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35 204 108 221 176 237
151 240 151 146 151 48
0 226 0 229 0 234
20 139 68 174 108 214
214 166 5 175 0 190
236 64 236 149 236 220
181 248 206 205 229 162
73 225 129 142 191 139 2015 Strategy Update Building New Norilsk
May, 2015 Colour palette
35 204 108 221 Disclaimer 176 237
151 240 The information contained herein has been prepared using information available to OJSC MMC Norilsk Nickel 151 146 (“Norilsk Nickel” or “NN”) at the time of preparation of the presentation. External or other factors may have impacted 151 48 on the business of Norilsk Nickel and the content of this presentation, since its preparation. In addition all relevant 0 226 information about Norilsk Nickel may not be included in this presentation. No representation or warranty, expressed or 0 229 0 234 implied, is made as to the accuracy, completeness or reliability of the information. Any forward looking information herein has been prepared on the basis of a number of assumptions which may prove 20 139 68 174 to be incorrect. Forward looking statements, by the nature, involve risk and uncertainty and Norilsk Nickel cautions that 108 214 actual results may differ materially from those expressed or implied in such statements. Reference should be made to
214 166 the most recent Annual Report for a description of major risk factors. There may be other factors, both known and 5 175 unknown to Norilsk Nickel, which may have an impact on its performance. This presentation should not be relied upon 0 190 as a recommendation or forecast by Norilsk Nickel, which does not undertake an obligation to release any revision to 236 64 these statements. 236 149 236 220 Certain market share information and other statements in this presentation regarding the industry in which Norilsk Nickel operates and the position of Norilsk Nickel relative to its competitors are based upon information made publicly 181 248 206 205 available by other metals and mining companies or obtained from trade and business organizations and associations. 229 162 Such information and statements have not been verified by any independent sources, and measures of the financial or
73 225 operating performance of Norilsk Nickel’s competitors used in evaluating comparative positions may have been 129 142 191 139 calculated in a different manner to the corresponding measures employed by Norilsk Nickel. This presentation does not constitute or form part of any advertisement of securities, any offer or invitation to sell or issue or any solicitation of any offer to purchase or subscribe for, any shares in Norilsk Nickel, nor shall it or any part of it nor the fact of its presentation or distribution form the basis of, or be relied on in connection with, any contract or investment decision.
1 Colour palette
35 204 108 221 2015 Strategy Update - Agenda 176 237
151 240 151 146 151 48 Building New Norilsk – CEO Vision | Vladimir Potanin
0 226 0 229 0 234 Operations - Progress Update | Sergey Dyachenko 20 139 68 174 108 214
214 166 Corporate - Efficiency Catalysts | Pavel Fedorov 5 175 0 190
236 64 236 149 236 220 Markets & Marketing | Anton Berlin
181 248 206 205 229 162 2014 Financial Performance Highlights | Sergey Malyshev 73 225 129 142 191 139 Governance Update | Andrey Bougrov
Closing Remarks | Vladimir Potanin
2 Colour palette
35 204 108 221 176 237
151 240 151 146 151 48
0 226 0 229 0 234
20 139 68 174 108 214
214 166 5 175 0 190
236 64 Building New Norilsk – CEO Vision 236 149 236 220
181 248 206 205 229 162
73 225 129 142 Vladimir POTANIN 191 139 Chief Executive Officer Chairman of the Management Board
Colour palette Norilsk’s Strategy - Focus on Tier I Assets, Value and
35 204 108 221 Investment Discipline 176 237
151 240 151 146 151 48
0 226 Our Vision: Since its 0 229 0 234 approval in 2013, 20 139 Norilsk Nickel to deliver sustainably high return on capital by owning and 68 174 Norilsk’s new 108 214 efficiently operating Tier I metals and mining assets located in regions with strategy 214 166 proved its 5 175 high geological potential, where the Company can build on its competitive edge 0 190 effectiveness and in many 236 64 236 149 ways 236 220 redefined 181 248 206 205 Norilsk’s 229 162 business
73 225 129 142 191 139 1 2 3 4 Capital and Focus on Tier I Optimal Value Social Investment Assets Chain Footprint Responsibility Discipline
4 Colour palette
35 204 108 221 Delivery to Date – Refocusing the Business on Tier I Assets 176 237
151 240 Norilsk Nickel – January 2013 Norilsk Nickel – May 2015 151 146 151 48 Tier I Asset Criteria: USD6bn+ capital returned to shareholders since 2013 0 226 0 229 Large Scale (>USD1bn Revenue) 0 234 . Non-Core assets exited or in the process of . High Margins (>40% EBITDA margin) disposal 20 139 68 174 . Long Reserve Life (>20 years) 108 214 Tackling “legacy” assets
214 166 At least 20% of the 5 175 0 190 Company’s value is non- Non-Core Tier I assets Remaining Non-Core Assets 236 64 Assets Excess 236 149 2-3% 236 220 Working New opportunity to Capital tackle “legacy” assets 181 248 206 205 229 162 Kola 73 225 129 142 Next 191 139 Layer of 29% Portfolio 20% Review
Tier I and Confirmed Other ROIC 2012 Tier I ROIC 2014
Sources: Bloomberg, Company data, management estimates
5 Colour palette
35 204 108 221 Delivery to Date – Strict Capital Discipline 176 237
151 240 151 146 151 48 “Stay-in-business” investments - USD1.0bn+ “Growth” investments: focus only on profitable savings relative to market expectations investments in Tier-1 assets 0 226 0 229 USDmn USD1.0bn+ IRR (2015-2018 program), % 0 234 Savings Relative to Broker 20 139 (1) 68 174 Expectations 108 214 -51% ~2,600
214 166 5 175 0 190 2,003
236 64 236 149 1,565 236 220 -40% 181 248 206 205 981 229 162
73 225 584 129 142 191 139 IRR Hurdle Rate: 20% CAPEX, Total Broker expectations 2012 2013 2014 0 1 2 3 4 USDbn 2013- for 2013-20141 2014
Sources: Company data, management estimates, broker reports Note: 1. Broker consensus expectations: for 2013 – estimates made in Dec 2012; for 2014 – estimates made in Dec 2013 6 Colour palette
35 204 108 221 Delivery to Date - Industry-Leading Shareholder Returns 176 237
151 240 1 151 146 Total Shareholder Return, 2014-2015YTD 151 48
0 226 0 229 Norilsk Nickel 37% 0 234 Implementation
20 139 of the new 2 68 174 NN Commodity Basket -4% 108 214 strategy has also grown into 214 166 5 175 Anglo American -5% 0 190 a clear and sustainable 236 64 Rio Tinto 236 149 competitive -6% 236 220 edge of Norilsk 181 248 206 205 for pursuing BHP Billiton -8% 229 162 value-creation 73 225 129 142 opportunities MSCI M&M -17% 191 139
Russia RTS -29%
Vale -40%
Sources: Bloomberg, Companies data 1. For Norilsk Nickel and peers total shareholder return calculated as the total percentage change in share price, inclusive of all dividends paid and announced in a period from January 2014 to April 2015. For indices and commodities - percentage change index from January 2014 to April 2015 7 2. Price performance of Nickel, Copper, Palladium and Platinum weighted by their share in Norilsk FY2014 metal sales revenues Colour palette
35 204 108 221 Shareholder Structure 176 237
151 240 151 146 151 48 Vladimir Potanin
0 226 CEO of Norilsk Nickel 0 229 0 234 Founder and President, Interros 30% 20 139 33% 68 174 108 214
214 166 5 175 0 190 Oleg Deripaska 3% 236 64 President, Member of the 236 149 6% 28% 236 220 Board of Directors, UC RUSAL
181 248 206 205 229 162 Interros 73 225 129 142 UC Rusal Crispian Investments Limited 191 139 The principal beneficiaries are: Crispian Investments Limited
Metalloinvest • Mr. Roman Abramovich • Mr. Alexandr Abramov Free Float • Mr. Alexandr Frolov
8 Colour palette
35 204 108 221 Robust Long-Term Growth of Underlying Markets 176 237
151 240 151 146 151 48 Robust Growth in Our Key Markets… … Matching Industry-Leading Cost Position Global nickel demand forecast, kt Global Nickel Cost Curve 0 226 0 229 0 234 +3.1% Cash costs, ‘000 USD/t 2,205 2,253 2,299 35.0 20 139 1,916 1,969 2,050 2,135 68 174 Ni 108 214 30.0
214 166 5 175 25.0 0 190 2014 2015 2016 2017 2018 2019 2020 20.0 236 64 236 149 Opportunity for Norilsk: tapping into growing / attractive 236 220 value-added segments 15.0
181 248 10.0 206 205 Global palladium demand forecast, Moz 229 162 +2.6% 5.0 73 225 129 142 10.7 10.9 11.2 191 139 9.6 9.8 10.0 10.2 0.0 Pd Nickel production -5.0
-10.0 2014 2015 2016 2017 2018 2019 2020 -15.0 Opportunity for Norilsk: stimulating sustainable demand for Pd through long-term and transparent security of supply
Sources: Norilsk Nickel estimates, Wood Mackenzie, Thomson Reuters
9 Colour palette Talnakh - the Most Valuable Mining Asset in Base and Precious
35 204 108 221 Metals Industry 176 237
151 240 151 146 The Largest Base Metals Projects by Value of M&I Resources (incl. P&P Reserves)1, USDbn2 151 48 P&P Reserves M&I Resources 0 226 0 229 0 234
20 139 68 174 881 108 214
214 166 5 175 0 190
236 64 236 149 236 220
181 248 206 205 229 162
73 225 129 142 191 139
Talnakh Escondida Olympic Dam Collahuasi El Teniente Andina Chuquicamata Freeport Oyu Tolgoi Los Pelambres Indonesia
Sources: Companies data, Bloomberg, Wood MacKenzie Notes: 1. M&I – Measured and Indicated Resources, including P&P (proved and probable) reserves 2. Norilsk nickel estimate based on average 2014 prices 10
Colour palette
35 204 108 221 Strategic Aspiration – Unlocking the Potential of Talnakh 176 237
151 240 Norilsk Nickel Existing Reserves on the Global Cost Curve 151 146 151 48 The main strategic 0 226 Under Undeveloped reserves & resources: 0 229 0 234 aspiration of the development Legacy Underinvestment in Exploration and Development NN Ore 20 139 next decade - 68 174 Reserves & 300 1,815 108 214 connecting the Resources, Mt: sound demand 214 166 Average Ore 4-5%1 5 175 0 190 story with the full Grade, development Ni-equivalent: 236 64 236 149 Significant part of resources 236 220 potential of has potential to be qualified as st nd Norilsk’s Tier I – ‘000 USD/t 1 / 2 quartile projects 181 248 206 205 Global 35.0 229 162 and one of the Nickel 30.0 world’s best - 25.0 73 225 Cost 20.0 129 142 Curve 191 139 resource base of 15.0 10.0 the Talnakh 5.0 0.0 mining center -5.0 -10.0 -15.0 | | 1Q | | 2Q| | | 3Q | | 4Q| |
Sources: Wood MacKenzie, Company data, Norilsk Nickel estimates Note: 1. Sum of metals in Ni equivalent, based on average 2014 prices 11 Colour palette
35 204 108 221 Vision for “New Norilsk” 176 237
151 240 151 146 151 48 Environment and Sustainability
0 226 0 229 0 234
20 139 68 174 108 214 Effectiveness and Efficiency
214 166 5 175 0 190
236 64 236 149 236 220 Global Competitiveness Through Tier I
181 248 206 205 229 162
73 225 129 142 191 139 Aspirations for Growth
Strong Corporate Culture
12 Colour palette Balancing Stakeholder Interests - Sustainable Development of
35 204 108 221 Norilsk (1/2) 176 237
151 240 151 146 151 48
0 226 “New Norilsk” – 0 229 0 234 The New Decade
20 139 68 174 108 214
214 166 Corporate priorities: 5 175 0 190
236 64 Environment, health, safety and on-the- 236 149 . 236 220 ground operational talent - on the top of the 181 248 206 205 investment agenda 229 162
73 225 129 142 . Focused social “investments” 191 139 . “Opening” the region and stimulating the development of new businesses
13 Colour palette Balancing Stakeholder Interests - Sustainable Development of
35 204 108 221 Norilsk (2/2) 176 237
151 240 151 146 151 48 Creating innovative . Transforming corporate culture
0 226 and professionally . Innovative forms of employment 0 229 0 234 challenging . Special programmes for development and
20 139 environment retaining of young specialists 68 174 108 214
214 166 5 175 “Welcoming environment” for new business 0 190 . in the region 236 64 Breaking “island” 236 149 . Construction of fiber optic connection with 236 220 mentality the “mainland” 181 248 206 205 . Reconstruction of Alykel airport 229 162
73 225 129 142 191 139 . Creating comfortable social, sports and transportation infrastructure Developing local infrastructure . Together with local authorities supporting community’s initiatives aimed at the development of urban environment
14 Colour palette Balancing Stakeholder Interests - Revamped Incentive System
35 204 108 221 and “Making Results Count” 176 237
151 240 151 146 151 48 “State of play” as of 12/2012 New incentive system (5/2015)
0 226 • Quarterly bonuses • Clear and simple KPI system 0 229 0 234 Short-term • Often taken for “granted”, • Covers “TOP-1000” managers Incentives no formal link to • Annual bonuses linked to “corporate”, 20 139 performance 68 174 “divisional” and “individual” performance 108 214 • HSE as a priority KPI 214 166 • “Corporate” KPIs for 2015 - EBITDA (70%), 5 175 0 190 free cash flow (30%)
236 64 • “Phantom” options program • Long-term incentive plan for 2015-2017 236 149 236 220 Long-term • Awarded at CEO’s • Covers “TOP-100” of executive ranks incentives discretion 181 248 • “Awarded at inception, rewarded with 206 205 • Balance tilted towards the results” – tied to successful execution of 229 162 size of award, not resulting production targets, efficiency and “on time / performance on budget” delivery of large projects 73 225 129 142 • Equity participation for value accretive 191 139 strategic initiatives (e.g. legacy assets and greenfields)
Revamped incentive system aligns value creation by the management team with interests of its shareholders
15 Colour palette Balancing Stakeholder Interests - High-Quality Dialogue with
35 204 108 221 the Government of Russian Federation 176 237
151 240 151 146 151 48 Accelerated Nickel Plant closure 0 226 0 229 0 234
20 139 68 174 108 214 Social responsibility (training and transfer for redundant personnel) 214 166 5 175 0 190
236 64 236 149 236 220 Accelerated cancellation of export duties for Ni/Cu
181 248 206 205 229 162
73 225 Development & production license for Maslovskoe 129 142 191 139 deposit
USD0.8bn financing of Bystrinsky project infrastructure
16 Colour palette
35 204 108 221 Evolving Agenda – Strategic Themes 176 237
151 240 151 146 Achieving the strategic aspiration for superior shareholder returns supported by: 151 48
0 226 0 229 Ensuring the priority of sustainable development agenda in Norilsk’s strategy for its 0 234 1 regions of presence 20 139 68 174 108 214
214 166 Retaining an uncompromised focus on Tier I assets and a value-accretive approach 5 175 2 0 190 to dealing with “legacy” and non-core assets
236 64 236 149 236 220 Utilizing the shared vision of shareholders and aligned management incentives for 181 248 206 205 3 229 162 achieving superior shareholder results
73 225 129 142 191 139 Maintaining a high quality, trusted and constructive dialogue with the Government 4 of Russian Federation
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35 204 108 221 176 237
151 240 151 146 151 48
0 226 0 229 0 234
20 139 68 174 108 214
214 166 5 175 0 190
236 64 Operations – Progress Update 236 149 236 220
181 248 206 205 229 162
73 225 129 142 Sergey DYACHENKO 191 139 First Deputy CEO Chief Operating Officer Colour palette
35 204 108 221 Operations Update – Key Themes 176 237
151 240 151 146 151 48 Focus on HSE – World-class Standards
0 226 0 229 0 234
20 139 68 174 108 214
214 166 Upstream Strategy – Redefining Projects Portfolio 5 175 0 190
236 64 236 149 236 220
181 248 206 205 229 162 Operational Efficiency – Maximizing Returns 73 225 129 142 191 139
Update on Production Assets Assessment
19 Colour palette
35 204 108 221 Health and Safety – 2014 Progress and Targets 176 237 Focus on HSE – World-class Standards 151 240 151 146 151 48 Material progress achieved by new management team LTIFR reduced by 43% in 2014 0 226 0 229 0 234 -6 Key corporate HSE standards have been developed and LTIFR dynamics, 1*10 20 139 implemented 68 174 -43% 108 214 0.77 0.80 Main production sites have been audited for HSE-compliance 214 166 by DuPont for the second time 5 175 0 190 0.46 HSE risk-management system rolled-out – key risks identified, 236 64 workspace safety programme being implemented 236 149 236 220
HSE training programs – over 16000 employees were 181 248 2012 2013 2014 206 205 involved 229 162
73 225 129 142 191 139 Key Priorities of Norilsk Nickel HSE Strategy:
1 Zero-fatality on production sites
2 Sustainable LTIFR improvement: target - 20% annual reduction in LTIFR in medium term perspective
20 Colour palette
35 204 108 221 Environment - Roadmap for New Norilsk 176 237 Focus on HSE – World-class Standards 151 240 151 146 SO2 Emission in Polar Division, ‘000 ton 151 48 Emissions from the facilities located outside of residential areas
0 226 -15% Emissions from the facilities located in the city area 0 229 ~1,800 0 234 1 500 - 1600 20 139 68 174 108 214
214 166 5 175 0 190 -30-35% <450
236 64 236 149 236 220
181 248 2014 Mid-term goal Long-term goal 206 205 229 162 Downstream reconfiguration
73 225 Environmental projects 129 142 191 139 Increase in pyrrhotite rejection post Talnakh Concentrator modernization of Talnakh concentrator
Nickel Plant Shut-down of all production lines
Nadezhda Smelter Construction of Sulphur Capturing facilities
. Construction of of Sulphur Capturing facilities Copper Plant (1) . Implementation of SO2 gas concentration technologies
Sources: Company data, Norilsk Nickel estimates Notes: 1. Installation of a continuous converting unit and matte granulation unit at smelting facilities (based on Vanukov’s furnace technology), which will allow for significant increase in concentration of SO2 in gas emissions and subsequent reduction of overall SO2 emission (at current utilization technology ~150-200kt SO2 p.a. starting from 2019) 21 Colour palette Nadezhda Smelter Sulfur Capturing Project –
35 204 108 221 on Track to Launch in 2019 176 237 Focus on HSE – World-class Standards 151 240 151 146 151 48 Nadezhda Status: EPC-contract tender 0 226 Smelter 0 229 0 234
20 139 68 174 108 214 2012 - 2014 2015 2019 214 166 5 175 0 190 2016 – start of construction, commissioning in 2019 236 64 236 149 236 220 . Preliminary study completed, pilot . Regulatory approval of project technology tests conducted with technical documentation 181 248 global leaders in industrial . Tendering among leading global 206 205 engineering 229 162 contractors (8 participants planned) . Preliminary assessment of capital 73 225 >50% 129 142 expenditures is already included in of target SO2 emission reduction 191 139 the investment program; public in Polar Division project costs disclosure is planned after signing the EPC contract
22 Colour palette
35 204 108 221 Environment – Improving Kola’s Ecological Footprint 176 237 Focus on HSE – World-class Standards 151 240 151 146 151 48 ! Emissions to reduce by more
0 226 Mines Smelting/Roasting shops than 20% from 2014 levels 0 229 Kola Division 0 234 Concentrator Refinery Populated area 20 139 68 174 108 214 NORWAY Kola Division’s SO2 emissions, kt Concentrator 214 166 Severny mine Roasting shop Barents Sea 5 175 Zapolyarny -20% 0 190 Tsentralny mine 150 236 64 Nickel 236 149 Kaula-Kotselvaara mine 236 220 ~120 An environmental management Murmansk 181 248 plan was put in place to reduce 206 205 229 162 SO2 emissions
73 225 129 142 Murmansk Region 191 139
Monchegorsk Refinery 2014 2015
23 Colour palette
35 204 108 221 Redefining Mining Projects Portfolio 176 237 Upstream Strategy 151 240 151 146 Context Result 151 48 . Macroeconomic YES . Development of “base strategic 0 226 0 229 volatility - “marginal portfolio” – highly profitable 0 234 projects” (with IRR projects (stress-tested IRR > 20 %) Projects Verification with no significant upside potential 20 139 just exceeding 20%) 68 174 do not stand stress . “Current project portfolio” is 108 214 test at spot prices sufficient to keep production level for the next 5-10 years 214 166 High profitability even under 5 175 1 0 190 . Definition of strict “stress case” test . Focus going forward – on-time and criteria for projects on-budget execution 236 64 All criteria of the investment process 2 236 149 to be included in the are confirmed 236 220 portfolio – scoping Scope is optimally defined to cover 181 248 study must be 3 . Identification of projects with 206 205 all payable resources 229 162 approved by the value upside potential Investment Technical solutions are proven and . Impact on mining profile in the 73 225 committee 4 129 142 match global best practices period until 2020 – “parked” 6.5Mt 191 139 of potential production (cumulative) . Recent exploration compared to earlier plans resulted in change . Focus going forward – redefine the of the resource base scope and technical solutions for some of the within comprehensive mine projects NO development plans
24 Colour palette
35 204 108 221 “Base Portfolio” - Sustainable Production Profile 176 237 Upstream Strategy 151 240 151 146 151 48 Polar Division Production Profile – “Base Portfolio” of Mining Projects Mt 0 226 0 229 0 234 18 Mining investment projects 17 20 139 68 174 108 214 16 15 214 166 Approved feasibility 5 175 0 190 14 studies 13 236 64 Reviewed under new 236 149 12 macroeconomic 236 220 11 conditions 181 248 206 205 10 229 162 9 Production outlook without 73 225 129 142 2 “expansion” CAPEX 191 139 1
0 2014 2015 2016 2017 2018 2019 2020
Taimyrskiy mine Zapolyarniy mine Skalisity mine Oktyabrskiy mine Komsomolskiy mine (excluding Skalistiy) Base production without “expansion” CAPEX
25 Colour palette
35 204 108 221 Key Brownfield Projects of Polar Division 176 237 Upstream Strategy 151 240 151 146 2 151 48 Taimyrskiy Mine Oktyabrskiy Mine Komsomolskiy Mine Reserves 0 226 covered by 0 229 projects 63 Mt of ore 59 Mt of ore 0 234 2.3% 1.0% 1,5% Ni1 3.5% 3.1% 1,8% 20 139 1 20 Mt of ore 68 174 Cu 108 214 Total 7.3 g/t 7.6 g/t 5,3 g/t PGM1 214 166 5 175 . Ore production to ramp up to 3.9 Mtpa by 2022 . Maintain production at 5.0-5.2 Mtpa until 2023 . Maintain production at 3.8-4.1 Mtpa until 2020 0 190 . Next phase to be launched in 2015 . Next phase to be launched in 2015 . Next phase to be launched is in 2015 Project 236 64 description . Total CAPEX: USD 450mn (2015-2022) . Total CAPEX : USD 300mn (2015-2023) . Total CAPEX : ~ USD 240mn (2015-2020) 236 149 236 220 . Completion level : 30% . Completion level: 35% . Completion level: 37%
181 248 Expected IRR 206 205 229 162 (average, based >60% >75% >50% on 1Q2015 spot)
73 225 57 47 60 129 142 CAPEX, USDmn 191 139 (actual 2014)
. 4,800 m of underground shafts and drifting . 2,300m of underground shafts and drifting . 4,700m of underground shafts and drifting Completed in 2014 . Launch of 1.2 Mtpa capacity (18Mt of . Pump station of the cage shaft reserves)
On time / On budget / / /
Notes: 1. Ore grade; 2. Komsomolskiy mine data does not include Skalistiy mine (Skalistiy mine is illustrated on a separate slide)
26 Colour palette
35 204 108 221 Skalisty Mine Development Update 176 237 Upstream Strategy 151 240 151 146 Project Overview 151 48 Production capacity – 2.4Mtpa 0 226 0 229 0 234 Ore reserves: 58Mt
20 139 Total CapEx: ~USD1.35bn (2015-2025) 68 174 108 214 Construction stage – completed by 36%
214 166 5 175 IRR exceeds 50% 0 190
2014 CAPEX – USD120mn 236 64 236 149 236 220 Phase 1 construction completed on schedule 181 248 206 205 229 162 Сompleted in 2014:
73 225 129 142 191 139 Main fan at the ventilation shaft
792м Shaft sinking
Drifting 2 400м
Existing objects and shafts as at Total capital mine works planned in the beginning of 2014 2015-2025 27 Colour palette
35 204 108 221 176 237
151 240 151 146 151 48
0 226 0 229 0 234
20 139 68 174 108 214
214 166 5 175 0 190
236 64 236 149 236 220
181 248 206 205 229 162
73 225 129 142 191 139 Colour palette
35 204 108 221 176 237
151 240 151 146 151 48
0 226 0 229 0 234
20 139 68 174 108 214
214 166 5 175 0 190
236 64 236 149 236 220
181 248 206 205 229 162
73 225 129 142 191 139 Colour palette
35 204 108 221 New Prospects – Potential Sources of Growth 176 237 Upstream Strategy 151 240 151 146 151 48 Brownfields
0 226 Leveraging reserves and resources base of existing brownfields: 0 229 I 0 234 . Defining comprehensive mine plans that would maximize the value of reserve base within current licenses 20 139 68 174 . Additional exploration to convert resources into reserves and involve them into 108 214 production plans
214 166 5 175 0 190 Greenfields
236 64 Maslovskoe deposit development: 236 149 II 236 220 . License granted – Q1 2015 . Exploration and pre-feasibility – 2015-2016 181 248 Brownfields 206 205 . Production to commence after 2020 (over 200Mt of ore reserves) 229 162 I
73 225 129 142 191 139 II III New exploration licenses: . 6 new licenses obtained as a result of constructive dialogue with the government on licensing legislation (estimated resource potential – over 500Mt of ore) . Goal – discovery of high-grade reserves with a potential for open pit development III and production
30 Colour palette Current Resource Base – Additional Growth Potential from
35 204 108 221 Cuprous and Low-Grade Ore 176 237 Upstream Strategy 151 240 151 146 151 48 Reserves and resources – Polar Division (as of 01.01.2015) Mt 0 226 0 229 2 0 234 Metal content (Nickel equivalent) , % 7.1 4.1 1.6
20 139 Reserves and 68 174 resources, years1 2,115 177 160 1,778 108 214 4% ~300 . “Base portfolio” covers the >20 214 166 (14%) most attractive and profitable 5 175 0 190 reserves 47%
236 64 236 149 236 220 . Next step – development of 82% comprehensive mine 181 248 206 205 96% development plans with 229 162 1,815 >55 potential for involvement of 73 225 additional reserves & 129 142 53% 191 139 resources
18%
Total High-grade ore Cuprous ore Low-grade ore Covered by “base portfolio” projects Not covered by projects
1. Volume of metal contained in reserves and resources divided by volume of metal contained in ore produced in 2014 2. Nickel equivalent is calculated based on average 2014 prices for nickel, copper, cobalt, PGMs (Pt/Pd – 20/80) 31 Colour palette
35 204 108 221 Potential of Maslovskoe Deposit – License Granted 176 237 Upstream Strategy 151 240 151 146 151 48 Brief Overview
0 226 Upon launch, Maslovskoe expected to become a Tier-1 asset 0 229 located in close proximity to the city Norilsk (12-15 km) Polar Division 0 234 Exploration license acquired in 2006, successful geological 20 139 discovery made in 2010 68 174 108 214 In March 2015, Norilsk Nickel was granted with the exclusive right to obtain long-term production license for the 214 166 development of the deposit 5 175 0 190 Next steps:
236 64 2015-2016 – exploration, pre-feasibility 236 149 236 220 2017 – investment decision
181 248 206 205 Potential to become the world’s largest PGM mine 229 162 License Area Populated Areas Annual production, Moz 73 225 Resources Metal Content in Ore 129 142 1.3 191 139 1.1 1.1 Ore, Mt 215 0.8 Palladium, Moz 32.3 4.56 g/t 0.5 0.5 Platinum, Moz 12.5 1.78 g/t Gold, Moz 1.3 0.19 g/t Nickel, kt 728 0.33%
Maslovskoe Impala Marikana Magalakwena Zimplats Kroondal Copper, kt 1,122 0.51% steady state
Source: Preliminary management estimate (for Maslovskoye), Companies data, Broker reports
32 Colour palette
35 204 108 221 2016 Target Production Configuration – Status Update 176 237 Operational Efficiency – Maximizing Returns 151 240 151 146 Assets Location Mining Concentrating Smelting Refining 151 48
0 226 Cu cathodes 0 229 Copper Smelter Copper Refinery 0 234 Norilsk Kola Division and Polar Division Concentrator 20 139 NN Harjavalta
Upgrade PGMs in 68 174 7 Mines Precious metals concentrate
108 214 Nadezhda Smelter refinery
Upgrade Polar Division Polar Kola Division Talnakh 214 166 Concentrator 5 175 0 190 Nickel Smelter Nickel Refinery
Finland Ni cathodes 236 64 NN Harjavalta Russia Chita Kola “Northern cluster” Cu cathodes
236 149 Upgrade & NNH &
PGMs in 236 220 Kola Nickel concentrate Refinery
181 248 Ni cathodes 206 205 Division 2 Mines Zapolyarny Nickel 229 162 Concentrator Smelter Ni salts
Kola Harjavalta Refinery
73 225 Mining operations 129 142 Cu conc. 191 139 Concentrators Au conc.
Chita Bystrinsky Bystrinsky Metallurgical plants O/P mine Concentrator Fe conc.
Downstream reconfiguration program – on schedule:
- Stage 1 of Talnakh concentrator launched, further modernization on track
- Shutdown of Nickel Plant at Polar Division in 2016 supported by the Government
2014 focus – recovery rate growth throughout all segments of the value chain
33 Colour palette Operational Efficiency Program for 2015-2017 – USD1.0 bn of
35 204 108 221 Incremental Cumulative EBITDA Effect 176 237 Operational Efficiency – Maximizing Returns 151 240 151 146 (1) 151 48 Levers / Approved Initiatives 2014 Actual Impact 2015-2017 Cumulative Target
0 226
0 229 kt of Ni equivalent kt of Ni equivalent 0 234 . Improvement of mine planning process
20 139 . Increase in overall recovery rate growth 68 174 28 60-65
108 214 . Re-processing of secondary deposits (tailings / rate rate Cu slags) 214 166 5 175 0 190 . Work-in-progress inventory level optimization
236 64 Recovery 236 149 + +
236 220
181 248 . Registering Polar Division’s copper on LME 206 205 229 162 . Upgrade of cobalt production technology, USD160mn(2) >USD150mn(2)
73 225 efficiency improvement of production quality 129 142
191 139 initiatives . Optimization of operating costs Other Other
Total Impact on EBITDA >USD0.5bn Up to USD1bn
For Reference: Targets Announced in May 2014 USD180mn N/A
Notes: 1. including impact of 2014 initiatives; 2. Estimated effect on EBITDA
34 Colour palette Polar Division Concentrators: Implementation of Approved
35 204 108 221 Plans and Development of Strategic Options for 2018+ 176 237 Operational Efficiency – Maximizing Returns 151 240 151 146 151 48 2014 2016 2018+ Projects Approved Under 2013/2014 Strategy Potential Options 0 226 0 229 0 234 Creating a unified concentration Talnakh Upgrade – 7.7 Mt capacity Talnakh Stage 2 – 10.2 Mt capacity center for Talknakh ore 20 139 68 174 108 214 Stage: concept development Impact: 214 166 1 5 175 . Increased throughput capacity 0 190 . Maintained high recovery rates
236 64 . Optimized logistics 236 149 Associated projects: development of a 236 220 comprehensive development plans for
181 248 Talnakh mines (2016) 206 205 Stage: project completed Stage: under construction 229 162 Refocusing Norilsk concentrator on On time/on budget : On time/on budget: processing of ore from Zapolyarny 73 225 129 142 Impact: Impact: mines and tailings / Cu slags 191 139 . Upgrade in floatation circuit resulted . Increase in throughput capacity Stage: concept development in Ni recovery improvement (by 1 %) Impact: . Improved reduction ratio 2 . Involvement of additional reserves and re-processing of tailings Connected projects: decision on development of Zapolyarny mine (2015)
35 Colour palette Запуск первого пускового комплекса ТОФ – on time, on
35 204 108 221 budget 176 237 2
151 240 151 146 151 48 Общее описание проекта . ТОФ-РФ – ключевой проект программы 0 226 0 229 реконфигурации производства 0 234 . Реконструкция ТОФ будет проходить в несколько этапов и позволит перерабатывать все руды, 20 139 68 174 добываемые талнахскими рудниками. 108 214 1 пусковой комплекс (первый этап) 214 166 5 175 . 0 190 В рамках первого пускового комплекса введен в строй полностью новый участок флотации • Проект завершен в срок, без 236 64 . Применение нового оборудования позволит: 236 149 отставания от графика 236 220 – Увеличение извлечения по факту: Ni на 1%, Cu на 1% • Достигнуты целевые показатели 181 248 – Снижение текущих ремонтов проекта 206 205 229 162 – Улучшение стабильности работы и • Линия подготовлена к переходу на показателей производимого концентрата «новую» технологию в рамках 73 225 за счет меньшего кол-ва остановок 129 142 реализации 2 ПК 191 139
Полная реализация проекта позволит значимо улучшить: . Сквозное извлечение металла
. Выделение серы в хвосты – снижение выбросов SO2 на плавильных переделах ЗФ . Логистические потоки
36 Colour palette Future of Talnakh Concentrator – Unified Concentration Center
35 204 108 221 for Talnakh Ore with Increased Capacity 176 237 Operational Efficiency – Maximizing Returns 151 240 151 146 Potential Project Rationale 151 48 Talnakh – Unified Concentration Center (subject to ongoing feasibility study) 0 226 Talnakh 0 229 0 234 1 Talnakh – Norilsk’s key strategic asset: Talnakh 20 139 Talnakh mining cluster Concentrator 68 174 108 214 Others
214 166 Reserves* 93% 7% 715 5 175 0 190 6.5 Mtpa 236 64 236 149 236 220 2 Efficiency gains due to potential increase in recovery rate for Norilsk redirected ore (6,5 Mtpa) 181 248 206 205 229 162 up to 5% Ni up to 2% Cu up to 2% PGM 73 225 . Phase 3 to increase Talnakh Norilsk 129 142 Concentrator 191 139 concentrator capacity making it capable of processing all ore from Talnakh mines 3 Optimization of ore transportation costs: . The project will allow for better -USD3 / ton logistics and optimization of reduction in transportation costs due to redirection of transportation costs material flows (6.5 Mt) between Norilsk concentrator and Talnakh concentrator (~70 km) Mines Concentrators Material flows
Sources: Company data, Norilsk Nickel estimates
37 Colour palette
35 204 108 221 Modernization Challenge for Norilsk Downstream 176 237 Operational Efficiency – Maximizing Returns 151 240 151 146 151 48 Strategic Objective: Accelerated Modernization of Smelting and Refining Capacities
0 226 0 229 0 234 Average Age of Smelters, years
20 139 Norilsk Nickel Smelters Global Smelters 68 174 108 214
214 166 5 175 73 0 190 66 63 236 64 54 236 149 Industry Average: 236 220 45 years 37 181 248 34 206 205 229 162
73 225 129 142 191 139
Nickel Copper Nadezhda USA Europe China Smelter Smelter Smelter
Source: Wood McKenzie, Norilsk Nickel estimates
38 Colour palette
35 204 108 221 176 237
151 240 151 146 151 48
0 226 0 229 0 234
20 139 68 174 108 214
214 166 5 175 0 190
236 64 236 149 236 220
181 248 206 205 229 162
73 225 129 142 191 139 Colour palette
35 204 108 221 176 237
151 240 151 146 151 48
0 226 0 229 0 234
20 139 68 174 108 214
214 166 5 175 0 190
236 64 236 149 236 220
181 248 206 205 229 162
73 225 129 142 191 139 Colour palette
35 204 108 221 Smelting and Refining – Building Efficient, Fit-to-Size Business 176 237 Operational Efficiency – Maximizing Returns 151 240 151 146 151 48 1 Efficiency 2 Fit-to-Size
0 226 Primary focus of reconfiguration Projected capacity utilization (base-case scenario), 2018, % 0 229 program – operational efficiency 0 234 Smelting Refining
20 139 640 2 400 65 145 45 68 174 2015 2016 2017 On time? 6% 108 214 60-70% Talnakh Stage 2 94% 100% 100% 100% 214 166 Ni 5 175 30-40% 0 190 Nickel Plant shutdown Kola Nadezhda Smelter NNH Kola Kola 236 64 Tankhouse-2 Tankhouse-1(1) 236 149 Nadezhda Smelter 236 220 expansion 1 800 100 350 20% 20% 10% Kola Refinery 181 248 206 205 upgrade 229 162 Cu 80% 80% 90%
73 225 129 142 191 139 Copper Smelter Kola Polar Free capacity Utilized capacity EBITDA Uplift:
USD350-400mn p.a. . In anticipation for potential growth in mining volumes, the Company conducts “bottleneck” analysis on a regular basis in order to identify options to re-balance capacities across the value chain in 2018 . There is a number of low capital options (e.g. maintaining Kola Tankhouse-1, etc) to maintain production in line with the guidance
Notes: 1. Tankhouse-1 – currently under care maintenance
41 Colour palette
35 204 108 221 Smelting and Refining Reconfiguration – On Time / On Budget 176 237 Operational Efficiency – Maximizing Returns 151 240 151 146 151 48 Shutdown of Nickel Smelter
0 226 Complete shut-down of smelting and refining capacities in 2016 0 229 0 234 Project executed on time/on budget
20 139 68 174 108 214
214 166 5 175 Modernization and expansion of capacities at Nadezhda Smelter 0 190 Upgrade of flash furnace-2 completed 236 64 236 149 236 220 Preparation for upgrade of flash furnace-1 is in progress (planned completion by December 2015) 181 248 206 205 Project executed on time/on budget 229 162
73 225 129 142 Expansion and modernization of Kola Refinery 191 139 Upgrade of Ni Tankhouse-2 – transition to new technology and increase in capacity to 145ktpa Full transition to chlorine leaching - by the end of 2017 Re-commissioning of 45 kt p.a. refining capacity (Tankhouse-1) Project executed on time/on budget
42 Colour palette
35 204 108 221 Efficient Labour Management Practices 176 237 Operational Efficiency – Maximizing Returns 151 240 151 146 151 48 I
0 226 Производительнос 0 229 Employee efficiency . 10% employee productivity growth by 2018 (target included in LTI) 0 234 ть труда
20 139 68 174 108 214 II 214 166 Трудовые . Best package of social benefits and compensation in the industry – attraction of the most 5 175 Employment 0 190 отношения с qualified employees strategy сотрудниками 236 64 . Fly-in fly-out model introduction – new opportunities for hiring new employees 236 149 236 220
181 248 III 206 205 . During 2014 over 50 000 employees participated in training programs 229 162 Employees Обучение educational . Re-training of the majority of Nickel plant employees (over 2000 employees) for further 73 225 сотрудников 129 142 programs redeployment at other operations 191 139
IV . STIP – new KPI-based motivation system was launched for TOP-1000 СистемаMotivation мотивации system . LTIP – new program (linked to strategic goals) was introduced for 2015-2017 for TOP-10 and TOP-100 managers
43 Colour palette
35 204 108 221 Emerging “Clusters” of the Polar Division 176 237 Assets assessment 151 240 151 146 “Talnakh Cluster” “South Cluster” 151 48 5 mines (Talnakh deposits) Zapolyarny mine, Medvezhiy Ruchey open pit, 0 226 Asset Perimeter 0 229 Talnakh Concentrator Norilsk Concentrator 0 234 2014 14,3 2.7 2014-2018 Ore Production 10% -55% 20 139 2018 15,8 1.2 68 174 108 214 Reserves, % of Total Polar 93% 7% 214 166 5 175 0 190 2014 Pro-forma Tier-I criteria: 236 64 . Large Scale (USD1bn+ Revenue) >USD7bn 236 149 . .
. Flagship asset in Norilsk’s portfolio . Relatively small in size and decreasing . Accelerated investments in growth and . Low-grade ore, focused on PGM creation of consolidated center for mining and ‘Cluster’ features . Logistically standalone assets concentration of Talnakh rich ores . Will require an upgrade (new construction) of the concentrator tailings dam (due by 2018)
Sources: Company data, Norilsk Nickel estimates
44 Colour palette
35 204 108 221 Kola “Northern Cluster” Confirmed as Tier I Asset 176 237 Assets assessment 151 240 151 146 151 48 Upside Potential – Mid-term Tier-1 criteria Approved plan Initiatives Under Review Targets 0 226 0 229 0 234 . Reprocessing of secondary . Analysis of opportunities Kola “Northern cluster”: Up to 20 139 deposits (tailings / slags) to increase profitable 68 174 Revenue USD1.0bn . Operating asset production volumes 108 214 . Maintenance of ore . Located in the North-West production at 7 Mtpa 214 166 5 175 of Murmansk region, in 0 190 proximity to Russian- Norway border 236 64 . Sustaining FX depreciation effect . Improvement in 236 149 EBITDA concentrate recoveries > 40% 236 220 . Infrastructure: proximity to for production costs margins . Improved energy- the large sea port, access . Optimization of mining costs 181 248 efficiency 206 205 to the Unified Energy (improved utilization of 229 162 Strict control over cost System (electricity) machinery and equipment) . inflation 73 225 . Reduction of G&A costs 129 142 191 139 Assets: . 2 mines . Conservative approach –only . Exploration and feasibility 20-23 Reserve projects supported by the studies involving years Concentrator (8.2Mtpa) development of additional . Life documentation are included in reserves – 25-40 Mt . Smelter the production profile
45 Colour palette
35 204 108 221 Bystrinsky Project –Tier-1 upon Launch 176 237 Assets assessment 151 240 151 146 151 48 Upstream Concentration
0 226 Reserves & Resources: 294 Mt Capacity: 10 Mtpa 0 229 Cu – 0.7% Cu – 66 kt (in concentrate) 0 234 Fe – 23% Fe – 3.1 Mt (magnetite concentrate) 20 139 Au – 0.8 g/t Au – 219 koz (in concentrate) 68 174 108 214 CAPEX 214 166 5 175 0 190 Remaining CAPEX: USD1.0 bn Project IRR at 236 64 236 149 April 2015 236 220 Global cost curve (‘000 USD/t of Cu) Production forecast average spot
macro 181 248 10 Ore production and processing, Mt 206 205 8 conditions – 229 162 9 10 6 >30%
Тысячи 8 4 73 225 2 129 142 191 139 0 (2) Bystrinsky deposit 2 (4) ~ (-USD1800)/ t (6) 2017 2018 2019 2020-2045 (8) (10) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% EBITDA: USD400-500mn EBITDA margin: 40-50%
Source: AME, Norilsk Nickel estimates
46 Colour palette
35 204 108 221 Bystrinsky Project - Update 176 237 Assets assessment 151 240 151 146 151 48 . Railway link to the project site is 90% complete (227 km, 3.7Mtpa capacity). Project financed in partnership with the Russian Government 0 226 0 229 0 234 . Will be commissioned in H1 2016
20 139 . Waste stripping at the open pits is on schedule 68 174 108 214 . 3mn m3 of waste rock were moved in 2014 214 166 5 175 0 190 . Regular air transportation service between Chita city and project site launched in October 236 64 2014 236 149 236 220
181 248 206 205 . Water dam (water storage capacity for the concentrator) was completed in 2014. 229 162
73 225 129 142 . Construction of main facilities has commenced in 2014: foundation for concentrator, camp and 191 139 storage facilities
. Construction of tailings dam is near completion
. Preliminary agreement with “Federal grid company” on power line construction and future operational model
47 Colour palette Bystrinsky Project – Stepping Stone for the Development of
35 204 108 221 New Mining Region 176 237 Moreover, the broader Chita region has a tremendous exploration and growth potential 151 240 151 146 151 48 World’s largest undeveloped copper projects1
0 226 Mt Cu 0 229 ZabaikalskyZabaikalsky Pebble 0 234 KraiKrai Resolution 20 139 68 174 108 214 Bystrinskiy project Udokan
214 166 Kamoa 5 175 Development of 0 190 Reko Diq some of the listed projects has been 236 64 Cobre Panama 236 149 put under review 236 220 due to Las Bambas unfavorable 181 248 206 205 2014: El Pachon macro 229 162 • Norilsk obtained 3 licenses for environment “Shakhtaminskiy” and Sierra Gorda 73 225 “Chingitayskiy” blocks 129 142 Tampakan 191 139 • Estimated resources – >6.5 Mt of Cu and ~600 t of Au Cerro Colorado (Panama) Quellaveco
Planned power line Russia La Granja - Existing licenses New railway Norilsk Nickel new license areas China Estimated potential of 8.6 - Expert assessment of the Chita cluster full geological potential of Bystinskiy project licenses the region
Sources: WoodMcKenzie, Company data, Norilsk Nickel estimates Note: 1. International Projects – Mineral reserves and resources (JORC), Chita Copper Project– Cu reserves and resources equivalent as per Russian classification 48 Colour palette
35 204 108 221 Confirming Production Guidance 176 237
151 240 151 146 Target Metal Production Volumes from Russian Source, 2013-2018 151 48
0 226 0 229 225-235 0 234 225-235 219 223 215-225
20 139 68 174 440-450 108 214 346 346 360-370 370-380
214 166 5 175 97 99 90-100 90-100 90-100 90-100 100-110 0 190 2013 2014 2015 2016 2018 236 64 236 149 236 220
2014 Production 2016 Production 2018 Production 181 248 206 205 229 162 Ni, kt 223 220-225 225-235 225-235 225-235 225-235 73 225 Cu, kt 129 142 PGMs,t 191 139 346 340-345 370-380 360-375 440-450 420-445
99 96-100 90-100 98-102 100-110 106-110
Fact 2014 May 2014 May 2015 May 2014 May 2015 May 2014 Strategy Strategy Strategy Strategy Strategy
Note: 1. Cu volumes include Chita since its launch in 2017
49 Colour palette
35 204 108 221 Key Take-Aways 176 237
151 240 151 146 151 48 1 Progress on the way to world–class HSE standards and clear roadmap for the environmental 0 226 program – “flagship” Sulphur Capturing Project at Nadezhda progressing at full speed 0 229 0 234
20 139 Redefined mining projects portfolio – development of “base portfolio” with stable production profile 68 174 2 108 214 for the next 5-10 years and identification of upside potential
214 166 5 175 0 190 2014 management focus on ROIC increase: low cost initiatives with cumulative EBITDA impact for 3 2015-2017 - up to USD1.0 bn 236 64 236 149 236 220
181 248 Going forward - focus on growth opportunities in Polar Division’s Upstream; 206 205 4 finding new project opportunities based on undeveloped resources 229 162
73 225 129 142 Next steps in production assets assessment: 191 139 5 . “Clusterization” of Polar Division with Tier-1 “Talnakh Cluster” and Non-Tier-1 “South Cluster” . Kola’s “Northern Cluster” (Upstream and Smelting) reconfirmed as Tier-1
6 Key strategic projects (Downstream Reconfiguration, Skalisty, Bystrinskiy) – delivery on track
50 Colour palette
35 204 108 221 176 237
151 240 151 146 151 48
0 226 0 229 0 234
20 139 68 174 108 214
214 166 5 175 0 190 Corporate - Efficiency 236 64 236 149 236 220 Catalysts
181 248 206 205 229 162
73 225 129 142 Pavel FEDOROV 191 139 First Deputy CEO Executive Director Colour palette
35 204 108 221 Corporate – Efficiency Catalysts 176 237
151 240 151 146 151 48
0 226 Investment Governance and Returns 0 229 0 234
20 139 68 174 108 214
214 166 5 175 Delivering on “5 in 4” Efficiency Targets 0 190
236 64 236 149 236 220
181 248 206 205 229 162 Value-Accretive Initiatives 73 225 129 142 191 139
Industry-Leading Shareholder Returns Targets
52 Colour palette
35 204 108 221 Investment Governance and Returns 176 237
151 240 151 146 151 48 Building Best-in-Class Investment Governance System
0 226 0 229 0 234 Strong commitment to Tier-1 asset portfolio – scalable accelerated Relevance for shareholders 20 139 68 174 investments in high-return growth (IRR >20%) 108 214
214 166 estimated “value at risk” 5 175 0 190 Selective investments in greenfield and bluesky growth opportunities depending on quality of >USD4-8bn involving risk-sharing and return-maximizing mechanisms involving projects planning and 236 64 236 149 where necessary extensive networks and leverage of anchor shareholders execution 236 220
181 248 206 205 Compliance with Company’s HSE obligations and sustainable 229 162 development objectives while adhering to strict capital discipline for of mandatory CAPEX 73 225 stay-in-business (SIB) investments 129 142 >USD1.0bn savings already realized 191 139 in 2013-2014
Implementing “best practice” standards for projects execution
53 Colour palette Investment Governance – Focused and Profitable Investment
35 204 108 221 Programme (2015-2018) 176 237
151 240 151 146 151 48 IRR, %
0 226 0 229 0 234 ~100% 100 20 139 68 174 108 214
214 166 >70% 5 175 0 190 >60%
236 64 50 236 149 236 220 >30%
181 248 >25% 206 205 229 162 20 73 225 5.0 1.0 0.7 0.9 1.0 0.4 CAPEX, 129 142 USDbn 191 139 0 Stay-in-Business Brownfield Talnakh Skalistiy Bystrinsky Other Upstream Concentrator and Kola Refinery upgrades Including Sulphur Capturing projects at Polar Division and Gas pipeline system modernization
54 Colour palette
35 204 108 221 Investment Governance - Rethinking Stay-in-Business Capex 176 237
151 240 151 146 151 48 “Stay-in-Business” CAPEX to Revenue Ratio, USDbn
0 226 0 229 2.0 1.0 0.6 0 234 • One-off projects: Expected one-off
20 139 ‘spikes’ – execution of environmental 68 174 programmes, IT infrastructure etc 108 214
214 166 5 175 16% • Base programme: 0 190 “Stay-in-business” CAPEX optimized
236 64 to healthy level in line with industry 236 149 benchmark: 236 220 -70% ~4% 9% - Stricter prioritization of projects 181 248 based on risk assessment 206 205 6-8% 7% 229 162 - Cost optimization due to 5% introduction of tendering 73 225 129 142 procedures 191 139 - FX impact
2012 2013 2014 Annual average Industry 2015-2018E 1 Average 2 Х% “Stay-in-Business” CAPEX, USDbn
Sources: Companies data, Norilsk Nickel estimate Notes: 1. Estimated based on 2014 average metals prices 2. Industry average – 2014 average among BHP, Rio Tinto, AngloAmerican and Vale 55 Colour palette
35 204 108 221 Investment Governance – Managing FX Risks 176 237
151 240 151 146 151 48 Capex Breakdown by Currency Exchange Rate Total CapEx ‘15-18 RUB/USD USD bn
0 226 0 229 FX component 0 234 RUB 20 139 45 68 174 Appreciation ~10 108 214 Against USD RUB per USD 35-40% 214 166 5 175 0 190 60-65% 236 64 236 149 Target Macro 54(1) 236 220 RUB Scenario ~9 RUB per USD 181 248 206 205 229 162
73 225 129 142 RUB 191 139 . “Above average” FX Component is driven by Depreciation 65 ~8 large share of “turnkey” contracts - Bystrinsky Against USD RUB per USD and Sulphur projects
. Under plausible macroeconomic scenario CAPEX sensitivity to FX rate estimated at +/- USD ~USD0.3bn p.a.
Notes: 1. Weighted average of internal exchange rate forecast for 2015-2018 years
56 Colour palette Investment Governance –
35 204 108 221 Reiteration of Medium-Term Capex Guidance 176 237
151 240 151 146 Average Annual CapEx, USDbn 151 48
0 226 0 229 1.0 0 234 Bystrinskiy (cumulative) project financing 20 139 (cumulative for 2015-2018) 68 174 108 214
214 166 5 175 0 190 2.7
236 64 236 149 2.0 2.0 p.a. 236 220 1.3 181 248 206 205 229 162
73 225 129 142 2016-2017 – expected 191 139 2012 2013 2014 Average . 2015-2018 “higher than average” spending (>2.0bn) due FX Component ~20% ~40% ~11% 35-40% to Sulphur projects
. Capex guidance for 2015-2018 reiterated at ~USD2.0bn p.a.
57 Colour palette
35 204 108 221 Investment Governance – Enhanced Project Execution 176 237
151 240 151 146 151 48 In 2014, new Primavera-based planning 0 226 and monitoring system introduced and 0 229 0 234 Management Systems already covers >120 major projects
20 139 New automated solutions for project cost / 68 174 budget control developed 108 214
214 166 5 175 0 190 9 project offices for key projects / programs Project director 236 64 established at HQ and asset levels 236 149 Acquiring and 236 220 New hires for key project management Retaining Talent Management Procurement Execution Support positions 181 248 206 205 229 162
73 225 129 142 191 139 Introduction of customized project-focused KPIs for project managers Project-focused Implementation of strategic projects to Incentive Plans schedule and to budget – substantial part of newly launched long-term incentive plan for NN Top-100 managers
58 Colour palette
35 204 108 221 Norilsk’s “Five In Four” – Healthy Progress 176 237
151 240 In May 2014 we set 2013-2016 target of USD4.0bn in cumulative cash flow improvement – 151 146 151 48 80 % of the target is delivered
0 226 0 229 0 234 Target Cash Flow Effect from Corporate Efficiency Initiatives (2013-2016), USDbn
20 139 68 174 108 214
214 166 4.0 5 175 0 190 0.5 3.2 236 64 236 149 236 220 0.2 0.4 181 248 2.1 206 205 80% 229 162
73 225 129 142 191 139
Reduction in WC Sale of Sale of Cumulative Total achieved Target for 2016 (ex. FX factor) International Assets Non-core Assets SG&A Reduction FCF Effect (announced in May 2014)
59 Colour palette
35 204 108 221 Evolving Perspective on Norilsk Asset Portfolio 176 237
151 240 151 146 Norilsk Nickel Asset Portfolio 151 48
Honeymoon Well 0 226 Maslovskoe 0 229 0 234
20 139 68 174 108 214 Strategic focus on Tier I (>95% of Bystrinsky 214 166 consolidated corporate results) – best in 5 175 class returns and continued improvement 0 190 Legacy assets – historically owned, through sharp focus, capital discipline, non-Tier I compliant, but related search for growth 236 64 Potential/Greenfields and/or influenced by NN business 236 149 236 220 Gas UpstreamCo 181 248 Gas PipelineCo Power 206 205 Kola
229 162
Polar: South Service Companies 73 225 Polar : Cluster (PGM / Tail Co) 129 142 191 139 Talnakh Cluster Logistics
Operating Residual Non-Core Assets Exited or in active disposal stage
Tier I Non-Tier I / Supporting Business
– The size of the bubble represents indicative estimate of the assets’ value compared to each other 60 Colour palette
35 204 108 221 Release of Non-Productive Capital – On Track 176 237
151 240 Closed Transactions Transactions in Closing Residual Assets 151 146 151 48
0 226 0 229 0 234
20 139 68 174 108 214
214 166 5 175 Australia: Africa: Australia: 0 190 . NEGO, Lake Johnston, Avalon/ . Nkomati . Honeymoon Well 236 64 Cawse, Black Swan/Silver Swan 236 149 Russia: 236 220 Africa: . Inter RAO 181 248 . Tati . Property portfolio 206 205 229 162 Russia: . Airline . Minority stakes in power 73 225 129 142 companies 191 139
Cash USD0.2bn USD0.4bn Proceeds:
Total Economic USD0.6bn USD0.4bn Impact:
61 Colour palette
35 204 108 221 “Norilsk Beyond Tier I” – Legacy Assets 176 237
151 240 151 146 Legacy “Non-Tier I” Assets – Stage II Strategic Review 151 48
0 226 0 229 0 234
20 139 South Cluster TailCo Upstream Gas Assets Select Logistics Assets 68 174 108 214
214 166 5 175 0 190
236 64 236 149 Development / 236 220 Monetization “Do Nothing”
181 248 206 205 229 162
73 225 129 142 191 139 “Status quo” Potential value hypothesis
62 Colour palette
35 204 108 221 South Cluster “TailCo” – Overview 176 237 Norilsk Concentrator (built in 1938) 151 240 Talnakh 151 146 Polar Division Concentrator 151 48
0 226 0 229 0 234 Share of South Cluster in 20 139 Norilsk 2014 Production, % 68 174 4% 108 214
214 166 Production Talnakh Cluster Medvezhiy Ruchey Open Pit Mine (1945) 5 175 0 190 since 1960-70s 236 64 236 149 236 220 South Cluster
181 248 206 205 229 162
73 225 Lebyazhye Tailings Dam 129 142 191 139 Tailings Dams
Norilsk Concentrator
Zapolyarny mine Production since 1940s Medvezhiy Ruchey open pit
Sources: Company data
63 Colour palette
35 204 108 221 South Cluster “TailCo” – Not A “Tier I” Asset 176 237
151 240 South Cluster TailCo Ore Production Profile, Mt 151 146 151 48
0 226 2.9 0 229 2.7 0 234
20 139 -55% 68 174 1.2 1.2 1.2 108 214
214 166 5 175 0 190 2010 2014 2018E 2020E 2025E 236 64 236 149 236 220 Tier I Asset Criteria “TailCo” 2014 Pro-Forma
181 248 206 205 Large Scale 229 162 ~USD0.6bn (USD1bn+ revenue) 73 225 129 142 High Margins 191 139 ~35% (40%+ EBITDA margin) ?
Long Reserve Life <20 (>20 years)
. Stage II of strategic review of South Cluster initiated
64 Colour palette
35 204 108 221 Norilsk Gas Assets – Geographical Footprint 176 237 YaNAO Krasnoyarsk region 151 240 151 146 Deryabinskoe 151 48 Geofizicheskoe Soletsko-Khanaveyskoe 0 226 Baikalovskoe 0 229 0 234 Payakhskoe Tota-Yakhinskoe NNK 20 139 [150km] 68 174 108 214 Pelyatkinskoe Semakovskoe Antipautinskoe
214 166 Severo- 5 175 Parusovoe 0 190 Soleninskoe Dudinka Uzhno-Soleninskoe Talnakh
236 64 Zapadno- 236 149 Messoyakhskoe Yamburg Messoyakhskoe 236 220 [100km] Norilsk
Vostochno- 181 248 Messoyakhskoe 206 205 Nakhodkinskoe 229 162
73 225 Yuzhno- Suzunskoe Urkharovskoe Messoyakhskoe [300km] 129 142 Norilsk Nickel condensate pipeline 191 139 Pyakakhinskoe Norilsk Nickel gas pipeline
Norilsk Nickel gas fields Urengoy
Khalmerpautinskoe Vankor Potential / under construction gas pipelines Tazovskoe Unified gas supply system
Large deposits Zapolyarnoe Tagulskoe
65 Colour palette
35 204 108 221 Norilsk Gas UpstreamCo – Potential vs. Limited Market 176 237
151 240 Current Asset Structure Production Outlook 151 146 151 48
Gas reserves, Year of Field Gas Production – Full Potential 13-16 bcm 0 226 ABC +C (bcm) Commissioning 0 229 1 2 0 234 . Distance to prospective Vostochno- Pelyatkinskoe 199 20 139 2003 Messoyakhskoe field: ~100km 68 174 108 214 . Estimated CAPEX required to connect to external gas pipeline systems: up to 214 166 USD1.5bn 5 175 South- 0 190 Soleninskoe 58 1972 Norilsk Region Consumption Outlook, bcm 236 64 236 149 3.4 236 220 3.3 3.3 3.1 3.0 2.9 North- 181 248 54 1983 206 205 Soleninskoe 229 162
73 225 129 142 191 139 Messoyakhskoe 7 1963
2015 2016 2017 2018 2019 2020
. Yet with the potential to produce 5.0x of the current production and a long-term development plan (assessed at up to USD1.5bn of capex and 5-10 year program) it might have an appeal for an investor with conviction for the region and the story
66 Colour palette
35 204 108 221 Norilsk Gas UpstreamCo - Overview 176 237 Severneft 151 240 151 146 Urengoy 151 48
0 226 0 229 Gas reserves, bcm 35,700 3,125 317 130 150 50 0 234
20 139 68 174 108 214 Gas production 487.4 62.2 3.8 1.7 1.4 1.1
214 166 5 175 0 190 Share of liquids in total 10% 8% 4% 5% 18% 19% reserves, % 236 64 236 149 236 220
181 248 Market cap, USD bn 65.9 29.5 – – – – 206 205 229 162
73 225 Connection to Unified Gas 129 142 191 139 Supply System
. Important asset for ensuring uninterrupted energy supply of the core Norilsk production base . UpstreamCo – a potentially attractive, but far-flung gas and relatively small gas asset, only a minor portion (4%) of reserves is liquid hydrocarbons and no target market in proximity
Sources: Companies data, Factset EnergyCo – Norilsk Nickel management estimate 67 Colour palette
35 204 108 221 Norilsk Logistics Business – Results of Portfolio Review 176 237 “Sea Logistics” – fully integrated in Norilsk value chain 151 240 151 146
151 48 Polar Transportation Division: ▪ Port of Dudinka ▪ Container park 0 226 0 229 0 234 Murmansk Transportation Division: ▪ Sea terminal 20 139 ▪ Arctic fleet 68 174 108 214 “River Logistics” – need to control operational risks 214 166 5 175 0 190 Lesosibirsk Port Krasnoyarsk River Port Yenisei River Shipping Company
236 64 Sale 236 149 236 220 Arkhangelsk Sea Port
181 248 206 205 229 162
73 225 129 142
191 139 Share of Norilsk Nickel Cargoes in Total Turnover Total in Cargoesof NickelNorilskShare
Availability of Alternative Service Providers for Norilsk Nickel
. New transportation and logistics strategy developed and approved by the Board in May 2015 . Based on the results of extensive strategic review of Norilsk’s logistics assets, Arkhangelsk Sea Port marked for sale
68 Colour palette
35 204 108 221 Arkhangelsk Sea Port – Planned Disposal 176 237
151 240 Assets Overview Key Operating Data 151 146 151 48 ▪ Arkhangelsk Sea Port – sea transportation hub, Cargo Turnover Mt 0 226 rd 0 229 located on the ‘Northern Sea Route’ 3 Parties Norilsk Nickel 0 234 ▪ Primary activity - stevedoring and warehousing of all -4% p.a. 20 139 1.7 1.7 1.6 68 174 types of cargoes 1.5 108 214 ▪ Additional services include vessel towing and 1.4 1.3 1.1 1.1 214 166 5 175 maintenance, sea and river freight forwarding services 0 190 0.3 0.4 0.5 0.4 236 64 2011 2012 2013 2014 236 149 236 220 Turnover by Type 181 248 206 205 229 162
73 225 129 142 25% 191 139 General 40% Bulk
Containers 35%
69 Colour palette
35 204 108 221 Stage II Strategic Review for Select Legacy Assets 176 237
151 240 May 2015 151 146 151 48 . Board’s Strategy Committee approval for commencing 0 226 0 229 0 234 Stage II strategic review for Gas UpstreamCo, TailCo and Arkhangelsk Port 20 139 68 174 108 214 2H 2015
214 166 5 175 0 190 . Internal assets / corporate restructuring on the basis of identified value creation hypotheses 236 64 236 149 236 220 . Finalisation of the investment case and choice of optimal 181 248 development / monetization scenario (turnaround, demerger, 206 205 229 162 sale, equity partnership)
73 225 129 142 191 139 Q1 2016 . Due process of the Board review and approval
. Subject to corporate approvals, announcement of transaction structure and terms
70 Colour palette
35 204 108 221 Bystrinsky Project – Tier I Asset Upon Launch 176 237
151 240 151 146 Upon launch of the production Bystrinsky project is to become a Tier I asset 151 48
0 226 0 229 0 234 Tier I Asset Criteria Bystrinsky (Steady State)
20 139 68 174 Large Scale 108 214 ~USD0.9-1.2bn (USD1bn+ revenue) 214 166 5 175 0 190
236 64 High Margins 236 149 ~50% 236 220 (40%+ EBITDA margin)
181 248 206 205 229 162 Long Reserve Life 73 225 >30 years 129 142 (>20 years) 191 139
Exploration Potential
71 Colour palette
35 204 108 221 De-Risking Bystrinsky Project (1/2) 176 237
151 240 151 146 151 48
0 226 0 229 0 234 Railroad Energy Supply
20 139 68 174 SPV mechanism, Compliance with 108 214 costs transfer, tariffs Federal Grid standards
214 166 5 175 0 190 Access to Bank and Subcontractor 236 64 236 149 New Projects Bystrinsky Financing 236 220 Exploration and Project Negotiations with 181 248 206 205 existing licenses creditors / on-time 229 162 completion of projects
73 225 129 142 Export and Labour and Social 191 139 Fiscal Regime Sustainability Constructive dialogue Negotiations with key with authorities stakeholders
72 Colour palette
35 204 108 221 De-Risking Bystrinsky Project (2/2) 176 237
151 240 151 146 151 48 . Potential to create a mining hub in the region / capitalize on the Asian growth 0 226 0 229 0 234 opportunity – strategic focus on Norilsk’s operatorship and consolidation
20 139 68 174 108 214 . Credit Committee / Management Board approval of up to USD1.0bn interim project finance from VTB Bank; discussions with VEB on the long-term project finance continue 214 166 5 175 0 190 . New equity partners considered – VTB Bank / target market investors 236 64 236 149 236 220 . Enhanced upside and limited downside to Norilsk’s shareholders through non- 181 248 206 205 229 162 recourse leverage and strong long-term partners
73 225 129 142 191 139
73 Colour palette
35 204 108 221 Palladium Market Initiatives – Context and Progress Update 176 237
151 240 On-the-Ground Stocks – Key Factor of 151 146 Uncertainty on the Palladium Market 151 48 Shipments from Russian Stockpiles (Gokhran)
0 226 MOz Deliveries from Ministry of Finance stockpiles, koz 0 229 Opaque Stocks 12 0 234 Not-For-Sale 1,800 Pipeline inventory 20 139 Market makers 68 174 108 214 9 Transparent stocks (ETFs, TOCOM, NYMEX) 214 166 1,200 5 175 0 190
6 236 64 236 149 Opaque Stocks 236 220 Strategic reserves 600 Strategic long term investors
181 248 3 206 205 229 162 Opaque Stocks Potentially Available 0 73 225 0 For Immediate Purchase 129 142 2006 2007 2008 2009 2010 2011 2012 2013 2014 191 139 0
Palladium Fund – Status Update
. Status: Negotiations of framework agreement with the Central Bank of Russian Federation . Norilsk Nickel Role: LP partner with a 49% interest and marketing agent (Potential partners – Interros, others) . Target capital commitment of Norilsk Nickel: up to USD200mn equity
74 Colour palette
35 204 108 221 Shareholder Returns – Consistent Delivery on Dividend Targets 176 237
151 240 151 146 Announced Dividend Payments, 2013-2014 Long-Term Dividend Target 151 48 Interim Final 0 226 0 229 0 234 4.8 50% of EBITDA
20 139 68 174 108 214 (1) 2.8 214 166 5 175 2.2 0 190 1.1 236 64 (1) 236 149 236 220 2.0 1.1
181 248 206 205 229 162 For 2013 For 2014 For 2015 onwards
73 225 129 142 191 139 Dividend target of USD7.0 bn including “special . Long-term guidance for dividend payments as 50% dividends” for 2013-2014 and 2017 will be fully of EBITDA ensuring industry-leading dividend yield delivered upon payment of final dividend for 2014 . In case of excess liquidity Norilsk will consider additional opportunities for returning capital to shareholders
Notes: 1. Declared interim and final dividends for 2014 converted into USD based on FX rate as of the date of announcement
75 Colour palette
35 204 108 221 Shareholder Returns – Best-in-Class Dividend Yield 176 237
151 240 151 146 Average Dividend Yield, 2015YTD1 151 48
0 226 0 229 % 0 234
20 139 15.2% 68 174 108 214
214 166 5 175 0 190
236 64 236 149 236 220 8.5%
181 248 206 205 229 162 5.4% 5.0% 73 225 4.6% 129 142 191 139
Norilsk Nickel Vale BHP Billiton Anglo American Rio Tinto
Sources: Bloomberg, Companies Data Notes: 1. Calculated as sum of paid interim and announced final dividends for 2014 divided by average share price in January-April 2015 76 Colour palette
35 204 108 221 Enhancing Shareholder Returns – 2015 Buyback 176 237
151 240 151 146 151 48 In April 2015, Norilsk Nickel announced its plans to buy back up to USD500mn of its own shares in 2015 to take advantage of share price weakness resulting from excess volatility 0 226 0 229 0 234 The announced buyback is a clear signal of the conviction of Norilsk Nickel’s 20 139 68 174 108 214 management of the fundamental value of the Company’s and confirms the Company’s
214 166 focus on maximization of shareholder returns 5 175 0 190 The shares to be purchased through open market operations and cancelled afterwards 236 64 236 149 236 220 Deutsche Bank appointed as the Company’s buyback agent 181 248 206 205 229 162 Main shareholders informed the management of the decision not to participate in the 73 225 129 142 191 139 potential buyback
Regular progress updates will be provided
77 Colour palette
35 204 108 221 176 237
151 240 151 146 151 48
0 226 0 229 0 234
20 139 68 174 108 214
214 166 5 175 0 190
236 64 Markets & Marketing 236 149 236 220
181 248 206 205 229 162
73 225 129 142 191 139 Anton BERLIN Head of Strategic Marketing Colour palette
35 204 108 221 Markets 2015-2016 Outlook 176 237
151 240 . Bullish price outlook based on market turning to deficit 151 146 151 48 . Healthy and growing global industrial demand underpinned by Chinese stainless steel - 1Q confirms the growth outlook for strong nickel usage in China (~4% p.a.) 0 226 Indonesian export ban is effective and expected to stay unchanged 0 229 Nickel . 0 234 . Pilipino deliveries and new projects do not compensate lost Indonesian supply
20 139 . China is becoming increasingly more reliant on imports of refined nickel 68 174 108 214 . LME stocks stabilized and expected to decline from now onwards
214 166 5 175 0 190 . Bullish price outlook based on sustained deficit, more bullish palladium . Russian strategic reserves (Ministry of finance) depleted 236 64 236 149 . Demand growth driven by tightening environmental legislation globally and 236 220 PGMs booming Chinese car industry 181 248 . Sustainable investment demand absorbing physical metal 206 205 229 162 . Declining global mine capacities . More than half of global on-ground PGMs inventories are not available for 73 225 immediate consumption 129 142 191 139
. Neutral price outlook, a marginal surplus Copper . China remains the biggest driver, but at slower pace . Moderate level of stocks coupled with possible supply disruptions (5-6% historical average) may easily wipe out the surplus
79 Colour palette
35 204 108 221 Preferred Metals Basket 176 237 Metal balances: Deficit in PGMs and Ni 151 240 151 146 for the Next Two Years Preferred Metal Basket for the Medium Term 151 48
5.3% 0 226 Consensus commodity price outlook 0 229 0 234 40%
20 139 2.2% 2.3% 30% Norilsk 68 174 1.9% 108 214 Nickel 1.0% 0.8% 0.8% Metal 0.5% 214 166 20% Basket 5 175 (exc. Al) 0 190 -0.5% 10% 236 64 236 149 236 220 -2.0% 0%
181 248 -3.2% 206 205 -10% 229 162
-5.3% 73 225 -20% 129 142 191 139 -7.1% -30%
-9.1% -40% Pd Pt Ni Cu Al Thermal Iron Ore 2014 2015Е 2016Е 2017Е Coal Nickel Copper Palladium Platinum 2015E 2016E Aluminum Gold Norilsk Nickel metal basket Iron Ore Crude Oil (Brent)
Sources: Company data, Bloomberg consensus, Citi Research, March 2015
80 Colour palette
35 204 108 221 Nickel Inventory at a Turning Point 176 237
151 240 LME: More Transparent Stock Means Better Market 151 146 LME Nickel Price Down 6%, Inventories up 4% YTD Visibility 151 48 kt USD/t 0 226 0 229 126 0 234 500 35,000 140
20 139 194 68 174 30,000 108 214 400 25,000 413 444 214 166 5 175 262 0 190 300 20,000
236 64 236 149 15,000 2013 2014 2015 236 220 200 LME Stock Non-LME Stock 10,000 181 kt 248 206 205 229 162 100 Almost 40% of the increase in LME nickel stock was 5,000 attributed to relocation of metal from Chinese bonded 73 225 warehouses 129 142 0 0 191 139 The growth of total global refined nickel stock has grown Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 (+114 ktons or +25%) over the course of 2013-2014 is substantially lower than increase of LME stock (+70%) Johor Rotterdam Other Nickel Price
Sources: Company data, Bloomberg
81 Colour palette
35 204 108 221 Growing Nickel Consumption 176 237
151 240 Primary Nickel Consumption (Stainless Steel) High-grade nickel consumption forecast (‘000 tpa) 151 146 151 48 1,600 kt +5% +4% +2.7% p.a 0 226 1,200 0 229 867 0 234 754 807 340 1,460 800 403 541 612
20 139 400 290 68 174 597 571 567 565 582 581 1,120 15 108 214 0 35 920 2010 2011 2012 2013 2014 2015E 214 166 630 5 175 RoW China2 0 190 Non-stainless Stainless steel (other) 160 236 64 140 236 149 Stainless steel (cathodes) 236 220 350 380
181 248 206 205 Primary Nickel Consumption (Non-Stainless Steel) 2015 Growth 2025F 229 162 (15-25) 600 kt +4% +3% 73 225 129 142 151 161.3 168.2 191 139 400 124 140 134 In the mid-term nickel consumption is mostly driven by stainless steel demand In the long-term usage of high grade nickel (cathodes, 200 359 359 368 377 332 341 briquettes) will see growth in non-stainless segments
0 2010 2011 2012 2013 2014 2015E RoW China
Sources: Norilsk Nickel estimates, broker reports
82 Colour palette
35 204 108 221 Chinese Stainless Remains Major Nickel Demand Driver 176 237
151 240 Solid Growth In Global Nickel Consumption … … Due to Chinese High Nickel Stainless 151 146 151 48 +4% kt 0 226 2,135 +5% 0 229 Consumption in Stainless Steel +4% +3% 0 234 Consumption in non-stainless applications 2,050 +3% 20 139 68 174 108 214 1,969 +5% 214 166 1,916 5 175 +11% 0 190 +9%
236 64 1,814 236 149 236 220
181 248 206 205
229 162
73 225
1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15
129 142 191 139
Other stainless steel Y-o-Y
Asia Asia Asia
2014 2015 2016 2017
China China
2013 Europe
Europe High Ni-contained Stainless Steel (300 series)
Americas Americas
(ex China) (ex
(exChina)
China share of global Ni demand has grown from 5% to 50% over the last 15 years Chinese Stainless Steel industry (Tsingshan, Fujian Fuxin, Shandong, Sichuan Southwest, Baosteel, TISCO and others) is expected to further expand capacity at over 5% CAGR in 2015-2017 Solid growth expected in global alloy and superalloy sector mainly driven by aerospace industry Moderate growth in ROW expected in 2015 and beyond
Source: Company data
83 Colour palette Nickel Ore Stocks in China are Depleting, Imports of Refined
35 204 108 221 Nickel on the Rise 176 237 Chinese Ni Ore Inventories Down: 2 Months of 151 240 151 146 Consumption Left Nickel Feed for Chinese NPI to Reduce by 35% by 2016 151 48 Stocks, Consumption, Ni contained, 490 mln. wet mt months 8 500 ktons 471 0 226 40 0 229 105 6 400 374 364 0 234 30 80 4 300 262 370 150 20 139 20 244 68 174 108 214 2 200 10 146 167 284 310 300 100 86 74 97 91 216 214 166 0 0 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 29 60 48 65 95 130 120 5 175 2 21 55 0 190 0 26 26 32 HG ore (Ni > 1.7%) MG ore (Ni 1.3-1.6%) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Blended HG & MG ore LG ore (Ni 0,8-1,2%) 236 64 Month of consumption HG & MG ore Ore imported from the Philippines Ore imported from Indonesia 236 149 Ore from Chinese stock 236 220 Strong increase of FeNi imports to China as 181 248 NPI is reducing sharply China’s Dependence on Imported Refined Ni Set to Rise 206 205 229 162
20 50
Y-on-Y Q1 45 73 225 23% 22% 28% 129 142 15 39% 34% 42% 191 139 40 49% 10 35 64% 67% 48% 53% 61% -23% 30 47%
5 Ni Ni import(Ni units), kt
- 25 NPI output NPI output units), (Ni kt
Fe 13% 13% 13% 11% 11% 11% 0 20 Jan 14 March 14 May 14 July 14 Sep 14 Nov 14 Jan 15 March 15 2010 2011 2012 2013 2014 2015E Fe-Ni import LHS NPI output RHS Domestic feed Imported feed Imported refined nickel
Source: Company data, China custom statistics, Mines and Geosciences Bureau Republic of Philippines region
84 Colour palette
35 204 108 221 Nickel Feed for China: Little Progress So Far 176 237
151 240 151 146 Only 3 Projects Have High Probability of Completion Indonesia NPI Output Forecast for 2015-2020 151 48 Mt 274 Project Status/ Start Capacity, 234 0 226 Probability 0 229 name Process year ktpa Ni 0 234 Indoferro BF Started 2013 12 167 20 139 PT Cahaya 68 174 BF Started 2014 3 109 108 214 Modern Metal Industry 54 214 166 Tsingshan RKEF High 2015 30 20 5 175 6 0 190 2014 2015 2016 2017 2018 2019 2020 9 projects RKEF, Medium 2016- 86 Comissioned in 2014-2015 High probability 236 64 236 149 BF 2018 Medium probability Low probability 236 220 RKEF, BF, 8 projects Low 2016-2017 163 181 248 Leach 206 205 Philippines Ore Import to China Ahead of 229 162 Mined Production in 2014 Indonesia and the Philippines were the major source of nickel 73 225 129 142 feed to China 38% 191 139 20% Indonesia has ceased shipping ore and is unlikely to be a 27% significant source of NPI in the next 5 years 12% 2% Pilipino shipments exceed mining due to sales of ore stocks -3% Nickel ore reserves and grade are substantially less in the 2012/2011 2013/2012 9М 2014/9М 2013 Philippines and cannot substitute former Indonesian supply Nickel ore production Nickel ore export to China Closure of NPI plants in China provides no stimulus to Change in Philippines nickel ore production and export to develop ore supply China Y-to-Y,%
Sources: Company estimates, China custom statistics, Mines and Geosciences Bureau Republic of Philippines (not include Tawi Tawi) region
85 Colour palette
35 204 108 221 Nickel Market Entering Deficit 176 237
151 240 Nickel Market Balance: Growing Market Deficit 151 146 151 48 kt 175
0 226 0 229 94 98 0 234
20 139 68 174 108 214 -2 (73) 214 166 5 175 2010 2011 2012 2013 2014 2015E 2016E 0 190
236 64 … New Projects Do Not Compensate For NPI Losses 236 149 Global Nickel Consumption Keeps Growing … 236 220 New projects growth kt kt 181 248 Change at existing 206 205 operations 229 162 120 65 100 NPI production losses 73 225 (incl. effect on Indonesian 129 142 80 191 139 78 NPI ramp-up) 60 40 88 20
2014 2015 2016 0 -20 2014 2015 2016 New demand increase -40
86 Colour palette
35 204 108 221 Palladium Demand Outstrips Supply 176 237 Automotive Industry is the Major Driver for Pd Palladium ETFs Holdings Change: 151 240 151 146 Demand Investors Fatigue Could be Temporary? 151 48 koz y-o-y 0 226 Mo +2% +2% 0 229 +1% +2% 1,104 10.1 10.2 904 0 234 9.5 9.6 9.8 507 430 20 139 381 68 174 108 214 24
214 166 (120) 5 175
0 190 (520) 2014
2013 2008 2009 2010 2011 2012 2013 2014 2015YTD Other
236 64 Other
2016E 2017E
236 149 2015E
Jewellery Chemical Jewellery
236 220 Chemical
Automotive Automotive
181 248 New Projects Require Long Time to Develop Global Palladium Market: Major Structural Deficit 206 205
229 162 Supply outlook by source, koz Surplus / (deficit), koz
8,000 998 73 225 129 142 191 139 7,000
6,000 (494) 5,000 (956)
(1)
2011 2012 2013 2014
2015E 2016E 2017E 2018E 2019E 2020E Production at existing sites Probable projects Possible projects Gokhran deliveries 2011 2012 2013E 2014E 2015E 2016E Primary metal consumption
Source: Company data
87 Colour palette
35 204 108 221 Platinum: Supply Side Issues Persist 176 237 Automotive Industry is the Major Driver for Pt 151 240 151 146 Demand Platinum ETFs Holdings Change 151 48 Moz +2% +2% koz y-o-y +5% 0 226 +4% 8.6 0 229 8.3 8.4 902 0 234 7.9 7.6 20 139 583 68 174 108 214 384 276 183 229 214 166 102 5 175
0 190 2014
236 64 2013 (60)
Other Other
Glass Glass
2016E 2017E
236 149 2015E Catalyst
236 220 Jewellery 2008 2009 2010 2011 2012 2013 2014 2015YTD
Automobile Automobile
181 248 206 205 Pt Global Supply: Steady Decline of South Africa Global Platinum Market: Deficit Holds 229 162 koz Surplus / (deficit), koz 73 225 7,000 500 129 142 191 139 6,000 13% 13% 5,000 14% 12% 11% 4,000 15% 3,000 78% (264) 74% 2,000 73% 73% 72% 65%
1,000 (621)
0 ≈ 2006 2011 2012 2013 2014 2015E
South Africa Russia Others Canada Zimbabwe 2011 2012 2013 2014E 2015E 2016E
Source: Norilsk Nickel, Johnson Matthey
88 Colour palette Recycled Supply: Palladium Peak Loadings Have Passed,
35 204 108 221 Platinum on its Way 176 237 …leads to slower CAGR of Palladium recycling 151 240 151 146 Pd loadings peaked before 2000s… in 2015-20 151 48 MOz MOz g/per vehicle 0 226 8 6.0 4 0 229 Avg age of recycled catalyst: 10-12 years 0 234 7 5.0 CAGR +5% 6 3 CAGR 5 4.0 +12% 20 139 68 174 4 3.0 2 108 214 3 2.0 2 1 214 166 1 1.0 5 175 0 190 0 0.0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E
236 64 Pd Global Automotive Demand Pd Loadings in N.America Pd Autocatalyst Recycling 236 149 236 220 Platinum usage peaked in mid-2000s … results in higher CAGR of Pt recycling in 2015-18 181 248 206 205 MOz g/per vehicle MOz 229 162 5 Avg age of recycled catalyst: 10-12 years 6.0 3 FLAT CAGR +7% 73 225 4 5.0 CAGR +5% 129 142 191 139 4.0 2 3 3.0 2 2.0 1 1 1.0 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E 0 0.0 -1 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Pt Global Automotive Demand Pt Loadings in Europe Pt Autocatalyst Recycling
Source: Company data
89 Colour palette
35 204 108 221 Global Car Industry Drives PGM Demand 176 237 Increasing Demand for PGMs: Global Car Production Growth in Vehicle Production: Diesel vs. Gasoline. 151 240 151 146 up 3% in 2014 Lead by China, up 7% Faster Gasoline Growth Driven by China 151 48
0 226
15% mln +3%
0 229 CAGR Diesel
0 234 10% l +5%
→ CAGR
Gasoline India
5% Brazi
Russia ASEAN
20 139 Argentina
2014 2014
68 174
0%
108 214 EU 77 -5% USA 74 Japan 68 71
Turkey 64 67 Canada China 59 -10% Mexico
214 166 in Growth 5 175 -15% .Korea South Share in the world automobile production→ 0 190 -20% 17 17 17 17 18 19 20 236 64 -25% 2011 2012 2013 2014 2015E 2016E 2017E 236 149 00% 10%100 20%200 30%300 40%400 50%500 60%600 70%700 80%800 90%900 100%1000 Diesel Gasoline Other 236 220 Chinese PGM Loading – Upside to Developed 181 248 206 205 World Gasoline – More Pd Intensive 229 162
g/per vehicle 73 225 5.0 100% 129 142 191 139 4.0 80%
3.0 60%
2.0 40%
1.0 20%
0.0 0% Developed Economies China Diesel (including HDD) Gasoline Pt Pd Rh
Source: Company data
90 Colour palette
35 204 108 221 Global Above-Ground PGM Stocks: Not as Much as it May Seem 176 237 Above-Ground Stocks: Only Half of Pd and a Third of The Market is Overestimating the Size of Available 151 240 151 146 Pt is Available for Immediate Consumption PGMs Stocks 151 48 Moz Months of consumption 0 226 15.0 not available 25 0 229 for immediate 12.0 0 234 consumption 20 9.0 not available 15 20 139 6.0 for immediate 68 174 108 214 3.0 consumption 10 0.0 5 214 166 Palladium Platinum Rhodium 5 175 Not-For-Sale Stocks ( consumer inventory and production-in-progress, coins, 0 0 190 strategic reserves, etc.) Palladium Platinum Restricted Availability (NYMEX & TOCOM, limitation on monthly delivery volumes) Norilsk Nickel Standard Bank 236 64 236 149 Low Elasticity Stock (ETFs) 236 220
181 248 Shipments from Russian Stockpiles (Gokhran) Switzerland Pd Stockpile: 2014 Back to 1988 Level 206 205 229 162 Deliveries from Ministry of Finance stockpiles, kOz Net annual cumulative increase/(reduction) in stockpile, MOz 5.0 1,800 73 225 4.0 129 142 191 139 3.0 1,200 2.0 1.0 0.0 600 -1.0 -2.0 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 1988 1992 1996 2000 2004 2008 2012
Sources: Company estimates
91 Colour palette
35 204 108 221 Discount of Palladium to Platinum Set to Decline Further 176 237
151 240 The Price Gap is Narrowing 151 146 Palladium is Undervalued Relative to Platinum 151 48
0 226 1,800 USD/oz 1,600 USD/oz 0 229 0 234 1,600
20 139 1,400 1,200 68 174 108 214 1,200
214 166 800 5 175 1,000 0 190 800 236 64 400 236 149 600 236 220 400 181 248 0 206 205 229 162 200
0 73 225 -400 129 142 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 191 139 YTD YTD Pd Pt Pt premium over Pd
Palladium and platinum come from the same mines, with similar processing costs
Both metals have almost equal importance to the automotive sector, which represents 70% of the PGM demand
The current discount of palladium to platinum has limited justification based on fundamentals; this discount has been reducing since 2008
Source: Company data
92 Colour palette
35 204 108 221 Copper Market Remains Balanced, Inventories Low 176 237 China Will Remain the Main Driver for 151 240 151 146 Cu Consumption Growth LME Copper Price and Stocks 151 48 Mt kt Price, USD/t 0 226 +3% 1,000 12,000 0 229 +3% +4% 10,000 0 234 +4% 800 23.3 23.9 22.6 8,000 20 139 21.8 600 68 174 20.6 6,000 108 214 400 4,000 200 214 166 2,000 2013 China Other 2014 China Other 2015 2016 2017 5 175 0 190 countries countries 0 0 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15
236 64 COMEX SHFE LME LME Price 236 149 Copper Mine Disruptions: On Average 5-6% 236 220 Annualy Copper Supply / Demand Balance
181 248 25,000 kt 10.0% 206 205 kt 229 162 560 20,000 8.0%
73 225 5.7% 129 142 5.4% 15,000 8.0% 6.0% 260 191 139 210 5.8% 5.8% 10,000 5.0% 4.0% 10 1.4% 3.5% 5,000 2.0%
0 0.0% 2008 2009 2010 2011 2012 2013 2014 2015 (330) YTD 2010 2011 2012 2013 2014 2015E 2016E 2017E Initinal mine production Supply disruptions
Source: Company data, Macquire Research, Wood Mackenzie
93 Colour palette
35 204 108 221 A Clear and Transparent Sales Strategy 176 237
151 240 151 146 151 48
0 226 0 229 0 234
20 139 68 174 108 214
214 166 5 175 0 190
236 64 236 149 236 220
181 248 206 205 229 162 Closely aligned with the upgrade and reconfiguration of operations 73 225 129 142 191 139 The focus on industrial consumers in nickel and PGM markets remains an essential element of the marketing strategy and will be enhanced further
Forming strategic alliances with anchor clients to develop synergies
Reliability of supply and excellent supply record are a substantial competitive advantage of Norilsk highly valued by customers
94 Colour palette
35 204 108 221 Creating Value: USD1.2bn Already Released to Shareholders 176 237
151 240 For Customers… 151 146 151 48 The Company will strengthen its bond with industrial customers by introducing 0 226 a sophisticated technical marketing service with in-depth knowledge on nickel 0 229 0 234 Client use in order to better understand and follow customer needs and thus creating
20 139 a capacity to bring additional value to consumers 68 174 108 214 The planned upgrade and reconfiguration of operational assets would allow the Technical 214 166 Company to address the needs of its customers with a more tailored approach 5 175 Marketing 0 190 Group The Company will seek profitable opportunities to further expand its nickel 236 64 236 149 customer base and products portfolio while still ensuring 100% liquidity of the Operations Sales 236 220 production
181 248 206 205 229 162
73 225 129 142 191 139 … And Shareholders Sales successfully managed through the cycle including global crisis – converting metal into cash
Improved EVA-based performance metrics introduced in sales and marketing since 2013 has allowed for over USD1.2bn of working capital released to shareholders as dividends
95 Colour palette
35 204 108 221 176 237
151 240 151 146 151 48
0 226 0 229 0 234
20 139 68 174 108 214
214 166 5 175 0 190 2014 Financial Performance
236 64 236 149 Highlights 236 220
181 248 206 205 229 162
73 225 129 142 Sergey MALYSHEV 191 139 Deputy CEO Chief Financial Officer Colour palette
35 204 108 221 2014 Financial Results 176 237
151 240 151 146 In USDm 2014 2013 % Change 151 48
0 226 Revenue 11,869 11,499 3% 0 229 0 234 Expenses (cash) 6,188 7,301 (15%) 20 139 68 174 108 214 Adjusted EBITDA1 5,681 4,198 35% 214 166 5 175 0 190 Adjusted EBITDA margin, % 48% 37%
236 64 236 149 236 220 Net Income 2,000 765 161%
181 248 206 205 Net income before impairment & FX loss 3,968 2,537 56% 229 162
73 225 Capital Expenditure 1,298 1,989 (35%) 129 142 191 139 Free Cash Flow2 4,725 2,606 81%
ROIC3 29% 15%
Net Debt / Adjusted EBITDA 0.6x 1.1х
Source: Norilsk Nickel Notes: 1. Adjusted EBITDA excludes impairments on property, plant and equipment. 2. Free cash flow is a non-IFRS measure and is calculated as net cash generated from operating activities less net cash used in investing activities for the reported period 97 3. ROIC is a non-IFRS measure and is calculated as net operating profit before impairment charges on property, plant and equipment, divided by average annual invested capital (total assets less excess cash and cash equivalents, financial assets, investments in associates and non-interest-bearing current liabilities)
Colour palette
35 204 108 221 A Year of 2014 176 237
151 240 151 146 Markets and Macroeconomic Headwinds Stable and Resilient Business Model 151 48 Change in Realized Metals Prices, 2013-2014 Revenue and EBITDA Margin, USDbn 0 226 0 229 0 234 11.5 11.9
13% 11% 48% 20 139 37% 68 174 108 214 2013 2014 214 166 5 175 Free Cash Flow, USDbn 0 190 4.7 -6% -6% 236 64 2.6 236 149 Nickel Palladium Platinum Copper 236 220
181 248 Russian GDP Growth Rate, YoY 2013 2014 206 205 229 162 4.3% Net Debt / EBITDA 3.4% 73 225 1.1x 129 142 191 139 1.3% 0.6x 0.6%
2011 2012 2013 2014 2013 2014
Norilsk Nickel benefits from stable and resilient business model allowing for growth in times of turbulence on commodity and home markets
Source: Bloomberg, Russian Federal Statistics Service, Company data
98 Colour palette
35 204 108 221 Solid Financial Performance vs. Global Peers 176 237
151 240 151 146 Leading Returns: EBITDA Margin, 2014 Conservative Leverage: Net Debt/EBITDA, 2014 151 48
0 226 0 229 48% NN 0.6х 0 234
20 139 68 174 108 214 48% Rio 0.6х 214 166 5 175 0 190
236 64 41% BHP 0.8х 236 149 236 220
181 248 206 205 229 162 35% Anglo 1.6х
73 225 129 142 191 139 25% Vale 1.8х
6% GlenXstrata 2.4х
Source: Bloomberg, Company data, 2014 Financial results
99 Colour palette
35 204 108 221 Consistently Beating Market Expectations 176 237
151 240 Norilsk Nickel’s 2014 results exceeded market expectations in all dimensions 151 146 151 48 USDbn
0 226 0 229 0 234 1.6 +194% Free Cash Flow 20 139 68 174 4.7 108 214
214 166 5 175 0 190
236 64 236 149 4.3 236 220 EBITDA +33%
181 248 5.7 206 205 229 162
73 225 129 142 191 139
Net Working Capital 0.9 Release +122% 1.9
YE2013 expectations for YE2014 1 YE2014 resuts 2
Sources: Bloomberg, Company data Notes: 1. Consensus of investment banks forecasts made in YE2013 for YE2014; 2. Based on IFRS results for year 2014 100 Colour palette
35 204 108 221 Revenue Evolution 176 237
151 240 151 146 Revenue Dynamics 151 48 Growth of metal sales by 5% to USD10.9bn due to USDmn 0 226 +3% Stronger nickel and palladium prices 0 229 825 . 0 234 1,004 1,082 973 . Increase in sales volumes of PGMs 20 139 68 174 108 214 13,297 11,362 10,417 10,896 . Negative off-set from lower nickel sales volumes 214 166 and lower copper and platinum prices 5 175 0 190
2011 2012 2013 2014 . Price factor contributed positively (+USD491mn) 236 64 236 149 Metal sales Other sales and volume factor – negatively (-USD82mn) 236 220 Metal Sales Breakdown: Growing Sales to Asia 181 248 Metals revenue mix 206 205 USDm 229 162 10,417 10,896 Europe . Share of PGMs up to 29% 73 225 129 142 191 139 52% 50% Asia . Nickel – the largest contributor accounting for 43% of sales Geographical mix North 29% 32% America . Share of European sales down to 50% 9% 9% Russia 10% 9% . Asia keeps growing and already accounts for 32% 2013 2014
Source: Company data
101 Colour palette
35 204 108 221 Sales & Distribution Results: Strong Pd Performance 176 237
151 240 151 146 Base Metals Sales up from Own Feed PGM Sales Volumes: Pd up 4%, Pt up 1%, y-o-y 151 48 kt -5% 370 369 koz +4% 0 226 12 286 13 0 229 273 14 9 2,645 2,745 0 234 152 55 45 117 12 6 20 139 +1% 68 174 108 214 347 651 344 2,528 2,593 660 219 222 +1% +1% 43 64 214 166 5 175 608 596 0 190
2013 2014 2013 2014 2013 2014 2013 2014 236 64 236 149 Russian feed 236 220 Russian feed Russian tolling International (from 3d party feed) International (from 3d party feed) 1 Nickel Copper Palladium Platinum 181 248 206 205 Realized Metals Prices: Ni and Pd Growth Metal sales: Breakdown by Metal 229 162 +5% USD/t +13% USDmn
73 225 17,072 10,417 10,896 129 142 4% 5% 191 139 15,156 9% 8% -6% 19% 21% -6% +11% 1,481 1,388 26% 23% 7,397 6,931 725 804 42% 43%
Nickel Copper Palladium Platinum 2013 2014 2013 2014 2013 2014 Nickel Copper Palladium Platinum Other
Source: Company data Note: 1. Excluding sales of metals purchased from third parties for resale 102 Colour palette
35 204 108 221 Improving Management Control of Cash Costs 176 237 Cash Cost Reduction in 2014: Management Cost 151 240 151 146 2014 Cash Costs Breakdown Controls and RUB Depreciation 151 48 USDmn USDmn 0 226 Other Labour 4,756 0 229 0 234 14% Services 20 139 11% 39% 109 51 68 174 (631) (94) 108 214 4,067 USD4,067mn (51) (21) (17) (35) 214 166 5 175 16% 0 190
Materials
2013 2014
Other Forex 20% Taxes
236 64 Labour services 236 149 Metals and party 3rd
236 220 semi-products supplies
Purchased
metals and metals
Materials and Materials
semi-products Transportation 181 248 Reported Cash Costs Dynamics 2014 vs. 2013 FX Adjusted Cash Costs 206 205 Other 229 162 USDmn Other USDmn -1% -14% 4,756 4,125 73 225 4,067 737 3rd party 129 142 4,067 3rd party 636 563 (11%) 563 services services 191 139 557 436 436 487 (10%) 912 665 665 Materials and 759 (12%) Materials and 720 supplies 829 supplies 829 720 15% Acquisition of Acquisition of 1,830 1,574 1,523 1,574 metals and 3% metals and semi-products semi-products Labour 2013 2014 Labour 2013 2014 FX adjusted
Source: Company data
103 Colour palette
35 204 108 221 FX Sensitivity 176 237
151 240 151 146 151 48 EBITDA sensitivity, USDm FCF sensitivity, USDm
0 226 0 229 Rouble devaluation Ruble appreciation Rouble devaluation Ruble appreciation 0 234 -3% -1% +1% +3% -3% -1% +1% +3% 20 139 68 174 108 214 +101
214 166 5 175 +78 0 190 +34 236 64 +26 236 149 236 220
181 248 206 205 -26 229 162 -34
73 225 -78 129 142 Calculation is done based on Calculation is done based on 191 139 assumption of 22% of foreign currency assumption of 11% of foreign currency share in OPEX share in CAPEX -101
. In 2014 Company was more levered to the exchange rate at FCF level as about 89% of CAPEX was RUB-denominated (FX component is expected to increase going forward)
Source: Norilsk Nickel estimates
104 Colour palette
35 204 108 221 EBITDA Bridge and SG&A 176 237 EBITDA increased by USD 1.5 bn (or 35%) on the back of higher metal sales prices, cost control measures and depreciation of 151 240 RUB against USD 151 146 151 48 . Up: metal sales growth by USD419m primarily due to nickel and palladium prices, partly offset by increased prices of purchased semi- products 0 226 0 229 . Up: depreciation of RUB against USD contributed more than USD760m additional EBITDA 0 234 . Up: cost control measures coupled with higher labour productivity - USD256m of cost reduction 20 139 68 174 . Up: decrease of SG&A by 19% y-o-y primarily due to reduced export duties (USD150m) and FX effect (USD150m out of the total 108 214 USD760m); launch of key optimization initiative – creation of shared services center (accounting, IT, treasury etc.)
214 166 EBITDA Bridge, USDm SG&A expenses, USDm 5 175 0 190 Macro&Regulatory factors: Operating improvements: +35% USD1.1 bn USD0.4 bn 236 64 5,681 236 149 105 -29% 236 220 94
150 256 (82) 181 248 1,621 206 205 760 (219) 229 162 1,409 1,147 73 225 129 142 191 139 419 4,198
2012 2013 2014
2013 2014
Other
Forex
duties
Sales
Export
volume
Inflation
One-offs
LME price LME
measures Cost control Cost
Source: Company data
105 Colour palette
35 204 108 221 Working Capital Release – 2016 Target Overachieved in 2014 176 237 NN achieved comfortable and 151 240 151 146 Net Working Capital Bridge: Management Initiatives and Favorable FX sustainable level of NWC 151 48 NWC as % of Revenue, End of 2014 0 226 0 229 4,044 Macro & regulatory Operating cash flow 0 234 factors: USD0.9bn improvement: USD1bn NN 2013 26%
20 139 USD1bn NN 2014 68 174 (-25%) 9% 108 214 3,018 214 166 Vale 12% 5 175 0 190 USD1.9bn (-64%) Anglo American 11% 236 64 236 149 2,000 236 220 (859) BHP Billiton 3% (74) 181 248 206 205 (456) Rio Tinto -2% 229 162 1,083 (278) 73 225 (102) NLMK 18% 129 142 (166) 191 139 Rusal 13%
Severstal 8%
FX
Other
n n of
2016
Asof Asof Asof
sales
terms Target in2014 Evraz
andnon- 3%
payables
operating
Non-cash
sfactoring
allowances Receivable
announced
Optimizatio
31.12.2012 31.12.2013 31.12.2014
tsmetal for Prepaymen
Source: Company data
106 Colour palette
35 204 108 221 Maintaining Conservative Balance Sheet 176 237
151 240 1 151 146 Leverage Reduced to 0.6x Net Debt/EBITDA . Under current macroeconomic conditions 151 48 USD bn comfortable debt level – up to 1.5 Net Debt / EBITDA 0 226 Strong liquidity with USD2.8bn in cash and cash 4.5 4.6 1.20 . 0 229 4.0 0 234 3.5 3.5 1.00 equivalents as of year-end 2014 covering the 1.1x 0.80 Company’s dividend commitments and short-term 0.5x 20 139 0.8x 1.7 0.8x 0.60 68 174 financing requirements 108 214 0.6x 0.40 0.4x 0.20 . Diversified and balanced debt portfolio: 214 166 0.00 (0.4x) ─ Over 90% of debt is long-term 5 175 -0.20 0 190 -0.40 ─ 100% of debt is unsecured (2.6) -0.60 236 64 ─ 79% of debt is in USD, 21% in RUB 236 149 2008 2009 2010 2011 2012 2013 2014 236 220 The Highest Credit Rating Among Russian 181 248 Liquidity Position and Maturity Profile1 Metals and Mining Peers According to S&P 206 205 229 162 USD bn 2.3 73 225 5.0 BBB- 129 142 1.6 191 139 2.2 1.2 BB+ BB+ BB+
0.6 0.6 2.8 BB
Available liquidity 2015 2016 2017 2018 2019+ Russian NLMK Severstal Metalloinvest Federation Cash and cash equivalents Available credit lines
Sources: Company data Notes: 1. As of December 31,2014 107 Colour palette
35 204 108 221 176 237
151 240 151 146 151 48
0 226 0 229 0 234
20 139 68 174 108 214
214 166 5 175 0 190
236 64 Governance Update 236 149 236 220
181 248 206 205 229 162
73 225 129 142 Andrei BOUGROV 191 139 Deputy Chairman of the Board, Deputy CEO Colour palette
35 204 108 221 Corporate Governance Review and Initiatives 176 237
151 240 151 146 151 48 KEY INITIATIVES APPROVED IN 2014-2015 NEW INITIATIVES
0 226 0 229 0 234
20 139 Self-evaluation/Performance Evaluation Policy 68 174 1 1 Environmental Strategy 108 214 for the Board of Directors
214 166 2 Board Nomination Policy 2 Revised Board Committee Regulations 5 175 0 190 3 Board Professional Development (Induction and 3 Corporate Governance Code 236 64 Continuous Education) Policy 236 149 236 220 Revised Corporate Secretary 4 Board Code of Conduct and Ethics 4 Regulations 181 248 206 205 5 Anti-Corruption Charter for Business 229 162 5 Management Evaluation and 6 Changes to the Board Committees (addition of Remuneration Policy 73 225 129 142 independent directors) 191 139 6 LTI program to be approved for TOP-10 7 Whistleblower Policy and Protection and TOP-100 employees
8 Improved Disclosure
9 Human Resources Development Program
109 Colour palette
35 204 108 221 Strong Board Led by Independent Chairman 176 237
151 240 BOARD OF DIRECTORS 151 146 151 48 Independent Chairman
0 226 Non - Executive 0 229 0 234 Total (12) (13) Independent 20 139 68 174 (5) 108 214 Corporate Governance 214 166 Audit Committee 5 175 Strategy Committee and Remuneration Budget Committee 0 190 Independent Chairman Committee 236 64 236 149 Total Independent Total Independent Total Independent Total Independent 236 220 (4) (2) (5) (3) (4) (2) (5) (1)
181 248 Sales& Marketing Strategy 206 205 IFRS Reports Anti-corruption Policy Annual Budget 229 162 Quarterly Upstream Strategy (new) Induction Policy Interim Budget Review 73 225 Management Reports 129 142 (new) Operational report (new) 191 139 Code of Ethics Dividends HS&E Reports (new) Financial update (new) Non-Core Assets Sales Cost Control and Cost Quarterly status report Saving Programme Approval of strategic investment projects Transportation and logistics strategy
110 Colour palette
35 204 108 221 176 237
151 240 151 146 151 48
0 226 0 229 0 234
20 139 68 174 108 214
214 166 5 175 0 190
236 64 Closing Remarks 236 149 236 220
181 248 206 205 229 162
73 225 129 142 Vladimir POTANIN 191 139 Chief Executive Officer Chairman of the Management Board Colour palette
35 204 108 221 New Norilsk – Vision Delivered by Execution 176 237
151 240 151 146 151 48 Alignment of Leading Global Shareholders Interest Market Position 0 226 0 229 Common vision for the Leading producer of nickel 0 234 business and palladium with strong
20 139 Attitude of owners, not positions in copper 68 174 caretakers 108 214 “Preferred” metal basket
214 166 5 175 Premium Margins Industry’s Best 0 190 and Dividend Payouts Resource Base 236 64 Profitable through the cycle Large, highest grade 236 149 polymetallic ore bodies 236 220 Top historic TSR among mining peers Diversified and balanced metal basket 181 248 Best-in-class dividend yield 206 205 Lowest cost producer 229 162
73 225 Focus on Capital and Robust 129 142 191 139 Investment Discipline Project Pipeline Focus on Tier I assets Attractive mix of brownfield New investment governance and greenfield mining system rolled out projects with stress-tested IRR
112