 30–35%. modern technologies, interacting with Efficiency of burning coal at the our customers and other stakeholders station, working in co-generation in order to provide the optimal balance 3 For more information about the practice Source: International Energy Agency, of using gas to generate electricity and “World Energy Outlook”, 2015. mode, reaches up to 70–80%. This of economic and environmental heat, see the “Environmental Safety” section means that we get more energy efficiency of its use. of the Report.

20 21 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy SUSTAINABLE DEVELOPMENT: 142 SUEK and regions: partnership for sustainable development PRIORITIES AND OBJECTIVES 175 Appendix

When preparing and implementing our strategy, we strive We are dedicated to the company’s Sustainable development strategy in action for a balanced management of economic, environmental sustainable growth, while ensuring maximum production safety and and social aspects of our activities. At the same time, we the reduction of the impact of our Strateic goals Implementation of key indicators 2014–2015 Case conduct our business, taking into account the interests activities on the environment. of stakeholders and society at large. An integral part of this strategy is our participation in the socio-economic Economic Sustainability development of the regions. Focus on growth. For two years In November 2015, a reconstructed (2015 in comparison with 2013): enrichment facility was put into operation Increase operational efficiency and at the SUEK-Kuzbass Taldinskaya- • proportion of enriched coal increased by productivity. Zapadnaya-1 mine with rated output of 18.5% (from 28,1 to 33,3 million tons); Priorities in the field of sustainable development Improve the coal delivery transport 3 million tons per year. The facility will system. • sales volume on the Russian market produce concentrate with a 6,500 calorie increased by 8% (from 50,2 count for sale mainly on the international to 54,2 million tons); market, and calorific value of 4,900 Economic Aspect Ecological Aspect Social Aspect • productivity at the mining enterprises calorie/kg for domestic market sales. increased by 11% (from 391 to 435 tons The innovative feature of the facility is its per person); compactness by introducing a series of innovative solutions. With the facility’s small • volume of transshipment through dimensions, its power is comparable to the port infrastructure increased by 24% plants that take up twice as much space. • economic stability, effective risk • decrease effect on environment • improve occupational and (from 35,3 to 43,8 million tons). management; when carrying out production production safety; activities; • improve product and service • educational system and Occupational Safety and Health quality; • biodiversity preservation employee motivation activities; development; Further improvement in Between 2013 and 2015: During the reporting period, we created • perfect management systems, occupational safety and health two analytical dispatch centers, one at the • LTIFR (Lost Time Injury Frequency Rate) production; • efficient use of resources. • promotion of socio-economic management. head office and one at SUEK Kuzbass. decreased by 18%, from 1.50 to 1.23; development in regions of The center in Moscow monitors the status • innovative activities. presence; Ensuring emergency sustainability. • LWD (Lost Work Day) due to illness and of industrial safety systems in real time, and Ensuring air safety and coal dust injuries have dropped from 7.7 to 7.1 per coordinates the responses of all specialists • improving the quality of life in safety. employee; in emergency situations. The Kuzbass • innovative technologies providing center accumulates information about all regions of presence; Introduction of modern security aerological safety and dust suppression processes and key performance indicators systems and control devices. have been introduced at Company’s on ​​safety and security, from air and gas • developing a dialogue and indicators to staff and equipment positioning, cooperation with interested Management of occupational mines and ports; injury risk. and automatically displays deviations from parties. • consolidated operations control and the norm on the system monitors. Improving workplace safety analysis centers monitoring safety status culture. at the enterprises in real-time mode have been put into operation; • corporate workwear and PPE (Personal Protective Equipment) standard was implemented. SUEK’s position and policy of Contract, the Social Charter of Russian with the best international practices corporate social responsibility are Business, Standard, ISO 26000 in this area, SUEK integrates the focused on internationally accepted (Social Responsibility Guidelines), and principles of social responsibility into principles and standards in this the recommendations of the Global the decision-making processes and area, as reflected in the UN Global Reporting Initiative. In accordance operations.

22 23 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health SUSTAINABLE DEVELOPMENT: 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership PRIORITIES AND OBJECTIVES for sustainable development Continuation 175 Appendix

Sustainable development strategy in action Sustainable development strategy in action

Strateic goals Implementation of key indicators 2014–2015 Case Strateic goals Implementation of key indicators 2014–2015 Case

Environmental protection Social Development

Development of environmental During the two years An important stage of modernization of dust Development of regional During the reporting period: In 2014, the Company started a new protection management systems. (2015 in comparison with 2013): control has been completed at the Vanino socioeconomic and human project – “Youth Entrepreneurship”4. • investments in the development of local bulk terminal, with the use of technologies potential. Since we consider small and medium • volume of recycled coal mine methane communities for 2014–2015, amounted Reduction in the negative unique to Russia. As a result, a unique businesses to be a promising tool in increased by 47.5% (from 5,09 to about 1.4 billion rubles; impact on the environment. chain has been created that provides Support dialogue with diversifying business in the single-industry to 7,51 million m3). Totally in 2014–2015 Implementation of comprehensive effective dust control at each stage of the stakeholders, development • the Company launched 13 new social towns and cities, we strive to develop about 13,19 mln tons of methane were environmental protection programs work. In particular it involves the installation of cooperation with regional programs; social skills and entrepreneurial initiative recovered; 1,917,000 MWh of electrical at enterprises, including measures of fogging, environment friendly foam authorities. of various age groups of local communities. power and 2,954,000 MWh of thermal • over 150 business projects have been to reduce hazardous emissions, generators for industrial spaces, stationary energy were generated by way Development of cross-sector developed by students, participants efficient use of water resources dust suppression cannon, DUSTEX and wastewater treatment, of methane combustion; partnerships in promoting regional of SUEK social programs; During the reporting period, the project was dispersion system at sorting station, social and economic development. attended by more than 1,500 students. recovery and reprocessing waste • more than 2,500 jobs have been created • comprehensive action program aimed at transportable snow-making machines. In 2014, they developed the 63 business and land recultivation. for members of SUEK labor teams during water resources preservation allowed our projects, and in 2015: 87, earning more the reporting period; Improving energy efficiency Company to reduce content of pollutants than 200 000 rubles. During the inter- of enterprises. in the effluent at the SUEK plants in total • more than 120 projects presented for the regional competition “My first business – by 33% (from 39 to 26 mln cubic meters); competition “Comfortable Environment” 2014” 60 projects were created, out of Participation in international • State-of-the-art dust suppression solutions by residents of regions of SUEK presence. which 15 winners were selected. In 2015, projects to prevent climate were commissioned at Vanino Bulk the Youth Entrepreneurship project received changes and preserve biological Terminal. the Time for Innovation award in the Social diversity. Innovation of the Year category. The award was established with support of the Ministry of Economics of the Russian Federation and Russian venture company. Human resource development

Improving the efficient use of the For the two reporting years In order to ensure an influx of applicants labor resources. (from 2013 through 2015): to the reserve pool and to ensure social mobility, in 2015, the Company began • social benefits spending increased by 25% Attracting and retaining talented working with the potential candidates specialists, and raising personnel (from 1,085 to 1,354 million rubles); 4 For more details about the project see forxtechnical manager positions, foreman, in section “The SUEK and regions: loyalty. • total duration of training hours per employee mine foreman and site mechanic positions. partnership for sustainable development”. Development of professional increased by 29% (from 33.7 to 45.7); As part of this effort, the range of programs and personal employee training • formation of a pool of key management at the Corporate University has been system. employees of the head office, heads of substantially expanded, to provide regional industrial associations, directors of a consistent training system for everyone Formation of reserve pool. production units; from a mechanic to plants chief executives of the company. This system allows • all mining companies of the Group entered tonot only prepare a personnel reserve into voluntary health insurance contracts and management positions, but to also (VMI) for employees. involve staff at all levels into solving issues outside of their job description, and gives employees an opportunity toparticipate in efficiency identification and innovation activities.

24 25 CORPORATE IN THIS SECTION 28 SUEK management groups 34 Ethics and anti-corruption measures GOVERNANCE 36 Risk management 38 Management systems development 40 Social responsibility and accountability 46 Cooperation with stakeholders

“An effective system of corporate governance is a significant competitive advantage and a significant factor for sustainable development of the Company, especially under difficult market conditions. A well-developed governance system allows the Company’s investments and resources to be used most effectively, flexibly and quickly in response to external economic changes, and to answer industry challenges, while maintaining its leading position.”

Iain Macdonald, SUEK PLC Board Member, Independent Director Chairman of the Audit Committee SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership for sustainable development SUEK MANAGEMENT GROUPS 175 Appendix

Development and implementation of SUEK PLC7 – a vertically integrated holding company SUEK PLC Governing Bodies sustainable development strategies of the SUEK Group, whose core business is coal mining. is carried out as part of the SUEK General Shareholders The structure of the SUEK PLC Board of • consultation with industry experts, corporate governance system. We are The Company’s headquarters are located in Cyprus, Meeting Directors includes independent directors. production facilities visits by the constantly improving the Company’s the mining assets are on the territory of the Russian As of December 31, 2015, eight out of members of the Company’s Board governance system, in order to ten members of the Board of Directors of Directors; Federation, and the sales network is worldwide. The General Shareholders Meeting efficiently manage our business. were represented by independent of SUEK PLC is the decision-making • transparency of information on the non-executive directors, except for the forum for the most significant work of all committees of the Board The SUEK Group’s corporate Chairman (this information is confirmed issues affecting the Company. members and the ability to attend governance system is based on the The main asset of SUEK PLC is JSC by the decision of the Board of Directors). Within its competence are issues meetings of any committees. standards of Russian and international Main SUEK PLC activities: SUEK, which: The director independence criteria are about amendments to the Charter, law, regulatory requirements, laid down in the Regulations on the reorganization and liquidation of the Three committees work under and SUEK corporate governance • implementation of the investment • carries out general management Board of Directors and are consistent Company, changes in equity, profit the Board of Directors8: standards. The Group seeks holding company functions: of JSC SUEK subsidiary companies; with the recommendations of the UK distribution, election of the Board to comply with international best management of interests Corporate Governance Code. The board • provides subsidiaries of JSC SUEK of Directors and appointment of the • Audit Committee; practices in corporate governance. in subsidiaries; members are elected for a term until the with transport services and freight; external auditor. • overall management of its subsidiary next annual General Meeting with the • Nomination and Compensation SUEK strives to ensure openness • provides a wide range of services activities; possibility of re-election. Committee; and transparency of its activities. The to other companies in the During the reporting year, the shareholders approved a new • Strategy Committee. Company regularly publishes financial • decisions on major investment SUEK Group; After the holding company management and management reports5, and projects; edition of the Charter, and changed • if necessary, implements centralized structure reorganization in April 2015 6 the composition of the Board of The Board of Directors consists sustainable development reports . the directors who had been members • organizing the Group’s treasury procurement for the Group’s Directors. The Annual General of competent professionals with of the JSC SUEK Board of Directors operations; subsidiaries. Meeting approved the Annual Report extensive work experience. Deep were included in SUEK PLC Board of The underlying principles and Financial Statements for 2014, knowledge of the industry and the • setting long-term Company goals in Directors. Thus, the Board of Directors of the SUEK Group corporate In 2015, the SUEK Group elected the new Board of Directors solid professional experience of the field of strategy and management ensured continuity in the leadership and governance system: management system was and appointed KPMG as the external members of the Board contribute to activities; retained enough awareness about the reorganized. On April 15, 2015 the auditor for 2015. the quality of strategic management. state of affairs of the Group companies, • equal treatment of all Company • preparation of the SUEK PLC Board of Directors of JSC SUEK The Nomination and Compensation which allows the most objective and shareholders, as well as the consolidated financial statements transferred to the Board of Directors Committee and the Audit Committee Board of Directors informed decisions. recognition and protection of their and its subsidiaries in accordance of SUEK PLC, which since April 15, are made up of independent directors rights; with International Financial Reporting 2015 has been the highest governing with specialized education and The Board of Directors defines The basis for making important Standards (IFRS). body of the Group. The following 9 • ensuring an effective system the mission of SUEK, carries out experience . The key criterion in is information about the SUEK PLC decisions by the Board of internal control and audit the general management of the the selection of candidates for the system of corporate governance. of Directors: mechanisms; Company’s activities in accordance Board of Directors is qualification. with the provisions of the Companies Candidates are evaluated regardless • providing information and financial • competence, professionalism and Law of the Republic of Cyprus. of ethnicity and gender. transparency of the Company by experience of the members of the The main purpose of the Board providing accurate information Board of Directors; of Directors is to ensure effective to stakeholders in an accessible management of the Company, the use • close cooperation between format; 8 of strategic opportunities, creation non-executive directors and the Competences, responsibilities and management of JSC SUEK and composition of the committees are • maintaining ethical business 5 of the conditions for sustainable These documents are presented SUEK AG and a deep awareness disclosed in detail in the 2015 SUEK standards; on the Group’s website development PLC Annual Report, posted at http:// at http://www.suek.com/en/investors/ of the state of their affairs; www.suek.com/files/pdf/en/SUEK_ • ensuring decent working conditions reporting/#fs_15, http://www.suek.ru/ of the Group in the long term and Annual_Report_2015_eng.pdf. for Company employees. investors/annual-reports/. • Monthly JSC SUEK management increase the value of the assets of reports between the SUEK PLC 9 Biographical information, expertise and 6 These documents are presented the Company, as well as to protect Board of Directors meetings, experience of the members of the Board on the website of JSC SUEK the interests of shareholders and notification of important events and of Directors are disclosed in detail in at http://www.suek.ru/corporate- disclosure of accurate information the 2015 SUEK PLC Annual Report at responsibility/corporate- 7 On April 18, 2016 SUEK PLC was renamed reviews about the situation in the http://www.suek.com/files/pdf/en/SUEK_ responsibility-reports/social-reports/. SUEK Ltd. about the Company. markets and in the coal industry; Annual_Report_2015_eng.pdf.

28 29 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership SUEK MANAGEMENT GROUPS for sustainable development 175 Appendix Continuation

To ensure stable development for development of directors. It was Group’s restructuring program being Sustainable development • approve a new standard Remuneration for Board through a diversity of opinions noted that one of the important issues implemented currently and within the issues considered by of corporate work outfits and PPE of Directors members and a systematic analysis of Company for the Board of Directors is the reporting period, including liquidation, (Personal Protective Equipment); 11 activity, the Company’s Board question of management structure redemption of shares and the change the Board of Directors’ • analyze staffing of production The amount of remuneration is represented by professionals with and ensuring a personnel pool and in the legal structure of a number committees in 2014–2015 units with qualified personnel, is established taking into account expertise in various fields. succession of top management. of Group companies. in particular for companies the performance of the main Strategy Committee: located in remote areas with responsibilities, as well as the The Company has a regular rotation In order to improve the management Activities of the Board difficult climatic conditions, where membership and performance procedure of the Board members. incentive system in 2015, the Board • updating SUEK strategy for 10 years there is traditionally a shortage of duties of the chairman of the Andrey Melnichenko has been of Directors during the of Directors reformed the design in general and in various directions; of specialists; Board committees. In addition, the Chairman of the SUEK PLC reporting period component of the system, adding Board members are entitled to full Board of Directors since April 2015. to its long-term component, based • development of measures to • summarize the goals achieved by reimbursement for all reasonable The Board of Directors Members of The Board works on the basis of on the implementation of key strategic improve the competitiveness of the managers for 2013–2014 and expenses incurred by them SUEK PLC did not own shares during an annual plan. In 2014, the Board objectives which are not formalized Company and increase profitability; 2014–2015, and approve objectives in connection with the performance the reporting period. of Directors of JSC SUEK held 7 in the form of projects. for the next period. • review of strategic management of duties as the Company’s Board in presentia and 12 in absentia initiatives to expand the resource 10 of Directors members. SUEK has developed mechanisms sessions, in 2015 : 12 in presentia The issues of industrial and base, taking into account long-term Audit Committee: aimed at preventing conflicts and 3 in absentia sessions. environmental safety, occupational forecasts of a market recovery. of interest. They are written into safety and health of employees • assesses financial reporting and the Regulations on the Board of were a constant focus of the Board financial audit risks and the volume Also, information on remuneration Nomination and Compensation is presented in the 2014–2015 Directors and reflected in the Board For more information on the of Directors. Production security Committee: of information disclosed in external Annual SUEK Reports located member Declaration of Interest, performance and remuneration of the remained the top priority. The Board reporting; at http://www.suek.com/en/investors/ Board members during the reporting which is provided upon election analyzed the causes of abnormal reporting/#fs_15. period, see the Company’s annual • analyze the state of affairs in the • oversees the development of a new and annually updated. report for 2014 and 2015 situations, shutdowns and accidents, field of personnel management for format of management reporting; at http://www.suek.ru/investors/ and assessed management’s the years 2013–2015; annual-reports/. The Evaluation of the Board actions and measures to prevent • approves SUEK Code of Conduct; of Directors takes place annually. similar situations in the future. The • develop solutions to reduce costs in • assesses the effectiveness of the During the reporting period, Board of Directors maintained an connection with the crisis situation; external auditor and compliance the Company continued the During the reporting period, along with open dialogue with the Company’s • summarize the project on labor with the policy of non-audit services; practice of evaluation in the form ongoing questions, special attention management, and paid close attention codes, that allow improvement of providing questionnaires for was paid to the preservation of to all aspects of work in this direction, in performance and payroll • evaluates strategic KPI in members of the Board, in which each business stability in a volatile market which ultimately made it possible optimization; terms of external reporting, director evaluates various aspects environment, rapid response to to establish the actual causes the development of initiatives of the Board’s activities on a scale. changes in the economic environment of malfunctions and emergency • initiate evaluation of the existing to improve annual and corporate Based on the 2015 evaluation, the and the strategic development of the situations and to develop preventive long-term management incentive social responsibility reporting; directors suggested specific steps Company as a whole. Management measures for the future. system and measures aimed at its for improvement. In particular, they initiatives were supported that reduce restructuring; • makes a comprehensive identified areas in which attention the negative impact of the worsening assessment of the effectiveness • monitor measures to increase of internal control and internal audit needed to be focused, indicated of the macroeconomic situation For more information, see safety and improve the system of services; management expectations, and on the performance of the Group. “Occupational safety and health” labor protection. Members of the section of the Report. set out additional opportunities During 2015, the Board oversaw the Committee personally visited two • further improves the risk underground mines in the Kuzbass management system; region to ascertain the adequacy of • supervises compliance with safety measures in the workplace. the requirements of anti-corruption Based on the results of the RAG legislation, assesses procedures 2013 technical audit, approaches to in the field of combating corruption further development of production and reporting cases of economic safety features were identified; crimes. 10 Until April 14, 2015 – the Board of Directors 11 Until April 14, 2015 – the Board of Directors of JSC SUEK, thereafter – the Board of JSC SUEK, thereafter – the Board of Directors of SUEK PLC. of Directors of SUEK PLC.

30 31 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership SUEK MANAGEMENT GROUPS for sustainable development 175 Appendix Continuation

Chief Executive Officer, The composition of the Executive Internal Audit Department Corporate documents regulating the issues of social Main documents defining the the Executive Board Board, the committees and the responsibility and sustainable development activities of JSC SUEK for results of operations during the The task of the service is to monitor sustainable development are on the of JSC SUEK reporting period, and the system Company’s website. http://www.suek. of remuneration of the members business processes risks of the Documents that define SUEK ru/corporate-responsibility/corporate- of the Executive Board are detailed Company, assist management Internal regulations on corporate activities, policies and priorities for responsibility-reports/corporate- The management of current activity in the Annual Reports of SUEK in improving corporate governance social-policy/. for 2014–2015 posted at http:// governance for SUEK Group: sustainable development: of JSC SUEK is carried out by the and risk management, and optimize executive bodies of JSC SUEK – www.suek.com/en/investors/ reporting/#fs_15. the internal control system. the CEO and the Executive Board. • Charter; • Corporate social policy; The CEO is elected by the Board The Internal Audit Department acts as • Corporate Code of Conduct; • Code of conduct; of Directors for an indefinite period. the third line of defence in the controls Since December 23, 2004 the CEO • Regulations on the procedure of • Environmental policy; of the Company’s management. preparation, convening and holding of SUEK has been V. Rashevsky. In 2015, the CEO of JSC SUEK • Policy in the field of industrial safety the General Meeting Shareholders Since August 2005, the CEO has Vladimir Rashevsky won the and labor protection; Best Top Managers award, as The service provides an assurance Meeting, the Regulations of the been the Chairman of the Executive of the following parameters: Board of SUEK. part of the “Top 1000 Russian Board of Directors; • Standard of work outfits and Managers – 2015”. The personal protective equipment • effectiveness of control • Regulations about the Executive organizers of the award are the of workers; The Executive Board is accountable mechanisms; Board; Association of Managers, the to the Board of Directors. The main • Actions in obtaining information Kommersant publishing house • Regulation about the Audit tasks of the CEO and the Executive • ensuring the safety and security about threats of emergencies and the All-Russian public Commission; Board are to develop production plans of assets; and during emergencies. organization Business Russia. and programs to optimize and ensure • quality of the reporting system; • Regulations on insider information. their implementation, as well as to • Healthcare policy and medical implement management decisions in • compliance with applicable laws support at hazardous production a timely and effective manner. and internal regulations; facilities; • efficiency of production processes. • Policy on quality of coal products; The Executive Board has six specialized committees1, that ensure • Information policy; the interaction of key managers and • Information safety policy; experts on core issues: • Company’s policy to inform • Risk Committee; employees about the corporate rules of conduct in the event • Industrial Safety Committee; The Audit Committee regularly reviews the results of Internal of a conflict of interest; Audit Department’s work, considering the observations • Investment Committee; developed in the course of audits, and monitors the progress • Anti-corruption policy; • Procurement Committee; of corrective actions. • Policy of planning staffing needs • Information Technology Committee; and recruitment; • Budget Committee. • Procedure for the assessment and development of staff, formation The Chairman of the Executive Board, of management reserve. CEO V. Rashevsky, is the chairman of all committees of the Executive Board.

32 33 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy ETHICS AND ANTI-CORRUPTION 142 SUEK and regions: partnership for sustainable development MEASURES 175 Appendix

In 2015, the Company The Code is based on a system anti-corruption efforts. In 2013, Human rights Aspects of potentially negative actions approved an updated SUEK of values as the basis for the creation the Company launched an anti- Through our business actions and of standards and rules of employee corruption, anti-bribery and anti- stakeholder interaction, we strictly on observance of human rights Code of Conduct – a basic conduct. The system of values was money laundering policy. Also, in observe human rights. We guarantee document establishing the determined by the study, in which 2015 we introduced an incentive non-discrimination in our Company Aspect Risks internal corporate standards 1,200 people from various levels in program for employees to help by either nationality, gender, origin, Economic • lowering prices and demand for coal. the Company participated. identify fraud. It operates on the age or other basis, and we recognize in the field of ethics. basis of the Regulation on material the right of workers to create voluntary Environmental • negative impact on the environment, The final list of values is catered incentives and personnel protection associations and organizations • negative impact on lives and health of local residents. For more information on the work to towards the internal and external of SUEK employees. In accordance to protect their rights and interests. develop and implement a Code of stakeholders and is designed to meet with the company procedure of data SUEK does not use child labor or any Social • occupational injuries and diseases, Ethics and the Ethics coordinators the identified range of expectations collection on violations, employees form of forced labor. We guarantee • corruption, see the “Development of Human and perceptions of the target can report fraudulent actions, theft that the rights of indigenous people Capital” section. • reduction in social support level for employees due groups. Within the framework of or embezzlement, through a hotline, and minorities during our interactions to production shut-down. the implementation of the rules and as well as by regular mail or e-mail. with them. provisions of the Code, an Ethics Commission and system of appeals Anti-corruption issues are part of We recognize that some aspects Our risk management system is geared towards managing and minimizing on the violation of ethical behavior the responsibility of the supreme of our activities can have a potential these risks, along with the production management systems, environmental with various feedback channels began corporate body. Twice a year, the negative impact on human rights. and social activities, personnel training system, systems of work with appeals to operate in the Company. Ethics Audit Committee of the Directors and complaints, and the systems of internal control and audit. coordinators, whose main task is to Board studies the report to identify support the processes of promotion cases of abuse and the measures of the Code within the Company, also taken in response to them. began working at the enterprises. We support the Anti-Corruption Anti-corruption activity Charter of Russian Business of the In order to prevent fraud, theft Russian Union of Industrialists and and corruption, we are implementing Entrepreneurs (RSPP). According security measures and developing to it, we support the participation corporate ethics. Among the security in tenders based on principles of measures is control of inventories, transparency and competition, anti- introduction of automated control corruption information availability, and accounting in order to reduce cooperation with the state, facilitation the influence of the human factor. of justice and observance of the law, effective financial monitoring and Russian legislation and internal other measures. corporate documents are our regulatory framework for our

34 35 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership for sustainable development RISK MANAGEMENT 175 Appendix

We recognize that there are industry JSC SUEK Executive Board in close the Company to rank the risks and risks and we understand that as cooperation with the SUEK PLC identify the key areas in each of our SUEK’s Social and Environmental Risks the Company develops, the need Board of Directors’ Audit Committee. activities, tracking changes in the level increases for effective management of their influence on the Company’s Risk Description Risk Management of a broad spectrum of risks. Effective Plans to identify and minimize risks operations. risk management promotes realization are set each year. Based on the Human Resources Risks of strategic goals and guarantees results of the 2014 analysis of our 12 stable growth in the long run. risk map, a new map was approved . Experienced qualified staff, particularly The set of measures to manage these risks includes programs on increasing Approval and control of measures on experienced mining engineers and workers training and education effectiveness. We are constantly searching, key risk management is carried out are our most important assets. The inability analyzing and seeking to reduce the by the Risk Management Committee to hire and retain qualified personnel may lead We have reward and motivation systems and are actively working to increase key financial and non-financial risks under the Executive Board of the to non-fulfillment of the production program the level of staff social support and to encourage their professional development. of the Company. Company. The Committee ensures and cause an increase in expenses. cross-functional interaction of key top Among the factors complicating the recruitment Also, we are implementing projects to support socio-economic development SUEK has a corporate risk managers and experts in operational process are migration of the labor force from in the regions of SUEK presence that improve the quality of life and satisfaction 12 level of our employees and their family members. management system integrated into risk management. Detailed information on SUEK key the regions of the SUEK presence, substandard risks is disclosed in annual reports residential infrastructure in these territories, the corporate governance system and of the Company for 2014 and 2015, an insufficient number of secondary educational For more information, refer to the Social Performance” and “Partnership with is built into all levels of management, The procedure of risk management located at http://www.suek.com/en/ institutions, as well as insufficient level Regions” of this Report. functionality and planning. Risk involves identification, assessment investors/reporting/#fs_15 (Report for 2014 – pp. 44–53, Annual Report of qualification among graduates. management is monitored by the and risk minimization measures. 2015 – pages 38–46). Risk Management Committee of the The developed risk map allows Environmental Risks

Coal extraction and enrichment activities are We comply with the environmental protection standards and implement SUEK’s Social and Environmental Risks associated with the risk of damage to the complex programs to improve environmental safety and environmental environment, including – emissions of pollutants care. Their content and frequency are determined by prevailing law and into the atmosphere, emissions of coal dust, our environmental policy. Some of these programs include projects on land Risk Description Risk Management contamination of soil and water resources, and reclamation, coal mine methane recovery, creation of sanitary protection noise pollution. As a consequence, this may result measures for use in direct proximity to residential areas. In the regions where Risks related to industrial safety and labor protection in civil liability, increased reputational risks and the SUEK is present, the Company is taking steps to reduce the harmful effects necessity to repair the damage. on the environment and ecosystems, reduce harmful emissions, and provide efficient waste recovery and recycling. Coal mining is associated with an increased The development of effective measures to minimize this risk, primarily aimed risk of accidents and emergencies. They can at ensuring a safe working environment, the prevention of accidents with fatalities For more information, see the “Environmental Performance” section occur as a result of geological factors, technical and injury reduction, are one of the most important tasks facing the Company. of the Report. conditions of enterprises, actions or omissions of the staff. The emergence of large-scale We continue to carry out continuous monitoring of hazards at all stages, paying emergency situations could have a negative special attention to safety. We implement target programs to minimize this risk. impact on the Company, its business, financial There are safety improvement programs underway at all Company enterprises. condition, operational results or reputation. All accidents are carefully investigated with the assistance of specialists, members of special committees, and based on the results of their work, a set of measures is developed, aimed at preventing similar situations in the future.

Safety issues are a strategic priority for all levels of SUEK administration.

For more information, see “Occupational safety and health” section of the report.

36 37 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital MANAGEMENT 92 Occupational safety and health 120 Environmental performance: safety and efficacy SYSTEMS 142 SUEK and regions: partnership for sustainable development DEVELOPMENT 175 Appendix

We strive to continually improve the effectiveness of Company management and to organize our work in accordance with the best international practices. SUEK’s Integrated Management System Structure In order to achieve this, since 2008 we have been introducing, developing and implementing certification of an integrated management system. It is based on three international standards: ISO 9001 (Management Quality System), ISO 14001 (Environmental Management System) and OHSAS 18001 (Occupational Health and Safety Integrated Management Management System). System – is a system of monitoring and improving business processes that provides the following: The integrated Management System provides:

• gathering, registering • reliability, manageability and reproducibility of SUEK business processes; and analyzing information about business processes; • timeliness and quality of strategic and quick decisions; ● • risk assessment and finding areas • compliance with quality of product/service to customer requirements; In accordance with the requirements for improvement; of international standards, • non-productive expense reduction; ● • perfect business processes and the integrated management system implement improvements. • constant improvement in SUEK activities; is monitored regularly with an assessment of the effectiveness • increasing employee responsibility and discipline; of business processes, employee • minimization of the negative impact on the environment and compliance satisfaction and consumer Occupational with environmental requirements for the Company’s practices; satisfaction, system performance Management Health and Safety analysis by the senior management, Quality System Management System • reduction in health and safety risks at the workplace. risk assessment and introduction ISO 9001–2008 ISO 18001–2007 of improvements. Goal: to ensure compliance Goal: to improve of business process the Company’s performance During the reporting period, results with the needs of indicators in the area customers, the company the integrated management system of occupational health The actions of the integrated Management System are certified by and society. Environmental and safety. concept was developed by the Management System international agencies AFNOR and Bureau Veritas Certification Rus for the following subsidiaries in the Group (these enterprises are amongst the Company. It determined the approach ISO 14001–2004 primary producers of SUEK): to imlementation of the management Goal: to increase system based on the international environmental effectiveness JSC SUEK-Krasnoyarsk principles within the SUEK. In of Company practices. ISO 9001–2008 JSC SUEK-Kuzbass connection with it, analysis has been (Management Quality System) LLC SUEK-Khakassia13 performed of the current state of the system in the SUEK, an assesement of implementation expediency, and JSC SUEK-Krasnoyarsk ISO 14001–2004 an approach to implement and JSC SUEK-Kuzbass (Environmental Management System) maintain the quality management LLC SUEK-Khakassia system has been developed.

OHSAS 18001 JSC SUEK-Krasnoyarsk 13 (Occupational Health and Safety During the reporting period the system JSC SUEK-Kuzbass was implemented at Vostochno-Beysky Assessment System) and Chernogorskiy, Chernogorskaya enrichment plant.

38 39 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy SOCIAL RESPONSIBILITY 142 SUEK and regions: partnership for sustainable development AND ACCOUNTABILITY 175 Appendix

SUEK’s corporate social responsibility policy and Russian documents, which define the current understanding During this process, a wide range of sources was used, including: presumes regular monitoring of the results of the concept of “corporate social responsibility” and thematic agenda • industry standards in the field of CSR and Sustainability of our work in this area and public disclosure such as the Principles of the UN Global Reporting Standards (sector appendix to G4, SASB16 standard of this information. Compact, the international standard for the coal industry); ISO 2600 – Guidance on Social • rating agencies information requests; Responsibility15, and the Social Charter of Russian Business. • industry association documents and reports of companies working The objectives of our CSR policy, towards integrating the Annual Report in the industry; its implementation and the achieved and CSR report. While building the process of defining • market research and industry CSR management practices. results are reported in the Company’s important topics and relevant indicators, social reports, which are based Substantive issues in the spotlight. we relied on the recommendations on international social reporting Performance management in the field of the Global Reporting Initiative – GRI standards. These reports are of CSR and reporting in this area is (G4 version) on sustained development. published every two years. We are focused on the most significant issues The process of identification of the Clarification of the list of important Through analysis of the documented The topic relevance for the also expanding the disclosure for the Company and its stakeholders, important topics developed by issues and setting priorities interaction with stakeholders in stakeholder groups is listed in the of social and environmental aspects such as corporate social responsibility the Company allows us to consider among the identified issues was the period 2014–015, a list of topics “Stakeholder Interaction” section. of the Company’s activities in and sustainability14. Significant issues a specific Company situation in the conducted from the standpoint and issues for stakeholders was We believe that the list compiled the Annual Reports, gradually moving are identified based on international context of global and industry trends. of SUEK strategic priorities and developed. Also, the company’s as a result reflects in a fairly balanced values ​​of SUEK, on ​​the one hand, activity was analyzed during the way the issues important to the and stakeholder priorities, on the reporting period and those aspects Company and its stakeholders. other hand. This process involved of it that could have an impact on In order to test whether or not Process of determining important topics and key industry indicators a survey of managers and specialists the parties concerned, Company the approaches are appropriate of the Company while collecting performance indicators and key for theselection and coverage of CSR information for reporting and analysis corporate documents (strategy, issues of sustainable development, List of important issues of the results of the annual employee values, policies, and corporate and enhanced credibility of the Global, cross-sector List of relevant for Company and its survey. The most relevant issues accountability). Report, the Company uses various “agenda” in CSR industry topics stakeholders to key stakeholders were identified forms of external assurance by analyzing the content of the The priority topics included were (independent audit and public Set by the international and Determined based on Identified based on the content Company’s regular interactions those with high significance for the assurance). Russian guidelines defining analysis of industry-standard, analysis of the Company’s with business partners, authorities, Company and for at least one key the content and boundaries rating agency information regular interactions with expert and public organizations, stakeholder group. Key performance of the corporate social requirements, company business partners, authorities, the media, and local communities. indicators were also identified based responsibility concept. reports, working in the industry expert and public organizations, As an external expert assessment on the important issues.17 The list and industry associations mass media, staff and local of essential issues, the company of topics and indicators was approved documents, market research community polls expert used materials from the previous by the Audit Committee of the SUEK and industry practices. interviews. discussion on the Report at the PLC Board of Directors. Council on Non-Financial Reporting 16 COAL OPERATIONS. Sustainability Accounting of the Russian Union of Industrialists The identified topics are relevant Standard. Sustainability Accounting Standards Board, 2014. and Entrepreneurs (RSPP), which to all SUEK assets (the topic 14 Topics and indicators that may be reasonably considered substantial, for embodying the organization’s consists of independent experts of “greenhouse gas emissions” 17 The list of indicators is supplemented impact on the economy, environment and society, or stakeholders. See: G4. for Sustainability on corporate governance, human is relevant to a greater extent for in the Report with a wider range of indicators. Reporting Guidelines. Instructions. Translated from English., GRI, p.11. During the reporting period the resource and environmental the SUEK mining enterprises.) All indicators are presented in accordance with system was implemented at Vostochno-Beysky and Chernogorskiy, Chernogorskaya enrichment plant. the recommendations of the Guide GRI – G4 management, and representatives (except in cases where disclosure goes 15 Adopted in Russia as GOST ISO 26000: 2012. of public organizations. beyond the standard indicators).

40 41 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health SOCIAL RESPONSIBILITY 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership AND ACCOUNTABILITY for sustainable development 175 Appendix Continuation

List of priority topics and significant key performance indicators List of priority topics and significant key performance indicators to cover in the 2014–2015 Report to cover in the 2014–2015 Report

Important Topics Key Indicators Stakeholders Justification Important Topics Key Indicators Stakeholders Justification

Economic aspect Environmental Aspect

Emissions • total emissions shareholders, investors, Coal is associated with emissions Financial stability • EBITDA, EBITDA margin, employees, Financial stability of the Company federal and regional of harmful substances and, credit ratings shareholders, investors, is the basis for the fulfillment of its authorities, local in particular, of greenhouse gases. suppliers, and business obligations to shareholders, investors, • specific emissions per 1 ton communities, expert partners, local employees, business partners, of product and public organizations communities and local communities. Greenhouse gas • total emissions shareholders, investors, emissions federal and regional Production • production staff labor shareholders, investors, Increasing labor productivity authorities, local effectiveness productivity employees and production efficiency • specific emissions per 1 ton of product communities, expert are the most important factors and public organizations • coal mining and rock mass in SUEK competitiveness. processing energy intensity Water consumption • total water consumption shareholders, investors, During coal mining, SUEK takes water federal and regional samples from local sources. authorities, local Product quality, • clean coal volume shareholders, investors, Improving the quality of products communities, expert high-value-added consumers, federal allows the growing international and public organizations products and • share of enriched coal in and regional authorities demand for premium grade coal to be environmental Group’s products met and contributes to strengthening Discharge into water • content of pollutants shareholders, investors, Discharge of water used during performance SUEK’s market position. Products with sources in wastewater federal and regional the production of SUEK activity could high environmental characteristics authorities, local potentially have a negative impact reduce its environmental impact. communities, expert on the environment. To minimize this and public organizations risk, the Company is implementing a large-scale water treatment program.

Waste Management • waste of I–IV hazard class shareholders, investors, During the coal mining process, waste federal and regional is generated, some of which is waste authorities, local of I–IV hazard class. communities, expert and public organizations

Land Restoration • disturbed land during shareholders, investors, Mining disturbs the soil cover. the year federal and regional authorities, local • restored land during communities, expert the year and public organizations

42 43 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health SOCIAL RESPONSIBILITY 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership AND ACCOUNTABILITY for sustainable development 175 Appendix Continuation

List of priority topics and significant key performance indicators to cover in the 2014–2015 Report Disclosing information in the Report application of GRI reporting principles “Basic Performance Indicators” Important Topics Key Indicators Stakeholders Justification on these topics, we expect that it will is clarified in Appendix 3. The GRI of the Russian Union of Industrialists serve as a basis for meaningful and Index is provided in Appendix 4. and Entrepreneurs (RSPP). The Social aspect constructive dialogue and cooperation The Report is based on SUEK subjects covered by the Report are with stakeholders in addressing management and audited financial reflected in the Table of Contents. pressing social and economic reporting, compiled in accordance The priority topics of the Report Operational safety • Lost Time Injury Frequency employees, trade unions, Coal mining and processing problems. with IFRS. are contained in the section “Social Rate (LTIFR) shareholders and are associated with risk of occupational Emergency investors, federal and injuries and crises. Responsibility and Accountability.” preparedness General Information about The data reflecting our activities • number of accidents regional authorities, local resulting in death communities. the Report for 2014–2015. This in the labor relations field, staff The Report was examined by the report covers the strategies, principles development, environmental Internal Audit Department of JSC • emergency measures and performance results to solve protection, as well as our social SUEK, and has undergone the economic, social and environmental activities in the regions cover JSC external assurance procedure: challenges that are relevant to the SUEK and its subsidiaries and The independent assurance of Fair wages and staff • lack of wage discrimination employees, trade unions, Competitive remuneration and sustainable development of the affiliates, unless otherwise indicated reports on sustainable development social support shareholders and a benefits package are some Company and community. The report in the text. The data was collected “Bureau Veritas Certification Rus” • social benefits expenses investors, federal and of the most important factors provides information on SUEK PLC and organised by activities based is in Appendix 1. The conclusion of regional authorities, local in attracting and retaining qualified communities. employees. and its subsidiaries and affiliates on information requests compiled the RSPP Council on non-financial for the 2014–2015 calendar years. in line with the GRI recommendations reporting on the outcome of the JSC The Company has adopted a two-year (G4 version). Data was also used from SUEK Social Report for 2014–2015 Employee Training • number of hours of training employees, trade unions, Training and staff development reporting cycle. The previous report the corporate information systems. for the purpose of public assurance per year per employee shareholders and provides SUEK with qualified staff for was released in 2014. The report took into account a number is available in Appendix 2. investors. successful solution of strategic tasks. of indicators of the Sector Application • opportunity to acquire The report was prepared in for the mining and metallurgical The Report was approved by the Audit a new profession accordance with the Main version industries to the Sustainability Committee of the SUEK PLC Board of the GRI Guidelines – G4. The Reporting Guidelines GRI and series of Directors. Labor Relations • number of employees employees, trade SUEK fulfilling its obligations covered by collective unions, shareholders to employees is the key to stable bargaining agreements and investors, federal Company operation. authorities

Participation in local • investments in local local communities, SUEK contributes to the development community development community development shareholders and of the regions of its presence investors, federal and as a major employer, taxpayer, • share of programs, with regional authorities, local participant in the economy and efficiency assessment authorities social investor.

44 45 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy COOPERATION WITH 142 SUEK and regions: partnership for sustainable development STAKEHOLDERS 175 Appendix

Cooperation with stakeholders Our interactions are regulated by of issues in the dialogue with is an integral part of our business prevailing Russian law and are stakeholders is based on content Interaction with stakeholders and a success factor in achieving based on the principles of honesty, analysis of corporate communication sustainable development goals. openness and mutual respect, channels and media, social Areas of cooperation for the By developing relationships with key providing information and financial situation research and public Interaction priorities – important issues Channels and methods of interaction reporting period stakeholders, we strive for equal transparency of all our activities. opinion in the regions of SUEK dialogue and partnerships that meet presence, and discussion of SUEK Employees the interests of each of the partners We maintain an ongoing dialogue social projects with stakeholders. on the basis of mutual accountability. with key stakeholders on significant The frequency and format • fair wages and staff social support • improving wage payment systems • agreements with trade unions and issues for the Company and for of interaction are determined by and social support collective bargaining We determine the Company’s the stakeholders. The degree of the specifics of a particular situation • operational safety stakeholders, based on the degree relevance and the importance and interests of the parties. • increasing operational safety • management meetings with • labor relations and healthcare employees of influence they have or potentially • training, including the possibility of acquiring can have on results of operations, • development of the training • corporate media system a new profession system and continuing education and on the other hand, the impact By working with government officials, we are contributing • opinion survey that the activities of the Company to the development of the industry by actively participating • financial stability of the Company development of a dialogue with the trade unions have on their well-being. in the development of the industry regulatory framework. • the Company’s participation in the development Our experts participated in: of local communities • social programs to improve The key group of our the living standards of employees • environmental impact of the Company’s and their families stakeholders: • ongoing debates on the problems of greenhouse gas emissions, operations changes in environmental legislation, implementation of the best • shareholders and investors; available techniques (acting as initiators); Shareholders • staff; • the work of the Russian Trilateral Commission for the Regulation • quality of corporate governance, protection • ensuring sustainable development of • General Shareholders Meeting • trade unions; of Social and Labor Relations, in particular, in the economic policy of shareholders’ rights, risk. management the Company meetings of the Commission; • corporate reporting • customers; • financial stability • increasing shareholder value • corporate media system • suppliers and business partners; • development of the “Russian Federation Coal Industry Development • production efficiency • developing risk management Strategy until 2030; systems • federal and regional authorities, • product quality, high-value-added products and environmental performance • respecting the rights of shareholders local self-government agencies; • launching of state work on the modernization of technical supervision • operational safety • improving industrial safety • local communities in the regions and design of coal mine enterprises; where the Company operates; • development of state program Social and Economic Development Investors • expert, non-profit and public of the Far East and the Baikal Region; organizations. • quality of corporate governance, risk • improving corporate governance • meetings with investors management • development of state support program for single-industry towns; • improving operational efficiency and • corporate reporting • financial stability quality of the Company’s products • corporate media system • international Russian government projects, as part of the cooperation • production efficiency • improving industrial safety system between coal and energy sectors, in particular the coal industry working group as part of the intergovernmental “Energy Dialogue • product quality, high-value-added products and environmental performance Russia-China”, as the representative of the Russian coal industry in the Coal Industry Advisory Board (CIAB) under the International • operational safety Energy Agency and Clean Coal Centre (Centre for Clean Coal • Company’s position on climate changes Technologies).

46 47 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health COOPERATION WITH 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership STAKEHOLDERS for sustainable development 175 Appendix Continuation

Interaction with stakeholders Interaction with stakeholders

Areas of cooperation for the Areas of cooperation for the Interaction priorities – important issues Channels and methods of interaction Interaction priorities – important issues Channels and methods of interaction reporting period reporting period

Trade unions Local communities in the regions of our presence

• production safety • improving the wages and social • agreements with trade unions and • Company’s participation in local community • implementation of social • social and charitable projects in the support systems collective contracts development investment programs areas of healthcare, culture, education, • labor relations housing improvement and development of • improving work safety and health • conferences, meetings between • production safety, emergency preparedness • employment of local • the Company’s financial stability sports, support for socially disadvantaged protection management and trade union population population groups representatives • environmental impact of the Company’s operations • cooperating with trade union members (air emissions, discharges of pollutants, waste • environmental measures • public hearings, roundtable discussions to improve industrial safety and health management, and reclamation of disturbed land) programs protection • seminars, conferences • financial stability and Company development prospects • improvement in industrial safety • corporate accountability Suppliers and business partners • corporate media system • financial stability • fulfillment of mutual obligations, • contracts development of long-term partnerships Expert, non-profit and public organizations • supplier requirements, local supplier • business meetings support • development of liability in the supply chain • conferences, exhibitions • financial stability and prospects for Company • implementation of social • joint implementation of social projects • ethical business practices development investment programs • anti-corruption efforts • open tenders • seminars • quality of corporate governance • employment of locals • participation in professional Russian and • roundtable discussions international unions and organizations • operational safety,emergency preparedness • environmental protection measures programs • corporate accountability • section on the suek.ru website for • environmental impact of the Company’s operations suppliers https://srm.suek.ru/irj/portal (air emissions, discharges of pollutants, waste • improvement in industrial management, disturbed soils and recultivation) safety • mass media publications. • Company’s environmental activities Consumers • Company’s participation in local community development • product quality, high-value-added products • programs to improve the quality of • contracts and environmental performance products and services • personnel policy and labor relations • conferences, exhibitions • ethical business practices • development of responsibility in the Federal and regional state authorities, local self-governing bodies supply chain • business meetings • contract obligation fulfillment, • reporting system of complaints and their • financial stability and prospects for Company • implementation of legislation • social and economic partnership development of long-term partnerships resolutions development norms and requirements agreements • expansion of the customer base, • corporate reporting • quality of corporate governance • implementation of state- • joint task forces private partnerships in the development of the sales network • corporate media system, including special • operational safety, emergency preparedness development of regions of • participation in committees and corporate website division for online coal presence conferences acquisition application: http://www.suek.ru/ • product quality, high-value-added products and coal-online/ environmental performance • joint development and • roundtable discussions, meetings • environmental impact of Company’s operations improvement of regulatory • corporate accountability branch base • Company’s participation in local community development • Company’s participation in development of single- industry towns’ potential • personnel policy and labor relations

48 49 IN THIS SECTION 52 Key indicators of economic erriciency 54 Investment program 56 Developinc sales markets 57 Improving product quality 60 Interacion with customers 62 Supply chain 64 Innovation activities 66 Areas of activity and objectives for the next reporting period

“We pay special attention to strengthening our leadership positions ECONOMIC in the industry, focusing on increasing effectiveness and improving our SUSTAINABILITY logistics solutions. To face the future, it is important not to lose the dynamics of growth, to constantly strive to develop AND EFFICIENCY and improve.” Vladimir Rashevsky, JSC SUEK Chief Executive Officer SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 97.8 92 Occupational safety and health 120 Environmental performance: mln tons safety and efficacy Coal Key indicators 142 SUEK and regions: partnership for sustainable development of economic erriciency 175 Appendix

The share of enriched coal in the Based on the results of 2014–2015, and enrichment, and continue the COMPLETION OF TARGETS SET FOR 2014–2015 total volume of production, % despite the difficult macroeconomic implementation of a large-scale conditions, SUEK was able to investment program. During this Goals Implementation 2015 34 maintain and strengthen its leadership period, our enterprises set new Production development: position. The situation on the world production records on a Russian 2014 32.4 market and the global decline in and global level. The Company further development of the Apsatskiy coking coal field in the Transbaikal Territory coal prices affected the financial economic performance allows us increase in coal production at Urgaly field in the Khabarovsk Krai 2013 29.1 performance of SUEK. However, even to provide direct economic benefits development of Kabaktinskiy coal fields under these conditions we were able to the stakeholders, to contribute to to increase the volume of domestic the development of the country and modernization and expansion of production capacity in Kuzbass, Khakassia and international sales, increase regions of our presence, and meet and at the Tugnuisky quarry in Buryatia the volume of coal production humanity’s global needs for energy. Waste Management

Strengthening sales market positions: Main operation factors preservation of volumes of coal sales in key market segments An essential aspect: 2014 2015 increase delivery volume to export markets, particularly Asian region markets quality of products. Production, mln tonnes 98.9 97.818 increase high-quality coal supplies to Poland and Turkey Including: Key indicator: increase the share of valuable coal grades in the supply portfolio volume of enriched coal. Fossil coal 65.0 61.1 Lignite 33.9 36.1 access to new markets (including the domestic market – the promotion of SUEK coal in the market of fuel supply for metallurgical and cement plants, to the newly introduced power generation facilities In open pitt mining 68.0 69.2 in in the Central Federal District of Russia, in the Urals and the Far East, implementation of oil fuel Underground mining 30.9 28.6 substitution for Company coal in the regional boiler-houses, etc.) Volume of enriched coal, million tons 32.1 33.3 optimization of the transport component of supply, modernization of the railway infrastructure Transportation: expansion of the Company's transshipment port capacity Railway 65.0 61.1 development of long-term relationships with key product consumers Through ports 30.9 28.6 Improving product quality: implementation of an investment program for the development of mining and processing facilities, in particular the modernization of existing enrichment plants, enrichment plant launch at JSC Urgalugol, Main financial results the development of enrichment facilities in the Kemerovo Region 2014 2015 2014 2015 implementation of quality management programs and grade change in coal composition An essential aspect: financial stability. mln dollars mln rubles improvement in the quality control system Revenues from sales 5,053 4,132 194,136.26 251,886.72 Key indicator: Innovation Development: EBITDA, EBITDA margin. Gross profit 598 556 22,975.16 33,893.76 development and implementation of innovative technologies in the promising technological schemes EBITDA 1,044 88719 40,110.48 54,071.52 of coal mining and processing, including technologies to improve consumer quality of coal, the creation of new coal products with high added value, utilization of coal combustion products, processing of lignite EBITDA margin 21% 21% 21% 21% into a product for the metallurgical markets. Investments 496 355 19,056.32 21,640.8 Tax on profit 87 96 3,342.54 5,852.16 Coal production, mln tons Coal enrichment, mln tons

18 2015 97.8 2015 33.3 Complex geological production conditions in Kuzbass and Urgal in 2015 caused a decrease in the total volume of production for the year. 2014 98.9 2014 32.1 19 In 2015, EBITDA decreased by 15% year-on-year. However, the growth in the volume of coal sales in the Russian and international markets and reduction of the cost of product sales in US dollars due 2013 96.5 2013 28.1 to the weakening of the ruble compensated the impact of profitability on EBITDA.

52 53 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 40.7 92 Occupational safety and health bln rubles 120 Environmental performance: safety and efficacy total capital expenditures 142 SUEK and regions: partnership for two years for sustainable development INVESTMENT PROGRAM 175 Appendix

During the reporting period, we We developed our program to continued to implement development expand the enrichment capacity, In 2014, the Company acquired Key investment projects for 2014–2015 programs in accordance with the which allows improvement in the the license to develop the strategic objectives – production quality of our coal, and increase Pravoberezhnyi site at the Urgal Coal mining Transportation infrastructure increase of high-quality products in the output of products with deposit. A plan was developed and expanding our presence on high added value. As a result in 2015, to explore the reserves, • Increase in production volume in sections • Build volumes of coal transshipment through international markets. Given the of the program, in two years aimed at increasing production of the Urgal coal deposit, Khabarovsk Territory. Vanino bulk terminal and Murmansk sea trading port. unfavorable market conditions, we of coal enrichment, the volumes during the next three to five • Development of the Apsatskyi quarry, focused on the most effective and increased by 18%. years, with the production Trans-Baikal Territory. • Increase the capacity of loading and transportation strategically important projects. volume of three million tons per departments, railway departments and SUEK • Start stripping operations on the southern The total capital expenditures We have invested in projects year. Exploring Pravoberezhnyi enterprise stations adjoining them. for the two years was $851 million. to develop the transportation in conjunction with the flank of the Apsatskyi quarry. infrastructure in order to increase • Increase the number of leased cars. development of the Bureya • Construction of the quarry on the acquired In coal mining, we continued to the efficiency of coal delivery quarry will eventually increase Pravoberezhnyi plot. increase the production capacity to consumers. At the end of 2015, coal supplied to the Urgal of the assets, concentrated on the the turnover at Vanino bulk terminal industrial complex to 12 million • Launch of new longwall at Polysaevskaya, Improving enterprises’ efficiency supply of coal to the Asia-Pacific amounted to 18.3 million tons, tons or more. Komsomolets and Kotinskaya mines, region – in Buryatia, Trans-Baikal at the Murmansk Commercial Sea Kemerovo Region. and productivity and Khabarovsk Territory. Port – 13,6 million tons. SUEK • Development of new production facilities • Optimization of space-planning decisions in mines. became the largest lessee in Russia at Sib-Damel enterprise Borodino repair of the innovative railway wagons, • Modernization of equipment fleet, purchase and machinery plant. that provide increased capacity. of new equipment from leading manufacturers. • Continued implementation of energy efficiency programs throughout the company. Enrichment • Development of automated dispatch of power • Launch of trial operation of the new Chegdomyn facilities control system. enrichment plant at the Urgal field with a design In 2014–2015, SUEK set a number of Russian and world records SUEK Labor productivity, capacity of enriching 6 million tons of coal per year. in performance, including: tons per person • Launch of operation enrichment facility at • world record excavation of rock mass in Khakassia; the Taldinskaya-Zapadnaya-1 mine after its modernization. During the reporting period, we have made significant • world record for shipment of overburden into motor-vehicle transport 2015 435 progress to improve the operating efficiency • Modernization of the conveyor line at the with Bucyrus and Hitachi excavators at the Tugnuisky quarry, with and productivity. Almost all SUEK facilities have 2014 421 Taldinskaya-Zapadnaya-2 mine, to increase a KOMATSU excavator at the Vostochno-Beysky and Chernogorskiy showed maximum performance in its history, a number mine production capacity to 5 million tons quarries, and with excavator PC-1250 at the Trans-Baikal Territory; 2013 391 of Russian and world production records have been of coal per year. set at Company enterprises. • world records for speed of drilling degasification wells in Kuzbass; • Complete the reconstruction of the Komsomolets enrichment plant. • absolute Russian record for the load on the working face at the November 7th Mine in Kuzbass; • Start upgrade of the Chernogorskaya enrichment plant in Khakassia. • Russian record for mining preparation of clearing by front miner An essential aspect: Sandvik at the Taldinskaya-Zapadnaya – 2 mine. production efficiency.

• Russian record for mining preparation by the KP-21 combine Key indicator: at the Ruban Mine. labor productivity.

54 55 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy DEVELOPING 142 SUEK and regions: partnership for sustainable development SALES MARKETS 175 Appendix

SUEK is one of the four Key sales figures, mln tons largest global providers of power generating coal 2013 2014 2015 and is the leading supplier International sales20 42.4 45.6 46.9 to the Russian market. Russian sales 50.2 49.7 54.2 including: Lignite 34.2 33.4 35.9 Coal 16 16.3 18.3 Total 92.6 95.3 101.1

SUEK is one of the four largest global customers in important markets, The network of distribution platforms providers of power generating coal including expanding and strengthening has been expanded in the Altai, and is the leading supplier to the our marketing network. Novosibirsk, Omsk, and Kemerovo Russian market. During the reporting Regions as well as in the Republic period, in accordance with its strategic In the Asia-Pacific region, we have of Khakassia. At the end of 2015, the goals, the Company continued to been working on the development volume of small wholesale and retail increase sales in the Asia-Pacific of SUEK marketing networks in China sale of coal through this network IMPROVING PRODUCT region, particularly Japan, India and South Korea, strengthened increased to 497,000 tons compared and Taiwan. Also we have started our presence in Malaysia, Vietnam to 247,000 tons in 2014, the sales developing new markets, including – and Thailand. At the end of 2015, volume of high-grade coal rose QUALITY in Sri Lanka, Vietnam and the the formation of the target structure to 408,000 tons from 179,000 tons Philippines. We have kept positions of SUEK sales network was virtually in 2014. in the major markets of the Atlantic completed in the region. This provided SUEK’s key objective as a responsible The key corporate document Since 2009, an integrated region, with a change in the sales us with an opportunity to expand the One of the key factors of successful supplier is to be a reliable partner regulating our activities in the management system has been focus: reduction of supply to the UK lists of potential coal buyers on local sales has been the development of our for our customers, ensuring strict field of quality is the Coal Product implemented at SUEK that and sales growth in the Netherlands markets, to develop warehouse trade, logistics system. We increased the fulfillment of contract obligations Quality Policy. There is a strict corresponds to ISO 9001:2008 and Turkey. and implement sales in local currency, volume of transshipment through our despite any fluctuations of the market product quality control system at all international standard. The system which had a positive impact on sales. ports, in particular, Russia’s largest environment. We strive to meet factories and mining enterprises, operates at the SUEK enterprises In the domestic market, our strategy For example, in China, the volume ports – Vanino bulk terminal. A number customer requirements for the quality which provide: in the Krasnoyarsk and Kemerovo has been to increase the volume of of sales through the subsidiary SUEK of projects were implemented to expand of our products and to foresee the Regions. During the reporting sales in the markets of metallurgical Shanghai Trading amounted to about the railway infrastructure, to increase emergence of claims against it. We • quality control of the produced, period the system was introduced and premium-quality coal, retaining 3.3 million tons at the end of 2015, our fleet of innovative wagons that are working to create an environment processed and shipped coal at at the sections Chernogorskiy the position as a leading supplier of compared to 1.0 million tons in 2014, allow the transport of 6–8 tons of cargo that prevents the emergence of every stage of the process; and Vostochno-Beysky mines, fuel coal in Russia. At the end of 2015, despite the overall decline in SUEK more than conventional cars. In 2015, defective product and minimizes the at the Chernogorskaya processing the SUEK’s share on the Russian coal export to China. SUEK managed over 9,000 of these risk at all stages and processes of • compliance of product quality with plant, began implementation at the market amounted to 40%. types of cars. production and consumption – from regulatory requirements; Tugnuisky quarry, and SUEK-Kuzbass In Russia, we were developing our exploration, design and production enterprises passed recertification. While working on the achievement own sales network and storage development to warehousing, • operative interaction with consumers on product quality. of strategic objectives, we have areas in the major regions of coal 20 Only hard coal is sold to the international shipping, transportation, and use of The main way to improve the quality built direct relationships with major consumption in the residential sector. markets. the product by the end user. of our products is to increase the volume

56 57 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health IMPROVING PRODUCT 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership QUALITY for sustainable development 175 Appendix Continuation

and conversion rate of coal processing. Coal enrichment reduces its ash content During the reporting period, the SUEK Chegdomyn enrichment plant While working to improve the quality of our products, we are actively and increases the caloric value, which launched its operation, with design capacity of 6 million tons of coal per cooperating with stakeholders – customers and research institutes. enables us to deliver high-quality year. The construction, which began in 2011, became one of the largest During the reporting period, Sibniiugleobogashchenie LLC began work products with high added value and investment projects for the Company. In December 2013, maintenance on the study of coal’s maceral composition (glossy, semi-glossy, semi- to increase business profitability. and equipment testing began at the plant’s section 1, and in 2014, matte, matte) in coal seams at the Chernogorskiy quarry. The study, equipment setup took place in section 2. By the end of 2014, the volume which is conducted in conjunction with the West-Siberian Test Center, Coal enrichment takes place of coal enrichment at the plant was 1,4 million tons, and in 2015: 3,2 million was launched in connection with the consumer’s wishes to reduce the in specialized enrichment plants, tons of coal. content of matte coal in coal production of coarse and middle grain. The located in the immediate vicinity project is set to be completed in 2016. of our operations. We also conduct The factory uses the latest available technology, which allows not only high coal crushing and sorting, which efficiency, but also minimizes the impact on the environment. In particular, allows us to more effectively meet a closed water system eliminates the discharge of sludge into septic tanks. the needs of our customers. SUEK At the Chegdomyn factory, the coal produced at the Urgal coal mine at the The increase in volume of shipped SUEK products are certified for has 15 crushing plants with total deposit in the Khabarovsk Region is enriched. The ash content is 36–37%, products and the growth of consumer compliance with international capacity of 45,4 million tons per year. the calorific value – within 4,250 kcal/kg. The enrichment plant produces attention to quality requires us standards of quality and safety by two products: concentrate with ash content of 17% and a calorific value to maintain control over all the SGS Vostok Limited and INCOLAB To further enhance the quality of our of 6,100 kcal/kg, which is sold mainly on the Asia-Pacific markets, and processes of coal preparation. We SERVICES RUSSIA companies. products, we implement investment middlings with ash content of 33% and a calorific value of 4,750 kcal/kg. are constantly improving the quality projects to expand and modernize our This product is sold on the Russian market mainly as fuel for the thermal control system. During the reporting SUEK’s quality control system enrichment capacity and improve its power plants of the Far Eastern region. operational efficiency. period, new operational methods includes working with suppliers of were introduced at our facilities for goods and services, in particular – determining coal ash content, mass the equipment for the Company. fraction of working moisture in mined Representatives of regional coal, manufactured and shipped coal companies, those who order products, mechanized methods of equipment in accordance with the selection and preparation of product terms specified in the contract, visit samples. A large-scale technical the supplier’s factories to control the upgrade program took place at production and acceptance of the SUEK-Krasnoyarsk enterprises for equipment. the quality of inspection departments and coal laboratories, for which new equipment from the world’s leading manufacturers (calorimeters, modern content analyzers of chemical elements in coal, precision scales, grinders, etc.) were purchased.

58 59 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy INTERACTION 142 SUEK and regions: partnership for sustainable development WITH CUSTOMERS 175 Appendix

Questions of quality brought up by consumers during the reporting period

Issue Region Action Taken by Company

Reduction of fine coal content in coal Republic of Khakassia At the SUEK-Khakassia enterprise-suppliers additional product equipment to separate fines from the high-quality fuel have been installed.

Reducing coal content presented On behalf of SUEK-Khakassia, Sibniiugleobogashchenie as matte forms, in coal products LLC began the study of maceral composition of coal in of the enrichment plant coal seams at the Chernogorskiy quarry. The completion of work is slated for 2016.

Increased production of medium and The reconstruction of the Chernogorskaya plant is large varieties of coal products underway, after which its production capacity will increase from 1,000 t/h to 1,500 t/h. Improving the quality of the product due to an increase in share of enriched coal shipment

Presence of rocks larger than 300 mm Republic of Khakassia Introduction into the crushing and sorting complex in the coal at the Apsatskiy quarry, in order to put into operation mechanized removal from mined coal of rock larger than Our priority in the relationships assessment of product quality and 100 mm and bringing coal up to 100 mm in size. with customers is the quality of SUEK services by consumers. SUEK is a member High content of fine coal in BPK grade Installation of additional equipment to separate fines from service, which includes timely and of international industry (brown coal) the high-quality fuel. uninterrupted supply. SUEK’s key The company organizes constant organizations and associations, sales principle is the development and interaction with customers on quality including Global Coal maintenance of direct relations with assurance. From the moment that and the German coal Increase in output of large and medium Trans-Baikal Territory Installation of additional equipment for coal sorting. consumers of coal and an individual the contract is entered into until the importers association Verein grades of coal products approach to the customer’s needs. obligations under it are fully fulfilled, der Kohlenimporteure E.V. SUEK is in close communication with the SUEK is actively involved in Careful attention is paid to maintaining customer to resolve the issues of quality the discussion of the Code the level of service that justifies the of the coal supplied. Quality control and the standards of the new Information about the quality consumers, the Company examines shipment of 0–50 mm grade coal trust and meets the expectations of issues that are brought up by consumers organization Better Coal, of the coal product is presented in its own laboratories and in the with restrictions on the particle our customers. In order to achieve are regularly discussed at enterprise designed to develop principles a certificate of quality and certificate partner research institutes’ size21, before shipment coal this, SUEK operates an information management board meetings, with the of social responsibility among of conformity, product specifications laboratories, and if necessary, is crushed in the ports to the required system for recording customer participation of the commercial unit and coal producers around and other normative and technical installs additional equipment in dimensions. complaints and resolutions. Quality Control Service. The results the world. documents. Upon receipt of our the workplace. For example, during of the Company’s interaction with products, the consumer receives the reporting period, based on the SUEK actively monitors the level its stakeholders on quality assurance are a quality certificate, which reflects demand of power engineers, customer satisfaction. Since 2009, taken into account in the formation the characteristics of the product. SUEK-Kuzbass was able to define research has been conducted of of goals and action plans of specific 21 the criteria of explosive properties The particle size distribution is the distribution satisfaction factors based on the enterprises to improve product quality. of grains (pieces) of coal particle sizes, When additional product of coal products. In order to fulfill characterized by the output in percent specifications are requested by contractual obligations to export of weight or the number of grains.

60 61 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership for sustainable development SUPPLY CHAIN 175 Appendix

Our interaction with suppliers and In 2014, the Company attracted 5,039 suppliers; business partners is aimed at the in 2015: 5,279. The vast majority of them development of reliable, long-term Distribution of suppliers by regions of the RF, 2014 relationships and involves joint efforts are located in the Russian Federation. to increase economic potential. Our relationships are based on principles of strict contractual obligation 1. Kemerovo Region...... 16.2% 1 compliance, and compliance with 2. Moscow...... 13.5% business ethics. Special attention 15 3. Krasnoyarsk Territory...... 11.9% 16 is paid to compliance by suppliers 13 14 2 12 4. Primorye Territory...... 7.4% with the principles of social 11 5. Khabarovsk Territory...... 6.7% responsibility, in particular in the 10 6. Republic of Khakassia...... 5.9% field of industrial safety and labor 9 7. Novosibirsk Region...... 4.9% protection. The requirements 3 8 8. Republic of Buryatia...... 3.8% of compliance standards in this area are part of the contracts that we 7 9. St. Petersburg...... 3.8% enter into with our suppliers. We also 6 4 10. Murmansk Region...... 3.3% 5 pay special attention to the quality 11. Trans-Baikal Territory...... 3% control of the production processes 12. Irkutsk Region...... 2.2% of our suppliers. 13. Sverdlovsk Region...... 2.2% 14. Altai Territory...... 1.5% The procedure for supplier selection 15. Moscow Region...... 1.2% has been standardized by the 16. Chelyabinsk Region...... 1% Company, and implemented on the basis of the regulated procedures. It provides the necessary transparency and efficiency of procurement. All the necessary Distribution of suppliers by regions of the RF, 2015 information about suppliers is located on the Company’s website, under “Procurements”. Geographical distribution of suppliers 1. Kemerovo Region...... 14.6% 1 The Company seeks to achieve Location Share 1 2. Moscow...... 14.4% a balance between centralized 3. Krasnoyarsk Territory...... 12.3% procurement and procurement 2014 2015 15 14 2 4. Primorye Territory...... 6% by regional offices. Centralized Russian Federation 98.89% 99.05% 13 12 4 5. Khabarovsk Territory...... 5.8% purchases are made in categories European Union 0.77% 0.64% 11 6. Republic of Khakassia...... 4.2% in which it is possible and 3 10 7. Novosibirsk Region ...... 3.8% economically justified to create USA 0.12% 0.09% synergies between all SUEK 9 3 8. St. Petersburg...... 3.5% enterprises. Decentralized purchases Australia 0.12% 0.06% 8 9. Republic of Buryatia...... 3.8% are conducted with insignificant 7 CIS 0.06% 0.08% 2 4 10. Murmansk Region...... 3.1% economic benefit from possible 6 5 11. Trans-Baikal Territory...... 2% synergies, as well as the purchase Japan 0.02% 0.06% 12. Irkutsk Region...... 1.9% of materials and equipment necessary Africa 0.02% – 13. Sverdlovsk Region...... 1.4% for the rectification of emergency 14. Moscow Region...... 1.2% situations in the workplace. Republic of China – 0.02% 15. Chelyabinsk Region...... 0.7%

62 63 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership for sustainable development INNOVATION ACTIVITIES 175 Appendix

Introduction of innovations in all areas of Company activity is one of the key factors in strengthening our market position. We develop and implement promising innovative technologies into coal extraction and processing. In particular, we are working to improve the consumer qualities of coal, creating new products from coal with high value-added, recycling of coal combustion products and processing of lignite into products for the iron and steel markets.

A significant focus of our innovation processing, including the technology SUEK objectives activity is the development in the to increase consumer qualities of field of coal chemistry. We are coal and the creation of new coal with in the area studying the possibility of complex high value-added products. of innovation processing of mined coal, including the extraction of rare-earth metals. At the Berezovsky quarry, coke fines We are also developing the produced from lignite were tested. technology of upgrading and efficient This product is used as a sorbent processing of low-metamorphized in the oil refining industry, water and coal and lignite. gas treatment. As part of this work, Coal production: the pilot plant for its production was First of all, we are working on the modernized. Product testing in the • improving environmental processing of lignite of the Kansk- laboratories of one of the world’s performance of coal mining Achinsk basin into semi-coke and leading oil companies confirmed the low iron content was successfully same time, can control the process brought together more than 300 tested for durability under real depending on the specific load: participants from different countries, • reduction of production costs other products. During the reporting possibility of using this sorbent on period, SUEK-Krasnoyarsk started hydrocracking of heavy oil residues production conditions of the adjusting the rotational frequency, a number of representatives of • increasing labor productivity the production of semi-coke at and its consumer properties, interested consumer. The company time, power, and other parameters. industry companies, scientists, the Berezovsky quarry. This surpassing the existing European has received confirmation of the The use of innovative design can teachers, specialized universities, type of fuel is used in metallurgy, counterparts. client’s interest to move to industrial significantly improve the reliability representatives from the federal cement production and calcination volumes of consumption of this and durability of the equipment, as government in the field of of alumina. The calorific value of The lignite coke produced at the innovative product. well as lower the power consumption. environmental and technological semi-coke is comparable to the Berezovsky quarry was pilot-scale Today, the main conveyor belt at the monitoring. The main topics of the A separate direction in our innovation Berezovsky quarry is equipped with conference were the improvements Coal deep processing: main raw material for the production tested. The product was found to of coking coal, the reserves of comply with state standards and technology is the introduction of these engines. in the technology of open pit mining, • increasing calorific value which are gradually declining. other regulatory requirements in advanced technologies in production. product quality control, advanced of lignite At the same time, semi-coke is the field of product quality. In 2015, In 2015, the Borodino Repair and In the process of development conversion and benefication of coal, distinguished by competitive prices the Company entered into the Engineering Plant started the and launching innovations, we and comprehensive utilization • obtaining chemical products and stable ash content. Together, first contract for the supply of this production of innovative valve- interact with stakeholders: partners, of mineral resources. Such important from lignite these features make this type of product. In 2016, SUEK plans to inductor engines for BelAZ, that are industry companies, consumers issues for the industry as the fuel promising for use in the energy expand production of lignite coke used at the SUEK enterprises. The and research institutes. We aim to introduction of innovative high-tech • production of motor fuel and metallurgical industries. at the quarry due to the increasing inductor-valve engine is the latest share the experiences and jointly solutions in industrial processes, from lignite demand for the product. We also development of Russian scientists, develop new ways and solutions improving the competitiveness During the reporting period, the main tested the technology of production combines the properties of an electric to increase overall capacity. So, in of solid fuel under the conditions innovation efforts of the Company of lignite semi-coke pellets using machine and an integrated system of 2015 SUEK was the organizer of of high market volatility, the were focused on the development a new type of binder. It produces controlled electric drive. As a result, the international scientific-practical prospects for thermal enrichment and and implementation of innovative high-strength and high-quality the motor converts electrical energy conference “Open Pit Mining deep processing of coal were also technologies in the field of coal pellets. A pilot batch of pellets with into mechanical energy and, at the in the XXI Century.” The forum discussed at the conference.

64 65 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital Capacity up to AREAS OF ACTIVITY AND 92 Occupational safety and health 120 Environmental performance: safety and efficacy OBJECTIVES FOR THE NEXT 142 SUEK and regions: partnership 1,500 for sustainable development tons/hour REPORTING PERIOD 175 Appendix

Production Development: Strengthening positions on the sales markets: Product quality improvement: Innovation Development: • increase production capacity at the Urgal deposit • strengthen positions on the markets of Japan, • implementation the investment program for the • introduction of developments on an in the Khabarovsk Territory; Korea and Taiwan; development of mining and enrichment facilities, industrial scale; in particular the reconstruction of the Chernogorsk • modernize and expand production capacity • increase direct sales through SUEK sales • creation of an integrated complex for production enrichment plant in the Republic of Khakassia, in Kuzbass, Khakassia, Buryatia and the networks; of lignite and semi-coke pellets on its basis; with the aim of increasing the hourly capacity up Trans-Baikal Territory; • build sales of high-quality coal in Poland, Turkey to 1,500 tons/hour, and improving product quality, • development of technology of pellet creation for • develop enrichment facilities at Urgalugol, and China; design of the enrichment plant at the Vostochno- the related industries; Tugnuisky quarry and in Kuzbass. Beysky quarry, with the capacity of 3,5 mln tons • develop marketing of semi-coke and hard coking • study of possibilities of briquetting lignite and per year, the construction of a crushing and coal to international and Russian metallurgical waste coal, the design possibilities of product sorting complex at the Apsatskiy quarry. enterprises; commercialization. • implementation of quality control programs • increase transshipment volumes through the and changing of coal composition; Company ports; • improvement of the quality control system. • increase throughput of stations of SUEK enterprises close to railway lines.

66 67 SOCIAL IN THIS SECTION PERFORMANCE: 70 General results for 2014–2015 72 Our approach to human resource management COMPANY 74 Characteristics of staff and types of employment HUMAN CAPITAL 78 Motivation and remuneration 82 Cooperation with trade unions 84 Education and development 88 Corporate culture 91 Directions and objectives for the next reporting period

“Only a close-knit team of professionals can achieve ambitious goals and high results; the company becomes a leader when its employees work together professionally. All this creates a comfortable environment in which everyone wants to grow, measure up to the overall level of achievement and that makes the job interesting and its results bring more gratification.”

D. Syromyatnikov, SUEK Deputy CEO and Human Resources and Administration Director SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy GENERAL RESULTS 142 SUEK and regions: partnership for sustainable development FOR 2014–2015 175 Appendix

Goals set for 2014–2015 Federal industry agreement on the The Code of Conduct has been Goals Implementation Russian Federation coal industry for revised, the Commission began work the period April 1, 2013 through March in all areas of Company presence. Increased productivity, control of personnel costs: 31, 2016 (FOS) has been extended • development of standard numbers of employees, optimization of number of employees in accordance until December 31, 2018. with the investment programs of high-performance equipment introduction. • work with government agencies to improve the regulatory framework

Improving wages and social benefits:

• unification of regulations on bonuses for production units

• extension of the voluntary medical insurance program to the entire SUEK staff and providing A consecutive human resources A program to improve the staffing voluntary medical insurance at special rates for the employee family members training system for all management efficiency of SUEK enterprises, levels has been formed, along in particular, with the current lack Employee Recruitment: with a key SUEK management of such staff, has been developed • implementation of youth recruitment and retention programs employee pool. and implemented. • development of the youth movement, as part of the Youth Council: internships for young professionals at SUEK Group enterprises; participation of young professionals at scientific and practical conferences

• implementation of measures to increase the rotation of engineering and technical personnel among the SUEK enterprises in different regions

A training program for personnel Voluntary medical insurance Increasing employee loyalty: improvement has been developed. contracts have been entered • implementation of a program to strengthen the SUEK brand as a reliable and attractive employer into for employees at all mining • increase employee loyalty through the development of an internal communications system enterprises. • competition of professional skills “Olympics-2014” among the SUEK industrial enterprises

• assist employees in effective mortgage and consumer lending

• organization of transportation system for enterprise employees who live far from work

Training and Staff Development:

• updating the education system to improve its quality

• revival of the mentoring system at enterprises

• promotion of training among enterprise employees, as well as senior staff

70 71 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy OUR APPROACH TO HUMAN 142 SUEK and regions: partnership for sustainable development RESOURCE MANAGEMENT 175 Appendix

Our employees are the main capital of the Company, Personnel management system the guarantee of its stable work today, and the foundation Main priorities in human resource management for its future growth. It is only possible to achieve strategic objectives, especially under difficult macroeconomic • providing staffing to achieve the Company’s The Board of Directors oversees the implementation of the SUEK Human conditions if the team has the necessary experience, high strategic goals; Resources strategy. The Nomination and Compensation Committee level of professionalism and involvement, as well a belief • ensuring a high level of industrial safety and labor in the corporate values. By recognizing the human capital oversees issues of appointments, motivation, social policy, health protection; of the company as the leading factor in its sustained and safety in the workplace. growth, we aim to create the best possible conditions for • efficient use of human resources, ensuring our employees’ development, improve the level of safety, consistently high levels of productivity; and to provide social support to staff members and their families. The Company strategic objectives determine • improving staff training system, development of career the areas of employee development, taking into account opportunities within the Company; the analysis of the labor market and the results of the dialogue with stakeholders – employees, unions and • creating favorable conditions for staff work SUEK Human Resources Strategic Planning government officials. and leisure; and Administration Block • general corporate policies • creating an effective system of internal and documents; communications, promoting SUEK corporate culture. • motivation management, labor relations management; • budget management and staffing; • implementation of key Human Resources Management projects.

Essential aspect: Regulatory framework of employee relations fair remuneration and staff social support. • International and Russian labor law; Key indicator: Lack of salary discrimination. • branch and territorial agreements with trade unions; Regional Production associations. • collective agreements; Operational control Regional Human Resources Services. • payroll and social payments • Corporate Social Policy; SUEK does not use child labor, nor any forms of forced budgeting; labor and guarantees equal rights and non-discrimination • Code of Conduct. Enterprises and production units. by nationality, gender, origin, age or other grounds. • implementation of human The Company recognizes the legitimate right of workers Services to work with enterprise staff. resources and social policy to create voluntary associations to protect their rights and interests, including the right to form trade unions from a regional perspective. and join them.

72 73 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital CHARACTERISTICS 92 Occupational safety and health 120 Environmental performance: safety and efficacy OF STAFF AND TYPES 142 SUEK and regions: partnership for sustainable development OF EMPLOYMENT 175 Appendix

Our Company is represented in eight regions of Russia and ten countries and regions around the world (Russia, Poland, China, Japan, South Korea, Characteristics of SUEK staff Indonesia, the USA, Taiwan, Cyprus, Switzerland).

1 1 4 5 SUEK is one of the major employers presence, lack of social and housing in the Russian coal industry. In 2014, infrastructure development. Among SUEK employed 31,438 people, the key measures to attract and retain in 2015: 32,124 people (average personnel are: 2 2 number). Out of that total, 74% are 3 workers and 26% are managers, • Bring in staff members from other specialists and other types of staff. Russian regions to regions. The SUEK staff socio-demographic characteristics remain stable from • Increase labor mobility between year to year. enterprises and regions. Staff and specialist team assignment During the reporting period, we allows retention of qualified were actively working to provide personnel within the perimeter Age Breakdown Gender breakdown the enterprises with the required of the Company, during periods number of staff, as well as to form of uncertain enterprise workflow. 1. 18–30 years old...... 22% 1. Men...... 76% a SUEK personnel reserve. This is 2. 31–40 years old...... 30% 2. Women ...... 24% particularly relevant in relation to a • Programs for regional development of the Company to improve the 3. 41–50 years old...... 23% number of common HR factors within the industry such as the decline in standard of living. 4. 51–60 years old...... 21% the prestige of working professions, 5. Over 60 years...... 4% insufficient number of specialized During the reporting period as a result educational institutions and low level of this work, the shortage of key 32,124 of qualification of their graduates, professionals for the Company as well as population outflow in decreased by 18%. average number of employees Turnover ratio, % a number of regions where SUEK has

2015 16.4

2014 17.7

2013 18.3

74 75 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health CHARACTERISTICS OF STAFF 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership AND TYPES OF EMPLOYMENT for sustainable development 175 Appendix Continuation

Due to the difficult macroeconomic situation, which has led to a reduction Our enterprise Urgalugol has an acute staff shortage problem. A key in coal production volume in the reason is the critical shortage of housing in the Chegdomyn village, where world, we are developing a strategy the majority of enterprise workers live, lack of transport accessibility, poor to proactively work with the staff, social infrastructure. All this leads to an outflow of the population from the in case there is a need to reduce village and makes it problematic to retain skilled personnel. production at the Company’s individual enterprises. The strategy In 2014, a comprehensive program was developed to solve this problem: aims to maintain the employees of the enterprises within the SUEK A bus service between the company and the village has been set up, perimeter. Approaches include: as well as for nearby communities with poor transport infrastructure, bus routes have been organized to transport personnel to Urgalugol. • rotation of staff using a shift method and assignment to SUEK Workers from other regions of Russia were brought in for permanent enterprises with a personnel jobs in the Company. This work continued in a systematic manner: built shortage; regular interaction with local government administration, employment agencies, information campaigns in the media, collective and personal • re-employment of laid-off meetings with employees and closing unprofitable mines. employees at other SUEK enterprises; A comprehensive solution to the main problem is under way, which is to provide housing to staff. Apartments are purchased in the town by • retraining of employees for the company in order to rent out to key employees at a minimal cost. The professions in demand within town dormitories are in the process of being renovated and expanded. the Company, using the local One such dormotory has been renovated to serve as an employer-rented employment centers; housing for employees and their families, the other is for single employees.

• establishment of commissions for the development of new In 2014–2015, the Company began jobs in the regions for the laid- The Shakhter housing program has been developed, key elements In 2015, a plot of land with the necessary utility infrastructure was work on the development of standards off employees, with possibility of which are: allocated for the construction, all the necessary project paperwork has for the number of employees at of alternative or similar job been prepared. each enterprise. A pilot project activities (repair and installation, • construction of a 180-apartment residential complex the key employees was implemented in the Kirov transportation, construction, etc.); of the company; Work was done on the development of social and communal and Yalevskiy mines in Kuzbass. infrastructure, in particular with the involvement of state support An evaluation to establish the required • ensuring social stability in the • To provide them with a preferential mortgage lending program without mechanisms. During the reporting period, the Company developed number of employees in core activities regions. undue financial burden; a comprehensive roadmap and investment plan for the development such as coal mining and excavation of hegdomyn to receive financial support for the single-industry town. was carried out. For this purpose • To include the complex construction in the regional plans for socio- A list of construction and reconstruction projects of the engineering comprehensive time recording was economic development, a study of co-financing opportunities through infrastructure has been developed. undertaken,. The output provided government programs (“Affordable housing”, etc.) objective information about the Against the background of the Company activities, the staff turnover rate number of employees required for at Urgalugol decreased in 2015 from 27% to 19% year-on-year. the main manufacturing operations, and thus the Company was able to plan accordingly.

76 77 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy MOTIVATION 142 SUEK and regions: partnership for sustainable development AND REMUNERATION 175 Appendix

The employee remuneration system is We constantly monitor the labor market designed to provide competitive and trends in Russia and the regions of our SUEK reward and motivation system fair wages and to motivate employees presence, study industry practices to work efficiently, while observing the of compensation and social benefits Fixed component: safety standards in the workplace. in an effort to offer our employees attractive working conditions. • salaries/wage rates; • bonuses and allowances, including for safe work

Salary Variable component:

Payroll and social benefits to employees22, • quarterly/monthly premiums; million rubles • end-of-year bonus for key performance indicators (KPIs) and individual goal achievement; 2013 2014 2015 • premiums as part of a long-term incentive system, one-time incentive payments. Total payments: 14,528 15,412 16,993 Benefits and Compensation Paid vacation transportation for an employee and family; utility costs compensation; including: voluntary medical insurance; lump sum payment at retirement; compensation of health salary fund 14,081 15,037 16,549 spas; financial aid, etc. social payments 448 375 444 Soft Incentives Government awards, departmental and corporate awards, corporate events, production competition, best employees/departments publication in the corporate newspaper

Average salary of employees in regions of SUEK presence23 Material remuneration

2014 2015 The tariff rates and salaries are A long-term motivation project was Average salary of SUEK employees, rub. 41,229 44,792 formed in accordance with the formed in 2015. In its scope are During the reporting period, Including at all enterprises in the regions of the “Minimum Labor Pay Levels for programs aimed at improving the SUEK began the process Russian Federation: Russian Coal Industry Workers” efficiency of business processes of unification and automation Krasnoyarsk Territory 35,319 37,998 guidelines, which are regulated by (e.g. in the part of logistics operations, of wage payment for the a Federal industry agreement for the certain areas of procurement activities employees of SUEK Group Republic of Buryatia 44,313 47,419 Russian Federation coal industry. and warehousing) and the development mining enterprises. A pilot project Trans-Baikal Territory 47,709 46,886 SUEK conducts regular indexation of productivity. Remuneration is linked of a fully automated calculation Republic of Khakassia 38,672 42,834 of staff wages based on the data not only to the achievement of KPI of wages based on performance from the Federal State Statistics of a project, but also to maintaining indicators has been successfully Primorye Territory 40,113 45,902 Service. At the end of 2014, the the stability of the result. In addition implemented at the Tugnuisky Khabarovsk Territory 47,216 53,170 indexation of tariff rates and salaries to stimulating project activity, the quarry. Within its framework Kemerovo Region 41,912 45,461 amounted to 8%, in 2015: 11.4%. program also serves as a means the production volumes are of keeping employees working on transferred from dispatch The Company has target motivation projects, the stability of teams and the system sensors straight into programs with monetary rewards reduction in project risks. During the the automated payroll system. for reaching key performance reporting period, 387 employees took Employees only need to review indicators (KPIs). Annual goals part in the motivation program, which the automatic calculations include industrial safety indicators, is 147 more than for the 2011–2013 to understand their performance development of social and charitable reporting period. We expect that as and wages. activities and cooperation with the system is further implemented, the stakeholders. number of employees involved in the project will increase significantly. 22 SUEK coal mining enterprises.

23 SUEK coal mining and service enterprises.

78 79 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health MOTIVATION 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership AND REMUNERATION for sustainable development 175 Appendix Continuation

Social support

The Social Benefits package for In order to preserve, protect and Special attention is paid to the the SUEK Group employees, which promote employee health in view Company’s no-alcohol policy. There applies to employees of Russian of industrial and individual risks, is a mandatory sobriety control at all enterprises, is based on the current we have implemented the “Health” enterprises at the beginning and end legislation, agreements with the trade program. Its purpose is to reduce of the work day (shift, route), a random unions and collective bargaining. industrial and off-the job accidents, shift check, and employee medical It includes: occupational diseases and therefore examination before the shift. reduce loss of working hours. • paid vacation transportation for During the reporting period, a medical employee and family; Health program details: evacuation system has been put • upon retirement, a pay-out of 15% in place at our enterprises, in case • monitoring employee health of average earnings, for each year of accidents, which will allow employees to identify occupational diseases of service in the coal industry; to effectively provide assistance in early stages; to each other and to promptly receive • financial assistance; • regular health check-ups, “health medical care, and consequently • voluntary medical insurance; passport” maintenance; reduce the severity of injuries. As part of the system, several employees • providing coal for the domestic • prevention programs (vaccination, will be receive training in medical needs of employees; identification of cardiovascular risk, evacuation, and a system of emergency musculoskeletal diseases, etc.); • compensation for energy utilities. medical help will be put in place, with • promotion of a healthy lifestyle. a telemedical remote panel to monitor A significant part of the social emergency situations as part of the Soft incentives assistance programs is made up As part of the program, we upgrade Health Centers. of SUEK’s staff health support. In health centers and equip them with When implementing measures aimed competitions, winners of which are professional societies, “Shaftman” 2014, the voluntary health insurance modern equipment, we bring in qualified In the five years of the Health at promoting corporate culture, SUEK awarded with memorable gifts and and “Miner” clubs, that organize skill program, one of the most important doctors, monitor the quality of medical program, labor losses due to illness pays great attention to employee prizes. Once a week, all enterprises training and experience exchange. benefits for the employees, according examinations and programs, and are have decreased from 15 days per year moral incentives. Among the soft hold increased production and to polls, was expanded to cover all the implementing a medical electronic in 2010, to 7.1 days in 2015. The share incentives are the celebration of increased drilling days to improve Employees whose work has made SUEK mining enterprises. document where each individual’s of the fit-for work employees rose by Miner’s Day, and athletic and cultural production results. a significant contribution to SUEK’s medical history can be saved. 17% to 72%. events in the regions where SUEK development and the entire coal is present. Before Miner’s Day, the In order to exchange best practices industry become eligible for state, Company holds annual production and improve productivity, SUEK has departmental and corporate awards.

80 81 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy COOPERATION 142 SUEK and regions: partnership for sustainable development WITH TRADE UNIONS 175 Appendix

SUEK actively cooperates with the trade unions on the Social payments, as part of collective agreements, Essential aspect: principles of social partnership and constructive dialogue. thousand rubles Equitable remuneration and Russian Independent Trade Union of Coal Industry Workers social support of staff. (Rosugleprof) and Independent Trade Union of Russian Payment Type 2013 2014 2015 Key indicator: 401,555 Miners (NPG) are present at all Company enterprises. Reward for years of service 345,299 377,205 Social package costs. Cost of coal payments to employees 88,836 90,330 90,846

Transportation payment 86,009 98,449 98,369 Lump sum payments (assistance, 161,862 166,195 106,590 SUEK Social commitments are Nearly rewards) at retirement Essential aspect: secured by bilateral territorial Vacation vouchers for employees 41,466 Labor relations. 40,001 39,948 agreements with trade unions and and family members collective agreements regulating Key indicator: social and labor relations between Employee financial aid 31,898 35,414 41,786 The number of employees the employer and the employee. 70% Various types of financial assistance 309,220 covered by collective bargaining Approximately 93.72% of the of all SUEK and other social payments to former 238,502 243,558 agreements. employees are covered by the employees are employees collective agreements. Benefits Voluntary insurance for employees, 208,414 members of trade 88,041 247,522 provided by the terms of collective including private unions. agreements apply to all employees Total: 1,084,781 1,239,017 1,353,517 of JSC SUEK.

SKUE is a permanent member of the There was also an amendment to the end of 2018. In cooperation with SUEK coal mine employees trade union Federal industrial agreement of the the collective agreements on special the trade unions, 60% of collective membership, % Russian Federation coal industry and assessment of working conditions, agreements were standardized during one of the founders of the All-Russia which according to legislative the reporting period, and work was 2014 2015 Industrial Association of Employers changes that came into force in 2014, carried out to identify a common set SUEK, total 71.3 70.1 of the Coal Industry (OOORUP). and replaced the previously existing of social benefits. In 2014–2015, negotiations with procedure of workplace certification. Republic of Buryatia 89.5 88.0 the trade unions were held as part With the introduction of procedures SUEK actively cooperates Krasnoyarsk Territory 73.2 77.2 of the association, which resulted to assess working conditions, we with the trade unions on safety Trans-Baikal Territory 83.4 80.9 in amendments signed to the Federal conducted large-scale expository issues. Their representatives are Republic of Khakassia 57.4 56.5 industry agreement, on wage work with the representatives of involved as experts in independent indexation, monetization of vacation both regional and primary trade safety evaluation at our facilities. Kemerovo Region 67.9 66.1 for work under hazardous working unions, as well as held meetings with The evaluation comments are put Primorye Territory 82.1 83.2 conditions and changes in the length Rosugleprof leadership. into a regulations book for further Khabarovsk Territory 74.3 66.2 of an employee workday at the assessment. The Company mining enterprises. During the reporting period, the is currently discussing the existing industry agreement for the establishment of a joint plan with the coal industry was extended until unions to improve the safety system.

82 83 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy EDUCATION 142 SUEK and regions: partnership for sustainable development AND DEVELOPMENT 175 Appendix

The current SUEK system of training and development Personnel development Essential aspect: is aimed at maximizing the professional and intellectual Training. and improvement of training centers guidelines for training programs. potential of employees, development of their Essential aspect: Key indicator: became one of the most urgent tasks A unified training standard professional and managerial skills, and the formation Training. Number of hours of training in the field of education during the will ensure common skills of the Company’s personnel reserve. During the reporting period. In 2015, an audit and qualifications at all SUEK per year per employee. Key indicator: reporting period, 178.5 million rubles were allocated of the activities of 17 enterprises was enterprises that will allow rotation The opportunity to acquire conducted. Based on its results, three of employees from one region to for training and development programs. new skills. areas of development were identified – another; educational and method framework, • qualification training of teaching teaching faculty, and necessary staff, providing training in equipment. A gap existed between contemporary educational the real need for qualified staff and approaches and training The training and development Staff training (education, additional the availability of relevant training was Employee Training technologies. The development of system covers all categories of staff training, skill enhancement training) identified, which leads to a shortage of a mentoring system at enterprises, and the target groups of potential is carried out on the basis of training qualified workers. 2013 2014 2015 and bringing in technical SUEK employees – from vocational courses and training centers. Underwent training, overall, people 21,161 29,837 26,698 engineering personnel to teach; guidance at school and collaboration Following the results of the audit, we with educational institutions, to the including: An uneven fulfillment of the Company’s developed a program that includes the • planning for training needs and promotion of employees up the managers and specialists 3,597 5,072 4,213 production places demand of flexibility follwoing actions: financial and equipment support career ladder. of the approach to and capacity for complexes, providing computer workers 17,564 24,765 22,485 requires the unified and utmost • development of methodological classes for the training center Basic tools of training and staff men 18,198 26,558 23,619 flexible system of training workers. basis for the training centers, facilities and introducing on-line development at SUEK are: women 2,963 3,279 3,079 Due to this aspect, the optimization and the development of unified education. out of those by type of training: • regional network of training centers and complexes; training, retraining, receiving secondary professions 3,504 3,208 9,098 • Corporate University; skill improvement training 3,358 8,100 3,639 Corporate university Number of personnel trained in the Corporate • system of interaction with state training in accordance with the University programs, people educational institutions. requirements of labor protection The Corporate University is the center and industrial safety 14,299 18,529 13,961 of knowledge management and Name of program 2013 2014 2015 Total The key areas of the Company the development of SUEK human out of those by location of training: staff training and development resource potential, which provides Locomotive 40 38 40 118 during the reporting period were trained at training facilities continuous professional development (offices, complexes) 11,965 8,832 18,533 as follows: of all staff groups and the formation of Director 48 23 – 71 at enterprises a personnel reserve of the Company. • vocational training and retraining (outside the training facilities) 3,372 7,954 3,290 The University provides various forms Head of site 85 66 – 151 of workers; at third-party locations 5,824 13,051 4,875 of education from offline and online programs to site surveys. During School of Mining Foremen – 102 72 174 Total training duration, overall, hours 1,128,190 606,687 1,467,860 • development of employee reserve the reporting period, the university Program of improving efficiency – – 15 15 for key positions at various levels. including: curriculum was expanded to include of repair and mechanical plants managers and specialists 57,943 236,271 215,400 “School of Mining Foremen “, “Head of the Port”, “Technical Director of Head of Port – – 16 16 workers 1,070,248 1,370,416 1,252,460 Enterprise”, “Section Mechanic” and a Technical Director of enteprise – – 31 31 men 952,375 1,443,976 1,322,384 program for improving the efficiency of women 175,815 162,711 145,476 repair and mechanical plants. Site mechanic – – 70 70 Quantity of training hours per one 53,31 53,85 54,98 employeer per year Total: 173 229 244 646

84 85 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health EDUCATION 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership AND DEVELOPMENT for sustainable development 175 Appendix Continuation

Work with students and young professionals

In order to meet the Company’s In 2014, Youth Councils were formed needs for qualified personnel, we Since 2012, we have been at all Company enterprises. The total are developing a system of targeted carrying out a scientific hands- number of youth council members training of employees by using “school on Youth Forum to address in SUEK was than 800 people. – university – company” system. production problems – The Any young employee can join the Mining School. In 2015, 166 council. Members of the Youth Council At the school level, SUEK holds young specialists took part in it. develop projects aimed at improving events for professional orientation SUEK’s initiative received the the efficiency of production and for students and potential college support of the Ministry of Energy, participate in the discussion students and implements programs the country’s key universities and of issues related to employment, to create specialized SUEK classes the leading companies in the development and career growth preparing high school students for fuel and energy sector. Forum of young employees, as well as take entering the mining profession. winners undergo training through part in trainings and conferences. the Presidential engineering During the reporting period, the Our interaction with technical staff preparation program, which Youth Council members analyzed the institutions and specialized includes additional training effectiveness of the young employee Personnel reserve formation universities is aimed at specific in leading mining universities, orientation program. The work training of engineers and the support studying the principles was aimed at reducing the turnover During the reporting period, we Technical directors, and Site of prospective students. Among the of economic production of personnel under the age of 35. have been actively working on the Mechanic. In 2015, a program was partners of the SUEK program are as part of the training at Toyota In order to analyze the problems and formation of the personnel reserve launched for the development seven of the largest Russian higher factories, and training at the bring in new ideas, the company SUEK. As a result, a consistent In order to assess the ability of the personnel reserve for site educational institutions in different mining enterprises in Australia. held a competition among members system of personnel preparation has of the reserve candidate, we use mechanics, targeted at the regions where SUEK is present. The winners of the investment of the Youth Council titled “Welcome.” been built, from key positions like a competencies model. It has been development of management ideas competition took part The initiative allowed in a short Regional Production Association developed with the involvement and business skills. The main Cooperation formats include: in the international exhibition span of time to receive feedback manager to site mechanic and of experts and task managers, element of the program was CHINA COAL & MINING EXPO on the shortcomings of the existing mining foremen. This structure senior management and the best working in groups to improve • research and development; 2015, as part of the Ministry orientation program, and to gather provides upward career mobility representatives of various SUEK economical production skills, a pool of ideas for the development • participation by Company of Energy delegation. within the Company and makes it professions. and working independently of a single, universal standard for specialists in meetings of colleges possible to create the required pool to improve production processes orientation program into the Company. certification commissions; of qualified candidates for arising The training programs for talent efficiency. In 2016, the talent managerial job vacancies. The pool of key management positions, pool will continue their training • assistance in improving the material Company also has a Locomotive in addition to the Corporate in vocational universities for and technical base of the university: program, aimed at developing the University programs, include professional skill enhancement. • stipend payment and payment for leadership potential of the most involvement of successors in project As part of the program, there are internships; talented employees. Employees activities, participation in various opportunities to present to allow selected during training at the committees in accordance with the employees to acquire the skills • student internships at SUEK Corporate University are eligible for scope of responsibility to the target needed to communicate their enterprises. the program, as well as employees position, filling in for the top manager ideas to the management. 178.5 recommended through the Regional during vacation and business trips, In 2015, there were 420 students Production Association heads or by as well as participating in specialized received training at vocational mln rubles head office appointment. conferences and seminars. This institutions in SUEK targeted have been invested into level of involvement in the target programs. educational and In 2014–2015, we implemented position tasks allow the applicant development programs a training program to prepare to prepare as much as possible for reserve staff for Head of Port, the intended level of responsibility head of Mechanical-Repair Plant, and volume of issues.

86 87 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy CORPORATE 142 SUEK and regions: partnership for sustainable development CULTURE 175 Appendix

In order to introduce the Code of Conduct Internal into the corporate culture, a large-scale information communications campaign was developed using all the internal communication tools to promote the Code’s We aim to develop a system of internal communications in order 24 values, as well as gather feedback. to provide an open and efficient as SUEK VALUES possible dialogue with our employees • SAFETY AND and to promote our corporate culture. Within the framework of the Employees can address the Main internal communication PERFORMANCE implementation of the rules issues of ethical regulations with channels: and provisions of the Code, the the help of: • PROFESSIONALISM Company began to operate an Ethics • hold team meetings on Commission and a system of appeals • multi-line single number hotline; organizational matters and other AND COOPERATION on the violation of ethical behavior. issues; corporate intranet portal; • e-filing applications forms through Ethics coordinators, appointed from information exchange between the corporate portal, with an among the employees, also began regions and enterprises; • STABILITY AND anonymous option; their work at Company enterprises. • corporate media system; DEVELOPMENT The task of these coordinators is to • confidential boxes at enterprises; support the processes of promotion • surveys and staff opinion research; • by personal visit to coordinator. of the Code and to analyze the level • SOCIAL RESPONSIBILITY • hot line for employees; of employee awareness, and advise An appropriate response time staff on compliance. All coordinators • “Signal Sheet”25; for feedback has been established. have been trained in knowledge of the A system of ethics coordinator • bulletin boards, plasma panels, Code, its standards of performance, interactions with the ethics brochures in corporate transport, communication skills, conflict commission in the regions, with information desks, electronic management, and the handling the responsible services and with newsletters, internal Internet portal of complaints. In November 2015, SUEK was developed, and levels in enterprises and at the main a coordinator conference was held in of decision-making are differentiated JSC SUEK office; Krasnoyarsk, where the coordinators by requests. At the core of the corporate culture with key Company managers, could discuss pressing issues related • corporate social are SUEK’s corporate values and focus groups and voluntary survey to the promotion of the Code of responsibility report. standards of behavior formalized in of staff in all areas of the Company, Conduct and share their experiences. the SUEK Code of Conduct. both among mining and auxiliary enterprises, including the transport In 2015, we developed and adopted segments. The final list of values ​​ an updated Code of Conduct, taking focused on internal and external 25 into account the Company’s priorities, stakeholders and was designed For more information see “Occupational safety and health” corporate values and rules of to meet the expectations and address employee business conduct. the perceptions identified of the given target groups. The approved Code The list of corporate values ​​shared of Conduct and its implementation by all categories of employees system became a platform for the was drawn up, taking into account Company’s communications with the identified expectations and stakeholders. perceptions of the target groups based on a study, in which over 1,200 people participated. In the 24 The value system is reflected in detail in the study, interviews were conducted “About Us” section of this Report.

88 89 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership CORPORATE CULTURE for sustainable development 175 Appendix Continuation

During the reporting period, The SUEK 2011–2013 Corporate a diagnostic test was developed In honor of the 70th anniversary Social Report received first place and launched to improve the internal of Victory in the Great Patriotic DIRECTIONS AND OBJECTIVES FOR after the Russian companies communication systems: War, the Memory Labor Shift took corporate transparency study place from February 8 through THE NEXT REPORTING PERIOD was conducted by the Russian • Additional elements of May 8, 2015. As part of the Regional Network for integrated communication tools have been labor shift, there were daily and reporting among private launched: display of informational monthly campaigns of increased companies. The report also brochures on company buses, production, increased shipments, Continue work on a unified number Implement a package of measures won the 17th annual contest e-mail mailing list. increased productivity, accident- of employees: completion and to improve the efficiency of industrial of annual reports carried out by free operation, and high-quality • Concept of methodological and the Moscow Stock Exchange coal production and shipment. implementation of the number of safety: introduce a system of additional information support execurives and The Securities Market of the enterprises being key standards in mining and tunneling, safety motivation; optimize approaches magazine in the “Best report on speakers during communication beginning of work on the standardization to training on labor safety and industrial corporate social responsibility with employees. and sustainable development” of ancillary units at SUEK-Kuzbass safety, develop communication systems. category, organized by the RSPP. • A number of internal information The Company is working on further enterprises (S. Kirov mine and V. campaigns to support general developing the image of SUEK Yalevskiy mine). corporate initiatives were held: as an attractive employer. brochures about the enterprises To ensure that, we are: and distribution of information about those regions seeking to recruit • Developing direct dialogue with personnel from other regions, etc. potential employees participating Ensure unification and transparency Optimize Company training center in career fairs, conferences, forums, of all types of personnel payments. Solve activities to ensure a common approach • Crowdsourcing was introduced round tables. as a new tool of internal the problem of shortage of qualified and personnel training standards. communications (crowdsourcing • Carrying out an information personnel at enterprises that experience involves groups of employees campaign in both federal and staff shortages. to solve production issues regional mass media, highlighting in a creative fashion). SUEK activities as an employer • The system of collecting feedback and social investor. “Signal Sheets26.” has been Launch a housing program for Urgalugol Introduce common standards for established. The involvement • Holding cultural events with the of employee in collective control involvement of employee family employees. direct and indirect communication over the observance of safety members and local communities at the Company enterprises, setup regulations, as well as in the in regions where SUEK is present. the feedback collection system. improvement of the workplace, provides a complete and current picture of the risks and provides the opportunity for improved prevention of risks. Interact with the unions, taking into Implement the Code of Conduct account the crisis situation in the coal Corporate Ethics and system of its market. Form the basic provisions administration. of the Federal industy agreement for 2016–2018.

26 For more information see “Occupational safety and health”

90 91 IN THIS SECTION 92 Occupational safety and health 94 Main achievements for 2014–2015 97 Following standards in the field of occupational safety and health 102 Ensuring emergency response 104 Ensuring aerological safety 108 Dust-explosion safety 109 Prevention and control of gas-dynamic phenomena 110 Occupational injuries risk management 114 Culture of safety 116 Health protection and prevention of occupational diseases 119 Areas of activity and objectives for the next reporting period

“Safety of employees at work and minimization of risks associated with mining and processing of coal are SUEK’s key priorities. Our main objective when OCCUPATIONAL it comes to industrial safety and labor protection is the complete elimination of injuries, accidents SAFETY and emergency situations in the workplace. We are confident that this goal is achievable, so we build a strategy in this area based on the principle: ‘any AND HEALTH accident and injury can be prevented’.”

Klaus-Dieter Beck, Board of Directors member, SUEK PLC SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy MAIN ACHIEVEMENTS 142 SUEK and regions: partnership for sustainable development FOR 2014–2015 175 Appendix

In 2014–2015, the Dynamics of labor protection and industrial safety Developed SUEK Introduced the software Implemented Company’s expenses financing 2006–2015, million rubles for labor protection and industrial safety package “Unified book a comprehensive industrial safety was 2,808.2 2,813.8 2,726.8 2,691.9 and labor protection of guidelines and the program of corporate more than policy. formation of shift duties.” governance with 2,371.2 2,126.7 personal protective gear. 1,963.7 2,6 1,836.0 billion rubles

1,050.1 938.0

Organized single Implemented the Instrumental dispatch and analysis Signal Sheet project, measurements carried centers at SUEK which involves all staff out as part of special 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Head Office and in in the industrial safety workplace assessment SUEK-Kuzbass that management system and of hazardous production comprehensively track occupational safety and factors at all SUEK units. the state of security at health. The Company Targets set for 2014–2015

enterprises in real-time. held a competition “Most Goals Implementation vigilant gets the reward.” Further improvement in occupational health and safety management:

• recertification of SUEK enterprises in compliance with the international standard OHSAS 18001: 2007/2008

• organization of a unified industrial safety occupational health management dispatch center

• Start of pilot program at A. Ruban mine in Kuzbass to replace the launch Launched innovative Introducted “Video Compared to 2010, equipment at sinking faces to compact stations with electronic and microprocessor technologies providing information development the loss of work time control circuits upper-air and dust safety and employee competence due to illness and Providing emergency sustainability and environmental safety: at mines and ports. and compliance with safety injury decreased from • further improvement in the method of gas management at working areas requirements” at SUEK- 15.4 to 7.1 days per • further implementation of the project of directional drilling of degasification wells, Kuzbass and Tugnuisky employee. drilling from the surface of inclined and horizontal wells quarry, and test terminals were set up at all coal • introduction of modern systems of mineshaft rock dusting mining regional enterprises. • Increase in the specific consumption of inert dust in order to increase the dust-explosion safety of mines

Risk management of occupational injuries, reduction in occupational diseases:

• reduction in lost work time due to illness or injury down to 7 days per one employee

• further implementation of the Health program

94 95 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health MAIN ACHIEVEMENTS 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership FOR 2014–2015 for sustainable development 175 Appendix Continuation

Distribution of funds for occupational health Regional Production Association and safety activities in 2014–20015, million rubles distribution of funds for occupational health and safety activities in 2014–20015, million rubles

8 1 8 7 2 6 7 1 6 5 4

5

3 4 3 2

1. Carrying out research and survey work in the field of Occupational 1. Kuzbass...... 2,455 / 45% Safety and Health and Environmental Protection...... 253.5 2. Urgalugol...... 1,050 / 19% 2. Insurance...... 96.5 3. Krasnoyarsk...... 946 / 17% 3. Technical measures...... 2,000.3 4. Khakassia...... 345 / 6% FOLLOWING STANDARDS 4. Militarized Mine Rescue Unit and other emergency rescue teams...... 1,056.3 5. Buryatia...... 322 / 6% 5. Acquisition of personal protective equipment...... 789.2 6. Primorskugol...... 195 / 4% 6. Organizational measures...... 702.2 7. Transbaikal...... 196 / 3% IN THE FIELD OF OCCUPATIONAL 7. Improving sanitary state of workplaces...... 429.3 8. Daltransugol...... 24 / 0% 8. Acquisition of equipment, monitoring devices...... 178.4 SAFETY AND HEALTH

SUEK’s long-term strategy of Safety occupational health and safety is SUEK is becoming a safer company. Over the past five At the same time, we cannot be aimed at supporting the Company’s Strategy years, the key figure in industrial safety, the relative indicator fully satisfied with today’s results. strategy and the achievement of Unfortunately, during 2014–2015, the best world-class safety and 27 Effectiveness of the frequency of injuries (LTIFR ) has decreased we were not able to completely emergency stability. The management at the Company’s enterprises from 2.2 to 1.23; common eliminate accidents and fatalities approach is aimed at improving Development and implementation of injuries have decreased by twofold. The rate of injuries in the workplace. We deeply mourn our ability to assess and prevent the loss of thirteen of our employees potential technical, technological and Approach technical policies and new technologies in our company for 2014–2015 was better than the average and are making every effort to avoid organizational risks. of leading coal mining companies globally. a repeat of these tragedies. Purchase advanced technology

Following OHS standards

27 LTIFR – Lost Time Injury Frequency Implementation Rate is a frequency ratio of injuries Employee Discipline at production facilities causing temporary loss of capacity to labor.

96 97 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company FOLLOWING STANDARDS human capital 92 Occupational safety and health IN THE FIELD OF OCCUPATIONAL 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership SAFETY AND HEALTH for sustainable development 175 Appendix Continuation

To achieve the key objectives Our work to ensure employee occupational The Company annually OSH Policy of occupational health and safety, safety and health develops and implements we are developing a risk management a comprehensive OSH We build our work in the area to achieve the main goal – to prevent system and a program to improve Nature Man action plan. In 2014–2015, of OSH based on the corporate injury and accidents. production safety at SUEK standards that comply with Russian enterprises. The principal activities Emergency Tolerance Safety Compliance SUEK spent more than Federation law and is our OSH On the basis of the general policy, in this area are: • Control of environment and • Control of knowledge and compliance 5,5 billion rubles to finance policy. SUEK’s internal standards every SUEK enterprise has developed compliance with safety requirements with safety rules, system of knowledge the comprehensive plan. are applicable to the company’s staff its local modifications, taking • continuous improvement in the at the production facilities evaluation, related to work clearance and contractor’s employees. into account the specifics of their mechanisms and methods that • Creation of automatic safety and • Promotion of personal safety activities. In order for every employee ensure safety of work of and communication system with miners In 2015, the Company adopted to know the basic Policy principles, working conditions; • Education and training system a corporate OSH policy. In it, the the Company has developed and • Emergency response plans and Company management determined implemented a Company-wide • specialist training in occupational competent mine rescue teams at all its obligations and the basic principles communications plan. health, training in safe work mines and quarries that should guide all SUEK employees methods, and strengthening labor Air and dust safety Health protection discipline; • solving issues of air safety, geared • Monitoring of the air status of mines • Modern means of individual protection at explosion prevention and • Advanced decontamination • Prevention and treatment minimizing the harmful effects technology, control of gases, dust control • Healthy lifestyle promotion of dust on the health of workers; SUEK OSH Principles • providing enterprises with new equipment, introducing modern Principle of safety priority Principle of unacceptability safety systems and control devices; Every production problem must be of deception and concealment • introducing a single information considered from the point of view Deception and concealment of system of labor protection; of safety of its implementation. If information relevant to the issues security issues are in conflict with the of occupational safety and health • implementing hygiene and production tasks, production tasks are unacceptable to the Company. occupational medicine programs. should be revised or repealed. Principle of professionalism and Principle of the intolerability competence of injuries and accidents We do not assign work to an We treat any injury or accident as employee who does not have the an emergency in the Company that necessary knowledge and skills shows the problem of the control to implement it. systems and the safe performance of work.

98 99 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company FOLLOWING STANDARDS human capital 92 Occupational safety and health IN THE FIELD OF OCCUPATIONAL 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership SAFETY AND HEALTH for sustainable development 175 Appendix Continuation

Management The Company has a vertical at all levels. The system is designed The progress in the implementation enterprise safety is carried out by the management system of occupational to ensure compliance with policies of OSH policies, safety and ensuring Industrial Safety Committee of the In 2015, for the first time in health and safety that provides a and procedures in this area with the the sustainability of emergency Company’s Management Board. The Russia an innovative longwall centralized methodology and monitoring most advanced international standards. preparedness is governed by the Committee examines the causes and that allows for unmanned coal SUEK Board of Directors. The circumstances of every accident that mining was put into use at the industrial safety is the first item resulted in serious injuries. It also SUEK-Kuzbass Polysaevskaya discussed at every Board meeting. assesses adequacy and efficiency mine. The control and The coordination of activities of the taken measures and the management of the downhole System of OSH Management to improve the system of labor scheduled preventive measures. equipment takes place by an protection and industrial safety, and operator from the neighboring gallery with an automated control system. The computer program During the reporting period, there were nine Committee meetings. is able to automatically identify Suek Production control management, • Operations Management The meetings: and produce the most efficient industrial safety, occupational safety and operation of the machinery, • Coordination and control of the thus significantly improving the environment. • reviewed and approved the main • reviewed the results of an occupational health and safety program approaches to industrial safety independent external industrial work safety level by excluding measures; safety audit at Kuzbass enterprises human presence in a potentially implementation. conducted by RAG Mining hazardous areas. • heard reports of the regional Solutions; leaders on the results of the work done; • considered a range of measures to improve operational safety • approved action plans to support • Tactical decision-making and of railway transport; Regional production associations. the formation of rescue teams; Central committee on the production implementation of programs iin the field • summed up the quality • reviewed the results of the targeted management program of personal control. Production. Control Services. of occupational health and safety. inspections at SUEK Group protection for workers. production facilities; • Coordination of enterprise production control services.

Certification of enterprise compliance At SUEK enterprises work safety of the Company the international protection commissions, which • Implementation of tactical decisions. standard OHSAS 18001: 2007/2008 include representatives of trade Companies and production units. is currently underway. The Kuzbass unions and the company’s Commissions and enterprise industrial • operating activities on occupational and Krasnoyarsk enterprises have management, are fully functioning. control services. confirmed the compliance of their The commissions are involved in the health and safety. management systems with this development of collective bargaining, standard. dealing with the issues to ensure safe and healthy working conditions.

Production facilities. • Compliance with the rules and procedures of occupational health and safety.

100 101 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy ENSURING EMERGENCY 142 SUEK and regions: partnership for sustainable development RESPONSE 175 Appendix

mine rescue teams began to operate emergency situations, it has a focus center was established to meet the indicators of air-gas conditions to the When the center was created, Essential aspect: at quarries for the first time. As of now, aimed primarily at addressing the requirements of the state concept state of the rock mass, personnel the best practices of energy and Operational safety. Emergency auxiliary mine rescue teams are actual reasons for dangerous work of a multifunctional coal mining positioning, equipment and vehicle manufacturing companies in this field preparedness. working at all SUEK mines and quarries situations arising. In accordance enterprise safety system. All data for work. The checklist contains were put to use. Now the center is (15 teams at quarries and 12 at shafts), with this, we are developing a safety Kuzbass enterprises is simultaneously 500 reports on various parameters visited by representatives of other coal Key indicator: engaging 1,422 people. All of the system, which should ensure the stored at the Company’s head office and it automatically colors the companies, government departments Emergency measures. emergency personnel workers are timely detection of risk factors, and in Moscow. The multi-level control displays where there is a deviation and regulatory authorities. The system certified to conduct mine rescue work, the development and implementation allows more effective monitoring from the norm. has been praised for its information and all are given a “Rescuer” status. of measures to address them. of the situation in underground content and its ability to monitor the mines, minimizing human error The center also provides analytical safety of personnel and equipment An action plan for local response and and significantly improving the reports on the state of the mines by the supervisory bodies. handling of an accident situation and In 2015, due to the increased fire risk and the introduction of a state performance discipline at the for various periods from days to liquidation of an accident aftermath is of emergency in the Republic of Khakassia and Buryatia, Trans-Baikal workplace. months. The entire management updated annually at every Company and Krasnoyarsk Territories, Company auxiliary mine rescue teams were team of the Company and enterprises enterprise that is to be potentially put on high alert. The system in real time accumulates is connected to the system. In an considered hazardous. All employees information about all activities, emergency, the system automatically are trained and instructed on how to The unit staff carried out preventive measures to minimize the risk ranging from key performance alerts managers about an incident. act in case of accidents and incidents. of natural forest fire influence on enterprises or settlements. As a result, a total area of 350 ha was cleared of forest fires, localized fires covering Multifunctional safety systems are an area of 1,200 hectares were put out, and assistance was provided in place at all SUEK enterprises – to the municipal territories. monitoring miners’ location and Dispatcher’s 12 displays for 80 video cameras communication with them through Wi- general video wall Fi, and through underground radios, 12 displays of current condition of the mines gas monitor sensors, and ventilation The Company has a system of miner During the reporting period, a on SUEK-Kuzbass The control board control. These systems allow: self-rescue, which includes a set situation control center was production contains: 500 screens of current condition of technical equipment, solutions and established at the SUEK’s head 500 reports • observation of the miners and organizational arrangements. The office. The main objectives of the consists of: determination of their location in the purpose of the system is to provide Center are monitoring problems underground shafts; conditions to lead the miners out of (monitoring the status of industrial danger. The system is based upon safety systems in real time, with • notification of workers about responsible behavior among workers, further analysis of the results and an emergency regardless of their aimed at preventing accidents prediction of situational development location; and willingness to take measures at the enterprises) and providing to protect lives and health in the event joint work of all the experts during • search and rescue of people during of an accident. emergency situations. an accident underground, with the determination of location through All extraordinary situations are A Kuzbass single dispatch and a 20-meter rock layer thickness with investigated by special commissions. analytical center has also been a small percentage of error. Based on the results of the established. The center brings investigation, the Company develops together all the safety systems that The emergency rescue services measures that should minimize control the mining operations at all at SUEK enterprises are provided remedies for recurrence. the Kuzbass mines and quarries. by the FSUE Militarized Mine Rescue The equipment supplier service Unit. In 2014, in accordance with Our OSH strategy has a focus units are also connected to the legal requirements, our own auxiliary not on the effective remedies for system. The dispatch and analytical

102 103 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy ENSURING AEROLOGICAL 142 SUEK and regions: partnership for sustainable development SAFETY 175 Appendix

The main risks in coal mining occupational Model of aerological safety safety and health include Boiler house in the SUEK mines Modular electrical the risk of a potentially power station explosive concentration Industrial site of methane. To minimize Flare Vacuum booster station this, the Company works stack to ensure upper-air safety Methane CH (safety of mining operations 4 Methane CH4 for a number of production microclimate factors Mobile vacuum-pump station Distribution substation using efficient ventilation of the shafts).

Methane CH Surface drilling 4

Main belt heading of Polenovsky coal bed

Tilted air crosscut

CMBH 2403 of Boldyrevsky coal bed

CMOCH 2403

Clinker 2453

Legend – degassing into the collapse dome – bed degassing – vertical well degassinng

104 105 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health ENSURING AEROLOGICAL 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership SAFETY for sustainable development 175 Appendix Continuation

Areas of activities What was done in 2014–2015 World records set by VLD-1000A drilling unit Ensuring safe ventilation modes and New main mine fans were installed at Taldinskaya Zapadnaya-1 mine; mobile CASE at SUEK mines modernization of ventilation shaft electric calorific installation28 at the A. Ruban mine, with the production capacity systems of 5,000 m3/min. Integrated mine degassing is underway by drilling degassing wells, through which methane is extracted out of the mining site. In total, the Company operates 24 main mine fans (as of 2015). These include:

Supply the required amount of air into The fresh air supply to the high-production mining areas was increased • connecting wells drilled from a parallel shaft; the mines and its rational distribution from 1,500 to 2,500 m3/min. • wells drilled from a parallel shaft into the collapse dome and into 1 May 2015 Overall, during the period between 2007 and 2015, the total air flow the workable seam layer; Rate of drilling 3 3 entering the SUEK mines, increased from 93,798 m /min. to 140,600 m /min., 594 lm/night i.e., by 46,800 m3/min. • vertical wells drilled into the collapse dome from the surface; 2 February 2014 Efficient gas emission control, removal Gas management blueprints for removing methane from the mines and insulating • wells drilled into the workable seam soil. of methane to the surface bridges have been developed that connect with the furnace. The methane is removed Rate of drilling through wells that have been drilled in accessible locations on the surface. We are constantly introducing new degassing methods and more 504 lm/night modern equipment that allow for the most efficient way to carry For the first time in Russia, the guide-bed degassing method has been introduced at out this process. the Kirov Mine with the use of long directional wells. 3 December 2013 Rate of drilling 456 lm/night Improving integrated degassing systems The third drilling rig Sandvik DE-880 has been put into operation, which allows drilling degassing boreholes from the surface. Surface drilling Surface drilling unit in 2007. unit in 2015. URB ANDVIK DE-880 Introduction of computerized air and gas The occupational safety dispatch centers, which began their work in the SUEK’s monitoring systems. offices in Moscow and Kuzbass, also allow evaluation of the aerological safety The coal mine methane released as conditions at enterprises. a result of degassing is partially used • Number of own drilling rigs – 1. • Number of own drilling rigs – 4. For immediate upper-air safety control, on the web-portal of the production to generate heat and electricity for unit, in 2014 applications were developed and started functioning: “Upper-air • Volume of drilling per year with own • Volume of drilling per year with the needs of the mines. This allows Report by Longwalls”, “Upper-air Report on Drifting Faces”, and Enterprise rigs – 2.55 km. own rigs – 37.3 km. for a more efficient use of energy Methane Emissions.” They are accumulating all the information in these areas • Volume of drilling per year • Average drilling speed – 65 m/day. consumed by the Company and for all SUEK production facilities and enable professionals to make informed by contractors – 26.9 km. increases environmental safety by decisions in real time. 29 • Average drilling speed – 10 m/day. reducing greenhouse gas emissions .

Machines for Machines for underground underground drilling in 2007. drilling in 2015. EBGP VLD-1000A

• Maximum drilling depth • Maximum drilling depth in seam – 150 m. in seam – 300 m. • Volume of drilling by • Volume of drilling by contractors – 25 km. contractors – 0 m. • Amount of drilling with • Volume of drilling with 28 Ventilation electric calorific installation own rigs – 6 km. own rigs – 200 km. provides blowing ventilation and room heating 29 For more information on the recovery of coal in recirculation mode, it also can be used solely mine methane, see the “Environmental safety” as high capacity air blower. section of the Report.

106 107 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy DUST-EXPLOSION 142 SUEK and regions: partnership for sustainable development SAFETY 175 Appendix

Dust build-up in the workplace is the second major risk for occupational health and safety in coal mining. When the state of dust suppression and dust protection is unsatisfactory, PREVENTION AND CONTROL even local methane explosions or suspended coal dust can spread a considerable distance through the network of mine OF GAS-DYNAMIC PHENOMENA workings. The main sources of coal dust formation in mines is the treatment and tunneling work. The analysis of methane gas and coal dust explosions in Russian mines show that In 2014, the S. Kirov mine held successful industrial it will be possible to assess the state of the rock mass about 40% of all the explosions occurred in the excavation testing of the “System of acoustic monitoring of the face with a planned and timely result assessment. In and preparation areas. In every tenth case, coal dust was condition of rock mass and prediction of gas-dynamic 2015, all additional equipment was installed at the Kirov involved in the explosions. In order to achieve dust-explosion phenomena.” The tests showed that the system can mine, the system was installed at the Kotinskaya mine, V. safety, we are implementing a number of measures designed automatically predict rock impacts, coal and gas Yalevskiy mine, and the Taldinskaya-Zapadnaya-2 mine. to eliminate the risk of coal dust explosion. emissions, geological disturbances in the underground In 2016, it is planned to switch the prediction of gas- workings of mines, and can control each cycle of coal dynamic phenomena in these mines to SAKSM system excavation in the clearing and preparation phases. equipment. Based on the test results, the Federal Service The system eliminates the human factor and predicts for Environmental, Technological and Nuclear Supervision the gas-dynamic phenomena without interrupting the (Rostekhnadzor) recommended testing the system main production processes. With the help of this system, at other coal mines in Russia.

Ensuring dust safety

Areas of activities What was done in 2014–2015 Monitoring dust Organization of instrument measurements and laboratory tests. levels Reducing the One of the main methods of controlling coal dust deposits all over concentration the world is rock dusting mine shafts with inert dust. When the inert of the airborne and dust content is about 80%, the mixture of coal dust and inert dust and deposited dust becomes inexplosive. With the improvement in methods for rock dusting, in mines rock dusting quality increases and, therefore, inert dust consumption increases as well. At SUEK-Kuzbass, the inert dust consumption has increased almost tripled in five years – from 6,106 to 18,036 tons per year. During the reporting period, the Company switched to large-scale introduction of mechanical rock dusting to improve the quality and increase the speed of rock dusting. Today, these resources include mobile and semiportable systems. Introduction of At the Vanino bulk terminal and the Tugnuiskaya and Chernogorskaya new technologies enrichment plants, advanced vacuum technology for dry collection and for integrated transportation of coal dust has been introduced. dedusting The Vanino bulk terminal also commissioned dust suppression devices on stacker – reclaimer No. 2; two sprinkler systems have been put into place and specialized pipes have been installed to dump coal dust when it is disposed of at the reloading stations. At the Murmansk port, a system to suppress the fine dust has been put into place. The system works by creating a misty veil and by spreading the veil with the help of an aerodynamic cone and a powerful fan. The unit will run year-round. The solution will allow reduction in the concentration of coal dust in the air by more than 80%.

108 109 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy OCCUPATIONAL INJURIES 142 SUEK and regions: partnership for sustainable development RISK MANAGEMENT 175 Appendix

Measures to minimize SUEK injury rate dynamic pattern in 2017–2015 Unfortunately, we were not able to railways and in the Khabarovsk Essential aspect: the risk of workplace completely eliminate fatal production Territory – at the coal loading area. accidents: during the reporting Special Commissions conducted Operational safety. injuries include training Injuries period there were 13 tragedies. a thorough analysis of each accident, Emergency preparedness. the staff in safe behavior We deeply mourn the loss of our identified its causes and developed culture, the introduction colleauges. Seven accidental measures to prevent and reduce Key indicator: 250 fatalities occurred in the Kuzbass, the likelihood of its recurrence. Frequency rate of injuries with of modern equipment and six of them – in underground mining The results of the investigations lost time. technology, raising the operations and one – in open pit and the implementation of measures The number of fatal accidents. level of mechanization and 157 mining. In addition, two accidents to prevent such accidents for each took place in Khakassia and case were discussed in detail automation of production 135 119 one in Primorye – in open pit at the meetings of the Committee processes. As a result, mining, one accident occurred for Industrial Safety of JSC over the past five years 95 94 in Krasnoyarsk – at the coal SUEK Board. 75 77 loading area, in Buryatia – on the the LTIFR (Lost Time Injury 62 Frequency Rates) ratio at Group enterprises fell I. Indicators of occupational injuries from 2.2 to 1.23. 2007 2008 2009 2010 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015

1. Number of injured in accidents at work, people. 104 101 77 78 67 LTIFR (including injured with accidents of contractor’s’ employees)

2. Number of fatally injured in accidents at work, people. 7 6 17 8 5 (including injured with accidents of contractor’s’ employees) 3.02 2.88 2.66 2.41 3. Number of days of disability associated with occupational 2.2 10,806 9,934 9,797 9,883 8,071 1.9 injuries, days 1.5 1.57 1.23 II. Occupational injuries indictars accepted worldwide

1. Fatal Injury Frequency Rates (FIFR), the number of fatal accidents 2007 2008 2009 2010 2011 2012 2013 2014 2015 per 1 million hours worked 1.1. – taking into account accidents with employees of contractors 0.15 0.12 0.34 0.16 0.10

Occupational injuries dynamics at JSC SUEK enterprises 2. Lost Time Injury Frequency Rates (LTIFR), the number of injured in accidents at work per 1 million hours worked

253 2.1. – taking into account accidents with employees of contractors 2.21 2.07 1.50 1.57 1.23 General injuries Light injuries 213 2.2. LTIFR, opencast mining works 1.14 0.92 0.71 0.56 1.09 205 Serious injuries Fatal injuries 2.3. LTIFR, underground mining works 4.47 4.00 3.18 3.22 2.75 175 157 3. Lost Time Injury Severity Rates (LTISR), the number of disability 230.1 203.2 196.39 201.7 160.0 134 135 days per 1 million hours worked 119 111 III. Indicators of occupational injuries adopted in the Russian Federation 99 95 94 84 81 75 77 1. Injury frequency ratio for 1 million tons of production 1.03 0.96 0.78 0.78 0.63 60 62 52 2. 41 Injury factor rate per 1,000 persons employed 3.25 3.12 2.45 2.52 2.07 31 16 3. Frequency rate of fatal accidents per 1 million tons of production 0.03 0.04 0.18 0.08 0.05 9 15 15 15 8 15 8 9 17 16 5 8 3 4 6 9 8 5 4. Frequency rate of fatal accidents per 1,000 working people 0.10 0.13 0.55 0.26 0.17

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 5. Factor severity of occupational injuries 117.5 110.4 168.91 143.2 141.6

110 111 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health OCCUPATIONAL INJURIES 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership RISK MANAGEMENT for sustainable development 175 Appendix Continuation

Causes of work-related To further enhance safety, we are We carefully analyze the causes of accidents. During Reducing the negative impact of human factors on industrial safety the reporting period, 139 production accidents occurred: accidents in 2015 implementing measures to improve the quality of the organization of work (Activities in 2014–2015) 77 in 2014, 62 – in 2015. Their analysis shows that the and the observance of technological main causes of accidents at work were organizational discipline. This includes a program • New equipment protected from accidental or unauthorized safety turn-off was introduced at mining works. Company is currently replacing the older in nature and associated with both the violation to assess the state of workplaces 1 to identify risks and take action to equipment with this new equipment piece by piece. of OSH requirements, and with the lack of qualifications eliminate them. and discipline of staff on safety issues. 2 • Pilot projects providing installation of infrared surveillance cameras at 9 main conveyors of Kirov, Ruban, Yalevsky and Kotinskaya mines.

For more information on this project, see • The Kotinskaja mine is implementing a project of providing equipment “Health and prevention of occupational 8 development faces, with telemetric information systems and video diseases” below. surveillance.

• Specialized software has been developed, taking into account the In 2014, SUEK was one of the first violation of the staff requirements for occupational safety in the database. 7 3 6 5 4 companies on the Russian coal The software package has been put into operation at all SUEK coal Causes of work-related market to introduce a personalized enterprises. Weekly monitoring is carried out to detect and eliminate 12 13 1 approach to identifying the motives violations. accidents in 2014 2 1. Unsatisfactory maintenance and shortcomings in the of employees who violate the rules organization of workplaces...... 8 of industrial safety. Testing for a 11 2. Violation of worker labor propensity towards risk covered regulations and labor discipline...... 19 24,000 employees. The test results have allowed development of new During the reporting period, at all SUEK coal enterprises a software 3. Victim was not working package was introduced titled “United book of regulations and of in area of his expertise...... 1 approaches to help employees feel personally responsible for the formation of interchangeable shifts.” Its main task is to monitor the 10 4. Structural defects and lack industrial safety at production facilities for the early detection and 3 of reliability of vehicies, safety of the workplace. The results 9 elimination of defects in the system of fire safety maintenance and 8 4 machinery, equipment...... 1 formed the basis for the subsequent 65 accident-preventive measures. The complex contains two blocks. 7 5. Operation of faulty vehicles, separation of employees into groups, The “United book of regulations and formation of interchangeable shifts” machinery, equipment...... 2 for each of which a separate approach is for recording violations, identified by production control and external 6. Poor technical state of buldings, to improving the culture of safe audit to be performed by the state inspection agencies. The reported 1. Non-use of employee personal protective equipment...... 3 factities and territoty...... 2 behavior is set up. cases are ranked on-line according to the degree of hazard. 2. Violation of worker labor regulations and labor discipline...... 23 7. Violation of production process...... 11 3. Victim was not working in area of his expertise...... 1 Based on the results of the testing, 8. Traffic violation...... 6 The system automatically generates orders to eliminate violations and 4. Production in violation of normative and technical individual conferences were set up 9. Unsatisfactory organization sends them into the unit, “ formation of interchangeable shifts”, so the documentation Requirements...... 4 with all employees who took part in of production work ...... 12 shifts teams are formed with consideration to the information on the 5. Structural defects and insufficient reliability of machinies, equipment...... 1 the tests. The test results are taken operational situation and the violations of the occupational safety 6. Imperfect product process...... 1 into account when deciding on the appointment of staff, making up requirements. The system blocks the approval of replacement shifts, 7. Operation of faulty vehicles, machinery, equipment...... 9 working groups and organization if measures to eliminate the violations have not been taken. 8. Violation of production process...... 6 of more control in areas where 9. Violation of safety requirements during vehicle operation...... 3 employees with high risk propensity 10. Traffic violation...... 2 work. A broad campaign to promote 11. Unsatisfactory organization of production work...... 11 occupational safety and behavior 12. Poor maintenance and shortcomings in the organization change has been launched among of workplacos and machinery performance...... 12 Company employees. 13. Deficiencies in the organization and occupational safety and health of workers...... 1

112 113 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership for sustainable development CULTURE OF SAFETY 175 Appendix

Personal employee responsibility behavior, improving our occupational on Employee Discipline, in open pit SUEK annually holds conferences is one of the key factors for health and safety training system, and underground mining operations, We continue to work to involve all employees, without exception, in the in the regions on issues of industrial compliance with occupational implementing measures to develop in correspondence with the RF Labor OHSAS management system and industrial safety. During the reporting safety, health and the environment. safety and health protection employee discipline. Code. The system of education period, a new project was launched – Signal Sheet. All workers They are attended by business in the workplace. To increase and training on occupational health have received special pads to fill out forms in which they can mark leaders, representatives of the the responsibility of each employee Key requirements for safe behavior and safety covers all employees the dangerous situation in the workplace. At the end of the shift, all regulatory and supervisory we are introducing a culture of safe are documented in the Charter of the Company. Signal sheets are collected into special boxes, from where they are authorities, scientific and educational transferred to the service of industrial control for further consideration institutions, and manufacturers and corrective measure implementation. This data is entered in the of personal protective equipment. “Unified regulations book” governing the current state of occupational During the conference, the previous health and safety and the elimination of deficiencies. In order to develop year’s occupational health and SUEK occupational health and safety training system a culture of safe behavior and enhance the motivation to use “Signal safety results are discussed, and Sheet” a competition took place throughout the Group enterprises titled the exchange of experience and “The most vigilant gets a reward! familiarity with best practices of regional services of industrial control and security takes place, analytical Regular and repeated unpianned Corporate seminars and training and modeling workshops are held Introductiory employment briefings in case of changes sessions to reduce the risk of on problem solving safety issues, training in production processes, accidents and injuries in the and an optimal program is developed legislation, ets. workplace to improve safety in hazardous occupations. Similar conferences were held in 2014 in Buryatia, and in 2015 in Khakassia. The participants Pre-certification training Educational programs for of the conferences were over of technical staff and their management (audit occupational Video Stands in administrative 150 representatives of mines and certification on the safe conduct health and safery, risk analysis, offices, corporate transport quarries from seven regions. of mining operations every investigations of accidents and video instructions 3 years emergencies, etc.

Additional training at training Preparation and production Special Health and Safery facilities, as well as with the of training materials in different Months involvement of industrial training formats (dooks, movies, institutes 3D-graphics, stands, etc.

We are systematically implementing of different colors for the violation mine. The screening test programs programs, evaluating the level of occupational safety requirements. are tailored to occupational risks of employee knowledge and After receiving a red badge, the inherent to different professions compliance with safe behavior and offender’s contract is terminated. and types of work. The admission providing work access only on the of personnel to work is now carried basis of satisfactory results. These During the reporting period, out based on the results of screening programs include the introduction electronic examiners appeared at our tests. In 2014–2015, the terminals in the last reporting period of a badge facilities, terminals on which the were installed at all SUEK coal system for mines and coupon employees are required to test their enterprises in Kuzbass and Buryatia. system for quarries. It involves the knowledge of occupational health issuance of coupons or tokens and safety before descending into the

114 115 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital HEALTH PROTECTION 92 Occupational safety and health 120 Environmental performance: safety and efficacy AND PREVENTION OF 142 SUEK and regions: partnership for sustainable development OCCUPATIONAL DISEASES 175 Appendix

The first step was to assess the best The results of the program are: harm to workers’ health, and their To minimize the risk of occupational diseases, and analyze the OSHA results, practices in this area and to develop health should allow them to do the job SUEK initiated the introduction of on this basis the requirements for • improving the quality and properly.” Policy principles became the company is actively working to reduce the automated system “Work-Expert. protective clothing and personal standardization of workwear and the basis for the Health program, Control”. protective equipment, including fabric, personal protective equipment; which has been implemented the negative impact of industrial environmental style, functionality, etc. Technical throughout the entire Company • creating a corporate style of In 2014, OHSAS took place at requirements (quality requirements) since 2010. factors on the health of workers. uniform; a number of enterprises in Kuzbass, for each PPE item were documented Khakassia and Krasnoyarsk Region, in the Corporate Standards • creation a common information Main Health program objectives: and in 2015 at all enterprises of of workwear and personal protective directory on PPE provision. Khakassia, Trans-Baikal, Buryatia, equipment. Also, the technical • decrease of occupational diseases, The main directions of the work: In 2014, the Company implemented Krasnoyarsk, Khabarovsk and conditions for the manufacture During the introduction of new • decrease the loss of working time, a special project for the assessment Primorye Regions, and the Moscow of special clothes were designed workwear at SUEK enterprises, • special assessment of working of working conditions at the Head Office. The workplaces in the corporate style, which have the Company held training on the • decrease household and industrial conditions at the workplace; workplace (OHSAS). The were evaluated for the presence been registered with the Federal effective use of personal protective injuries, assessment includes identification • protection of workers from the of harmful factors, and technical Agency on Technical Regulating and equipment. of hazardous and dangerous • promote healthy lifestyles. adverse effects of the working and organizational measures Metrology. factors, measurements of factors to reduce their impact on the health All SUEK personnel receives environment; As part of the program, the at the workplace, updating the of employees were developed. During the development process, medical treatment in accordance enterprises operate health centers, • preventive health care. classification of these jobs by class we consulted with the Company with the objectives of the Company’s staffed by qualified doctors and and subclass hazards. Based on the In 2013, in order improve working staff who use clothing and protective health policies and medical support equipped with emergency services OHSAS results, a set of benefits and conditions, a program was launched equipment. Trial prototypes were for work at especially hazardous equipment. During the reporting compensations has been determined to implement quality control programs tested at Company pilot enterprises locations. The policy defined the period, automated pre-shift for employees who work under of personal protective equipment and adjusted in accordance with their basic principle of SUEK in this examination systems (APES) were hazardous conditions. To systematize (PPE) for SUEK employees. assessment. direction: “work should not cause

116 117 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company HEALTH PROTECTION human capital 92 Occupational safety and health AND PREVENTION OF 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership OCCUPATIONAL DISEASES for sustainable development 175 Appendix Continuation

introduced. They measure blood pressure, pulse and detect ethanol During the reporting period as part In 2015, the Healthy Eating vapors, entering all the results of the Health program: program was launched AREAS OF ACTIVITY AND into a single database. In 2015, at SUEK-Kuzbass and • Occupational Health and Anti- 54 APES functioned at the company SUEK-Krasnoyarsk. Health nicotine programs were launched; OBJECTIVES FOR THE NEXT enterprises. experts analyzed the statistics • a specialized medical unit at of our employee illnesses The company operates “Anti- Kuzbass enterprises and SUEK- and developed a healthy REPORTING PERIOD nicotine,” ”Healthy Eating”, ”Water”, Khakassia, and an occupational nutrition guide for doctors, ”Vaccination”, “Behavior-based safety” medicine division in Primorskugol staff cafeteria employees programs. were created; and the workers themselves. A special balanced menu was Technical measures Risk management of occupational injuries, • corporate standards of pre-shift During the reporting period, the created and introduced at the Switch to the prediction reduction in occupational diseases Moscow office of the company created health inspections were developed; enterprise cafeterias in Kuzbass of gas-dynamic phenomena Development and implementation of measures to minimize the negative a special medical unit – “Office • a program to improve sanitary and Krasnoyarsk. Also, the through “System acoustic impact of harmful and production factors on the health of workers, based of Occupational Medicine”, staffed conditions of dining halls, service Water program was launched condition monitoring of rock mass on the actual results of the special assessment of working conditions by highly skilled practitioners. The rooms and utility facilities, health at the SUEK-Kuzbass mines: and prediction of gas-dynamic at the workplace in order to reduce the class/subclass of hazardous division is responsible for the medical centers and laundries was to compensate for the deficit phenomena” (SAKSM). working conditions. safety of the production processes, implemented; of salts and trace elements, the organization and conducting of drinking regime of miners was Increase the volume of rock Development of methodology and software to test knowledge and • drug screenings were introduced compulsory medical measures in supplemented with mineral water. dusting of shafts mechanically enhance competence of workers; introduction of test terminals throughout as part of the pre-shift examinations SUEK, and the effective management (using rock-dusting the Group’s enterprises. of all Company medical services. for locomotive crews; machines) to 90%. Providing employees with work outfits and personal protective equipment Since 2015 management has • work was started on the in accordance with the established corporate standards; expanded in a new direction – Labor organization of specialized food Hygiene, tasks of which include the for the employees; Organization of seminars on improving the safety culture for employees creation and maintenance of a healthy of operational areas, employees of production control and safety services. working environment and safety. • the International Labor Organization initiative on “Voluntary and Development and implementation of evidence-based techniques confidential counseling and HIV to identify hazardous work situations, risk management, improve efficiency testing in the workplace was and safety of industrial sites. supported”. Conduct annual regional conference with the leaders of SUEK enterprise on the pressing issues of industrial safety, occupational safety and ecology at SUEK-Krasnoyarsk. Dynamics of SUEK personnel illness, Further implementation of the Healthy Eating program at Company number of days in a year enterprises and workplaces in the regions.

Indicator 2014 2015 Implementation of Water Program at the SUEK-Kuzbass mines.

Duration of sick days 23.5 23 Implementation of a project on modern occupational and physical therapy. Development of the Occupational Health in Coal Industry program. Loss of work time due to injuries and diseases 7.1 7.1

Share of frequently ill 3.6% 3.5%

Share of healthy employees 70% 72%

118 119 IN THIS SECTION 122 Main results of 2014–2015 124 Our approach to ensuring environmental safety 128 Reduction of negative impact on the environment 130 Land reclamation 131 Effiient use of water resources 133 Reducing emissions of pollutants into atmosphere 136 Waste management 138 Energy saving and energy efficiency 141 Goals and objectives for the next reporting period

“Environmental responsibility, careful and rational use of natural resources are the principles of SUEK’s activities. We implement environmental programs, ENVIRONMENTAL constantly working to improve the environmental safety of our businesses and introduce innovative PERFORMANCE: technologies in coal mining and processing, to minimize the impact of industrial activities on the SAFETY AND environment.” Vladimir Artemiev, Deputy CEO, SUEK Director EFFICACY of Production Operations SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership for sustainable development MAIN RESULTS OF 2014–2015 175 Appendix

Targets set for 2014–2015 In 2014–2015, the Company spending Goals Implementation on environmental safety amounted Development of environmental protection management systems: to more than • maintaining effective environmental management systems in accordance with the requirements of international standard ISO 14001:2004 at Company enterprises

• development of corporate policies and standards on energy conservation 1.32 30 billion rubles and energy efficiency • development of corporate policies and environmental standards

Reduction in the negative impacts on the environment:

• development and subsequent implementation of a long-term program of environmental 31 Design, construction and As part of the Kyoto Protocol activities of the Company, using the best available environmentally safe technology reconstruction of facilities for industrial agreements, the next stage of the project • participation in global programs aimed at climate protection and biodiversity wastewater treatment continued to reduce greenhouse gas emissions has • putting into operation sewage treatment plants in container configuration at company mines. As a result of the been implemented. In the 2014–2015, at the JSC SUEK-Kuzbass Kotinskaya mine comprehensive program of measures nearly 13.19 million m3 of methane • development of a project for covering Vanino bulk terminal with windscreen and 32 for water conservation, the content was recovered, and 19.17 thousand a dust guard, examining possibilities of briquetting collected coal dust

of pollutants in wastewater dropped MWh of electricity produced and, Energy efficiency increase: by 33% in two years. 29.54 thousand MWh of heat energy • implementation of a comprehensive energy saving and energy efficiency program were produced by burning methane. for 2014–2016

• project development and construction of a plant for liquefaction of coal mine degassing methane, with goals to use it as an alternative fuel for mining equipment

Unique dust suppression technologies Participation was developed in the • development and implementation of district heating projects based on heat pumps were introduced at the Vanino bulk project on biodiversity preservation in running on low-potential sources of earth’s thermal energy and coal mine groundwater

terminal. Khakassia, implemented by the Global • development and introduction of technically and organizationally substantiated standards Environment Facility, United Nations for power usage

Development Program and the Ministry • increasing energy efficiency of main production and auxiliary equipment of Environmental Protection and Natural Resources of Russia.

30 During the reporting period, the technical policy of the company was updated on the choice of sewage treatment technology, and RPA standards in the field of environmental protection were developed.

31 During the reporting period, the Program was developed, its approval and implementation is planned for the next reporting period.

32 Development of the project will be continued during the next reporting period.

122 123 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy OUR APPROACH TO ENSURING 142 SUEK and regions: partnership for sustainable development ENVIRONMENTAL SAFETY 175 Appendix

A responsible attitude towards favorable environment for present and development strategy. Our environmental the environment is SUEK’s future generations. protection programs help sustainable Our environmental protection work strategic priority when making development in the regions of our any management and production Ensuring environmental safety, company’s presence, improve the quality Production • Ensuring compliance with national regulations of production processes; decisions. We are aware of the man minimizing environmental production of people’s lives and help us to reduce • provision of energy and resources at all stages of the production process; made impact of our activities and of risks, protecting nature, all that is an operational risks, and give opportunities the responsibility for maintaining a integral part of SUEK’s sustainable to improve performance. • minimizing and possibly preventing negative impacts on health and safety of the local population during production activities.

Reducing the negative impact • minimizing environmental risks; on the environment • measures for biodiversity preservation and compensation of damage caused Implementation to the environment; Ecological Goals of environmental strategies Economic Goals • efficient use of natural resources: land reclamation, management and treatment of wastewater, reduction of pollutant emissions, waste Minimizing the impact Utilization of Coal Mine Efficiency increase management. on the environment, Methane. and production cost preservation and reduction. Rational use of component restoration of ecosystems. Improving management systems • improving the environmental management system of the Company; extracted minerals. • improved production performance in the field of environmental protection; Reduction of losses of coal • making management and investment decisions based on environmental during its mining and priorities, economic and social factors; processing. • environmental education of SUEK employees. Providing energy and resources at all stages of the production process. Interaction with stakeholders • openness of environmental information, raising awareness of stakeholders on the environmental activities of the Company; • public participation and participation of local authorities in the preparation, discussion, decision-making and the implementation of environmental decisions; Our approach to environmental The normative basis of our external audit for compliance with • Taking into account the rights of indigenous peoples to maintain traditional safety is established in the SUEK environmental strategy is the their own management systems way of life and the preservation of native habitats. Environmental Policy.1 This document environmental legislation of the to these standards. During the defines our values, commitments, and Russian Federation. We also focus reporting period, SUEK-Khakassia mechanisms for implementation of on international law and safety and Vostochnyi-Beysky quarry environmental protection. principle.33 The environmental policy underwent this audit. is the basis for the development and implementation of environmental measures. The document is located on the Company website: http://www.suek.ru/ An environmental management corporate-responsibility/ system that meets the requirements corporate-responsibility-reports/ of ISO 14001: 2004 international 33 The precautionary principle suggests that if any environmental-policy/ standards operates at all SUEK activity may pose a threat to human health or the environment, precautionary measures enterprises. All of the enterprises should be taken even if some cause-and-effect regularly undergo independent relationship cannot be established completely.

124 125 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health OUR APPROACH TO ENSURING 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership ENVIRONMENTAL SAFETY for sustainable development 175 Appendix Continuation

System of environmental management Environmental Risk Management

Environmental Risk Management is part of the risk management and environmental management systems • Strategic planning on environmental Head office. Production control applied at all stages of our activities. managament, industrial safery, protection and rational nature management; occupational safery and • General corporate policies environmental protection and standards aimed at reducing the Ecological risks Ways to minimize risks environmental risks; Risk of non-compliance with the requirements Bringing all the Company’s activities up to date on environmental • Improving environmental of Russian Federation environmental protection, according to the changing requirements of the legislation. legislation in connection with its changes management system; during 2015–2020. • Operations Management. Air pollution, greenhouse gas emissions • Reduction of dust emissions and gaseous pollutants during production • Introduction of modern greenhouse gas reduction technologies. Regional manufacturing • Development of projects of sanitary protection zones. associations. Environmental RPA.Businesses and Wastewater discharge, depletion and pollution • Integrated use of mine and quarry waters. of groundwater industrial units of enterprise. Operations activities of environmental • The use of circulating systems of water supply and disposal. Ecologists of enterprises. and ecological safery. • Reducing sewage pollution discharged into bodies of water.

Withdrawal from economic circulation of land • Reducing the amount of waste in production and engineering occupied by overburden infrastructure, their maximum possible use or environmentally safe disposal. The SUEK Board of Directors technologies. SUEK enterprises • Reclamation of land disturbed by mining operations. monitors the strategy of implementing are actively involved in national and In 2015, SUEK became one • Use of advanced storage technologies for overburden and country ecological safety and environmental international environmental initiatives, of the recipient of the “Mark rocks in the dumps that are suitable for further biological reclamation, practices, and defining strategic including the non-commercial of ecological responsibility” use of scientific and technical methods to restore the fertility objectives. partnership “National Carbon award. The award was of disturbed lands. Agreement,” technical working established by the Russian • Implementation of measures for the preservation of biodiversity. We attach great importance to the group “Bureau of best available environmental organizations environmental education of our technologies”, “Mainstreaming community, experts and employees, and the improvement biodiversity preservation into policies NPOs. The company received Environmental impact of Company’s products Development of coal processing and enrichment technology to produce of their skills, cooperation with and programs of development of the the award “For the practical during consumer use high-quality fuel with improved environmental characteristics. scientific and expert organizations, energy sector in Russia” project implementation of the principles that allow us to implement innovative and others. of environmental responsibility and effective nature protection in the mining industry.”

126 127 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy REDUCTION OF NEGATIVE 142 SUEK and regions: partnership for sustainable development IMPACT ON THE ENVIRONMENT 175 Appendix

Spending on environmental protection, million rubles

2011 2012 2013 2014 2015

Operating costs 363.1 346.0 400.5 423.3 897.4

Including:

costs for wastewater treatment 142.8 142 185 176.45 135.609

cost of waste management 14.3 23.4 33.9 55.71 3.239

cost of air cleaning 67.2 60.7 46.9 40.40 36.531 charges for violation of environmental legislation, including the elimination of damages 101.1 80.7 104.5 0.06 1.8

payments for regulatory impact 101.0 80.7 104.5 130.05 117.833

Capital costs for environmental protection 37.8 39.2 30.2 20.67 602.4

SUEK’s capital expenditures In 2014–2015 such projects were: By investing in environmental on environmental protection protection, the Company is guided In 2015, an important stage in the implementation of the program 2014 2015 by the norms of international “Modernization of dust suppression systems” with the introduction include expenditures law and Russian environmental of technologies not previously used in the Russian ports was completed on activities carried out • construction of modular structures • replacement of dust collectors at legislation, the requirements of at the Vanino bulk terminal. The program was developed in collaboration as part of the investment to clean mine waters at Kotinskaya Urgalugol OJSC boiler. which are getting more onerous. with leading international research institutes. The developed advanced mine; The significant increase in investment technological solutions are designed to work in the climate of the Tatar • Repair dust collectors at program of the Company. into environmental protection during Strait (Khabarovsk Region). As a result, the program has created a unique • reconstruction of the existing Nazarovsky JSC quarry. the reporting period reflects the process chain. In industrial premises of the terminal, the dust suppression system of water supply and company’s commitment to maximize system has been implemented, consisting of an aspiration system, wastewater disposal in the • construction of treatment plants the efficient nature management, fogging systems and environment-friendly foam generator. Stationary dust Berezovskiy quarry; of physical-chemical treatment of industrial and domestic waste in to reduce the effect on the suppression guns are functioning at the coal storage and a new irrigation • designing structures for the Novoshakhtinskoye surface mine environment, and the implementation system works on a coal stacker reclaimer34. At the packing station, treatment of mine and domestic office. of the precautionary principle. a DUSTEX dispersion system has been implemented, which is used sewage at the Taldinskaya- in areas with a high dust content in the air. The terminal is equipped with • development of the project Zapadnaya-1 mine; mobile snow guns, which in the summer work as fog machines, modern of construction of treatment cleaners and watering machines. The future plans of the Company include • design facilities for treatment facilities for purification of fencing in the terminal area with special wind-breaking and dust-trapping of mine water in Urgal’s coal deposit Novoshakhtinskoye sewage pit mesh, a unique environmental project for Russia. Severnaya mine; water • construction of treatment plants for • acquisition and installation of new wastewater at Khakassia mine. equipment in laboratory tests (water, air) at Berezovsky quarry. • Continuation of the water supply system reconstruction at Berezovskiy quarry (installation of sand and oil catcher designed for purification of the production waste waters from oil products and 34 suspended materials. Stacker reclaimer – rail equipment for the storage and unloading of coal.

128 129 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership for sustainable development LAND RECLAMATION 175 Appendix

Mining is associated with disrupting the best practices for recultivation to Global Environment Facility and the soil layer of the earth. Due restore the ecosystem as efficiently as the UN Development Program to the dynamic development of the possible. We consistently increase the in conjunction with the Ministry EFFICIENT USE OF WATER Company’s production capacity, the cost of restoration, despite the difficult of Environmental Protection and rate of land stripping during coal economic situation: whereas in 2011 Natural Resources of Russia. RESOURCES mining activities exceeds the pace the cost of restoration was 75.3 million of reclamation. So, for the period from rubles, in 2015 this figure amounted to As part of the project, collections January 2011 through December 136.9 million rubles. of innovative solutions for the The main part of the flushed During the reporting period, the main activities of the program were: 2015, 4,813 hectares of land were conservation of biodiversity have wastewater of SUEK enterprises stripped in the process of coal SUEK-Khakassia is doing intensive been created, in the three sectors is simultaneously taken away by • construction of modular structures to clean mine waters at the production, while the reclaimed land work in this direction, in collaboration of energy: oil, coal and hydropower. the mining natural water with a Kotinskaya mine; for the period was 1,238 hectares. with the Institute of Agricultural The Chernogorskiy quarry project quality consistent for the groundwater Problems of Republic of Khakassia. became a showcase in “Reclamation in the region. We are implementing • design of structures for treatment of mine and domestic sewage at the SUEK, adhering to responsible For eight years, at the Chernogorskiy of stripped lands in the coal mining an ambitious program of construction Taldinskaya – Zapadnaya-1 mine; subsoil policy, seeks to close this gap quarry, according to a jointly industry under the climatic conditions and reconstruction of facilities by implementing large-scale projects developed technology, dumps were of Khakassia.” As part of the project, for industrial wastewater treatment, • design of facilities for treatment of mine water at the Urgal coal deposit on land reclamation, including the not flattened on the surface, but experimental techniques of biological introducing the most advanced Severnaya mine. reconstruction of the relief, leveling instead were shaped into alternating recultivation of forestry have been technologies and global best piles of rocks, soil and vegetation ridges of hills and valleys. used, planting fruit and berry crops practices. The aim is to further reduce • construction of treatment plants for wastewater at the Khakasskaya mine; restoration, reforestation, creation and coniferous trees in the dumps. the pollutants in wastewater. of new landscapes, landscaping This allows protection of the soil from This biological reclamation, based and gardening. While developing blowing wind, retains moisture better on research findings, accelerates • construction of a building for the treatment facilities at the A. Ruban mine. deposits, we also strive to reduce and encourages revegetation. Also regeneration of topsoil 2.5 times the area and volume of the external during the reporting period SUEK- faster and reduces the content • purchase of modern equipment for the complex of sanitary and industrial dumps. Based on the requirements Khakassia continued to participate of heavy metals to values ​​well laboratory of Borodinsky quarry. of federal standards on restoration, in the project for biodiversity below the maximum permissible we study, develop and implement preservation, implemented by the concentrations.

Usage and land reclamation35 As a result of the program, the content Essential aspect: The wastewater treatment plant at the A. Ruban mine was built based of pollutants in wastewater in 2015 Recovery of land. on the innovative technology of multi-stage water purification. As a result, decreased by 33% compared to 2013. 2011 2012 2013 2014 2015 the quality of the water returned to the Meret River meets drinking Specific indicators characterizing the Stripped land, ha Key indicator: standards. Since the launch of the treatment facilities, representatives content of pollutants in wastewater Stripped lands during the year. of the “Mainstreaming biodiversity preservation into policies and per ton of production for the period At beginning of year 15,297 15,643 16,270 16,944 17,663 Restored land during the year. programs of development of the Russian energy sector” project, which under review, have also declined and At end of year 15,643 16,270 16,944 17,663 18,872 is implemented by the UN Development Program, the Global Environment amounted to 0.3 in 2014, and in 2015 Facility and Russia’s Ministry of Environmental Protection and Natural to 0.26 kg per ton of production. Stripped during the year 494 895 1,026 979 1,419 Resources have been involved. As noted by the project manager of this project Svetlana Sheynfeld: “These facilities are essential to Reclaimed during the year 148 268 352 260 210 the environment of the region, and for biological diversity preservation. And the purified water that is discharged into the Meret River today has a beneficial effect on the ecology of the water system and the entire region.”

35 The discrepancy between the quantitative characteristics of the cost for reclamation and the reclaimed land area for the period of 2011–2014 presented in this report, compared to the data presented in the report for the period 2011–2013, is due to a change in the accounting approach. In 2011–2014, data on the areas of reclaimed land were calculated based on the actual figures for the current year. Since 2015, data have been available, according to the forms of state statistical reporting (2-TP) and contracts for recultivation. The 2-TP form displays only the land stripped by mining operations, excluding the land reclamation of the land occupied by other objects of subsoil use, it does not include land under the administrative objects and many other objects necessary for subsoil use.

130 131 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health EFFICIENT USE OF WATER 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership RESOURCES for sustainable development 175 Appendix Continuation

Total water consumption and water removal in 2014–2015, million m3 REDUCING EMISSIONS 2011 2012 2013 2014 2015 Essential aspect: OF POLLUTANTS INTO Total water consumption, 175.198 165.745 120.330 120.132 120.098 Water consumption. Transferred to other Key indicator: ATMOSPHERE consumers (without use)36 164.643 153.832 107.176 105.209 106.624 Total water consumption.

Wastewater disposal 168.241 158.294 110.088 03.309 106.173 Work on mine degassing, which Gross emissions37 Including: is conducted to enhance the safety of production, is accompanied by 2011 2012 2013 2014 2015 without treatment 125.917 92.005 40.770 62.645 42.533 methane emissions. This gas makes Gross emissions, 157.664 148.617 186.048 196.855 198.136 Partially purified 19.815 54.575 57.112 20.105 50.172 up the major share in the total pollutant thousand tons38 emissions of SUEK enterprises Including: Regulatory clean 6.031 4.147 3.933 3.921 3.768 (89.7% in 2014, 88.18% in 2015). CO Regulatory purified 10.066 0.477 0.609 8.623 0.724 8.904 8.213 13.5 8.064 7.645 NO 3.448 4.004 2.748 4.504 4.631 Transferred to other x consumers (after use) 0.741 0.626 1.118 0.953 1.106 SO 1.65 3.249 1.987 1.795 1.602 Essential aspect: 2 Emissions into the atmosphere. Solid material 6.522 5.861 5.891 12.141 7.747 Greenhouse gas emissions. VOC (total) 137.14 127.29 162.78 169.882 176.172 Content of pollutants in waste water, thousand t Key indicator: Methane 135.93 125.98 161.75 168.483 174.727 Total emissions. VOC other than methane 1.28 1.3 1.02 1.399 1.446 2011 2012 2013 2014 2015

Total 80.114 58.539 39.041 29.117 26.021 Essential aspect: Discharges into bodies of water. Suspended solids 1.189 1.421 1.356 1.106 1.176 Gross emissions for 2011–2015 by region Key indicator: Petroleum products 0.006 0.004 0.005 0.004 0.004 2011 2012 2013 2014 2015 Content of pollutants Total biochemical oxygen in wastewater Kemerovo Region 140.88 130.65 166.46 172.72 178.55 demand 0.327 0.413 0.347 0.251 0.316 Krasnoyarsk Territory 4.646 6.416 2.543 5.269 5.16 Solids 63.466 42.593 23.949 14.096 11.178 Trans-Baikal Territory Iron 0.040 0.036 0.020 0.014 0.017 and Buryatia Republic 4.522 4.562 5.180 5.085 5.285 Primorye Territory 0.766 0.853 0.874 8.071 3.236 Nitrates 0.333 0.520 0.354 0.657 0.267 Khabarovsk Territory 1.13 1.784 1.751 0.929 1.573 Sulfates 10.137 8.909 8.232 7.803 4.158 Republic of Khakassia 5.768 4.436 10.240 4.506 4.336 Chloride 3.041 2.471 2.638 2.694 3.389

Other 101.0 80.7 104.5 130.05 117.833

37 Breakdown of the emissions takes into account the main emissions, without taking into account other substances. The total amount of gross emissions is given in view of other substances.

38 The calculating method – through the actual fuel consumption by source or group of sources, respectively (gasoline, diesel, fuel oil, electrodes, carbon, etc.). Starting in 2016, greenhouse gas accounting in the Company will be conducted in accordance with the guidelines and guidance to quantify greenhouse gas emissions approved in the Order of the Ministry of Environmental Protection and Natural Resources 36 Water supplied to public drainage (service utility). of Russia No.300 of June 30, 2015.

132 133 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health EFFICIENT USE OF WATER 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership RESOURCES for sustainable development 175 Appendix Continuation

In 2014–2015 we performed works to improve efficiency of the Our position on climate change degasation systems. More efficient Model CMM operation of these systems caused The possibility of negative climate changes has recently become one of the increase of the volumes and central issues on the environmental agenda. At the UN World Climate specific indicators of atmospheric Conference in December 2015, 195 delegations from around the world, pollutant emissions: the volume including Russia, supported the global agreement to significantly reduce of emissions between 2014 and greenhouse gas emissions in order to combat climate change on the planet. 2015 increased by 0.65%; specific emission performance in 2013 As the largest coal supplier, we are aware of our responsibility in the Heat generation totaled 1.94 kg per ton of produce preservation of the environment for present and future generations. in 2014: 1.99 kg/ton, 2015: 2,03 kg/t. We understand that coal mining and coal power generation are associated Coal mine To reduce pollutant emissions we with emissions of harmful substances and in particular of greenhouse gases. continued developing our methane At the same time, we are convinced that climate change should be considered recycling program During the in the broader context of sustainable human development. We believe that Degassing reporting period, we continued to coal, the most common and cheapest fuel in the world, will be needed for Ventilation CMM to boiler implement the project for methane a very long time in order to meet the growing demand for energy, to serve recovery and emission reduction. economic development and improve people’s lives. In this context, the task Among the measures was activity to develop and introduce new coal technologies and coal power generation to reduce methane emissions in becomes especially urgent, because it will help to reduce their negative the mine workings in the Kirov and impact on the environment. Komsomolets mines. As part of the agreements of the Kyoto Protocol, For our part, we intend to: projects to reduce greenhouse gas • continue to take measures of stage-by-stage reduction of emissions at emissions, which provide mine our facilities, implementing special programs to minimize them at places methane to generate electricity Flare stack where it is technically feasible; and heat, have been implemented. In 2014–2015, as a result of • invest in technologies that improve production efficiency and the project 13.26 million m3 of environmental safety and, particularly, helping reduce the emissions; methane was recovered, and 19.17 • develop cross-sector cooperation and partnership with the state to Coalmine methane thousand MWh of electricity and Finished coal bed 29.54 thousand MWh (25.4 Gcal) develop global measures and achieve the goals of emission reduction was produced. Energy savings in our industry and in our country as a whole. reached 10% of the total electricity consumption and heat savings 20% of the total energy consumption at Coalmine methane Gas generator the Kirov mine. In monetary terms, Degassing methane recovery Methane the total savings in electricity and Recovered CMM Energy Generated to flare stack heat for 2014–2015 amounted to 101 million RUB. Year total when generating, t Electric Heat Unfinished coal bed m3 ton electricity heat MWh Heat, Gcal 2009 1,981,526 1,421 1,211 210 5,971 2,257 2010 4,553,748 3,265 2,682 583 12,773 8,679 2011 5,878,224 4,215 1,367 851 6,429 10,426 2012 5,893,627 4,226 2,105 198 9,786 2,232 Among the measures for air protection cyclones, repair and adjust aspiration reduce the risks of endogenous fires, 2013 5,085,274 3,646 1,568 1,052 7,288 12,614 conducted in 2014–2015, was the systems, dust suppression technology and environmental monitoring on the 2014 5,678,765 4,072 2,012 1,421 9,353 17,039 work to replace the elements on the on the roads and work sites of border of sanitary protection zones. 2015 7,581,590 5,436 2,112 697 9,818 8,364 cyclones in the boiler houses, adjust quarries and dumps, measures to Total: 36,652,754 26,281 13,057 5,012 61,418 61,611

134 135 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership for sustainable development WASTE MANAGEMENT 175 Appendix

The main volume of waste generated established procedure of technical Neutralization, thousand tons in the process of coal mining consists project involving mineral deposits Essential aspect: of overburden, which is class V development the overburden rocks Waste Management. hazard waste (non-toxic)39. The rest are placed in the internal and external 812 of the waste is ash and slag, used oil dumps to stow, fill gaps and restore Key indicator: 812 Waste hazard class 1–4. and used tires. In accordance with the mining lands. 20 19

14 I class hazard 13 3.02 3.04 II class hazard 3 3 Waste Management 0.61 III class hazard 0.61 0.31 0.21 0.08 0.09 0.012 0.019 0.017 IV class hazard 0.005 0.008 0.01 0.01 0.008 0.004 0.008 V class hazard 0.000 0.000 0.000 Waste generation, thousand tons Collection of waste from other 0.000 organizations, thousand tons 2011 2012 2013 2014 2015 Total 505,236 505,228 457,626 457,617 Available year-end waste, thousand tons 336,911 336,900

260,993 2011 1,925 260,980 220,747

220,739 2012 2,127 10.40 8.94 7.25 7.20

6.80 2013 2,809 1,077,823 1,049,244 1,070,380 2.54 1,077,822 1,070,377 2.02 1.82 1.80 1,049,241 1.44 999,366 2014 5,714 999,363 0.031 0.038 121,733 0.036 0.034 0.034 121,730 0.005 0.004 0.004 0.004 0.004 2015 5,455 I class hazard 3.50 3.31 2011 2012 2013 2014 2015 3.29 II class hazard 2.83 2.63 III class hazard 0.12 0.13 0.07 0.08 Use of waste, thousand tons 0.16 IV class hazard 0.004 0.004 0.010 0.030 0.009 0.003 0.002 V class hazard 0.000 0.000 0.000 349,905

349,903 2011 2012 2013 2014 2015 Total 337,895 337,894 235,794 235,789 166,433 166,427 161,031 161,028

3.04 Waste Transfer to third parties, thousand tons 3.02 I class hazard 2.28

1.93 II class hazard 5,747 5,740 5,492 1.46 III class hazard 5,484 1.10 1.10 0.67 0.66

IV class hazard 3,002 2,993 0.43 0.02 0.02 0.02 2,632 0.001 0.001 V class hazard 2,626 0.000 0.000 0.000 0.000 0.000 2,299 2,291 I class hazard 2011 2012 2013 2014 2015 Total II class hazard 7.71 7.17 6.92 III class hazard 5.64 5.42 0.14 0.07 0.14 0.72 0.63 IV class hazard 0.017 0.044 0.019 0.020 0.026 0.008 0.005 0.005 0.005 0.005 37 There is a waste classification system effective in Russia, it is established by the Ministry of Natural Resources and Environment of the Russian Federation in 2001 V class hazard and divides wastes by their hazard classes, i.e. degree of negative effect on environment. In accordance with the system there are 5 classes of waste” from extremely 2011 2012 2013 2014 2015 Total hazardous (Class I). irreversibly damaging environment, to almost non-hazardous (class V), inflicting very minor damage.

136 137 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy ENERGY SAVING 142 SUEK and regions: partnership for sustainable development AND ENERGY EFFICIENCY 175 Appendix

The recent increasing consumption The corporate legal framework of this of the Strategy Committee of the Energy consumption structure, thousand tons of oil equivalent Higher specific indicators of energy (in particular, electricity and motor activity is: Executive Board of SUEK. Thanks consumption at mines are caused by fuel – the most important types of to the program implementation in 2015 operation of the accessory equipment energy for us) is due to the steady • the strategy of energy saving the Company saved 85 mln kWh. Also 934 +18%* and and conveyor transport being pace of production growth. At the and improving energy efficiency during the reporting period, an energy 893 substantial part of the underground 841 859 same time, we are implementing in JSC SUEK; efficiency department was created by 108 mining works (ventilation, water 789 60 +156%* a policy of reducing human labor the production asset management. 66 58 sewage). intensity, which leads to the growth • the standard “Energy balances. 339 356 42 324 of installed power production, and The formation, coordination The total amount of SUEK’s consumed 325 Major increase of energy intensity 314 OGR – open therefore energy consumption as well. and control of execution.” energy has increased from 2011 +13%* in mines is associated with water Aware of the anthropogenic impact of to 2015 by 18%. The largest increase pit mining (quarries) influx requiring extensive working these processes, SUEK implements During the reporting period, the Company occurred in the auxiliary service hours of pump plants, and introduction PGR – underground activities on energy saving and energy has worked on the implementation of companies that actively implement the mining (mine) of new auxiliary equipment as well a comprehensive energy saving and development programs, including the 494 as sufficient capacity increase efficiency. Its aim is to reduce energy 450 477 471 intensity of production, while providing energy efficiency program that covers program of import substitution in the 433 VSP – auxiliary of process equipment. the secure, continuous and efficient 2014–2016. Its course and goals of supply of spare parts, components enterprises operation of enterprises. the Company for the next period were and assemblies for repair of equipment +9%* discussed in February 2015 at a meeting of mines and quarries. * Increase of energy consumption in 2015 2011 2012 2013 2014 2015 compared to 2011 Main directions of energy saving and energy efficiency activities

Improving Improving Improving energy Electricity The total electricity consumption in Reduction of specific energy 2015 was 1,320 million kWxh, of which consumption of Company coal equipment efficiency efficiency 41% was spent on open-pit mining, mines as a whole has been achieved efficiency of industrial activity Essential aspect: and 50% on underground mining and by the commissioning of new as a whole Production efficiency. 9% for subsidiary enterprises. modern energy-efficient equipment, modernization of electric drives of 32 Key indicator: In 2015, SUEK’s specific energy excavators, conveyor belts in seven The energy intensity of coal mining consumption per 1 cu. m of processed factories, electrical boiler house and processing of rock mass. • modernization of e[isting • introduction of instruments • optimization of consumed rock mass decreased comparing equipment, etc. equipment; and technical accounting of energy resources stucture; to the 9% level in 2011 from 3.37 to 3 energy systems; 3.05 kWxh/m , which means that the • renovation of equipment • optimization of circuits and energy consumption has become (replacement of old equipment • energy consumption ration- power consumption modes; more efficient. to new, with higher-efficiency ing (development, validation, • Introduction of new energy options). updating rules; saving production processes • optimization of technical, (technologies); In 2015, an automated dispatch management system (ASDUE) was operating and organizational launched at SUEK-Khakassia. It allows control of the electrical parameters • creation of personnel processes. of the power system operation and control of them promptly from motivation and training system. the dispatch center in real time. The use of ASDUE will reduce the influence of the human factor (e.g. possibility of mistakes while electricity supply system is controlled by employees) thanks to remote control of maintenance personnel activities and automatic blocking of their wtong actions and ensure an uninterrupted power supply to industrial and residential complexes. During the reporting period, 10 distribution substations were upgraded.

138 139 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health ENERGY SAVING 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership AND ENERGY EFFICIENCY for sustainable development 175 Appendix Continuation

Engine fuel Diesel fuel consumption structure, thousand tons GOALS AND OBJECTIVES The main consumers of diesel fuel are quarry dump trucks. The volume 471 +65% of fuel consumption has increased in 471 -31% FOR THE NEXT REPORTING PERIOD comparison with 2011 by 2.4 times 494 471 +55% and in 2015 was 106,000 tons, while 477 494 the consumption of diesel fuel by 477 locomotives dropped by 22%. 450 494 471 +433% 477 Reduction of the Energy saving and energy efficiency 450 471 +59% In 2011–2015, fuel efficiency 433 494 negative impact Electricity: increased by all groups of equipment. 450 433 477 494 471 +22% Specific consumption of diesel fuel on the environment: • modernization of excavators and auxiliary equipment to improve energy 433 450 477 Quarry dump trucks of quarry dump trucks decreased 494 • land reclamation; efficiency of their work, 433 450 471 +142% by 23.5% from 0.115 g/t·km to 433 477 Diesel engines • modernization of distribution substations to minimize losses during voltage 450 • emissions reduction; 0.088 g/t·km. 494 conversion; 433 Bulldozers • further work to reduce 477 • introduction of integrated automated electrical equipment control systems; Reducing diesel fuel consumption Excavaters greenhouse gas emissions; has been achieved during 450 433 • installation of reactive power compensation devices for electrical appliances; the reporting period due to: Other • waste management; • switching heaters in the mines to coal fuel; • wastewater treatment; • introduction of fuel control systems, 2011 2012 2013 2014 2015 Road dump trucks • improving standardization systems and motivation; enhancing the validity of norms and • participation in biodiversity • as a result – reducing energy consumption for production enterprises by 4% preventing the appropriation of fuel; projects. with an expected annual effect of 110 million rubles. Unit cost • optimization of the system Motor fuel: of regulation; 179.3 179 -0.2% 176.2 171.8 171.2 • development of the existing equipment dispatching systems; • introduction of dispatcher systems • increase in the utilization factor of the load capacity of vechiles; to optimize and monitor the 27.8 28.4 26.7 -4.0% 26.1 24.7 Excavaters, • reduction of idle runs and improvement in mining equipment servicing; performance of the equipment fleet; kg/м3 • optimization of tire pressure in equipment; • renovation of the equipment fleet, 18 17.6 Bulldozers, 17.5 15.2 14.4 -20.0% use of more efficient and modern kg/motor-hours • improvement in the state of the road bed; models of equipment. 0.115 0.107 0.105 0.103 0.088 -23.5% Diesel engines, • expanding functioning of dispatching systems and fuel consumption load/tkm monitoring; • improvement in standardization and motivation systems; Quarry dump trucks, 2011 2012 2013 2014 2015 load/tkm • the result – a reduction in specific fuel consumption for dump trucks and bulldozers by 4%, for diesel engines by 5%, with an expected economic impact of about 250 million rubles/year. Regular energy audits at Tugnuisky quarry JSC, Kharanorsky quarry JSC, SUEK-Khakassia LLC, Urgalugol JSC and Primorskugol JSC, and Chitaugol LLC. During the reporting period, our specialists were actively involved in the preparation of an RF Government Decree that regulates the issues of categorizing equipment and technology as high energy efficient machinery. The values of quantitative indicators of equipment energy efficiency were identified as a result of the energy audit of the Company’s coal-mining enterprises.

140 141 IN THIS SECTION 144 Main results of 2014–2015 activities 146 Our approach to social investments 153 Interaction with stakeholders 156 Main social projects and results for 2014–2015 172 Public recognition 174 Areas of activity and odjectives for the next reporting period

“A favorable economic situation in the regions of our presence is important for us, as well as social stability, safe working environment and comfortable lives of our employees. This not only ensures the stable operation of our enterprises, but also allows for long-term company development SUEK AND REGIONS: planning. We are doing everything that we can to make the lives of our employees and their families, residents of the regions PARTNERSHIP where our companies are located the most comfortable that it can be, the most safe FOR SUSTAINABLE and high-quality.” Vladimir Rashevsky, DEVELOPMENT SUEK CEO SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy MAIN RESULTS OF 2014–2015 142 SUEK and regions: partnership for sustainable development ACTIVITIES 175 Appendix

Essential aspect: Tasks SET FOR 2014–2015 Participation in the development of local communities. Goals Implementation About 1.4 billion rubles have been invested Key indicator: in SUEK’s social programs in 2014–2015. Investments in the development of local communities. Development of regions’ social and economic potential, human resources quality improvement, Despite the difficult external economic introduction of innovative social technologies: environment, the Company maintains • introduction of new approaches for territory development and replication of successful projects (in particular, the replication of development models for small- and medium- the level of investment in the social sphere sized enterprises, professional self-awareness for young people, development and aims to improve the efficiency of its of community initiatives, development of integrated investment plans for cities social activities. and towns in SUEK regions of presence) • active involvement of local community stakeholders to attract their resources in the creation and development of the social infrastructure (through mechanisms such as social initiatives modeling, taking into account discussions with stakeholders in regions of presence, the introduction of competitive social project selection, the creation of resource centers in main areas of cooperation) Ten projects are ongoing, 13 new SUEK 150 business projects have been • improved qualification of social infrastructure institution employees and local government social projects have been launched. developed by school students, who employees for the use and development of new financial and organizational capacities participated in SUEK training programs. and budgetary alignment and extra-budgetary fund-raising systems • promoting regional employee potential development

Work on territory development through • labor market diversification and support of small and medium businesses total stakeholder involvement and More than 2,500 temporary jobs widespread local community involvement were created for members of SUEK • youth initiative support is still underway. labor units. • social infrastructure improvement participation

• cultural and educational institution support

• sport, healthy lifestyle support Training programs for social SUEK’s Little Stars Festival, the Youth entrepreneurship for local residents, Entrepreneurship project and School • disadvantaged social groups support residing in SUEK regions of presence of Social Entrepreneurship all Development of dialogue with stakeholders and cross-sector partnerships to promote sustainable have been developed and launched. became winners of a number socio-economic development of the territories: of professional and community • continued dialogue on the problems of single-industry towns modernization awards and competitions. • implementation of agreements on social and economic cooperation with regional As part of the Company’s social administrations programs, local residents have • development of public-private partnership, including within the framework of federal developed and implemented more than and regional target programs 43 projects of social entrepreneurship. • cooperation with public and nonprofit organizations

• engaging business partners, including financial institutions in socially important project implementation

• building cooperation with partner organizations interested in social infrastructure development

144 145 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health 120 Environmental performance: safety and efficacy OUR APPROACH TO SOCIAL 142 SUEK and regions: partnership for sustainable development INVESTMENTS 175 Appendix

SUEK works in Krasnoyarsk, SUEK Social Program Strategy Khabarovsk, Primorye territories SUEK employee distribution throughout the regions and the Trans-Baikal, Kemerovo Our social programs are made SUEK’s social activity strategy is Region 2014 2015 40 Company policy text available on Region, Buryatia and Khakassia in accordance with the corporate based on development goals for Company web site: http://www.suek.ru/ Republics. For 11 cities and Total 31,438 32,124 social responsibility policy approved a specific region and how those assets/uploads/sites/9/2013/08/ towns our enterprises are crucial by the SUEK Board of Directors.40 correlate with the Company’s 414-Corporate-Social-Policy_ of which: Korporativnyj-socialnyj-otchet- to the community livelihood. The The strategic goal of our social business strategy. Special attention Russian-.pdf# Company is an important factor Krasnoyarsk Territory 5,353 5,408 programs is a well-rounded is paid to the formation of a local in providing economic and social regional development, compliance community’s development potential, stability in regions of our presence. Republic of Buryatia 2,100 2,091 of quality of life to the best of infrastructure and knowledge, to SUEK contributes as an employer, Russian standards, which allows independently solve current problems, Trans-Baikal Territory 1,491 1,423 taxpayer, economic participant, and attraction and retention of promising and attract the necessary resources. social investor in their sustainable Republic of Khakassia 3,049 3,048 employees. We strive to ensure that We believe that the basic condition for development. We are aware that the our employees and their families, regional sustainable development is development of our enterprises and Primorye Territory 1,672 1,786 residents of the regions where the development of human resources. the development of regions of SUEK Krasnoyarsk Territory 2,728 2,943 SUEK is present are satisfied with The increase in programs and local presence are inextricably linked, and the quality and the conditions of life, community initiatives, in turn, affect we consider social programs to be Kemerovo Region 14,483 14,623 and have the opportunity for self- the number of social initiatives, one of the most important factors in fulfillment in various aspects of life, entrepreneurship development and, Moscow 423 422 the successful solution of strategic so that young people here would as a result, allows the transition from tasks for the Company. other 139 380 see the potential for their personal a paternalistic model to one that is development. partially or fully self-sustaining.

In solving issues of regional development, we strive to be a reliable In March 2015, Kemerovo Region governor Aman Tuleyev and SUEK Regional development Model partner for the state and society, and CEO Vladimir Rashevsky signed an agreement on social and economic actively cooperate with the regional cooperation for 2015. Among SUEK’s key social projects is the funding and municipal administrations, for the recreation programs for Kuzbass children; coal supply for non-governmental organizations, low-income residents; implementation of social development programs and local residents. We believe in the region, the continuation of the SUEK Labor Teams project; Development Regional Increasing the Expansion of The transition that constructive relationships with support for athletic, healthcare, culture programs, as well as Miner’s program human resource number of social abilities of local from paternalistic them, social stability, positive social Day celebrations. “Neither SUEK investments into Kuzbass, nor our assistance and professionalism initiatives, communities to model to a partially climate in regions of our presence social programs have slowed down. Today, it is important to maintain initiatives of local and competency entrepreneurship independently or fully are important factors in sustainable the momentum of development, to create a solid foundation for the communities and growth development solve socio- self-sustaining development and competitiveness future, to maintain a high-quality team of professionals. And SUEK makes authorities economic model. of the Company. Every year the every effort to meet these challenges in Kuzbass, the most important development company enters into an agreement on coal region of the country. Our cooperation with the administration of problem Growth of social social and economic cooperation with the Kemerovo Region is a positive example of how government and stability in the region the regional authorities. The direction business work together to solve important issues, work together for the of partnership in these agreements good of the region and the country,” said Vladimir Rashevsky. is determined by the tasks of social development of the region and SUEK’s principles of corporate social responsibility. In 2014, these agreements were entered into with the Kemerovo Region and the Republic of Khakassia, in 2015, with the Kemerovo region.

146 147 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health OUR APPROACH TO SOCIAL 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership INVESTMENTS for sustainable development 175 Appendix Continuation

Social Activity Management

SUEK Social Activity Control System

Block on External Relations and Strategic planning and control Head Office Communications • Policies and standards • Improving social investment management system • Overall coordination of social activity • Development and coordination of special projects in the field of communication and social policy • Preparation, implementation and control of execution of agreements with regional administrations

Regional industrial association Implementation of social Public Relations Services. and charity projects Enterprise Press services (SUEK to the regions Fund) • Interaction with stakeholders: local authorities, We achieve our strategic goals Cooperation with stakeholders Area’s of SUEK social activities: non-governmental organizations, nonprofit of our social programs through: plays the most important role in the organizations (NPOs), local communities development and implementation • ecology; • local community engagement; of our social programs, as well • Social activities in the region related • education; as learning what their needs are to the enterprise • extension and diversification and based on that, developing our • sports and healthy lifestyle; of social programs; dialogue further. This allows us to not • healthcare; • job search assistance; only relate the needs of stakeholders with our business priorities, but also • infrastructure improvement • extension of services market; to create the maximum opportunities and development; • introduction of innovative for the development of local • leisure, culture, realization The overall management of the social The main tool for regional social policy technologies and approaches into communities. 41 Learn about the Fund’s management of creative potential; policy program implementation is implementation is SUEK to Regions the social sphere. bodies, the main directions of its carried out by the Company CEO Charitable Foundation (hereinafter – activities and get to know the reports The Company’s social programs cover • local government improvement; and SUEK Management Board. Their the Fund, SUEK TO REGIONS41), on our work at http://fond.suek.ru. a range of areas, the most significant area of responsibility is to establish established in 2007. The Fund’s ones in our opinion, to improve the • development of social and business a common concept of management, programs cover all areas of SUEK quality of life in the regions. programs for the local population, with opportunities for self- the evaluation and operation of presence. The Fund develops improvement development; management, which is responsible for and implements its own programs specific areas of social policy. in areas of presence, that are created • affordable housing and affordable with consideration for the specifics utilities; of each location. • other areas.

148 149 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health OUR APPROACH TO SOCIAL 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership INVESTMENTS for sustainable development 175 Appendix Continuation

Evaluating Social Investment Effectiveness

Our social programs are Qualitative: planned and implemented based on monitoring of the social • improving the efficiency of public- situation and the evaluation private partnerships and During the reporting period, of the implementation by independent complementing it with the interaction of and corporate experts. Monitoring business and nonprofit sector in solving the development of territories and social problems; 19 projects the local community is realized • stability of previously implemented by means of complex sociological underwent effectiveness social projects (project goes on to assessment research, cluster surveys, and operate independently with financial feedback on events. assistance from a variety of sources, without the Company’s financial An essential aspect: Most social projects implemented support); Participation in the development by the Company are long-term. of local communities. Each project goes through a testing • favorable conditions for cooperation period at one or two regions where with authorities, the public and other Key indicator: the Company operates. Successful stakeholders; Share of programs for which projects are replicated to other areas. efficiency assessment is done. The format of the network project • strengthening SUEK’s reputation allows optimization of the budget as an economically sustainable necessary for its implementation, and socially responsible Company. support of the growth points, and raising of regional and federal budget funds for the development of the given area.

The effectiveness of social investments is regularly assessed. Administration’ The key evaluation criteria for us are Monitoring territories of presence a set of quantitative and qualitative Events indicators:

Quantitative: Independent Companies • number of events held; experts Experts • number of beneficiaries;

• volume of attracted funds from various sources for the Summary analysis of results implementation of Company social Definition programs; of basic social measures • number of “points of growth”42 created as a result of Company social activities.

42 Growing point – it is an establishment or organization set up as a result of implementation of a social project enhancing living standards on particular territories (Maternity support center, music workshop, mini-cinema etc.)

150 151 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health OUR APPROACH TO SOCIAL 120 Environmental performance: safety and efficacy 142 SUEKINTERACTI and regions: partnership ON WITH INVESTMENTS for sustainable development 175 Appendix Continuation STAKEHOLDERS

Social Investment Performance indicators

2014 2014 2015

The number (or proportion) of projects evaluated for effectiveness 10 9 10

Number of direct project participants 4,750 4,551 5,017

Number of established growth points 54 35 56 The involvement of stakeholders in the implementation of SUEK’s social projects, the development Evaluation system of social investment effectiveness of dialogue and strategic partnership with them is a key principle of our social programs in

Monitoring Evaluation of individual Final evaluation the regions. the implementation events and programs results. of program of projects. results The fundamental principles of Tools: Expert interviews, Tools: Working meetings event participant surveys, our relationships with employees, of project expert groups, program result discussion focus groups with local at public events with customers, suppliers, authorities and regional authorities. the participation of all stakeholders. and society in general, and the regions of SUEK’s presence are legitimacy and ethics. We build our cooperation based on mutual

Evaluating the effectiveness • development of small- and medium- businesses and the nonprofit sector respect, partnership, and the of completed projects shows that sized businesses allows the public significantly increases the efficiency the principle of social investment, to purchase goods and services in of real estate use and infrastructure observance of the undertaken when projects with a clear potential their regions, creating new jobs, and located in the regions; obligations in good faith. for development and a measurable reducing the outflow of funds; result are funded, rather than selected • target improvement of municipal social facilities, is the most flexible • development and implementation employees competence level and effective instrument for solving of social projects allows allows for more efficient means a region’s social and economic involvement of local community of attracting bigger budgets and problems: human resources, as well as public funds for infrastructure public resources in solving urgent development. issues of local development and the creation of social infrastructure “growth points;”

• the development of small

152 153 SUEK corporate social responsibility report 2014–2015 06 SUEK: sustained development and value creation 26 Corporate governance 50 Economic sustainability and efficiency 68 Social performance: company human capital 92 Occupational safety and health INTERACTION WITH 120 Environmental performance: safety and efficacy 142 SUEK and regions: partnership STAKEHOLDERS for sustainable development 175 Appendix Continuation

Interaction with key SUEK stakeholders in the regions in the context of sustainable development challenges

Stakeholders Format Interaction result

Federal, regional and local authorities, Socio-economic cooperation agreement Involvement of local authorities local governments in addressing the region’s problems, Joint projects to address the problems increase their efforts and administrative of regional development capacity Involvement in round table discussions, forums, Combining resources of administration public hearings and businesses to better address Consultations during the social project regional development problems development process More favorable environment for business development

Employees Communication via system of corporate media Improving employee quality of life Implementation of social projects aimed Increased loyalty towards SUEK, at employees and their families, among others as an employer and social investor

Local Communities Implementation, including joint implementation Human resources growth In the process of stakeholder of socio-economic development projects engagement, we develop an active On December 16, 2015 Russia’s Public Chamber held a roundtable discussion designed to increase the wellbeing of local SUEK reputation capital growth dialogue. Its contents are determined on new approaches to support small- and medium-sized businesses, and residents. Personnel reserve formation by the objectives of socio-economic especially financing housing and utilities modernization projects in single- Involvement in dialogues and public hearings, Better environment for Company’s development, analysis of the social industry towns in Russia. The roundtable was organized by SUEK. It’s regional climate research, etc. business operation situation and public opinion in participants discussed the prospects of single-industry towns support under the Consultations during the social project SUEK regions of presence and the current economic conditions. development process discussion of our social projects. Deputy Chairman of Vnesheconombank, Head of the Working Group on Public organizations, associations Participation in associations whose goal or one More effective solutions to region’s Modernizing Single-Industry Towns under the Government Commission on of purposes is to solve regional development pressing problems Examples of our dialogues with Economic Development and Integration, Irina Makieva noted in her address that socio-economic issues43 Combining NPO and business stakeholders in 2014–2015 company towns can and should become “growth points” for the country – “The are presented in Appendix 4 main thing is to create comfortable living conditions and job opportunities for Joint social project implementation resources for regional development of the Report. people who do not plan on leaving their community. By combining the efforts Involvement in dialogues and public hearings, of the state, public and business community, this is a very realistic task.” Sergei regional climate research, etc. Grigoriev, Chairman of the commission on the development of the real sector Involvement of experts to evaluate effectiveness of the Russian Public Chamber, JSC SUEK Deputy CEO and President of of SUEK social investments and development the SUEK-TO THE REGIONS Fund, said: “The issue of single-industry towns of new projects. development is that of localized economic activity and as the end result, the quality of life and stability in the region. The company’s mission is to make life on our territories attractive, so that people can plan their family’s future with ease.”

SUEK’s experience at the Chegdomyn village, Khabarovsk Region, was presented at the roundtable discussion. There, SUEK has been building affordable housing for its employees and their families. The Company uses quickly erectable structures to build apartment buildings in the village. The price of the apartments was determined based on the financial capabilities of the 43 These associations, in which SUEK participates, include the Social Charter of Russian business, Russian Union of Industrialists and Entrepreneurs (CSR Committee and Demographic Policy), the Association general population. As a result, nearly 300 applications were received for 200 of Managers, and the Anti-Corruption Charter. apartments under construction. “

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Despite the difficult economic situation, during the reporting period, SUEK continued to implement its programs in the planned volume, in accordance with the strategy and set goals for 2014–2015. We continued to implement our long-term projects and started a number of new programs, aimed at creating a favorable social environment and solutions for urgent social development problems. All projects are implemented in accordance with the main directions of Company social investments.

Education

EDUCATION to improve the municipal education industry, search and support of system for further human resources creative young professionals who “Human Resource Development” training in the coal industry, in can work under innovative economic (Khabarovsk Territory, implemented correspondence with its current conditions. The competition was since 2014) requirements. The target audience attended by senior students of the of the project is regional university Siberian Federal University, Kuzbass The project is aimed at young people and college professors, the Human State Technical University (Kemerovo in need of career guidance, ensuring Resources staff at SUEK-Kuzbass region), Katanov Khakassia State an operational relationship between enterprises, and students from University, Buryat State University, the labor market and education, technical universities. In 2015, Far Eastern Federal and Pacific identification of ambitious, creative the project participants attended State University. In 2014, 20 student young people as potential SUEK a seminar in KuzSTU and had projects became finalists and in enterprises employees. The target internships in creating an integrated 2015: 32. The contest winners in audience is educational institutions educational environment and dual each category received diplomas and employees, city Department of education system for workers and incentive-based grants. Education representatives, and engineers (this type of education Urgalugol representatives. In 2014, presumes both theoretical training in Financial support for educational as part of the project, school teachers the classroom and hands-on training institutions in regions of SUEK from several regional schools in the workplace.) presence. During the reporting underwent training in methods and period, SUEK assisted in the approaches of professional self- Inter-regional student project purchase of textbooks, interactive determination, which they could use in competition “Golden Human whiteboards for schools, took part in the future on the job. Resources” (all regions of SUEK rewards for the best school graduates presence, implemented since 2012) and rewards for best teachers, helped “Modernization of the municipal organize school holidays, repair work, human resources training system” The purpose of the contest is the and support for educational projects (Kemerovo region, implemented in identification of promising ideas for through V. Astafiev Foundation, 2015). The purpose of the project is the development of the coal mining among others.

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Sports and healthy lifestyle

Children’s Olympics “SUEK Olympians”. (Krasnoyarsk Territory, Support for youth athletic programs, financing of sports facilities CASE implemented since 2013) The project construction work, purchase of athletic equipment. is aimed at promoting a healthy During the reporting period SUEK launched two designed specifically for these projects, including four lifestyle and athletics among the Projects that received SUEK support in 2014–2015: interrelated social projects: “School of Innovative ranges. At the “Erudite” range, the children learned regions’ teenagers. In 2014, the • construction of winter sports facilities in the city of Borodino; Thinking” and “ Youth Entrepreneurial Training and Labor interdisciplinary integration of knowledge and problem- second Games were attended by 150 amateur athletes ages 13 to 16, Education.” solving in cases format. The Collider Experiment was • purchase of gymnastics equipment for gymnastics training center in 2015 there were 130 participants. devoted to the development of inventive thinking, (Kuzbass); The overall objective of the project was the development of construction engineering, analysis and risk forecasts. They competed in mini-soccer, innovative thinking among young people, the formation of At the Problem.net range, the students develop solutions volleyball, basketball, chess and • development of rugby as a sport in Borodino, Nazarovo, Sharypovo their professional self-determination skills, and stimulation to current socio-economic and technological challenges. other sports. The 2015 Games were (Youth Athletic School “Yenisei-STM”); of interest towards the coal industry professions. The The Effective Speaker allowed participants to work dedicated to the 70th anniversary projects were implemented in the Republic of Buryatia through communication skills, negotiation and discussion. of Victory Day and were held under • participation in the European Cup and judo training camps and Khakassia, Krasnoyarsk, Primorye and Khabarovsk In addition, at each marathon range, the marathoners the motto “We want to dedicate all (Youth Sports School, Khakassia); Territories and Kemerovo region. Participants were teams learned to think systematically and learned to work as of our records to our grandparents from each region, including teachers, representatives of a team to generate and present ideas. and thank them for our Victory!” • participation in Russian chess championships and Siberian region city education departments and school students. championships (Borodino) During the project implementation, over 1000 students Support for athletic events. During • holding Wrestling Federation summer training camps (Khakassia); In order to achieve these objectives, a hands-on learning from six regions where SUEK is present took part in the the reporting period, the Company program was developed, which is aimed at students and “Enterprise Marathons”. Students gained knowledge provided financial support to the • Olympic reserve school programs in gymnastics (Kuzbass); teachers and includes a variety of formats: and practical skills in the field of entrepreneurship regional tournament in women’s and innovation development. Teachers and municipal volleyball “Spring Thaw”, Athletic • Primorye Region Fund programs for the development of athletic • The “Innovative Thinking Development” course: seminars, employees took part in four workshops on training students Festival “Eyes on the Victory!” and the culture and sports “We Are Together” trainings, workshops on research development, critical in this field, as well as networking seminars on setting up “Best Athlete of the Year” competition thinking skills and structured dialogue experience. models of municipal “Enterprise Marathons.” A textbook (all – Kemerovo Region), Children’s • holding City of Moscow Championship for people with disabilities • “Enterprise marathons”: competitive collective work “Methodological Kit to Develop Enterprising Thinking and open regional rugby tournament for (Powerlifting Federation); aimed at the development of theoretical and practical Behavior” has been included in the curriculum of schools SUEK prizes, a chess tournament • Russian Martial Arts Union programs and other projects. knowledge and skills of an entrepreneur and an innovator. in six regions. The same schools also began to use the and city basketball competitions innovative educational technologies “Quest”, “Enterprise (Krasnoyarsk). • Educational networking seminars for teachers to learn Marathon”, and “Intellectual Battle.” The results of the design of municipal models of “Enterprise Marathons” the projects and the regional team presentation were ranges; showcased at the regional conference “Enterprise as a • Development and implementation of “Methodological Factor in Successful Development: the Experience of the Kit to Develop Enterprising Thinking and Behavior” Russian Regions.” in schools ; • Entrepreneurial training program for members of the SUEK labor teams and urban camps (city of Leninsk- Kuznetsky).

The “Enterprise Marathon” is a new learning format,

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Healthcare “Dream Skis” program starts up titled “Dream Skis”, aimed trainers. They will use special in Kuzbass at rehabilitation and socialization techniques to teach people with Treatment and rehabilitation of through downhill skiing, for people disabilities downhill skiing. “Dream children from regions of SUEK In the Tashtagol District of living with cerebral palsy, autism, Skis” was founded in 2014 by presence (all SUEK presence regions, Kemerovo Region, a regional Down’s syndrome, impaired Russian actor and director Sergei implemented since 2009). The project center for skiing and vision and hearing. Participation Belogolovtsev and his wife is implemented in cooperation with the snowboarding has opened up, in the program improves posture Natalia. Nearly a thousand people Office of Affairs of the President of the as a center for Olympic athlete and coordination, increases have undergone rehabilitation Russian Federation. Every year over training. At the suggestion of joint mobility, reduces spastic over the last two years, ranging in 150 children (including children from the region’s governor, with the symptoms, and improves the age from 3 to 62. orphanages and underprivileged families) support of SUEK, the center immune system. During the winter undergo a course of health improvement began a charity program season, the center will have eight procedures at the Polyany (Meadows) rehab department, a Presidential Office of Affairs medical facility. The medical center, which has the most modern equipment and innovative techniques, allows in a short period of time to make a thorough diagnosis and develop a program of treatment and health rehabilitation for each of the children.

Health improvement of Kuzbass children at resorts in Greece. Every year, with the support of the Company, about 1,000 children from Kuzbass spend their holidays at Greek resorts.

Medical treatment for veteran miners (all regions of SUEK presence, implemented since 2010 in cooperation with the Office of Affairs of the President of the Russian Federation). Annually, over 40 veteran miners spend time at the Gertzeno medical Financial support for healthcare facilities, purchase of modern medical resort, which belongs to the Office equipment. During the reporting period, the Company assisted in the of Affairs of the President of the acquisition of: Russian Federation. The veterans undergo highly qualified medical • medical equipment for Krasnoyarsk Regional Veterans Hospital; examination, receive a course of specialized procedures and necessary • fitness equipment for the rehabilitation center (Kuzbass); recommendations. • housing for young professionals of Rybinsk Central Regional Hospital; Cooperation with charitable foundations to finance the • equipment and furniture for physical therapy offices and the rehabilitation treatment of seriously ill children of the Kiselevsk infant home Teremok (Kuzbass) and other projects. (Rusfond, Podari Zhizn (Give Life), Schastie Detyam (Happiness to children), (Pust Vsegda Budu Ya (Let There Always Be Me), Milocerdie (Mercy) and others.).

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Ecology Infrastructure improvement and development

The “Comfortable Environment” Financing environmental education Contest (Kemerovo region, events of Priroda (Nature) Fund Republic of Khakassia and Buryatia, within the framework of the Russian Krasnoyarsk, Khabarovsk, Primorye Geographical Society Festival. and Trans-Baikal Territories. The project is aimed at the protection Implemented since 2011) The contest of Amur leopards and Siberian tigers. identifies, distributes and supports the best ideas for the development of the Support for the activities of environment. Winners are selected “Land of Leopard” park (Primorye at the regional and interregional Territory). The park is directed towards stage and receive financial support protecting rare species of felines, to implement their ideas. In 2014, in particular, the Amur leopard. During the competition featured more than 2015, the Company provided financial 120 projects. In the four categories, support for a number of events in under consideration were ideas the park, informational-promotional of landscaping yards, territories, and advertising campaigns of the landscape and environmental projects park. During the charity auction in as well as projects to promote healthy September, SUEK received the right lifestyles. The winners were nine to become the guardian of one of the projects in seven regions, which leopards. received support in the amount ranging from 95,000 rubles to 400,000 rubles. The 2015 competition was dedicated to the anniversary of World War II Victory Day. Among the 15 winning projects that received funding, overall totalling approximately 2.8 million rubles, there were initiatives on improvement of World War II memorials.

The “Best Yard competition. Turn Dreams into Reality” (Krasnoyarsk Territory, implemented since 2012) The contest is aimed at the development of the local community, the city of Borodino, where an ambitious group of local citizens wants to improve the quality of life in the city and, in particular, in their local area. The groups that won the contest received a playground for their yard. During the reporting period, new athletic equipment and playgrounds appeared in 32 yards, and five empty areas were landscaped.

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Leisure, culture, realization of creative potential

Support for the preservation Financial support for cultural • financing the participation of ethnic cultural initiatives, institutions: of children with disabilities programs and activities to promote and children from low-income and human spiritual development. • reconstruction of the museum- large families of the Khabarovsk During the reporting period, SUEK estate territory of Buryatia national Region in the charity gala supported the forum “Historical and writer Isay Kalashnikov; (International House of Music, Cultural Heritage as a Resource for Moscow) Social and Cultural Development” • repair of the movie theater of the International Environmental- (Chegdomyn); Assistance in the construction ethnic Festival of Puppet Theatres and reconstruction of religious “Chir Chayaan” (all in the Republic • conducting a citywide graduation and ethno-cultural objects. In the of Khakassia), national competition festival “The Final Bell”, provision reporting period, SUEK allocated of Buryat wrestling (Republic of grants to children’s creative funds for the construction of: of Buryatia). groups that take part in the charity event “Together We Help Children” • temples in the village of Shkolnyi, Event financing related to (Kuzbass); city of Novokuznetsk, Leninsk- the celebration of national, Kuznetsk, Kemerovo region, and professional, regional and local • staging a New Year’s performance Sorsk, Republic of Khakassia; holidays. During the reporting period, for children, for orphans, children CASE In 2014, the festival brought together more than the Company funded the creation with disabilities, children from large • chapel in the village of Bolshaya 1,500 participants. The winner of the Grand Prix, 12-year- of memorials dedicated to the 70th families and children in a difficult Talda, Kemerovo Region, the bell Children’s Art Festival “SUEK Little Stars” has been old Ekaterina Prokudina from Nazarovo, went on to take anniversary of WWII Victory Day life situation (Pushkin Theatre, tower of the church of St. Nicholas taking place in the Krasnoyarsk Region since 2013. part in the Russian television project Golos.Deti (Voice. (in all regions of SUEK presence), Krasnoyarsk); the Archbishop of Myra and Festival Goals: Children), and was selected by one of the mentors. a chapel on the premises In 2015, 2,000 children took part in the qualifying rounds and organized a tour of the Moscow • identify, support and help develop the creative potential • support for a festival for children (Republic of Buryatia); of the festival. Art Theater (Krasnoyarsk). of children’s groups and gifted children; with disabilities “Heart to Heart” (organized by the charitable • Datsan “Amarlin” (Republic • promote unity among the children of SUEK employees; Marina Smirnova, Chairman of the jury, representative organization “Shield”, Krasnoyarsk); of Buryatia); of SUEK-TO THE REGIONS Fund in Krasnoyarsk • form a culture of communicating in children, and form Region said: “The concert was very moving and warm. their spiritual education by exploring national traditions • Ceremonial site for Khakassia In the year of the 70th anniversary of the WWII victory we and customs, through sharing creative achievements in Regional Public Movement could not avoid this theme. And the qualifying rounds and various art forms; of the Khakass people the gala concert of SUEK’s Little Stars were dedicated to (Republic of Khakassia). • assist Russian state bodies and public organizations in this important event for each of us. I want to add that the the preservation and development of Russian culture festival was held for the third year in a row, and each time SUEK also provided traditional and youth education. we discover a new talent. The good news is that there are assistance and provided temples a lot of gifted children in small towns, and our festival is and monasteries with coal. The festival takes place in two stages. During the first a launching pad for their great success.” stage, qualification rounds for children ages 6 to 18, are held in Borodino, Nazarovo and Sharypovo The second During the reporting period, the SUEK Little Stars stage, is a gala concert in Krasnoyarsk for the winners Festival received several awards. The project received of the qualifying rounds. The jury consists of cultural first prize in the All-Russian competition for the best and art figures, representatives of regional authorities, practices of employers, for work with children, youth representatives of SUEK-TO THE REGIONS Fund and and human resources “Creating the Future”, established SUEK-Krasnoyarsk. The competition categories are by the Russian Federation Ministry of Education and vocals, choreography, and instrumental performance. All Science. Also, the festival twice won the nomination for participants receive prizes and gifts from the Company: the “The best project for young people”, the All-Russian diplomas and certificates. competition of student and corporate communication projects “Eventiada Awards”.

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Development of the population’s social and business activities, development of self-realization opportunities

“SUEK Labor Teams” (Krasnoyarsk is an example of an effective public- Kemerovo Region, in 2015 – in the Territory, Republic of Buryatia, private partnership: methodological Republic of Khakassia, Primorye Primorye Territory, Kemerovo Region, support and vocational guidance Territory and Khabarovsk Territory). Trans-Baikal Territory, implemented provided by labor and employment since 2005). agencies. Municipal Administration We support small and medium teams oversee, and provide students businesses as a promising tool in For more than 10 years in the with a scope of work, help in the diversifying business in the single- regions, we have been developing organization of free time. In 2014, industry towns and cities. Special employment for adolescents ages 1,090 jobs were created for the labor attention is given to entrepreneurial 14 to 18 during the summer holidays. team members and in 2015, there activity among children and youth. Over the years, the project turned were 1,418 jobs. The 2015 labor Participation in these projects into a youth movement in all regions season was held under the auspices contributes to their social adaptation of our presence. of the 70th anniversary of the WWII and expansion of options for their Victory, and team “soldiers” became future career choices. The target SUEK Labor Teams involve young active participants in the All-Russian audience of the project is also the people in the socio-economic patriotic activities. employees of municipal authorities development of their regions, and local businesses. It develops promote socialization and vocational “Youth Entrepreneurship” systematic approaches to supporting guidance of children and increase the (Implemented in 2014 in the Republic young entrepreneurs in the region. prestige of mining jobs. The project of Buryatia, KrasnoyarskTerritory, Local government improvement

By developing social entrepreneurship for this project to work in the “School community initiatives, development and encouraging the growth of of Entrepreneurship Development” of competencies of municipal Project implementation mechanism the population’s activities, we and the organization of SUEK Labor employees, promotion and replication strive to involve all concerned Teams, supported the municipal of Company social projects. Within parties and in particular, regional business projects competition, the project, a series of roundtable and municipal authorities and and introduced a new analytical discussions were held, at which government. The objective of the tool for municipal management. representatives of local communities, Employee training Organization Organization for the Summary Company is to contribute to the The matrix of socially significant administrations, governments, NPOs of municipal structures of regional teams youth, future and presentation of the establishment and development problems (determination of target and representatives of SUEK to the and local businesses (staff of municipal entrepreneurs school of business of the municipal infrastructure to groups, their current problems and regions Fund shared their experience to work with youth: institutions, of practice-oriented projects at the support small businesses and social ways to solve them) improves the in solving regional social problems. formation of skills entrepreneurs, training events interregional contest entrepreneurship. This approach social environment of each region of doing business from teachers, students) “My First Business” allows for a more efficient use by expanding the range of social In 2015, the number of such meetings idea to project realization of resources of all stakeholders, services, training and improving included: including improved effectiveness of the competitiveness of businesses the budget funds allocated for the operations in the social sphere. • round table discussion on social development of small businesses, entrepreneurship opportunities as well as for the development of The “SUEK Public Debate Club” for the development of Vanino a synergy of cooperation between Project. (Khabarovsk Territory, and Vanino District (Vanino village, business, government and experts in Murmansk Region, implemented Khabarovsk Territory); dealing with territorial development since 2015) The objectives of the objectives. project are to share experience in • round table discussion “Social solving social problems between entrepreneurship as an effective During the reporting period, we the regions of SUEK presence; mechanism for solving regional attracted the municipal authorities identification and development of social problems” (Khabarovsk).

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“School of Social In the “School” aspiring entrepreneurs publicly present on-going work and Entrepreneurship” (Kemerovo whose projects are selected its results. As part of the project, an Region, Republic of hakassia, on a competitive basis, participate annual inter-regional competition of Khabarovsk Territory, Krasnoyarsk in training sessions, get expert social entrepreneurship and business Territory, implemented since 2012). support for their projects, learn to projects “Creation” takes place.

Project implementation mechanism

Training representatives On-location Seminars, trainings and Development of municipal structures selection of participants internships for school and implementation of to identify the most urgent using matrices of social students, expert student social projects regional problems and problems monitoring trips with the support of SUEK select promising candidates for school

During the reporting period, more than 1500 school students participated in In 2015, SUEK-TO THE REGIONS The results of the teams were Main results of the project the project. In 2014, they developed Fund held an economic camp evaluated based on performance, implementation from 2014–2015: In 2014, graduates of the Krasnoyarsk Territory) – 63 business projects and in 2015, “Territory of Success” in Sochi the number of clients and Social Entrepreneurship School 300,000 rubles; 87 business projects, earning them as part of the development of revenue. Among the final projects • 53 candidates were selected participated in the socio- • Impulse Music Studio a total of more than 200,000 rubles. youth entrepreneurial potential. were Braid-making Studio, for school; entrepreneurial projects contest (Sharypovo, Krasnoyarsk The inter-regional competition “My Children who have done well Cultural Events Agency, and “Creation”, organized by the region) – 200,000 rubles; First Business – 2014” had 60 projects at the Youth Entrepreneurship Dance Studio. • 43 social and business projects SUEK-TO THE REGIONS Fund. submitted, 15 of which were chosen project came to participate at created and started The winners were allocated funds • Maternity Support Center as winners. In 2015, the project the camp from the Republic of When congratulating the for the implementation of their Waiting for a Miracle “Youth Entrepreneurship” received Buryatia, Kemerovo Region and participants from Sharypovo, • 116 people employed. projects: (Sharypovo, Krasnoyarsk the award in the category of “Social Krasnoyarsk Territory. The format who were the game finalists, the Territory) – 100,000 rubles; Innovation of the Year”, “Time for of the camp was a business city mayor V. Barshinov, said A further development project was • 3D mini-movie theater Innovation”. The competition takes game, where teams had to that “Leadership, practicality the launch of “School for Social (Sagan-Nur village, Republic of • “Talking sand” (Leninsk- place with the support by the Russian organize an imaginary business, and sense of purpose is already Entrepreneurship Coaches” and the Buryatia – 150,000 rubles) Kuznetsk, Kemerovo region) – 100,000 rubles. Ministry of Economic Development under life-like conditions. The clearly visible in you. I am creation of resource centers for social • Rybka (Little Fish) Infant and RVC OJSC. participants received the skills confident that they will take you entrepreneurship development. Swimming Center (Ust-Abakan In 2014, the Social and knowledge for the game at on a wide road in life. And it would Village, Republic of Khakassia.) Entrepreneurship School project training events and in workshops: be great to see some of you use There is a competitive enrollment – 300,000 rubles; “Technology of Design,” Creativity your talents in our city, helping procedure to the “School for received the “Impulse of Good” in Business – Generating develop its economy, create new Entrepreneurship Coaches”(Kemerovo • Children’s Vision correction award in the nomination “For Business Ideas,” “How to Create jobs and new industries.” region, implemented since 2014). office Daycare Kolosok the best corporate program a Successful Market Product,” Together with administration (Chernogorsk, Republic for the development of social “Partnership or Competition” representatives, the competitive selection of Khakassia) – 450,000 rubles; entrepreneurship”. and others. is made, based on business experience, • The Museum of Entertaining motivation and coaching potential. In Astronomy and Space at the 2014, the first six coaches began their Sharypovo Museum of training process. It is presumed that their Local History (Sharypovo, work will be a part of the developing municipal infrastructure of social enterprise support.

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Creation of resource centers • create social and business residents with great life experience Other projects for the development of social communities; and social capital. entrepreneurship (Kemerovo • assure interaction between Providing assistance for veterans, people with disabilities, retirees, large Targeted assistance: Region, Krasnoyarsk Territory, In order to interest young people government and business. families and low-income families and their public associations: Republic of Khakassia and Buryatia, in social entrepreneurship, a project • financial assistance to victims implemented since 2015), The was launched in 2015, titled “Future • “Books as a gift” program – publication of special edition illustrated books, of fires in Khakassia in 2015; project aims to develop the capacity In 2015, social entrepreneurship of the Region – Future of SUEK”. to present to visually impaired and blind children (Kemerovo Region, to solve social problems in specific development centers began work It took place in the Republic the Republic of Khakassia and Buryatia, Primorye Territory); • financial assistance for road municipalities. Centers are created in the Mukhorshibirsky Region, of Buryatia, Primorsky Region repair and reconstruction in the • support for Veterans Council events (Krasnoyarsk Territory); on the basis of existing support Republic of Buryatia, in Sharypovo, and Kemerovo Region. Within both Prokopyevsk district (Kemerovo structures for small businesses projects, seminars were set up for Krasnoyarsk Territory and Leninsk- • support for the first interregional arts and crafts by the elderly festival Region); or community organizations through the participants on social designing Kuznetsk, Kemerovo Region. “The house where hearts open” (Krasnoyarsk Territory); targeted training of future leaders. and social initiative competitions. • acquisition of public passenger • car acquisition for large families (Kemerovo region); The company aims to carry out Based on the results of the projects, buses (Kemerovo region); The Center model assumes the participants of Third/Best Age social entrepreneurship development • construction financing for the rehabilitation center Nadezhda, Center for Police that it will: received between 20,000 and 120,000 projects focused on various local Veterans (Republic of Khakassia) and other projects. • co-financing of kindergarten resident groups. So, in 2014 in rubles for the implementation of their construction in the Krasnyi Kamen • identify a region’s urgent social the Republic of Buryatia and the projects. The participants of the region (Kemerovo Region); problems, Krasnoyarsk Region, we implemented Future of the Region – Future of SUEK a similar project for retirees and implemented 18 projects geared at • provide advice on legal and • Charity Fair at the SUEK head residents close to retirement age the support of motherhood, childhood, accounting issues, as well office to raise funds for the titled – “Third/Best age”. It helped education and youth development. as business processes; Ust-Altacheyskoy boarding activate on the labor market school (Republic of Buryatia) and other projects.

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2014 2015

Winner of the contest “Leaders Winner of the “Impulse of The winner of the All-Russian of Corporate Philanthropy – 2014” Good” award in the nomination RSPP competition “Leaders in the “Information Transparency” “Best Corporate Program for of Russian Business: Dynamics category and “Effectiveness of the Development of Social and Responsibility – 2014” in the Charitable Program Management”. Entrepreneurship”. Award for nomination “For Contribution The company ranked second in the contribution to the development and to the Solution of Regional Social sub-ranking “Leaders in Corporate promotion of social entrepreneurship Problems”. Philanthropy in the Industrial Sector”. in Russia, organized by the Fund In the general ranking of Russian “Our Future”, which annually notes companies SUEK took 4th place examples of successful social Winner in the “Social Partners” (among 59 companies). business cases, provides support category (SUEK Labor Teams to new social businesses, and project), and the “Startup category” contributes to the comprehensive (Youth Entrepreneurship project) development of the social business II All-Russian competition for the infrastructure. best employer practices in human resource development “Building the Future”.

Winner of the All-Russian Winner of the All-Russian Prize for the support of small and competition of student and competition “Best Russian medium-sized businesses “Basis corporate communication projects Enterprises. Dynamics, Efficiency, for Growth” in the nomination at “Eventiada-2015” in the “The Responsibility” in the main “Regional Program of the Year”, which Best Project for Young People” nomination “High Business Social is held annually with the support of the nomination. Responsibility”. RF Ministry of Economic Development and RSPP. Recipient of the “Basis for Growth” in the “Regional Program of the Year” nomination for small and medium business support. Winner of the category “Art Winner of the All-Russian Workshop”, at the First All- competition of student and corporate SUEK’s Little Stars project was Russian competition for the best communication projects “Eventiada included in the National program practices of employers on work 2014” in nomination “Best Project catalog “Russia’s Best Social with children, youth and human for Young People” (SUEK Little Projects”. resources “Creating the Future”, Stars Festival) established by the Russian Federation Ministry of Education SUEK social programs are included in the best In the general company ranking for and Science. projects digest under “the Company’s Practice the “Corporate Philanthropy Leaders in the Field of Philanthropy and Social Investment,” 2015” competition, the Company “Donors Forum,” the Library of RSPP corporate placed 18th (65 companies practices and the Business for the Regions digest. participated in the ranking).

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AREAS OF ACTIVITY AND OBJECTIVES FOR THE NEXT Appendix 1. REPORTING PERIOD Application of GRI reporting principles

GRI Principle Principle Compliance in Given Report Development of social and economic potential Further implementation of social programs in key of the regions, improving the quality of life in local areas of social activity: Interaction with interested parties The list of key stakeholders is given in the Code of Corporate Conduct of the Company. communities, development of human capital: • ecology; The identification and determination of interaction formats has been carried out based on the scale of mutual influence and mutual dependency, opportunities and prospects • circulation, development of the existing • education; for cooperation, as well as taking into account the specific interests of each group. and introduction of new territorial development The report provides information on interaction principles with each of the parties mechanisms; • sports and healthy lifestyle; and the key results of the interaction with them. • development of integrated investment plans • healthcare; for single-industry towns and villages in the regions • infrastructure improvement and development; Sustainable Development Context We cover the results of our activities in the context of our strategy priorities and priorities of SUEK presence; for society’s sustainable development, including regional development priorities. • leisure, culture, realization of creative potential; • promoting the employment potential of the regions; • local government improvement; • expansion of the services market; Essence We have developed a process of identifying priority issues that help specify the range • development of social and business programs of topics to cover in the report, which is determined based on the importance of specific • promotion of employment; for the local population, with opportunities economic, social and environmental issues for us and our stakeholders, while taking into consideration global and industry trends in the realm of CSR and sustainable • participation in the modernization of social for self-development; development. The information demands of the stakeholders have been identified infrastructure; • affordable housing and affordable utilities. through a system of corporate communications and during the course of special • support for cultural and educational institutions; events dedicated to relevant issue discussion and the opportunities for constructive engagement. Feedback, polls and sociological research have also been taken into • support for sports and healthy lifestyle. consideration.

Completeness The report reflects all the key essential topics within the reporting period (three calendar years). The report includes all organizational units under the direct control of SUEK. Promoting activity and initiative of local communities: Development of dialogue with stakeholders and cross-sector partnerships to promote sustainable • promotion of social entrepreneurship of various Balance The report contains information on both our achievements, as well as our current socio-economic development in the regions: local community groups; problems, solutions to which we are currently working on. • implementation of agreements on social • implementation of business training programs and economic cooperation with regional for the locals; Comparability The data comparability between reporting periods is provided by our audited financial administrations; statements and the management reports for a number of years. The opportunity • social development of competitive project selection • development of public-private partnership, to compare results with a number of other Russian and international companies mechanisms; including with federal and regional target is made possible by the use of GRI reporting standard elements, including a number • creation of resource centers in the main areas programs; of indicators of the latest version of the GRI sector supplement for the mining and metallurgical industry, as well as the Russian system of non-financial reporting “Basic of cooperation; • cooperation with public and non-profit indicators of the effectiveness of the RSPP”. The report also shows information about • development of competences and resources organizations; the reporting boundaries. in support of business employees of local • involvement of business partners, including government, social infrastructure; financial institutions, in the implementation Accuracy The Report is based on a set of standard reporting elements, in line with • development of innovative and entrepreneurial of social projects; the recommendations of the Basic version of GRI-G4. The descriptive information thinking for children and youth, support for youth reflects specific situations and illustrates the main points of the Report. The Report uses • building cooperation with partner organizations initiatives. the elements of infographics to better illustrate the indicator dynamics. interested in social infrastructure development of the regions. Timely Reporting We usually publish our CSR Reports every two years. The content covers the most significant activities and results of the reporting period, including information relevant at the time of reporting. At the same time, information on priority topics is also published in the Annual Report.

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Appendix 1. Application of GRI reporting principles Appendix 2. Continuation Index of standard disclosures

In accordance with the GRI Guidelines in the version reporting, including a number of indicators of GRI Sector GRI Principle Principle Compliance in Given Report G4, the report focuses primarily on those issues that are Supplement for the mining and metallurgical industries. most significant for the Company and its stakeholders, The index also includes relevant indicators of the Russian Clarity The report is structured in accordance with the basic building blocks of content to simplify and that have been identified in the process of materiality system of performance indicators in the area of sustainable the search process. The report includes the GRI performance index. In the case of using assessment44. In preparing this report we have focused development (“Basic Indicators of Performance”, RSPP specific terms, the definition is cited in the footnotes. The report is published in both on the Basic version of the Guide, which contains the designed for use in corporate social responsibility reports). Russian and English and is available on our corporate website. most important elements in the field of sustainability

Reliability The authenticity of the data published in the report is provided during the information gathering and information consolidation process by using the standard procedures. General disclosure standards The quantitative indicators are consolidated based on our information systems, as well as at special requests during the preparation period of the Report. These requests reflect the requirements of the GRI Guidelines. Any divergence from the GRI Degree of disclosure: protocol is associated with the specifics of the country’s system of state statistics and – complete disclosure of indicator characteristics of corporate management information. In the case of such divergence, – partial disclosure of indicator we specify in the Index of standard reporting components that the corresponding figure is partially disclosed. GRI code and description Pp.of Report / Deg. of No. RSPP Excluded information / External of the Standard Disclosures reference to the disclosure indicator comments audit45 The report has been coordinated with our operational divisions. The quality of information Annual Report has been also verified by the Internal Audit Department. The Report includes audited financial statements. To ensure the reliability of information, we believe it is important Strategy and analysis to use an external audit. The auditor is asked to express an opinion about the quality G4-1. Statement by the General 7–9 of data, materiality of issues covered, as well compliance with GRI-G4 disclosure Director- Chairman of the Board guidelines. G4-2. Key impacts, risks and 7–9, 24–28, 39, opportunities 51–54, 62–64, 74–75, 92–94, 121–122, 124, 141–144 Organization profile

G4-3. Name of organization 10 G4-4. Types of products and 13–14 services G4-5. Headquarters Location Head office of JSC SUEK is located at 53/7 Dubininskaya St., Moscow, Russia, 115054. SUEK PLC is registered in Cyprus G4-6. Countries of the activity 13–14 and location of branches G4-7. Nature of ownership and 28 corporate form G4-8. Markets where the 62–63 organization operates G4-9.Company size 13, 58–59, 76, 143

44 See “About Us” section of this Report.

45 The subject of the certification is to meet the disclosure requirements of the basic version of GRI G4.

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Appendix 2. Index of standard disclosures Continuation

GRI code and description Pp.of Report / Deg. of No. RSPP Excluded information / External GRI code and description Pp.of Report / Deg. of No. RSPP Excluded information / External of the Standard Disclosures reference to the disclosure indicator comments audit of the Standard Disclosures reference to the disclosure indicator comments audit Annual Report Annual Report G4-10. Number of employees 76 3.1.1 G4-23. Significant changes in the 46–49 scope and boundaries of aspects G4-11. Percentage of employees 84 3.1.4 compared to previous reporting covered by collective agreements periods G4-12. Organization’s chain 67–69 G4-24. List of stakeholders 51 of supply. G4-25. Principles for the 51 G4-13. Change of scale, the 30–31 identification and selection of structure of ownership, or the stakeholders organization’s supply chain G4-26. Organization's approach 51–55, 74–75, 96–97, G4-14. Precautionary principle 122, 126 to stakeholder engagement 123, 143 application G4-27. Key topics and concerns 51–55, 46–50, 65–67, G4-15. Economic, environmental 38 that have been raised by 77, 150, 194–197 and social principles and stakeholders other initiatives to which the organization subscribes General information about the report or endorses G4-28. Reporting year 2014–2015 G4-16. Membership 66 in associations G4-29. Date of publication August 5, 2014 of the previous sustainable Identified significant aspects and limits development report G4-17. Legal entities, reporting See Annual reports G4-30. Reporting cycle 3–4, 45 of which was included in the SUEK PLC for 2014 G4-31. Contact person for 171 Also see section “About the consolidated financial statements and 2015. Reports are questions regarding the report report” SUEK Corporate Social located at http://www. Responsibility Report for suek.com/en/investors/ 2011–2013, reporting/#fs_15. The 2014 Report G4-32. Content Index GRI 169–189 Aleksey Anatolyevich is on p. 124, the 2015 Naumenko Deputy Director for Report is on p. 102. Contacts and Communications. [email protected] G4-18. Method for determining 43–45 Yuliya Aleksandrovna Kulikova the content of the Report Head of Dept. of Labor and limits of aspects Relations and Social Issues G4-19. All significant aspects 46–49 [email protected] G4-20. Aspects essential within 46–49 G4-33. Policy and practice of 45 the organization the organization in relation to providing external assurance G4-21. Aspects essential outside 46–49 report of the organization G4-22. The results of all The report contains restatements listed in earlier no restatements of information reports, and explanations. provided in earlier reports.

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Appendix 2. Index of standard disclosures Continuation

GRI code and description Pp.of Report / Deg. of No. RSPP Excluded information / External GRI code and description Pp.of Report / Deg. of No. RSPP Excluded information / External of the Standard Disclosures reference to the disclosure indicator comments audit of the Standard Disclosures reference to the disclosure indicator comments audit Annual Report Annual Report Corporate management G4-43. Measures taken to 27, 30–31 develop and raise awareness G4-34. Corporate management 29–30 of members of the highest structure body of corporate governance G4-35. Delegation of authority 35–36, 94, 117, 138 with respect to economic, to address economic, environmental and social environmental and social problems problems from the highest G4-44. Evaluation of the 31 authority to other employees. activities of highest body of G4-36. Manager/managers who 35–36, 76, 99, 124, governance are responsible for the solution 146 G4-45. Role of the supreme 33, 38 of economic, environmental and body of corporate governance social problems. to identify the impacts, risks and G4-37. Procedures for 32 opportunities and manage consultations on economic, G4-46. Role of the supreme 34, 39 environmental and social body of corporate governance problems among stakeholders in analyzing the effectiveness and the highest body of of the organization use risk corporate governance management techniques G4-38. Composition of the 31–32, 35 G4-47. The analysis frequency 39, 37, 95 highest corporate body and of the economic, environmental its committees and social impacts, risks and G4-39. Is corporate governance No. opportunities of the highest body higher authority also the of corporate governance Executive Director? G4-48. Position of the person The report is approved by G4-40. Procedure for nomination 31. Also see SUEK who formally reviewed and the Audit Committee of the and selection of candidates PLC Annual Report approved the report of the SUEK PLC Board of Directors. for members of the highest for 2015, “Corporate organization and provided Chairman of the Committee - Ian governance body and its Management” section coverage of all essential aspects McDonald. committees. at http://www.suek. G4-49. The corporate 99, Also see SUEK com/files/pdf/en/ G4-41. Procedures of the governance procedures for PLC Annual Report SUEK_Annual_ highest governance body for informing the supreme body on for 2015, “Corporate Report_2015_eng.pdf conflict of interest prevention the critical issues Management” section and management at http://www.suek. com/files/pdf/en/ G4-42. Role of the supreme 31 SUEK_Annual_ body of corporate governance Report_2015_eng.pdf and executive senior executives in the development, approval and updating of goals, values, mission, policies and objectives of the organization

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Appendix 2. Index of standard disclosures Continuation

GRI code and description Pp.of Report / Deg. of No. RSPP Excluded information / External Significant aspects of the Standard Disclosures reference to the disclosure indicator comments audit Annual Report Degree of disclosure: G4-50. The nature and 99, Also see SUEK – complete disclosure of indicator the total number of critical PLC Annual Report issues that have been for 2015, “Corporate – partial disclosure of indicator brought to the attention Management” section of higher authority corporate at http://www.suek. Data on Management earnings Pp.of Report / Deg. of No. RSPP Excluded information / External 46 governance mechanisms for the com/files/pdf/en/ (DME) and indicators reference to the disclosure indicator comments audit consideration and resolution SUEK_Annual_ Annual Report Report_2015_eng.pdf “Economic” Category

G4-51. Terms of remuneration 35, 79 Also see SUEK Economic performance of corporate governance and PLC Annual Reports executive heads of the for 2014 and 2015 G4-DME. Data on Management 11, 16–17, 53–55 highest-ranking members at http://www.suek. earnings of the supreme body com/en/investors/ reporting/#fs_15 G4-EC1. Created and distributed 59, 79, 141 1.2 For information about SUEK G4-52. The procedure for (2014 Report on direct economic value 1.3 capital see 2014 and 2015 determining the remuneration p. 102, 2015 Report 1.4 Annual Reports of members of the highest body on p. 83) 1.6 at http://www.suek.com/en/ of corporate governance and 1.7 investors/reporting/ executive senior executives. #fs_15, Financial Reporting G4-54. The ratio of the total annual remuneration of the most highly paid official to the average G4-EC2. Financial implications 132–133 annual remuneration of all and other risks and opportunities employees. for the organization's activities related climate change Ethics and integrity G4-EC3. Coverage of the 79, 83 1.8 In accordance with Russian G4-56. Values, principles, 12–13, 28, 37 organization related to retirement legislation, the Company standards and rules of conduct, benefit plans with set benefits fulfills its obligations codes of conduct/codes of ethics through contributions to the Pension Fund. G4-57. Internal and external 36, 83–84 appeal mechanisms for G4-EC4. Financial aid received During the reporting period, consultation on ethical and from the government the Company did not receive law-abiding behavior, as well financial assistance from as matters relating to unfair the state. treatment, confidential line Market presence G4-58. Internal and external 38, 89–91 mechanisms for reporting G4-DME. Data on Management 7–8, 143–145 unethical or illegal conduct/ earnings misconduct G4-EC5. The ratio of standard 79 entry level wage employees of different genders to set minimum wage at significant locations of operation G4-EC6. The proportion of senior 82 executives in significant locations of operation, hired from among the representatives of the local population.

46 The subject of the audit is compliance of information disclosure with the requirements of the Basic version of GRI-G4.

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Appendix 2. Index of standard disclosures Continuation

Data on Management earnings Pp.of Report / Deg. of No. RSPP Excluded information / External Data on Management earnings Pp.of Report / Deg. of No. RSPP Excluded information / External (DME) and indicators reference to the disclosure indicator comments audit (DME) and indicators reference to the disclosure indicator comments audit Annual Report Annual Report Indirect economic impact Biodiversity

G4-DME. Data on Management 7–8, 143–145 G4-DME. Data on Management 122–124 earnings earnings G4-EC7. Development and 141, 143–145, G4-EN11. The production sites There are no production assets impact of infrastructure 151–162 owned, leased, or managed at or on adjacent areas that are investments and gratuitous and located in protected areas especially protected, natural services and areas of high biodiversity territories of federal and regional value outside the boundaries value. G4-EC8. Significant indirect 18–19, 82, 141, of protected areas, or adjacent economic impacts, including area 143–145 to such areas. No rare, endangered species of of impact animals, plants and fungi have G4-EN12. Description of been identified. “Environmental” Category significant impact of activities, However, while planning Energy products, and services on biodiversity in protected areas economic activity, SUEK carefully evaluates potential G4-DME. Data on Management 114–116, 128 of high biodiversity value outside environmental risks and seeks earnings the boundaries of protected natural areas. to avoid serious or irreversible G4-EN3 Energy consumption 130–131 2.2 environmental damage. within the organization G4-EN13. Habitats protected 127–128 G4-EN4. Energy consumption No accounting, in the absence or restored outside the organization of legal requirements G4-EN14. The total number On the site of production assets, G4-EN5. Energy intensity 130–131 2.2.1 of species listed in the IUCN Red as well as adjacent areas, rare, List and national conservation endangered species of animals, G4-EN6. Reduction of energy 129–131 list species with habitats in the plants and fungi have not been consumption territory, in areas affected by identified. G4-EN7. Reduction of demand Not applicable to Company operations, by level of threat for energy products or services products to species survival. Water G4-MM1. The area of land, 127 owned or leased, used for G4-DME. Data on Management 122–123, 132 production activities, damaged7 earnings and recultivated. G4-EN8. Total water withdrawal 129–130 2.3 G4-MM2. The number and 127 by sources percentage of sites requiring G4-EN9. Water sources The Company’s water intake biodiversity management plans significantly affected by has no significant impact on according to the mentioned withdrawal of water water sources. The Company criteria, and the amount (share) does not intake from sources of the sites on which these plans believed to be vulnerable, already exist. protected by the state, or especially valuable for local communities and biodiversity. G4-EN10. Ratio and total volume 129–130 2.4 of recycled and reused water

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Appendix 2. Index of standard disclosures Continuation

Data on Management earnings Pp.of Report / Deg. of No. RSPP Excluded information / External Data on Management earnings Pp.of Report / Deg. of No. RSPP Excluded information / External (DME) and indicators reference to the disclosure indicator comments audit (DME) and indicators reference to the disclosure indicator comments audit Annual Report Annual Report Emissions Transport

G4-DME. Data on Management 122–124, 132 G4-DME. Data on Management 122–124 earnings earnings G4-EN15. Direct greenhouse gas 131–321 General information emissions (Coverage area 1) G4-DME. Data on Management 122–124 G4-EN19. Reducing greenhouse 131–134 earnings gas emissions G4-EN31 Total expenditures 126 G4-EN20 Emissions 122–124 and investments in of ozone-depleting substances environmental protection by type (ODS) Mechanisms for complaints on environmental issues G4-EN21. Emissions of NOx, 122–124 SOx and other significant air G4-EN34. The number of During the reporting period, emissions complaints on environmental no complaints have been violations submitted, processed registered. G4-EN22. Total emissions 130 2.7 and resolved through formal by quality of sewage and 2.7.2 mechanisms of their submission destination “Social” category Waste Labor practices and decent work G4-DME. Data on Management 122–124 Employment earnings G4-DME. Data on Management 74–75 G4-EN23. Total weight of waste 134–135 2.8 earnings by type and treatment methods G4-LA1. The total number 3.1.2 The number of new hires in G4-EN25. Weight of transported, 138–135 The Company does not and percentage of newly hired 3.1.3 2014 was 9,021, in 2015 8,654. imported, exported or treated transport, import, export employees, and employee waste deemed hazardous under or process waste that is turnover by age group, gender Appendices I, II, III and VIII of the hazardous in accordance with and region. Basel Convention as well as the Appendices I, II, III and VIII percentage of international waste to the Basel Convention. G4-LA2. Benefits provided to 79–80 SUEK offers a unified benefits shipment. employees working full-time, that package for employees are not available to employees, of all mining enterprises. G4-EN26. Affiliation, size, The Company has no significant working temporarily or part- protected status, and the value effect on bodies of water time; employees by significant in terms of biodiversity of water and related habitats. locations of the organization. bodies and related habitats, on which the discharges of G4-LA4. Minimum notice period The company follows the the organization and runoff about significant operational Labor Code, which defines from its territory can have changes, including whether the minimum notice period a significant impact. it is specified in the collective regarding significant changes agreements. in the activities of the Compliance with the requirements organization (no later than two G4-DME. Data on Management 122–124 months before the start of the earnings relevant activities, and in the case of a decision to reduce G4-EN29. Monetary value 126 2.10 the number of workers or of significant fines and total staff that may lead to mass number of non-monetary layoffs - no later than three sanctions for noncompliance months before the start of the with environmental laws and relevant activities). regulations.

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Appendix 2. Index of standard disclosures Continuation

Data on Management earnings Pp.of Report / Deg. of No. RSPP Excluded information / External Data on Management earnings Pp.of Report / Deg. of No. RSPP Excluded information / External (DME) and indicators reference to the disclosure indicator comments audit (DME) and indicators reference to the disclosure indicator comments audit Annual Report Annual Report Health and Safety in the workplace G4-LA11. Percentage of 87 Estimates of performance are employees for whom periodic made for a number of categories G4-DME. Data on Management 74–75, 98 assessments are carried out of SUEK management positions, earnings for performance and career at the corporate center JSC G4-LA5. Percentage of total 98 development by gender and SUEK and mining enterprises workforce represented in formal employee categories (In 2015, 410 employees were joint committees on health and assessed). Employees who are safety with the participation of part of the Company personnel representatives of management reserve undergo assessment of and employees involved in career development monitoring and advising on Diversity and equal opportunities workplace health and safety programs G4-DME. Data on Management 75 earnings G4-LA6. Types and levels of 110–112 3.1.5 industrial injuries, occupational 3.1.6 G4-LA12. Composition of the 76 diseases, lost days, and absence 3.1.7 governing bodies and the in the workplace, as well as the 3.1.8 main categories of personnel, total number of deaths related to by gender, age, belonging work, by region and gender to minority groups and other characteristics of diversity G4-LA7. Workers with high Due to the specifics of the injury rate and high risk of industry, the Company Equal pay for women and men morbidity associated with type of has employees engaged occupation in professional activities that G4-DME. Data on Management 38, 75–76 carry a high risk of injury earnings or high incidence of certain G4-LA13. Ratio of basic salary 79 The Company has set the same diseases (workers employed of men to women by category base salary for men and women in underground mining of workers and at significant operations, which account locations of activities for 19%) “Social” category G4-LA8 Health and safety topics 83 Human rtghts covered in formal agreements with trade unions Freedom of association and collective bargaining Training and education G4-DME. Data on Management 38 earnings G4-DME. Data on Management 74–75, 84 earnings G4-HR4. Identified units in 3.2.1 Have not been revealed during which and suppliers who have reporting period G4-LA9. Average annual number 85 3.1.10 the right to exercise freedom of training hours per employee, of association and collective broken down by gender and staff bargaining may be violated or category be exposed to significant risks, G4-LA10 Programs for 86–88 and actions taken to support skills management and these rights lifelong learning that support employability of employees and assist them in managing career endings

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Appendix 2. Index of standard disclosures Continuation

Data on Management earnings Pp.of Report / Deg. of No. RSPP Excluded information / External Data on Management earnings Pp.of Report / Deg. of No. RSPP Excluded information / External (DME) and indicators reference to the disclosure indicator comments audit (DME) and indicators reference to the disclosure indicator comments audit Annual Report Annual Report Rights of Indigenous Peoples Anti-corruption

G4-DME. Data on Management 38 G4-SO3. Total number and SUEK has a corporate risk earnings percentage of units for which risk management system that covers assessment has been carried all divisions and businesses of G4-HR8. Total number of 3.2.3 Incidents of violations involving out, related to corruption, and the Company. Risk assessment incidents of violations involving rights of indigenous peoples, identified as significant risks is carried out on a regular basis. rights of indigenous people and have not been identified actions taken G4-SO4. Information about 38 policies and methods of G4-MM5. Total number of SUEK does not conduct combating corruption and transactions in indigenous activities on the territories training on policies peoples' territories and related of minority or indigenous people territories, the number and Product liability percentage of operations or sites where there are formal G4-PR7. Total number of Non-compliance has not been agreements with indigenous non-compliance incidents identified in the reporting period. communities with regulations and voluntary codes concerning marketing “Social” category communications, including Society advertising, promotion and Local Communities sponsorship Industry topics (aspects) G4-DME. Data on Management 142–144 earnings Emergency readiness G4-SO1. Percentage of units 143 3.3.3 Programs on interacting G4-DME. Data on Management 122–123 with completed programs with local communities are earnings of cooperation with local implemented at all Company's communities, programs to key enterprises. G4-MM3. Total amount of 64, 128 assess the impact of activities overburden, rock, tailings, and on local communities and sludges and risks associated programs of community Plans to halt activities development G4-MM6. Number and SUEK does not conduct G4-DME. Data on Management 74–75 description of significant disputes activities on the territories of earnings concerning land and indigenous minority or indigenous people G4-MM10. Operations for which 78 rights and Indigenous Peoples, plans to halt the activities have based on custom been developed G4-MM7. Extent to which SUEK does not conduct grievance mechanisms were activities on the territories of used to resolve disputes minority or indigenous people regarding the land rights of indigenous and minority people, based on custom, and with what results

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Appendix 4. Dialogues with stakeholders in 2014–2015: Appendix 3. Structure of the company topics and results

Note: The structure of the Company is represented by enterprises of which SUEK is not a shareholder, as well enterprises, of which the Company’s share is less than 50%. Data on the above mentioned companies were not Examples of dialogues with stakeholders in 2014–2015 included in the Report parameters. The parameter of the Report included the companies, the share of SUEK in which is 50% or more. Format Participants Topics Results

2014 Coal mining Manage-ment and other Round table discussion SUEK work experience in regions, Approval of the training and enrich-ment Service functions “The older generation: solutions to actual problems program launch for the challenges and of the region. Sharypovo older generation. JSC SUEK-Kuzbass LLC Nazarovo Mining and SUEK PLC opportunities”. Creating a plan for further JSC Razrez Berezovskiy Installation and Commissioning JSC Siberian Coal Energy Sharypovo Management development of social projects JSC SUEK-Krasnoyarsk Company with the participation of older LLC Borodino Repair and LLC Greenfin people in the region. JSC Primorsk-ugol Engineering Works LLC Siberian Research Institute JSC Razrez Tugnuiskiy JSC Management of Prevention and of Coal Enrichment Round table discussion Federal and regional Creation of a unified center for Modernization models for JSC Razrez Nazarovskiy Recultivation LLC Krasnoyarskaya “Current approaches authorities, business development of single-industry single-industry towns, new JSC Shakhto-upravleniye JSC Montenegrin Mechanical to the problems community, media towns and the need to form teams techniques and programs LLC SUEK-Finance Vostochnoe Repair Plant of development and representatives, Members to manage single-industry town for single-industry area LLC IFL Ugolshchik LLC SUEK-Khakasia LLC Chernovskiye TSEMM modernization of the Working Group on modernization projects. development were proposed JSC Agro-industrial company of single-industry the modernization of single- and reviewed. Pravoberezhnoe LLC LLC Sib-Damel towns”. Kemerovo industry towns under the Siberia JSC Razrez Izykhskiy Ltd. Central Coal Laboratories Government Commission LLC Sayantransservis on Economic Development JSC Urgalugol UAB Sibgenco Specialus Materialai Westline Private Trust and Integration (on-line). LLC Tugnui Enrichment Plant Company Limited JSC Razrez Kharanorskiy Coal sales Round table discussion Representatives of regions, Issues on the presence of com- SUEK proposal was reviewed LLC Chitaugol “Prospects for the banking structures, federal panies in single-industry towns, at the meeting of the Working SUEK AG LLC Vostochno-Beyskiy razrez development of Russian ministries and agencies, interaction with LM, raising invest- Group on single-industry town LLC Trading Company SUEK single-industry towns” Federations of Russian ments in the town, promoting local modernization. JSC Kabaktinskoe Moscow, Russian Public Independent Trade Unions, entrepreneurship, role of social LLC SUEK Polska LLC Chita Coal Company Chamber Chairman of the Commission activity of companies in single-in- LLC Ivanovo-SUEK on the development of the dustry town development. Awards LLC Arcticheskie razrabotki LLC Altai-SUEK real sector of the economy, for winners of Competition for Best LLC Chitaugol of the Russian Public Project “SUEK Labor Teams.” Ltd. GlavEnergo-Sbyt LLC Primorskugol Chamber, experts and media Awards to winners of Media Com- LLC Khabarovsk-SUEK representatives. petition “With the Prefix ‘Single’: Experience of Interaction between JSC Kuzbass Energy Retail Business and Authorities”. Coal transporT Company ОLLC Tugnuisky Loading and LLC Lestoprom Transport Management Interregional conference Administration of the Summing up work results Presen- SUEK-TO THE REGIONS” LLC PT SUEK Indonesia “Investment in human SUEK-TO THE REGIONS Fund, tation of the results of the “School Fund projects have received JSC Industrial Transport Madake Enterprises Company capital – the path of representatives of federal and of Social Entrepreneurship”, a positive evaluation by the JSC Daltransugol Limited development of single- regional governments, local “Youth Entrepreneurship”, “School participants. The Positive industry territories administration, representatives of Innovative Thinking”. Award impact on the increase The Joint Production and Transport PT Birutani Jaya Semesta of Siberia and the Far of regional SUEK units, expert presentation for winners of “My of the human capital and social Management of Kuzbass Ltd. SUEK Korea Ltd. East.” Moscow community, public organizations, First Business”, “Golden Person- development areas was noted. PJSC Murmanskiy Morskoi SUEK Japan Corporation representatives of local regional nel Reserve”, as well as school Torgoviy Port47 communities of SUEK presence. “Enterprise Marathons.” territories of SUEK presence – LLC Stividornaya kompaniya active participants in company Maly port47 social projects, students and 47 SUEK has less than 50% stake in these schoolchildren. SUEK Logistic Ltd. (Switzerland) companies.

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Appendix 4. Dialogues with stakeholders in 2014–2015: topics and results Continuation

Format Participants Topics Results Format Participants Topics Results

2015 Round table discussion Representatives of ministries, Discussion of single-industry towns’ Discussion of proposals “New mechanisms Fund of assistance to reform support prospects in the current to further support to support small housing and utility services, economic situation, exchange of single-industry towns. Roundtable discussion: Representatives of the Relevancy of the dual educational Discussion of models for dual and medium-sized Single-industry Towns experience in the implementation “The new model for Moscow Institute of Education system in forming the industry’s education in regions of SUEK businesses, and Development Foundation, of support programs the organization of Development, Kuzbass personnel reserve Creation presence. especially financing representatives of public vocational education: State Technical University, of an integrated educational utilities modernization and expert organizations, dual system of Kemerovo Institute of Teacher environment. Development of proposals projects in Russian administrations of a number education” Kemerovo Training, SUEK-Kuzbass. for further work in this area. Dual training of workers and single-industry of Russian regions, SUEK engineers. towns”, Public representatives. Chamber of the Russian Federation, Moscow Round table discussion Members of the Working Federal instruments of single- A discussion was held on the “Development of Group on modernization, industry town support; promoting practical experience of single- Russian single- representatives of federal, their investment activity. industry town modernization, Round table Representatives of Khabarovsk Exchange of experience in solving As a result of the meeting industry towns and regional and municipal the most effective means discussion “Social Regional Government, NPOs, social problems of Siberian and it was deemed necessary: new opportunities for authorities. Activity of the Single-Industry of resolving problems of entrepreneurship as an business, small- and medium- Far East territories, including • Actively develop social attracting investment Town Development Foundation single-industry villages, effective mechanism for sized business support through the development of social entrepreneurship at the into the regional “Cases” on single-industry town systems of measures taken in solving regional social structures, experts from entrepreneurship municipal level; economy”. Kemerovo modernization. Kemerovo Region for socio- problems”, Khabarovsk “SUEK-TO THE REGIONS” economic development and Fund, social entrepreneurs and • Create methodological basis diversification of single-industry representatives of municipal for the dynamic development town economies. territories of SUEK presence. of social entrepreneurship; • consolidate resources for Round table Representatives of the Exchange of experience in Preparation of proposals the development of social discussion “Social Murmansk administration, solving single-industry town social to expand government support entrepreneurship, entrepreneurship as an Murmansk region Public problems through the development measures in the region, and • develop public-private effective mechanism for Chamber, Committee for of social entrepreneurship development of training of partnership in this area, solving regional social cooperation with public social services providers, problems”. Murmansk organizations and youth affairs presenting issues of social • stimulate an increase in of the Murmansk Region, entrepreneurship for the further the number of non-profit representatives of the agenda of the Murmansk organizations that implement SUEK-TO THE REGIONS Public Chamber social entrepreneurial Fund projects.

Interregional conference SUEK representatives, regional Summing up the implementation The presentation of work results “Entrepreneurship as authorities and local government of SUEK-TO THE REGIONS by regional teams of teachers a factor in successful representatives, public Fund social projects in 2015, and schoolchildren of Primorye, development: the organizations, representative, the announcement of competition Khabarovsk and Krasnoyarsk experience of Russian local community member results of competitions held by the Regions, Republic of Buryatia, regions”. Moscow in regions of SUEK presence. Fund as part of the implementation Khakassia and Kemerovo region of social projects. based on the results of the “Enterprise Marathons”. Evaluation of marathon participants and the “Youth Entrepreneurship” projects as a practical educational tool for development of children and youth entrepreneurship and innovative thinking.

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Appendix 5. Information about company awards

During the reporting period, SUEK’s activities in the field of sustainable development have been marked by a number of awards. We are grateful for the appreciation of our work, and we believe that these achievements confirm the effectiveness Title of Award, Competition Organizer, comments of the Company’s strategy in this area. Below is the information about some of the awards that the company received Winner of the “Partner of Russian Railways” competition in the “Best Enterprise – JSC Russian Railways in 2014–2015. Owner of Non-public Railway Tracks” nomination.

The winner of the “Impulse of Good” award in the “Best Corporate Program for “Our Future” Fund, nomination established Title of Award, Competition Organizer, comments the Development of Social Entrepreneurship” nomination for the creation and by the Russian Union of Industrialists and implementation of the “School of Social Entrepreneurship” project. Entrepreneurs SUEK Awards The winner of the “Art Workshop” category in the I All-Russian competition for the best Russian Ministry of Education and Science practices of employers to work with children, youth and human resource pool “Creating 2015 the Future” for the organization of the SUEK’s Little Stars festival.

The winner of the All-Russian competition RSPP “Leaders of Russian Business: Russian Union of Industrialists and Winner of the All-Russian competition of student and corporate communication Youth Business Community – Managers Dynamics and Responsibility – 2014” in the nomination “Contribution to the Solution Entrepreneurs projects “Eventiada 2014” in “The Best Project for young people” nomination. Association, Moscow State University of Regional Social Problems” Philosophy Department, Elefante agency

Winner of Second All-Russian competition for the best practices of employers Russian Ministry of Education and Science Corporate newspaper SUEK – the winner of the award “Golden Miner-2014” in the Mining Forum “Miner’s Day – Gold Miner” in human resource development “Creating the Future” in the “Social Partners” nomination “Best Corporate Mining Newspaper” category (for the SUEK Labor Teams), and the “Startup” category (for the Youth Entrepreneurship project). Awards of SUEK subsidiaries

Winner of the All-Russian competition of student and corporate communication Youth Business Community – Managers projects “Eventiada-2015” in nomination “Best Project for Young People” Association, Moscow State University 2015 Philosophy Department; Elefante agency Gold medal at the Inter-regional competition for the best goods and services Federal and local authorities Winner of award for small and medium business support “Basis for Growth” Russian Ministry of Economic of Siberia – GEMMA-2015. Awarded to SUEK-Kuzbass for the quality of medical in the “Regional Program of the Year” category. Development and Russian Union of services provided by the medical facility of the enterprise Industrialists and Entrepreneurs Berezovsky quarry, SUEK-Krasnoyarsk, Nazarovo Mining and Installation and Krasnoyarsk Region Administration Participant of the company ranking competition “Leaders of Corporate Nonprofit partnership of grant-providing Commissioning Management – winners of the Krasnoyarsk Region contest on the Philanthropy – 2015” (18th place out of 65). organizations "Donor’s Forum", Vedomosti best organization of labor in the group mining safety group, “Mining Minerals, and newspaper, PwC consulting firm Processing Plants”.

Winner of the “Environmental Responsibility Mark”. SUEK has received the award for Community environmental organizations, Borodino Repair and Engineering Works, Shchadov Borodino Quarry and Nazarovo Krasnoyarsk Regional Council, Regional “Practical implementation of the principles of environmental responsibility in the mining experts and Russia’s NPOs Mining and Installation and Commissioning Management – winners of Krasnoyarsk Trade Unions Federation, Krasnoyarsk industry”. Region review-competition for “High Social Efficiency and Development of Social Region Producers and Entrepreneurs Partnership” in the “Coal Industry” nomination Union Winner “Time for Innovation” award in the “Social Innovation of the Year”. Independent Award with support by Russia’s Ministry of Economy and the 2014 Russian Venture Company Nazarovo Mining and Installation and Commissioning Management and Nazarovsky Krasnoyarsk Regional Council, Regional SUEK’s Little Stars project is included in the National program catalog “Best Social Program made possible by the city of quarry – became winners of review-competition of Krasnoyarsk Region for “ High Trade Unions Federation, Krasnoyarsk Projects of Russia”. Moscow Government, WWF, Strategic Social efficiency and Development of Social Partnership” in the “Coal Industry” Region Producers and Entrepreneurs Initiatives Agency and others nomination, based on the results of 2013. Union

2014 Berezovsky Quarry, SUEK-Krasnoyarsk, Nazarovo Mining and Installation and Krasnoyarsk Region Administration Commissioning Management – winners of the competition of the Krasnoyarsk Region The winner of the All-Russian competition RSPP “Best Russian Enterprises. Dynamics, Russian Union of Industrialists and for the best organization of labor safety (second, third, fourth place) based on the Efficiency, Responsibility” in the main nomination for “High Social Responsibility of Entrepreneurs results of 2013. Business”. Murmansk sea trading port – winner of the Best Stevedoring Company of the Association of Sea Commercial Ports The winner of “The leaders of Corporate Philanthropy – 2014” competition in the Nonprofit partnership of grant-providing Association of Commercial Sea Ports of 2013 competition. “Information transparency” and “Effectiveness of charitable program management” organizations “Donor’s Forum”, Vedomosti categories. The company ranked second in the sub-ranking “Leaders in Corporate newspaper, PwC consulting firm Philanthropy of the industrial sector”. In the general ranking of Russian companies, SUEK placed 4th ( 59 companies participated in the ranking). SUEK social programs were included in the collection of the best projects of “Company’s Practice in Philanthropy and Social Investment” of the Donor’s Forum and the Library of RSPP corporate practices and “Business for the Regions” Collection.

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Appendix 6. Independent assurance of non-financial reporting

To Siberian Coal and Energy Company and its stakeholders. Methodology and volume of assurance works performed • Verification of compliance of information, published official websites of administrations of regions of Company’s in the corporate website and other Internet resources presence (http://абакан.рф/, http://www.kemerovo.ru/, http:// Introduction The following methodological provisions and procedures were of the Company, with AA1000SES (2011) standard www.krskstate.ru/, https://khabkrai.ru/). used when preparing the assurance: and GRI recommendations. This auditors’ assurance relates to “Creating the Value” – Works to complete the Report were started before the full • Interviews with management representatives and Company’s • Evaluation of Report’s availability to all stakeholders and a corporate social report of SUEK Group for 2014–2015 version of the Report was officially published in Company’s employees in order to find out how the Company takes into efficiency of established feedback mechanism. (hereinafter referred to as the “Report”). The Report was corporate website. account key aspects of corporate social responsibility when prepared by SUEK Group (hereinafter referred to as the forming long-term business development strategy, and how Adequacy of a number of assertions, statements and data “Company”) which is responsible for collecting, systematizing Assurance limitation these aspects are integrated into Company’s system of presented in the Report was verified using procedures and and presenting all information in the Report. Bureau Veritas business processes. guidelines of Bureau Veritas Certification Rus concerning social Certification Rus is liable for results of Report certification only • The assurance does not consider performance indicators reporting, and included: to the Company and does not undertake liability to any party for • Verification of achievement of targets for 2014–2015 in the outside the current reporting cycle of 2014–2015. decisions taken, put off or withdrawn based on this certification. field of corporate social responsibility set by the Company • assurer’s visit to head office of SUEK in May 2016, interview in previous periods’ reports. with Deputy CEO – Director on HR and Administration, • The assurance does not consider financial indicators verified Certification scope managers and specialists of HSE Department, Deputy by other independent auditing organizations. • Verification of internal regulations (corporate procedures, Director on Relations and Communication on Report standards, guidelines, etc.) and data arrays (with traceability Report certification was completed on the basis of formalized preparation procedure and material economic, social and • The assurance does not cover opinions, suggestions, wishes to initial sources of information) describing results of methodology of AA1000 Assurance Standard (AS) 2008 environmental aspects and indicators included in the Report. or intentions of the Company to take any actions in the future. and audit of non-financial reporting of International Standard Company’s responsible business practice in the field of on Assurance Engagements ISAE 3000. corporate social responsibility. • assurer’s visit to industrial and social infrastructure facilities of Grounds influenced formation of our opinion SUEK-Khakassia in May 2016 which is a part of the Company • Evaluation of efficiency of Company’s approaches and situated in Chernogorsk, Republic of Khakassia. The following tasks were set and performed when working to management of economic, environmental and Report completion was based on analysis of initial and Meeting with Deputy General Director – Technical Director on the Report: social aspects. aggregated information on corporate social responsibility of the Company, with Deputy General Director on Human provided by Company’s management and structural units, 1. To evaluate degree of introduction by the Company • Verification of processes of Company’s interaction with Resources, with managers and specialists of HSE Service. and on other data from available sources using methods of of Global Reporting Initiative (GRI) Sustainability stakeholders in the reporting period in order to evaluate criteria Visit to production units (Chernogorsky Openpit, Chernogorsk analytical confirmation. The assurance considers industrial Reporting Guidelines, G4 version, “Core” option in relation and procedures of selecting material economic, social and Repair and Mechanics Plant, Chernogorsk Washing Plant, features of Company’s activities. Conducted at “moderate” to principles of determining content and ensuring quality environmental aspects to be included in the Report. Studying city of Chernogorsk), observation of production processes, level, spot verification of Report information ensures a lower of the Report. documents on Company’s interaction with stakeholders inspection of utilities premises and food supply unit, level of assurance guarantees than the full verification of all conversation with production personnel at workplaces. Visit 2. To conduct spot evaluation of compliance of disclosure (informational materials, proposals and recommendations, information (“highest” level). As to quantitative indicators to enterprise’s training center. Meeting with Deputy Head of completeness and indicators reliability with GRI amendments and supplements made to the Report based on included in the Report, the work conducted cannot be Chernogorsk Administration for Economics and Forecasting, requirements. interaction results). considered comprehensive to discover all possible inaccurate conversation on Company’s participation in social programs • Studying results of internal and external audits of Company’s information. At the same time, the data collected by the assurer 3. To evaluate compliance of interaction with stakeholders of the region of presence. Visit to sports complex Neptune, certified management systems. during its work are representative to form our conclusions during Report preparation with requirements of AA1000 meeting with head coach of the Republic of Khakassia’s with taken “moderate” level of assurance in relation to degree Stakeholder Engagement of Standard (SES) 2011 • Consideration of interim version of the Report in order judo team and discussion of SUEK-Khakassia’s support of Company’s implementation of principles of determining of the Institute of Social and Ethical Accountability. to discover possible inaccuracies, contradictions of republican youth sporting movement. Visit to Khakassia content and ensuring quality of the Report and quality National Puppet Theatre Skazka, meeting with artistic director 4. To give recommendations on further improvement and groundless assertions. of disclosing sustainability efficiency indicators in accordance of the theatre and conversation on SUEK-Khakassia’s of Company’s public reporting. • Analysis of sample of information from mass media and with AA1000AS (2008) standard and recommendations of the participation in regional cultural programs. Internet resources which include references to Company’s Global Reporting Initiative. Type and level of the assurance activities in the field of assurance, and published statements When preparing the assurance, in addition to information from Compliance of the Report with principles of third parties which characterize Company’s commitment the Report, the assurer considered the information published Report assurance was based on the following provisions of GRI G4 Sustainability Reporting Guidelines in relation to the values in the field of corporate social responsibility as in Company’s corporate website at http://www.suek.ru/, websites of AA1000AS (2008) standard: to determining content and ensuring quality of the Report evidential basis to verify validity of statements in the Report. of its regional representative offices http://www.suek-Khakassia. • the assurance type is 2 (Type 2 – Accountability Principles • Information requests to the Company to clarify certain ru/company/about/, http://suek-krasnoyarsk.ru/, http://chitaugol. Interaction with stakeholders and Performance Information) which provides for evaluation provisions of the Report. ru/audit.html, materials from various publications at federal, of degree of reporting principles compliance together regional and local levels (newspapers Arguments and Facts, • The information presented in the Report and direct and with evaluation of reliability of performance indicators • Spot evaluation and recalculation of certain indicators Moscow Komsomolets, Rossiyskaya Gazeta), corporate disclosing identified material aspects in order to confirm indirect evidences received by us allow to make a conclusion (data, assertions) included in the Report; newspaper of SUEK OJSC, republican and city newspapers that, when preparing information to be included in the Report, sources, reliability and completeness of reporting information. (Khakassia, Chernogorsk Worker, Abakan), territorial television • the assurance level is “moderate.” we did considered interests of key stakeholders. of Khakassia ARSTRBC (Khakassia News), information from

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Appendix 6. Independent assurance of non-financial reporting Continuation

• The Company has identified 8 key groups of stakeholders Materiality Comparability about any facts which may materially influence accuracy of data and determined optimal methods of systematic interaction and indicators included in the Report. with them. The Company actively engages stakeholders • The Company continues to support the process of The data and indicators included in the Report are prepared in the process of development and introduction of criteria determining material aspects of sustainability which directly using universal GRI methodology. Important changes (limits Evaluation of compliance of disclosure completeness and to determine relevance and importance of material issues. relate to its activities, manufactured products and territories of aspects, scope) are specified. Report structure is continuous. indicators reliability with GRI requirements. It ensures comprehensive, consistent and coordinated of presence. In the reporting period, this process was This allows stakeholders to evaluate efficiency of the • The Report contains information about standard elements approach to consideration of all significant aspects and further developed by considering existing macroeconomic Company’s activities in the field of sustainability compared of reporting (general and specific), including the information problems discovered during interaction with stakeholders, situation and long-term environmental and social factors. to various reporting periods and compared to corresponding about management approaches and GRI performance and to determination of methods of their resolution. Results of the process are introduced into business indicators of domestic and foreign coal mining companies. indicators in accordance with taken “Core” option of Report activities of the Company. preparation. • Selection of priority topics, responding to which the Company Accuracy considers reasonable on the basis of interaction with • The Report is a balanced and justified presentation of • The Company has determined 26 performance indicators stakeholders, is justified. information on economic, social and environmental aspects of The Report contains the information which was calculated or connected with material aspects. Performance indicators were the Company’s activities material for stakeholders. is a subject of continuous monitoring. The methods used by disclosed using the guidelines set forth in Part 2 “Directions • The Report demonstrates allocation of resources to perform the Company to collect, aggregate and analyse the information for Use” of GRI G4 Guidelines. undertaken obligations and to respond to material interests • The Company marks out 15 material aspects of activities generally provide required accuracy of the indicators. Qualitative • In general, the GRI Guidelines indicators table, given (problems) of stakeholders. combined in the materiality table. When ranking the aspects, information is presented clearly and in necessary details. in the Report, relevantly reflects the actual level of information the Company considers key internal and external activity Accuracy of initial data taken for Report preparation is within disclosure. • Methods to interact with stakeholders and to inform them conditions, risks, key success factors, stakeholders’ interests, acceptable limits. in the Report are determined and documented. They and legal and other regulations which are of strategic Evaluation of interaction with stakeholders in accordance include: reports, including this Report, general meeting of importance for the Company and its stakeholders. Timeliness with requirements of AA1000 Stakeholder Engagement shareholders, news reports, press releases, interviews, Standard 2011 business meetings, participation in exhibitions and forums, • The attention paid to various Report topics reflects their The Report was prepared in accordance with corporate plans bilateral visits, management’s meetings with employees, relative importance (materiality). The Report reflects key of annual reporting preparation within reasonable terms after The process of public reporting corresponds public reception rooms, corporate newspaper and Company’s events of 2014–2015 which may have influence on decisions the end of the reporting period which allows stakeholders to to recommendations of AA1000SES (2011) standard. website, audits, verifications, and other mechanisms of open and behaviour of stakeholders in relation to the Company, and take justified decisions. The Report contains clear information The Company continues to maintain the methodology access. which reflect significant impacts on economy, environment about reporting period and terms of issue of previous report on of stakeholders’ identification on the basis of multi-criteria and society. sustainability. approach using criteria of dependence, liability, degree • SUEK has a long-standing practice of preparing corporate of influence, etc. The process of stakeholders’ engagement in social reporting with participation of stakeholders and ensures • Based on analysis of Report data and the interviews held, we Clarity corporate reporting preparation is planned in advance. Liability continuity and transparency ofreporting preparation process. cannot specify any aspect of corporate social responsibility, and authorities of management and employees of the Company material for stakeholders, which would be missed or The Report contains information in an amount sufficient for in the issues of interaction with stakeholders are determined, • Processes of interaction with stakeholders, used to take groundlessly excluded from the reporting. stakeholders while avoiding excessive details. The Report is necessary resources are allocated. Key stakeholders’ interests, decisions during report preparation, corresponds to scope presented in a comprehensible form; it is accurate enough, needs and expectations are periodically monitored and updated, and limits of the Report. Informational transparency of the Completeness objective, informative, and balanced by content. The text part thereupon priorities and optimal interaction methods Company is demonstrated by Report data on key topics is accompanied by graphs and diagrams which positively are determined. Efficiency of interaction with stakeholders is of dialogs with stakeholders and their results. The Report discloses important information of the reporting influences general perception of the reporting information. period on the basis of applying principles of materiality, context Report information is presented in a form allowing stakeholders evaluated. • Currently, we are not aware of any areas that would have of sustainability, and engagement of stakeholders. The Report to identify trends of changes in Company’s performance General opinion on the Report been but were not disclosed in the Report, and in which the covers all organizational units which meet criteria of direct indicators, its achievements and unresolved problems in the Company would be unable to respond to reasonable requests control or material influence of the Company. The information context of economic, environmental and social components of Based on the assurance methodology taken and considering of stakeholders. which may influence stakeholders’ estimates or decisions is sustainability. the volume of work performed, we think it is possible to make included in the Report. the following conclusions on the Report as a whole: Context of sustainability Reliability Balance • The Report is built on the basis of recommendations of Fourth SUEK demonstrates understanding of the concept of corporate Company’s processes of collection, consolidation, processing, Generation of the Sustainability Reporting Guidelines of the social responsibility and sustainability and uses objective The Report reflects not only positive results of Company’s analysis and documentation of the information used upon Global Reporting Initiative and corresponds to “Core” option information when reflecting various economic, environmental activities during the reporting period but also unresolved issues Report preparation provide proper quality of disclosure of of information disclosure. and social topics in its Report. The Report quite apparently which ensures reasonable and comprehensive evaluation of its material aspects and indicators of Company’s performance in demonstrates how main topics of sustainability, including activities efficiency in the field of sustainability. the field of sustainability. The materials presented in the Report • The Report objectively reflects key events and indicators topics related to supply chains, and related goals and reporting are traceable to initial sources of information and SUEK’s of Company’s activities during the reporting period and indicators influence long-term development of the Company, its internal reporting documents. We are not aware of any details trend of Company’s development in terms of corporate risks, opportunities, and taking strategic decisions and initiatives. about performance not confirmed by evidence in the Report, or social responsibility.

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Appendix 6. Independent assurance of non-financial reporting Appendix 7. Continuation Feedback questionnaire

• The Report reflects relationship between the Company’s report (including creation and publication in Company’s strategy, corporate governance, the activities results achieved, website of interactive (electronic) version of the report with Dear Reader! 4. Do you have any other suggestions, comments and social, ecological and economic environment in which the possibility to selectively extract and transfer facts and figures or recommendations? Company operates. in general users’ formats (Word, Excel, etc.). Thank you for taking the time and opportunity to read the • The Company continues to seek improvement of information 2014–2015 SUEK Corporate Social Responsibility Report. • Ensuring continuity of formal attributes (structure, content) transparency of its activities in the field of corporate social We would like to know your opinion on this document. Your of the reports allowing stakeholders to track the areas of responsibility. Qualitative statements match quantitative feedback will help us make the next SUEK Report even more corporate social policy selected by the Company and to information contained in the Report and other data from helpful and informative. correctly evaluate performance of undertaken obligations available sources of information. (measures, programs, plans) in dynamics. 1. What do you think about the Report’s content? • The Company continued to improve and strengthen (document quality, tone, relevance of information, etc.) its corporate strategy of social responsibility in the reporting • Increasing level of balance of both positive and negative period. Corporate social responsibility is considered by trends in performance of sustainability tasks given the Company as an instrument to implement sustainability in the reports. strategy aimed at minimizing non-financial risks. 5. Your contact information: Statement of Bureau Veritas Certification Rus • The Company has introduced efficient management on independence, impartiality and competence systems allowing to identify material economic, social and Full Name: environmental aspects of sustainability, to plan, manage • Bureau Veritas is an independent professional international and improve related processes, to determine stakeholders’ company specializing in provision of services in the field of Organisation: expectations in relation to material aspects and to respond to accredited certification of various management systems for them in the course of operational activities. more than 180 years (in particular, quality, occupational health Telephone and e-mail: and safety, environmental protection, social responsibility, etc. • The systems of organization, management and control management systems). of process of corporate social reporting preparation by Company’s management are fully supported by policies, • Bureau Veritas Certification Rus CJSC officially states that 2. Is there any other information you would like 6. Your connection with SUEK: procedures, and allocated resources. this Assurance is an independent evaluation of a third-party to see in the next Report? auditor. Bureau Veritas Certification Rus CJSC was not employee • Senior management of the Company demonstrates involved in preparation of the Report and has no commercial commitment to principles of corporate social responsibility and interests in the Company’s activities except for the assurance supplier is directly engaged in the process of Report preparation. services provided. • Certain inaccuracies and discrepancies in quantitative data • Auditors of Bureau Veritas Certification Rus CJSC, involved in customer discovered during spot study of interim version of the Report the assurance, have necessary level of competence, long- are not material, generally do not distort the information given standing experience in assuring public non-financial reporting, investor in the Report, do not materially affect stakeholders’ ability knowledge of economic, environmental and social aspects to make corresponding conclusions regarding results of the of activities of companies operating in various branches of NPO representative Company’s activities, and were eliminated by the Company industry and uses in their work our internal procedures and during work on the final version of the Report. world best practices. government officer 3. How would you evaluate our Social Report? Recommendations on preparation of corporate public non- Assurer (on a scale of 1 to 5) other (please specify) financial reporting of future periods considering world best Bureau Veritas Certification Rus CJSC practices Comprehensiveness 5 4 3 2 1 Lead Auditor, Ph.D. in Economics V. G. Mitiashin • Expansion of list of disclosed indicators provided for by Fourth IRCA No. 01191213 Design and graphics 5 4 3 2 1 Please e-mail us your response at [email protected] or, Generation of the Sustainability Reporting Guidelines of the alternatively, mail it to us at: 53/7, Dubininskaya St., Global Reporting Initiative in relation to selected material May 30, 2016 Phrasing and language 5 4 3 2 1 Moscow, Russia, 115054 aspects of activities. Moscow Overall impression 5 4 3 2 1 Please accept our grateful thanks for your comments • Reflection of fuller stakeholders’ comments on current cycle’s and suggestions. Report in reports of the next cycle.

• Expansion of scale of using modern telecommunication means to inform stakeholders about the corporate social

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