Social and Environmental Report 2015

Home , ALROSA, Lensk, Markha (Vilyuy), Nakhara, Olenyok (rural locality), Udachny

SOCIAL AND ENVIRONMENTAL REPORT 2015 ALROSA* is a Russian Group of diamond mining companies that occupies a leading position in the industry and has the largest rough diamond reserves in the world. The Group accounts for one third of the reserves and more than a quarter of the production of the global rough diamonds market. The key areas of activity, comprising the focus of the major strategic efforts of the Group, are deposits exploration, mining, processing and sales of rough diamonds.

The core activities of ALROSA Group are concentrated in two regions of the Russian Federation, namely the Republic of Sakha (Yakutia) and the Arkhangelsk Region, as well as on the African continent.

The majority of ALROSA Group revenue comes from selling rough diamonds. Rough diamonds are sold under long-term agreements to Russian and foreign diamond cutting companies. The rough diamond segment accounts for about 90% of the total Group revenue.

*For the purpose of this Report, ALROSA Group means PJSC ALROSA and its subsidiaries. INTRODUCTION

ADDRESS BY THE PRESIDENT 2 4 6 OF PJSC ALROSA 6 OUR APPROACH ENVIRONMENTAL INDEPENDENT ABOUT THIS REPORT TO SUSTAINABLE RESPONSIBILITY AUDITOR’S 10 DEVELOPMENT 61 REPORT 27 ENVIRONMENTAL POLICY 112 IMPLEMENTATION INTEGRATION OF SUSTAINABLE 62 DEVELOPMENT GOALS IN ACTIVITIES OF THE COMPANY FUNDING OF ENVIRONMENTAL 28 PROTECTION ACTIVITIES 70 1 STAKEHOLDER ENGAGEMENT 31 ENVIRONMENTAL PROTECTION GOALS ABOUT ALROSA GROUP ACHIEVEMENT MANAGEMENT IN THE SPHERE 73 7 17 OF SUSTAINABLE DEVELOPMENT GENERAL INFORMATION 34 ANNEXES 18 115 ETHICS AND ANTI-CORRUPTION Annex 1. PRODUCTION CHAIN ACTIVITIES 40 SCOPE OF MATERIAL ASPECTS AND GEOGRAPHY 116 18 INNOVATIVE DEVELOPMENT Annex 2. KEY PERFORMANCE RESULTS 2015 43 G4 GRI CONTENTS INDEX 22 118 5 Annex 3. SOCIAL OUTCOMES 128 SOCIAL RESPONSIBILITY 85 Annex 4. 3 ENVIRONMENTAL OUTCOMES HSE 130 86 ECONOMIC EFFICIENCY GLOSSARY OF TERMS 49 INVESTMENTS IN HUMAN CAPITAL AND ABBREVIATIONS 94 136 ECONOMIC PERFORMANCE RESULTS 2015 SOCIAL INVESTMENTS 50 CONTACT INFORMATION 109 141 CREATION AND DISTRIBUTION OF ECONOMIC VALUE 56 ADDRESS BY THE PRESIDENT OF PJSC ALROSA

Dear readers, the general development of the dia- increasing underground mining pro- ronmental responsibility principles mond industry. Despite the difficul- duction. Implementation of all the through investing in health and en- We would like to draw your atten- ties, we achieved solid results at the said projects was necessary for fur- vironmental protection. tion to the PJSC ALROSA’s Social end of the year reaching the goals ther strategic development of the and Environmental Report for 2015. set for geological exploration, pro- ALROSA Group. We made more considerable ef- The fifth public sustainable devel- duction and sale of rough diamonds. forts towards ensuring environ- opment report reflects essential as- Despite the significant drop in de- mental wellbeing in the regions pects of economic, environmental The Company continues to make mand and prices for rough and where the Company operates. As and social impacts of the Compa- significant investments in geolog- polished diamonds in 2015, our a result of these efforts, there ny and our approaches to manag- ical exploration aimed at resource rough and polished diamonds sales was created a concept on intro- ing the said impacts. base expansion. In 2015, geological amounted to USD 3,554.4 mn ow- ducing an action plan for cars, exploration and on-site exploration ing to our effective sales system mobile vehicles and diesel power We keep strictly adhering to stra- expenses amounted to about RUB based on long-term contracts. In plants switching to liquefied nat- tegic guidelines, mission and op- 6.3 bn and the ALROSA Group re- the reporting year, the number of ural gas which will reduce emis- erating principles of the Company. source base grew by 43.6 mn carats. long-term customers of the Compa- sions of harmful substances into ALROSA Group, as always, aims to In 2015, our enterprises increased ny grew from 47 to 54. The general the atmosphere. Moreover, the assume leadership in natural di- rough diamonds production to 38.3 market conditions and depreciation Company developed Guidelines on amonds production based on re- mn carats, which exceeded the level of the Russian Rouble against the calculating the volume of carbon source base expansion, a focus on of 2014 by 6% and made it possible US Dollar had a double effect on dioxide emissions from stationary the rough diamond business, and for us to retain the leading position ALROSA Group making it possible and mobile sources of PJSC ALRO- an increase in production efficiency in the industry. to compensate the negative con- SA enterprises. The said measures through innovation and implemen- sequences of the decrease in sales contribute to further development tation of a new social responsibili- In 2015, we put into operation the through gross revenue growth, im- of the corporate greenhouse gas ty model. Botuobinsky open pit mine, a new prove profitability and earn a net emissions management system. deposit that yielded about 1 mn profit of RUB 32.2 mn . The reporting year became for us carats for the Company over the We continue implementation of the remarkable in terms of production course of the year, we performed a Increased scale of ALROSA Group Comprehensive Environmental Pro- capacity and potential resource large-scale technical upgrade and operation and development of protection Program of PJSC ALROSA for growth as well as challenging in modernisation of our production en- duction and economic platforms 2011–2018. The total environmen- terms of macroeconomic trends in terprises and addressed the issue of allow us to follow social and envi- tal expenses of the Company in

6 Social and Environmental Report of PJSC ALROSA 2015 Social and Environmental Report of PJSC ALROSA 2015 7 2015 amounted to over RUB 6 bn. employees can undergo a medical solving the tasks of timely acquir- cooperation and constructive de- Most of the funds were allocated examination and receive treatment ing highly qualified staff, reducing cisions. I express my sincere grati- to capital investments in construc- in the leading healthcare centres workplace injury rate and introduc- tude to the management team and tion of environmental protection fa- in Russia, in the reporting year over ing international standards in man- workers of our enterprises for their cilities, sewage treatment facilities, 14 thousand employees of the Com- agement processes of the Company. high professionalism and dedicat- land rehabilitation and R&D sup- pany received health resort-based ed work as well as readiness to face port of environmental protection treatment and preventive treatment I am grateful to our shareholders challenges and perform tasks of any activities. in corporate healthcare institutions, and business partners for fruitful complexity. over 18 thousand participants of Among the pressing problems at non-state pension schemes are the focus of the Company’s atten- paid an additional corporate pen- President of PJSC ALROSA tion, there are still the issues sur- sion. Our investments in personnel Andrey Zharkov rounding occupational health and in 2015 totalled RUB 3.4 bn. safety. In general, the workplace injury rate in the Company shows a Social investments of PJSC ALROSA downward trend. Based on results of in the reporting year totalled RUB 2015, the lost-time injury frequen- 2.7 bn. RUB 521 mn was transferred cy indicator amounted to 0.45 per 1 to the Trust Fund for Future Genera- mn hours worked. The occupation- tions (non-profit organisation) in ac- al safety targets are included in the cordance with voluntary obligations system of key performance indica- of the Company to fund construc- tors of the ALROSA Group devel- tion of facilities for social needs in oped within the framework of the the Republic of Sakha (Yakutia). Long-Term Development Program of the ALROSA Group until 2023. In 2015, the Company provided targeted financial aid to cultural, The Company, as always, performs medical, sports and educational in- in good faith its obligations as a re- stitutions as well as administrations sponsible employer. In 2015, the aver- of municipalities. In accordance with age salary of PJSC ALROSA employees the Regional Development program grew by 5.2%, three times exceed- and regional agreements with nine ing the average salary in the Russian districts of Western Yakutia, the an- Federation and two times the aver- nual financial aid of RUB 81.7 mn age salary in the Republic of Sakha was provided for agricultural and (Yakutia). PJSC ALROSA invests in traditional fishing and hunting ac- professional development of its per- tivities as well as conducting char- sonnel: the average training time per ity campaigns for children. employee in 2015 totalled 44 hours. The Company has in place a collec- We have a lot of work ahead. In tive bargaining agreement stipulating the short and medium term we will an expanded benefits and guarantees be addressing the issues concern- package for our employees. ing development of underground mines and new deposits, introduc- In 2015, we implemented all the tion of innovative technologies, de- planned initiatives within the frame- velopment of sales and marketing, work of corporate social programs. disposal of non-core assets and Every year, over two thousand our cost improvement. We will be also

8 Social and Environmental Report of PJSC ALROSA 2015 Social and Environmental Report of PJSC ALROSA 2015 9 ABOUT THIS REPORT The information on financial per- nancial statements under IFRS, a formance as well as the informa- relevant note is included in the Re- PJSC ALROSA Social and Environ- is to inform wide audience on the The Report for tion contained in the About ALROSA port. mental Report 2015 (hereinafter re- Company performance results dur- 2015 is prepared Group section (unless otherwise ferred to as the Report) is the fifth ing the reporting period in line with in accordance specified) refers to the entire AL- In relation to some general indica- public sustainable development re- the selected strategy and targets. with the GRI G4 ROSA Group. Financial performance tors concerning corporate govern- port of ALROSA Joint-Stock Compa- The previous non-financial report results of the associated companies ance, environmental responsibility ny. The main objective of the Report was issued in July 2015. Core level with PJSC ALROSA participation in and labour practices, the Report the authorised capital of less than provides information only about 50% are reflected in the ALROSA the parent company, PJSC ALROSA. Group consolidated financial perfor- Information about environmental This Report was prepared in accordance with GRI G4 Reporting Principles and mance results based on the partici- protection and social responsibility Standard Disclosures and G4 Mining and Metals Sector Disclosures. patory interest. In case of publishing activities of the subsidiaries is pre- To ensure the quality of the Report, the Company was guided by the interna- any information corresponding to sented in subsections of relevant tional principles set out in the GRI G4 Guidelines: balance, comparability, ac- the ALROSA Group consolidated fi- sections of the Report. curacy, timeliness, clarity and reliability.

MATERIAL ASPECTS

The Report contains amendments concerning the name of the Company. Our Report traditionally includes unconventional indicators concern- Pricewaterhouse- In June 2015, the General Meeting of Shareholders of the Company approved the sections covering the three ar- ing Company activities considered Coopers Audit amendments to the constituent documents associated with gaining the status eas of highest impact: namely eco- to be the most significant in the re- verified the report of a public joint-stock company. In accordance with the amendments, the full nomic, environmental and social, in porting year. corporate name of the Company is Public Joint-Stock Company ALROSA. The order to provide stakeholders with abbreviated corporate name is PJSC ALROSA. Names of subsidiaries were also extensive information on the level The map of essential aspects in this changed due to their acquired status of public joint-stock companies, abbrevi- of our social and economic respon- Report was produced based on the ated names of joint-stock companies being a part of the ALROSA Group produc- sibility. interviews of internal and external tion complex are given in the Glossary of Terms and Abbreviations of the Report. stakeholders of the Company con- The structure, scope and methods of measurement in the Report remain Apart from general standard indi- ducted in 2015. unchanged. cators, the Report discloses some

SCOPE OF ASPECTS OUTLINE OF THE REPORT Impacts of each essential aspect are activity is diamond mining, namely The Report discloses results of curred before or after that period specified in Appendix 1. The scope of PJSC ALROSA-Nyurba, JSC Almazy PJSC ALROSA performance in the if they are deemed significant for a the aspects includes information on Anabara (including JSC Nizhne- period from January 1 to Decem- better understanding of the infor- the parent company PJSC ALROSA Lenskoe) and PJSC Severalmaz. ber 31, 2015. In order to reflect the mation in this document. and its key subsidiaries whose core dynamics of basic processes in the sphere of sustainable development The strategic documents referred to in the Report, where possible, the in the Report apply to all structural ASSURANCE OF THE REPORT data from the last five years (2011– units of the ALROSA Group, name- 2015) was presented. The Report ly PJSC ALROSA and all its subsidi- Annually we obtain assurance of our non-financial report from an independent also mentions the events that oc- aries and affiliates. auditor. A report on the JSC PriceWaterhouseCoopers Audit containing limited assurance is published on page 112.

10 Social and Environmental Report of PJSC ALROSA 2015 Social and Environmental Report of PJSC ALROSA 2015 11 Map of essential aspects to be included in PJSC ALROSA Social and Environmental Report 2015

3.00

2.50 2 1

3 44 23 43 2.00 25 30 11 24 4 10

5 28 19 17 9 45 1.50 48

1.00 33

0.50

0.00 KEY PERFORMANCE INDICATORS 2015 0.00 0.50 1.00 1.50 2.00 2.50 3.00

Impact of the aspects on estimates and decisions of stakeholders Materiality of the aspects impact on implementation of the Company strategy

Production activities Innovation activities 1 Geological exploration and development 48 Innovation Development The Social and Environmental The level of of new deposits and Technological Upgrade Program compliance – Core 2 Improving production efficiency Report of PJSC ALROSA for 2015 is 3 Technical upgrade and replacement Ecology and safety prepared in accordance with the GRI of worn out equipment 23 Rational use of natural resources Reporting Guidelines (version G4) 24 Compliance with national and international PJSC ALROSA Strategy environmental legislation Information is provided for the past 4 Sustainable development management 25 Environmental management system in the context of the Company strategy and environmental policy implementation 5 Risk management system 39 Company impact on the regions 5 years Occupational safety where the Company operates GRI standard indicators were disclosed (2011 – 2015) 45 Labour protection 43 Support of local communities and ensuring safe production 44 Contribution of the Company to the regional development Stakeholder engagement 9 Product marketing Human capital and sales network development 28 Social policy The Report was subject to The Report discloses results 10 Sales policy of the Company 30 Remuneration system external approval (auditor – of the company’s performance 11 International cooperation 33 Formation of human resources. PricewaterhouseCoopers Audit) in the period from January 1 Personnel training and development to December 31, 2015 Economy and finance 17 Financial and economic results of the Company activities 19 Investment Program of the Company

12 Social and Environmental Report of PJSC ALROSA 2015 Social and Environmental Report of PJSC ALROSA 2015 13

ABOUT ALROSA GROUP

ALROSA Group is a group of Russian diamond mining companies that for seven years has been a leader in terms of rough diamond production and owns the largest proven diamond reserves in the world. The share of ALROSA Group in global natural diamonds production is 28%.

16 Social and Environmental Report of PJSC ALROSA 2015 GENERAL INFORMATION Geological exploration Mining and processing Sorting, evaluation, sale

ALROSA Group is comprised of PJSC ALROSA, the parent company, Geological exploration Mining and processing Polished diamond sales and its subsidiaries and affiliates. The core activities of our enterprises complex complex complex are exploration, production and sale of natural diamonds. Our geological exploration policy is Our mining and processing divisions con- Sales enterprises carry out a complete cy- based on the understanding that with- stitute the core of the Company produc- cle of sorting, initial valuation, pre-sale mn carats people out timely replacement of the mineral re- tion capacity. treatment and sales of all the rough dia- 38.3 39,508 sources base it is impossible to maintain The key distinction in our production to- monds produced by mining and process- was production is the annual average the leading position in diamond produc- day is the transition to underground dia- ing divisions of the Company. of natural diamonds in 2015 ALROSA Group headcount tion and foster further development of mond mining, which requires managing Since 2000, PJSC ALROSA has been de- the diamond mining industry in gener- a number of specific risks. veloping its own cutting enterprise, BRIL- al. We continue to maintain and expand LIANTY ALROSA, producing highest 11 16 the ALROSA Group resource base and re- quality polished diamonds of any sizes kimberlite pipes placer deposits serves through targeted geological ex- and any type of faceting, and selling them ploration in promising regions of Russia in domestic and international markets. and Africa. PJSC ALROSA share capital structure

ALROSA was established in 1992 ploration, production and sales of Production infrastructure being a legal successor of the en- natural diamonds in domestic and terprises forming Yakutalmaz Re- international markets. Currently Innovation and R&D Construction complex Specialised repairs search and Production Association the share capital of PJSC ALROSA complex complex (established in 1957 in the USSR). is owned by legal entities and pri- The research is closely linked with pro- Given the remoteness and severe cli- Almazavtomatika Specialised Division is The Company gained control of ex- vate individuals. duction tasks of the Company, the most matic conditions of the diamond min- engaged in design, introduction and op- important of which are maintenance of ing region, the Company carries out a eration of communication and telecom- the resource base and efficient diamond large-scale construction and develop- munication facilities. Almazavtomatika mining. Yakutniproalmaz Research and ment of diamond industry facilities and assembly and repair units are located at Government Government of the Republic Design Institute is active in the three key infrastructure of the region along with all northern production sites of the Com- of the Russian Federation of Sakha (Yakutia) areas: namely research and technology, its core activities. pany and deal with automation of tech- design and surveying, engineering and nological processes at plants, open pit economics as well as acting in the capac- mines and underground mines. 43.9256% 25.0002% ity of general designer, coordinator and project initiator. 8 municipalities of the Republic Other legal entities of Sakha (Yakutia) and individuals 8.0003% 23.0739% Transportation Social and wellbeing and procurement division complex The largest PJSC ALROSA minority shareholders are Oppenheimer Funds, Lazard Asset Management, Genesis and Capital Group. Remoteness of structural units of PJSC The complex is represented by a corpo- ALROSA from main transportation routes rate enterprise whose activities are aimed was the reason for choosing to deliver at the support and safeguarding of per- most of the resources via a main naviga- sonnel health and fostering a healthy life- PRODUCTION CHAIN AND GEOGRAPHY tional artery and to develop the Compa- style. ny’s own logistic infrastructure.

PJSC ALROSA is a vertically integrated company whose management con- trols all processes of the production chain from mining design, geological exploration, production and processing of rough diamonds, to sorting and sales.

18 Social and Environmental Report of PJSC ALROSA 2015 About ALROSA Group Social and Environmental Report of PJSC ALROSA 2015 About ALROSA Group 19 JSC Almazy Anabara PJSC ALROSA GEOGRAPHY Ebelyakh, Gusinaya, Istok and Udachny Mining Morgogor placer deposits. and Processing Division Headcount is 1,814 employees. Udachnaya pipe, underground The core activities of ALROSA Group for natural In 2015, production amounted mine. Zarnitsa pipe, open pit to 3,308.9 thousand carats mine. Dellyuvialnaya and rough diamonds production are concentrated in totalling USD 176.2 mn Piropovy Creek placer deposits. the Russian Federation and the Republic of Ango- In 2015, there was completed la. Gem-quality rough diamond sales account for JSC Nizhne-Lenskoe open pit mining of Udachnaya Molodo, Billyakh, Pritoki Billyakh Republic of Sakha pipe, the oldest kimberlite pipe about 90% of ALROSA Group revenue. and Talakhtakh placer deposits. (Yakutia), in Western Yakutia. Processing The largest export markets for our enterprises are Headcount is 62 employees. Russian Federation plant No. 12 with the capacity trading venues in Belgium, India, Israel and China. In 2015, production amounted Diamond mining, geological of 12 mn tons per year. St. Petersburg, to 1,964.0 thousand carats exploration, sorting, evaluation Headcount is 3,393 employees. totalling USD 185.3 mn Russian Federation and sale of diamonds In 2015, production amounted to 4,297.3 thousand carats Research, development Executive division totalling USD 417.9 mn and innovation activities (Headquarters: 6 Lenina Street, Mirny)

Moscow, Russian Federation Sorting, cutting and sale of diamonds Executive division

Nyurba Mining and Processing Division of PJSC ALROSA New York, London, Arkhangelsk region, for PJSC ALROSA-Nyurba USA Great Britain Russian Federation Nyurbinskaya pipe, open pit Trading activity Trading activity Diamond mining mine, Nyurbinskaya placer. Botuobinskaya pipe, open pit A nt w erp, mine, Botuobinskaya placer. Belgium Processing plant No. 15 with Trading activity the capacity of 0.5 mn tons Altai Krai, per year and processing plant Russian Federation No. 16 with the capacity Cutting enterprise, of 1.3 mn tons per year. Orel Region, representative office Headcount is 1,574 employees. Russian Federation In 2015, production amounted Cutting enterprise, to 7,509.6 thousand carats representative office totalling USD 603.3 mn Ramat Gan, Israel Trading activity Hong Kong, Peoples Republic of China Trading activity

Luanda, Lunda-Sul, PJSC ALROSA PJSC ALROSA ALROSA Group has Angola Mirny Mining Aikhal Mining a participating interest Rough diamond production, and Processing Division and Processing Division of 32.8% in Catoca Ltd. Dubai, Exploration Mir pipe, underground mine. Aikhal pipe, underground mine. Mining Company, a diamond UAE Internatsionalnaya pipe, Komsomolskaya pipe, open pit mining company developing Trading activity underground mine. Irelyakh, mine. Yubileynaya pipe, open the Catoca kimberlite pipe PJSC Severalmaz Levoberezhnoe, Gornoe and pit mine. Processing plant No. in the Republic of Angola. Arkhangelskaya pipe, open Vodorazdelnye galechniki 8 with the capacity of 1.7 mn pit mine. Karpinskogo-1 pipe, placer deposits. Tailing tons per year and processing open pit mine. Processing dump of Processing Plant plant No. 14 with the capacity plant No. 1: module No. 1 with No. 5 technogenic deposit. of 10 mn tons per year. the capacity of 1 mn tons per Processing plant No. 3 with the Headcount is 4,271 employees. year and module No. 2 with capacity of 2 mn tons per year. In 2015, production amounted the capacity of 3 mn tons per Headcount is 3,926 employees. to 12,322.2 thousand carats year. In 2015, production amounted totalling USD 1,338.6 mn Headcount is 1,685 employees. to 6,908.3 thousand carats In 2015, production amounted totalling USD 1,117.6 mn to 1,950.2 thousand carats totalling USD 127.7 mn

20 Social and Environmental Report of PJSC ALROSA 2015 About ALROSA Group Social and Environmental Report of PJSC ALROSA 2015 About ALROSA Group 21 KEY PERFORMANCE RESULTS 2015 Strategic priorities Goals for 2015 Results 2015

Our strategic priorities Focusing on the rough Ensure a balanced policy in implemen- In 2015, the Company sold its share diamond business tation of the Non-Core Assets Dispos- capital of four subsidiaries, namely CB al Program MAK-Bank (LLC), NIKONOVKA LLC, Sun- • gaining the status of recognised • Focusing on the rough diamond tartseolit LLC and ALROSA-VGS LLC. leader of the diamond industry with business a flawless reputation among customers • Increasing productivity through Increasing productivity through Continue introduction of new techniques In the reporting year the first results innovation and continuous improve- innovation and continuous and methods of prospecting for diamond yielded from introducing modern in- improvement of production deposits novative geological exploration tech- • Maintaining and expanding the ment of production processes nologies and, first and foremost, from processes ALROSA Group resource base and airborne geophysical technologies, reserves through targeted geologi- • Implementing in Yakutia a new were obtained. cal exploration in promising regions model of social responsibility aimed of Russia and Africa at ensuring availability of vital ser- Implementing the Program of Reforming In October 2015, the Supervisory Board vices in remote regions Implementation of a new model of social responsibility the Housing and Utility Complex of PJSC ALROSA approved programs of reforming the housing and utility complex. The Action Plan on Reforming the Housing and Utility Complex of PJSC AL- ROSA during the period from 01.07.2014 to 01.07.2016 is being implemented in Results of the year within the framework of implementation accordance with the established time of the ALROSA Group Strategy frame.

Strategic priorities Goals for 2015 Results 2015 Operations efficiency For the purpose of improving economic In 2015, the proportion of contracts improvement efficiency based on quality changes of concluded with manufacturers and Industry leadership Increase rough diamond production by Rough diamond production by ALRO- the materials and equipment procure- dealers amounted to 62% of the num- in rough diamond production ALROSA Group to 38 mn carats SA Group amounted to 38.3 mn carats ment system, it is necessary to ensure: ber and 93% of the value of the procure- • Increase ore production at Mir under- • Ore production at Mir underground • conclusion of direct agreements with ment procedures performed. ground mine to 750 thousand tons mine in the reporting year amounted manufacturers and their official deal- The proportion of public procurement • Increase PJSC Severalmaz rough di- to 783 thousand tons ers amounting to at least 60% of the procedures, including e-procurement, amond production to 1.9 mn carats • PJSC Severalmaz actual rough dia- total number of agreements and max- amounted to 82% of the total procure- • Start operations on the open pit mine mond production amounted to 1.95 imum reduction of the procurement ment value and 93% of the total num- at Botuobinskaya pipe deposit and en- mn carats lead time; ber of procurement procedures. sure ore production of 250 thousand • Ore production at Botuobinskaya pipe • carrying out public procurement pro- tons deposit in 2015 amounted to 250 cedures, including e-procurement, thousand tons amounting to at least 80% of the total number of purchases.

Group mineral resource base Ensure ALROSA Group reserves growth Based on results of the works per- expansion to 43 mn carats. formed in 2015 within the framework of implementation of the Program for For the purpose of improving business In the reporting year, at a meeting held Key Areas of Geological Exploration of efficiency, we continue to develop mech- in Las Vegas, USA, the Company entered PJSC ALROSA for 2011–2018, ALROSA anisms of interaction with the largest di- into an agreement with the seven larg- Group reserves growth in 2015 amount- amond mining companies. est diamond mining companies of the ed to 43.6 mn carats. world through the establishment of the Diamond Producers Association.

Start prospecting in Angola and Bot- In the reporting year, prospecting works swana for diamond deposits were performed at licensed joint venture sites in Botswa- na and Angola.

22 Social and Environmental Report of PJSC ALROSA 2015 About ALROSA Group Social and Environmental Report of PJSC ALROSA 2015 About ALROSA Group 23 Key outcomes of the Company in the sphere of sustainable development in 2011–2015

Indicators UoM 2011 2012 2013 2014 2015 2015/ 2011, %

Rough diamond production thousand carats 34,551.4 34,420.3 36,913.9 36,212.1 38,260.5 110.7 volume Cost of rough diamonds mn USD 2,567.5 2,684.4 3,065.2 3,770.7 3,966.6 154.5 extracted Revenue from sales of diamond mn USD 4,454.8 4,610.7 4,945.4 5,045.0 3,554.4 79.8 products EBITDA RUB mn 65,217.0 61,828.0 69,100.0 93,857.0 118,498.0 181.7 Payment of dividends RUB mn 2,134.0 7,979.0 9,009.0 11,487.0 12,789.0 599.3 Environmental expenses RUB mn 2,689.7 3,377.1 6,676.6 5,960.5 6,031.1 224.2 Emissions of contaminants into thousand tons/carat 0.27 0.26 0.28 0.30 0.30 111.1 the atmosphere Discharge of polluting thousand tons 6.5 6.0 5.6 4.6 4.8 73.8 substances into surface water bodies Discharge of waste water onto thousand tons 16.7 16.8 15.4 14.5 12.7 76.0 water body surfaces Energy resources consumption GJ/carat 0.30 0.32 0.32 0.33 0.32 108.4 Water consumption level cub. m/carat 0.53 0.48 0.42 0.46 0.40 75.5 Disturbed land areas ha 2,482.3 2,853.0 1,307.2 1,443.4 1,414.3 57.0 Reclaimed land areas ha 1,343.9 2,394.3 1,932.5 1,570.9 1,132.3 84.3 ALROSA Group Headcount people 36,630.0 41,319.0 41,015.0 40,140.0 39,508.0 107.9 PJSC ALROSA Headcount people 30,295.0 31,183.0 30,287.0 29,796.0 29,400.0 97.0 General workplace injury rate Number of injuries 0.89 0.99 0.89 0.40 0.78 87.6 including fatal/1,000 employees

LTIFR Number of lost time 0.50 0.55 0.48 0.21 0.45 90.0 injuries/1,000,000 hours worked FTIFR Number of fatal 0.06 0.08 0.08 0.04 0.04 66.7 injuries/1,000,000 hours worked Staff turnover rate % 10.0 10.5 10.3 9.8 9.0 90.0 Proportion of women in % 30.6 32.1 31.9 32.5 31.0 101.0 managerial positions Volume of social investments RUB mn 4,382.0 9,249 4,609.0 5,707.0 5,410.0 123.5

* The data is presented in accordance with the consolidated financial statements of PJSC ALROSA and its subsidiaries for 2015 prepared under IFRS

24 Social and Environmental Report of PJSC ALROSA 2015 About ALROSA Group OUR APPROACH TO SUSTAINABLE DEVELOPMENT

ALROSA Group is focused on maintaining a balance between interests of shareholders and other key stakeholders, namely personnel, the state, customers, suppliers, industry-specific partners and local communities. We maintain this balance keeping the return on our assets stable and simultaneously performing our environmental obligations and the obligations to reduce the negative impact of mining works, ensure safe working conditions, health and wellbeing of the personnel and create conditions for social and economic development of the regions in which the Company operates.

26 Social and Environmental Report of PJSC ALROSA 2015 INTEGRATION OF SUSTAINABLE DEVELOPMENT GOALS IN ACTIVITIES OF THE COMPANY

Our approaches Key impacts and risks in the sphere of sustainable development

Aspect Goal Integral documents Aspect Economic

Economic Achievement of the planned targets in production Long-term Development Program of ALROSA Impacts Economic efficiency of the Company impact, in the first place, on economies of its major shareholders, namely and sales of the diamond products, completion of Group until 2023 the Russian Federation and the Republic of Sakha (Yakutia). The Company is included in the list of Russian construction of the strategic production facilities, strategic enterprises as one of the major taxpayers and employers of the Republic of Sakha (Yakutia). ensuring income of the shareholders, debt reduc- Program for Innovation Development and Tech- As a major natural rough diamonds producer, the Company makes a significant impact on the global diamond tion, efficient investment activities including those nological Upgrade of PJSC ALROSA market stability and the rough and polished diamond industry in general. in the sphere of innovation and technological upgrade, improvement of efficiency of the econom- Policy on Sustainable Development and Corporate ic impact on the economy of the regions in which Social Responsibility of PJSC ALROSA Risk Major risk factors Main risk management mechanisms the Company operates. groups ALROSA ALLIANCE Guidelines on Responsible Business Practices Industry-specific Limited global rough diamonds reserves • The Company implements a wide range of measures in areas such as: Regulations On the Procedure and Terms of Sales Macroeconomic changes affecting consumers’ — exploration and prospecting works; of Natural Rough Diamonds by PJSC ALROSA welfare, fluctuations in demand for the product — development of deposits with a lower diamond content. Agreement on Social and Economic Development • The Company develops and implements pro- of the Republic of Sakha (Yakutia) grams aimed at minimising the influence of rough and polished diamond price drops on its activities. These measures include implementation of a flex- Environmental Reduction of the negative impact on the environ- Comprehensive Environmental Protection Pro- ible customer policy. ment, rational use of mineral resources and re- gram of PJSC ALROSA for 2011–2018 • The Company implements production cost-sav- source conservation, compliance with the laws ing programs. and international environmental management Energy Saving and Energy Efficiency Program of • The Company introduces resource-saving tech- standards. PJSC ALROSA for 2014–2016 nologies. • PJSC ALROSA sales system is based on long- Policy on Sustainable Development and Corporate term contracts. Social Responsibility of PJSC ALROSA

Social Ensuring workplace safety and professional devel- Social Policy of PJSC ALROSA Country-specific Business activities of PJSC ALROSA in the Russian • The Company is on the list of strategic en- opment of the personnel, improving social protec- and region- Federation in the context of economic crisis and terprises with guaranteed support via govern- tion of the employees, participation in ensuring HR Policy of PJSC ALROSA specific geopolitical tension ment-backed loans. Thus, given the existing risks social and economic wellbeing of the populations and uncertainty over the issuing of credit, the state of regions in which the Company operates, provid- Collective Bargaining Agreement between PJSC Foreign exchange fluctuations assumed liability for some of the risks. ing support to local communities, implementation ALROSA and Profalmaz Interregional Trade Union • The Company plans and carries out its activi- of charity projects. of PJSC ALROSA employees for 2014–2016 Remoteness and severe climatic conditions of the ties taking into consideration the actual (estimat- major part of the Company assets (Republic of ed) foreign exchange fluctuations. Policy on Sustainable Development and Corporate Sakha (Yakutia)) • In the context of general geopolitical tension, Social Responsibility of PJSC ALROSA the Company actively participates in the processes of international consolidation of rough and polished diamond producers with a view to development and support the entire industry. • The Republic of Sakha (Yakutia) is one of polit- ically, economically and socially stable regions of the Russian Federation. Despite its remoteness, the Republic has in place a reliable transportation plan on delivery of materials and equipment and a sufficient number of backup power and heat supply sources.

28 Social and Environmental Report of PJSC ALROSA 2015 Our approach to sustainable development Social and Environmental Report of PJSC ALROSA 2015 Our approach to sustainable development 29 Aspect Environmental STAKEHOLDER ENGAGEMENT

Impacts PJSC ALROSA and its diamond mining subsidiaries have considerable impact on the environment, including the volume of the water and energy resources used. In order to define the stakeholder on soundness of the Company and groups, we used the criterion of ma- its performance results as well as the Risk Major risk factors Main risk management mechanisms teriality, taking into consideration the presence of obligations stipulated by groups impact of PJSC ALROSA activities on the legislation or other regulations. the groups and impact of the groups Environmental Open-pit mining and underground mining • The Company implements the environmental policy aimed at minimising the negative impact Hazardous production facilities of the Company on the environment and rational and careful use of natural resources. Relations between the Company and stakeholders in 2015 • The Company has in place a corporate environmental monitoring system. • The Company performs preliminary evaluation Stakeholders Key topics Key events of 2015 of the possible consequences and develops environmental protection measures at the works de- Shareholders Distribution of the fixed capital, strat- The annual General Meeting of Shareholders of PJSC sign stage. and investors egy implementation action plans, cor- ALROSA was held on June 25, 2015, in Mirny. • The Company has in place a comprehensive sys- porate governance, management of During 2015, business meetings with over 200 repre- tem of occupational health and safety manage- conflict of interest risks sentatives of the investment community were held in ment including insurance of public liability for the the form of international investment bank conferenc- damage caused to the environment in the event es, Investor Day in London and other events, including of accidents at hazardous production facilities. visits to production facilities of the Company.

Aspect Social Government authorities Strategic development, construction In May 2015, a working meeting was held between Ye- of the Russian of facilities intended for social needs, gor Borisov, the Head of the Republic of Sakha (Yaku- development of mineral resource tia), and Andrey Zharkov, the President of PJSC ALROSA, Impacts A substantial portion of the population of the regions where the Company operates works at ALROSA Group Federation and the base, compliance with environmen- during which the discussion focused on the issues of im- enterprises, especially in the Republic of Sakha (Yakutia) where single-industry towns are created. The Company regions where the tal protection and occupational health plementing the Cooperation Agreement between the has a decisive impact on employment, development of local infrastructure and resolution of social problems Company operates and safety laws, taxes Government of the Republic and the Company effective in the Republic. until 2020. The working meeting was also attended by PJSC ALROSA is a major benefactor when it comes to participating in scientific, medical, educational, cultural members of the Cabinet of Ministers of the Republic, lo- and sports projects. cal authority deputies and PJSC ALROSA top managers. In September 2015, Ilya Ryashchin, the First Vice Presi- Statutory Established legal obligations to the personnel and • The Company strictly complies with the nation- dent of PJSC ALROSA, represented the Company at the the population of the regions where the Compa- al labour legislation and provisions of the Collec- first Eastern Economic Forum organised to discuss pros- ny operates stipulated by the legislation and vol- tive Bargaining Agreement between PJSC ALROSA pects and opportunities of development of the Russian untary initiatives under the collective bargaining and Profalmaz Interregional Trade Union of PJSC Far East and introduction of measures for the state sup- agreement, Sustainable Development and Corpo- ALROSA employees. port of subsoil users. rate Social Responsibility Policy • The Company has in place a commission on regulation of social and labour relations composed of authorised representatives of the parties on a Employees, Profalmaz Workplace safety, improvement of The annual Meeting of the active functionaries of PJSC parity basis. Interregional Trade social conditions and convenience in ALROSA attended by labour collectives and manage- • The Company implements a wide range of so- Union of PJSC ALROSA the workplace, improvement of the ment of the Company was held on March 27, 2015. remuneration system, social partner- In 2015, planned meetings were held between the Pro- cial policy measures aimed at recruitment and re- employees taining of skilled personnel. ship systems. falmaz Interregional Trade Union and the Company management and labour collectives of structural units. The main topic of the meetings was special assessment of Region-specific Remoteness of the region, natural and climatic • The local population is the source of potential working conditions conducted due to changes in the conditions, absence of any other developed sectors personnel for the Company. Federal legislation. of the economy apart from the diamond industry • The Company implements targeted social programs contributing to promotion of a healthy lifestyle and organisation of cultural entertainment as well as providing support to local communities corporate and sponsor assistance and charity programs.

Detailed information on the risk management system and the risks map is contained in the Annual Report of ALROSA Group for 2015, pp. 77–81. Information on ALROSA Group risks is contained in the issuer’s reports published on the corporate website at http://www.alrosa.ru/documents/ежеквартальные-отчеты/

30 Social and Environmental Report of PJSC ALROSA 2015 Our approach to sustainable development Social and Environmental Report of PJSC ALROSA 2015 Our approach to sustainable development 31 Stakeholders Key topics Key events of 2015 Stakeholders Key topics Key events of 2015

Customers Long-term trade relations, transpar- In February 2015, the Company produced the list of International Development of joint solutions and In February 2015, PJSC ALROSA and the Israel Diamond (buyers ent pricing, improvement of custom- long-term customers for the 2015–2017 contract peri- and national industry- documents to improve transparency, Stock Exchange signed a Memorandum of Understand- of diamond er service, risk management od. In the reporting year, the number of long-term cus- specific community consumer confidence in the industry, ing to strengthen partnership and develop the diamond tomers of the Company grew from 47 to 54. protection of the global rough and mining industry in Russia and Israel. products) On December 9, 2015, the management team of the polished diamond markets from en- On April 21–22, 2015, representatives of the Compa- Company headed by the President Andrey Zharkov had trance of artificial gem manufacturers. ny participated in the 2nd Dubai Diamond Conference a traditional meeting with long-term customers in or- held in Dubai. der to discuss interim results of the work and diamond In May 2015, PJSC ALROSA became one of the seven market condition. largest diamond mining companies in the world to en- In 2015, ALROSA Group continued development of AL- ter into an agreement on the establishment of the Di- ROSA ALLIANCE, a partnership program for long-term amond Producers Association at a meeting held in Las customers, including through participation in major in- Vegas, USA. ternational exhibitions. Moreover, in the reporting year On June 16, in Israel, Andrey Zharkov, the President of ALROSA Group entered into negotiations with the lead- the Company, took part in a meeting for the presidents ing global jewellery product retail networks on the pos- of the organisations participating in the World Federa- sibility of creating joint programs for rough and polished tion of Diamond Bourses and the International Diamond diamond products marketing and sales. Manufacturers Association. The 11th Meeting of the World Diamond Council representatives was held in Moscow with the support of Suppliers of goods Equal conditions of participation in In the reporting year, the Company devoted significant PJSC ALROSA on October 12–14. For the first time in the history of the WDC, Andrey Polyakov, Vice President of and services tenders, performance of mutual obli- attention to developing partnership relations with small gations in a timely manner, anti-cor- and medium-sized businesses and increasing their pro- PJSC ALROSA, was elected Vice President of the WDC*. ruption activities, compliance with portion in the total number of procurement procedure ethical standards. participants. For this purpose an advisory body responsible for the procurement public audit was appointed in 2015. In the reporting year, the number of supplier representatives of small and medium-sized businesses amounted to 2,265, while the proportion of purchases from small and medium-sized businesses in the to- Local communities Employment, support for agriculture, In 2015, PJSC ALROSA performed all its obligations to tal number of contracts concluded by the Company in assistance in organising children’s provide financial aid under regional agreements be- 2015 was three times greater than the planned target. leisure time, sports and cultural ac- tween the Company and administrations of municipal- In the reporting year, the Company continued to oper- tivities funding, including nation- ities in Western Yakutia and acted as a benefactor and ate its own electronic procurement platform (ALRO- al holidays, charitable assistance to sponsor of many social projects. The largest of the said SA EPP) providing a full range of procurement activity schools, kindergartens, healthcare, projects was the construction of academic and labora- management tools, from purchase request to delivery scientific and educational institutions, tory buildings in educational institutions, the building of the product. other non-profit organisations. of a social rehabilitation centre for the underage and a skiing depot in the town of Mirny, an ethnocultural centre in the settlement of Olenyok in Olenyoksky Evenki National District, school and kindergarten in the settlement of Ulukhan-Kyuel in Churapchinsky ulus and many others.

Detailed information on membership of the Company in industry-specific and other international organisations is available on the corporate website at http://www.alrosa.ru/алмазы-и-рынок/международные-отраслевые-организаци/ * In May 2016, Andrey Polyakov was elected and assumed his position as President of the WDC.

32 Social and Environmental Report of PJSC ALROSA 2015 Our approach to sustainable development Social and Environmental Report of PJSC ALROSA 2015 Our approach to sustainable development 33 MANAGEMENT IN THE SPHERE Our achievements OF SUSTAINABLE DEVELOPMENT Corporate In March 2015, PJSC ALROSA was rated 7 by the Russian Institute of Di- governance ratings rectors on the National Corporate Governance Rating scale for the De- In 2015 ALROSA Management in the sphere of sustainable development in the Company covers veloped Corporate Governance Practice. was rated 7 for all elements of the corporate system, from development of strategic targets at Based on this scale, a company is rated 7 if it complies with requirements “Developed of the Russian corporate governance laws, follows most recommenda- the level of supreme governing bodies, to their integration into the Company’s tions of the Russian Corporate Conduct Code and some recommenda- Corporate activities under the supervision of functional divisions and heads of structural tions of the international best corporate governance practices as well Governance units. as being characterised by relatively low-risk losses for owners, linked Practice” to the quality of corporate governance. At all management levels of ALROSA Group enterprises there are designated according to employees responsible for personnel management and social protection, occu- the National Personnel Awards Andrey Lekarev, Corporate Secretary, Head of the Corporate Support De- pational health and safety, environmental protection and integration of the rel- partment, in 2015 was again ranked in the Top 1000 of Russian manag- corporate evant corporate standards and principles in business operations. ers and rated the most efficient corporate director in the metals sector. governance rating The Top 1,000 ratings were prepared by the Russian Managers Associ- scale ation and published in the Kommersant newspaper.

The main internal regulatory doc- distribution of profits, entitlement ument that determines principles to effective protection in case of a and general rules of corporate gov- violation of rights; ernance in the Company is the Cor- porate Governance Code of PJSC • responsibility of executive bod- ALROSA developed on the basis of ies of the Company for achievement recommendations of the Bank of of good results, their accountabili- Russia and taking into considera- ty to the General Meeting of Share- tion global best practices. holders and the Supervisory Board;

In accordance with the standards of • timely disclosure of complete this Code, the corporate governance and reliable information on the of PJSC ALROSA is based on respect- Company, corporate social respon- ing rights and legal interests of its sibility, etc. participants and contributes to efficient activities of the Company in- Compliance with the corporate cluding asset value growth, creation governance principles is monitored of new jobs and maintenance of fi- through periodic audits conducted nancial soundness and profitability by the internal control unit, self-as- of the Company. sessment of the Company govern- The Corporate ance bodies, audit of the corporate Governance Code The key corporate governance prin- governance system by an independ- of PJSC ALROSA is ciples of PJSC ALROSA include: ent external auditor and regulato- published on the ry authorities and via a corporate corporate website at http://www.alrosa.ru/ • respect for the rights of share- governance rating given by an in- documents/устав-и- holders to participate in man- dependent rating agency. иные-внутренние- agement of the Company and документы/

34 Social and Environmental Report of PJSC ALROSA 2015 Our approach to sustainable development Social and Environmental Report of PJSC ALROSA 2015 Our approach to sustainable development 35 COMPOSITION AND COMPETENCE OF THE SUPREME CORPORATE In 2015, a total of 15 corporate events of the Supervisory Board took place, namely 6 meetings GOVERNANCE BODIES and 9 absentee voting occasions.

The General Meeting of Shareholders overall management and monitor- ALROSA Annual Composition of the Supervisory Board as of December 31, 2015 of the Company ensures shareholders ing of executive body activities. The General Meeting can exercise their right to participate Supervisory Board may also estab- of Shareholders in the management decision-mak- lish committees (consultative bodies was held on June 2015 15 1 14 including 3 ing on strategic and other impor- for preliminary consideration of the 25, 2015 in Mirny tant issues concerning activities of most important issues falling within 2014 15 1 14 including 2 the Company. Resolutions of the an- the competence of the Supervisory total number executive non-executive independent nual General Meeting of Sharehold- Board). The Chairman of the Super- of members director directors directors ers were made on the composition of visory Board may not simultaneous- of the Supervisory the Supervisory Board, the Auditing ly occupy the position of executive Board Committee, annual accounting state- director of the Company. ments, Annual Report, auditor of the Company, payment (announce- In accordance with a resolution of ment) of dividends, profit distribution the General Meeting of Shareholders 2015 5 10 5 based on the financial year results, held in June 2015, the 15 members of and amendments to the constituent the Supervisory Board of the Compa- 2014 3 6 9 documents of PJSC ALROSA. ny were composed of 11 representa- women members aged members older tives of the Russian Federation and 30-50 years than 50 years In 2015, the annual General Meeting the Republic of Sakha (Yakutia), one of Shareholders was held on June 25 representative of the municipali- in Mirny. No extraordinary General ties of the Republic of Sakha (Yaku- Meeting of Shareholders of PJSC AL- tia) and three independent directors, ROSA was held in 2015. two of whom were nominated by the Government of the Russian Federa- In 2015, the Supervisory Board approved important documents The Supervisory Board of PJSC tion and the third one was nominated in the sphere of risk management and internal control. ALROSA is responsible for develop- by the foreign minority shareholders. ing the strategy of the Company, its Regulations on Risk Management A new edition of the Regulations on Risk Management clarifies the procedure for prepa- of PJSC ALROSA ration and approval of documents, terminology, introduces the preferred risk concept, reflects the assessment of the risk management system efficiency and clarifies the func- tion and procedure for interaction of the participants in the risk management process.

Regulations on Internal Audit The Regulations on Internal Audit define the aim, objectives, powers and responsibili- of PJSC ALROSA ties of the internal audit department, regulates stakeholder engagement and the procedure for assessing internal audit activities.

Regulations on the Quality The Regulations on the Quality Management System regulate the process of develop- Management System of PJSC ment and introduction of a unified quality management system combining separate ALROSA management systems in place in some structural units of the Company that meet requirements of ISO 9001, ISO 14001 and ISO 50001. For detailed information on members of the Supervisory Board of PJSC ALROSA and the The Regulations development was based on certain factors and conditions specific for procedure for payment of annual remuneration to members of the Supervisory Board, please see the Company activities (production and sales of industrial and non-industrial diamonds ALROSA Group Annual Report 2015, pp. 92–117. as well as manufacture and sales of polished diamonds) aimed at increasing PJSC AL- The Regulations on Remuneration to Members of the Supervisory Board is published on the ROSA customers satisfaction. corporate website at http://www.alrosa.ru/documents/устав-и-иные-внутренние-документы/

36 Social and Environmental Report of PJSC ALROSA 2015 Our approach to sustainable development Social and Environmental Report of PJSC ALROSA 2015 Our approach to sustainable development 37 The President and the Executive visory Board and Chairman of the For detailed information on Management in the sphere of sustainable development the President and members ( ) Committee are responsible for tak- Executive Committee. Top manag- of the Executive Committee and corporate social responsibility CSR ing the key decisions on the Com- ers who are members of the Execu- and the procedure for pany operations and manage the tive Committee directly participate and payments of annual remuneration to members day-to-day activities in accordance in the development of key docu- of the Executive Committee, General Meeting Auditing Corporate with the strategy formulated by the ments and adoption of decisions in please see ALROSA Group of Shareholders Committee Secretary Annual Report 2015, pp. Supervisory Board and the Gener- the sphere of sustainable develop- 119–127. al Meeting of Shareholders of the ment submitted to the Superviso- President (Chairman Company. The President of PJSC ry Board and/or its committees for Supervisory Board of the Executive ALROSA is a member of the Super- consideration and approval. and its committees Committee)

In April 2015, the Supervisory Board of the Company approved Andrey Zharkov as the new President of PJSC ALROSA. Strategic Human Resources Audit Executive Committee Planning and Remunerations Committee ( ) Committee Committee executive body

Executive Committee composition as of December 31, 2015

Key areas of activity in the sphere of sustainable development 2015 13 0 7 6

2014 13 0 6 7 Strategy Economic Environmental Innovations Stakeholder Personnel training total number of Executive women members members development activities activities, and technological engagement and development, Committee members aged 30–50 older than 50 and strategic risks occupational upgrade of the social policy management health and safety production

Members of the Executive Committee in charge of areas of activity in the sphere of sustainable development KEY PERFORMANCE INDICATORS 2015 President First Vice First Vice Vice President Vice President Vice President President President – Executive Director, Chief Engineer

3,198 11.22 mn RUB Management department activities in the sphere of sustainable development and CSR anti-corruption inspections were held Revenue per employee involved in core activities

Strategic Planning Economic Occupational Council on Corporate HR Department, and Budgeting Planning Safety and Innovations under Communications Social Security Department Department, Labour Protection the President of and Advertising and Regional Labour and Department, PJSC ALROSA, Department, Development Remuneration including Innovation and Customer Policy Department In April 2015, a quality management system was established Department, Environmental Technology Centre and Marketing Investment Protection Section at the premises of Department Activities Yakutniproalmaz Department Research and Design Institute

38 Social and Environmental Report of PJSC ALROSA 2015 Our approach to sustainable development Social and Environmental Report of PJSC ALROSA 2015 Our approach to sustainable development 39 ETHICS AND ANTI-CORRUPTION ACTIVITIES

PRODUCER ETHICS ALROSA ALLIANCE Key Principles

PJSC ALROSA uses only transparent cess and high social status. Sales of • Commitment to aims and principles of the Kimberley Process and ethical procedures for sales of such unique goods oblige producers natural rough diamonds. to follow the principles of high pro- • Observance of the principles of lawful and fair competition, combatting fessionalism and flawless business bribery and corruption, financial transparency and information disclosure Rough and polished diamonds have ethics, through strengthening trust always been considered an emo- and striving to satisfy the highest • Respect for human rights, non-discrimination, renouncing of forced and child tional symbol of love, loyalty, suc- demands of our customers. labour, respect for labour rights based on social partnership principles

• Reduction in the negative impact on the environment, rational use of the Conformance to the key requirements of customers subsoil

Guarantee of authenticity Availability of complete Flawless product reputation and conformance to the information about the product In accordance with the Regulations sible Business Practices, their de- international quality standards On the Procedure and Terms of sire to adhere to these Guidelines in Sales of Natural Rough Diamonds their activities throughout the en- The rough diamonds sorting and prima- Вся информация об установленных All Our Company is a member of the World ry evaluation system of our Company is the information about determined con- Diamond Council, established within the by PJSC ALROSA, all customers can tire chain of diamond products sup- certified and meets national and inter- sumer qualities of our products is con- framework of the Kimberley Process in purchase diamonds of the Compa- ply, from producer to end consumer. national standards. The conformance of tained in supply agreements or rough 2000. ny based on the unified criteria and raw materials to the established require- diamond sale and purchase agreements. The Kimberley Process Certification ments is ensured through using a quali- In November 2015, in Russia, amend- Scheme covers all stages of rough dia- rules. The main customer require- In the last few years, one of the ty control system and issuing necessary ments to legislation came into effect mond production and sales at the nation- ments are stable financial standing most acute problems that rough di- documents. stipulating that product labels of jewel- al and international levels guaranteeing and compliance with the procedure amond suppliers face in the sphere No cases of non-compliance with require- lery being sold should contain informa- that the diamonds have a legal origin and ments, in terms of information on prop- tion on any treatment methods applied are not in any way linked to, or the prod- for separate sales of natural, treat- of reputational risks has been the erties of diamond products and labelling, which altered the quality, colour and price uct of, illegal mining operations, armed ed natural and artificial stones, as mixing of artificial diamonds into were identified in 2015, and no fines were of the stone, as well as information on conflicts or terrorist activities. well as products made from them. a batch of natural diamonds. Our imposed for non-compliance with legis- whether the stone is a precious stone (a lation and requirements in this sphere. natural gem). Company tasks itself with making We introduced the ALROSA ALLI- a clear distinction between natural Detailed information on sales of natural rough diamonds and polished diamonds is published by the Company on a special ANCE Guidelines on Responsible and artificial stones. We also con- commercial website at http://sales.alrosa.ru Business Practices for long-term tinue research aimed at creating customers. The document lays out maximum efficiency high-speed ALROSA Group key ethical princi- diamond detectors, support and To establish quality management system in PJSC ALROSA, the Company ples for business conduct in the participate in development of leg- appointed Head of the Quality Council of PJSC ALROSA — a collegial body, as sphere of rough and polished di- islative initiatives regulating the is- the Company top management representative for quality. amond sales. sues of artificial diamond turnover in the jewellery industry and trans- By using the brand and logo of AL- parency of customer information. The quality management system of the company includes the areas of Regulations ROSA ALLIANCE, long-term custom- on the Quality activity in which the quality of the final products (rough and polished Management System diamonds) depends on additional areas of activity (research, develop- ers of the Company demonstrate ment and survey works) the results of which are intended not only for of PJSC ALROSA their commitment to the ALROSA internal but also for external consumers of the Company. ALLIANCE Guidelines on Respon-

40 Social and Environmental Report of PJSC ALROSA 2015 Our approach to sustainable development Social and Environmental Report of PJSC ALROSA 2015 Our approach to sustainable development 41 INTRA-CORPORATE ETHICS INNOVATIVE DEVELOPMENT

The Corporate Ethics Code of PJSC the corporate ethical standards on PJSC ALROSA Corporate The Program for Innovation Devel- the changes in innovation and busi- ALROSA, in effect since 2013, (here- managers at all levels. Ethics Code is published on opment and Technological Upgrade ness activities of the Company that the corporate website at inafter referred to as the Code) is the In accordance with clauses 11.2.3– http://www.alrosa.ru/ of PJSC ALROSA is integrated into a have taken place since approval of the baseline document that establish- 11.2.6 of the Code, the Company documents/устав-и-ины- strategic documents package and is first revision of the Program. е-внутренние-докумен- es the intra-corporate ethical stand- has in place consulting mechanisms ты/#2013 aimed at strengthening competitive ards. All employees of PJSC ALROSA concerning the use of corporate advantages of the Company, improv- As part of the Program revision, a re- regardless of their position are sup- standards and reporting non-ethical ing activities efficiency and reducing view of results of the technology audit posed to comply in their profession- or illegal conduct of a line manag- mining expenses. conducted in 2015 was carried out, in al activities with the requirements er. As part of the implementation of addition to a review of the analysis of of this document and bear respon- the provisions of the Code, the Com- In 2015, in accordance with the in- the prospective position of the Com- sibility for compliance with the pany has established the Commis- structions of the Government of the pany, taking into account external ethical standards stipulated by the sion for compliance with corporate Russian Federation, the Program for factors and internal resources based Code. The Company imposes height- ethical standards and resolution of Innovation Development and Tech- on SWOT and STEEP analyses. ened obligations for conforming to conflicts of interests. nological Upgrade of PJSC ALRO- SA was revised to cover the period 2016–2023 taking into consideration ANTI-CORRUPTION ACTIVITIES

Since 2013, PJSC ALROSA has been nel training and development, assis- In accordance with results of the technology audit of ALROSA Group conducted a participant in the Anti-Corruption tance to law enforcement agencies 3,189 by consultants of McKinsey & Company in 2015, the Company secured its status Charter of the Russian Business of and other measures. The Company ALROSA’s of the diamond production market leader with strong technological competences. the Russian Union of Industrialists has in place the Anti-Bribery and business partners Currently research and initial stages of works are being carried out based on the and Entrepreneurs of Russia (RSPP). Corruption Policy of PJSC ALROSA were analysed technology audit recommendations. The Charter provides for negation and ALROSA ALLIANCE Guidelines in connection Assessment of the recommendations application and their implementation of the right to preferential advan- on Responsible Business Practices with the risks analysis are scheduled for completion by 2018. tages, procurement by way of open stipulating corruption combatting associated with tenders, financial control, person- standards. corruption Structure of innovation processes management of PJSC ALROSA In 2015, the Company conducted 3,198 checks aimed at identifying violations in the sphere of combatting corruption.

Vice President of PJSC ALROSA Yakutniproalmaz Research for Innovation and Design Institute 2015 3,189 142 3

Innovation and Technology Centre 2014 4,637 194 11 of PJSC ALROSA business partners of the total number of employees were dismissed Company were analysed in administrative measures because of violations Expert Advisory Board Research and Geological Exploration connection with the risks taken in response to associated with corruption on Innovation headed Quality Council Enterprise of PJSC ALROSA by the President of PJSC ALROSA associated with corruption violations by employees of PJSC ALROSA

JSC Research and Production Enterprise Bourevestnik, a subsidiary company

42 Social and Environmental Report of PJSC ALROSA 2015 Our approach to sustainable development Social and Environmental Report of PJSC ALROSA 2015 Our approach to sustainable development 43 Conducting research Research, development and engineering works in the Company are carried out by Ya- In 2015, the total funding of the In- to the previous year because of tran- and application of the results kutniproalmaz Research and Design Institute and the Research and Geological Explo- (commercialisation) ration Enterprise in accordance with the topical plan. In 2015, the Company applied novation Development and Tech- sition to the stage of implementation the results derived from 27 research and development projects, the economic effect of nological Upgrade Program of the of the main innovation projects and which is estimated at RUB 560 mn; 11 titles of protection documents for utility models Company amounted to RUB 2,040.7 the corresponding reduction in capi- and inventions were obtained. mn and decreased by 22% compared tal expenses. Release of innovative products The list of the manufactured products includes x-ray separators for diamond ores and analytical devices and systems for the metal industry, oil refining, medicine, environmental monitoring and the mining industry. Key program activities in the sphere of innovation development and technological upgrade Creation and development Continuous development of the research infrastructure and bench-top testing facility Activities in the sphere of the research infrastructure of research units of PJSC ALROSA and OJSC Bourevestnik Research and Production En- and bench-top testing facility terprise, its subsidiary, contributes to improving the quality of laboratory and analyti- of mastering new technologies: cal research and experimental works performed in-house.

Energy Efficiency Energy saving and energy resources consumption optimisation activities make it possible Improvement of innovation During the reporting year, works to develop new documents and revise the existing doc- Improvement Program for the Company to reduce expenses and negative impact on the environment. Among major projects of 2015 implemented in this sphere the following are worth mentioning: activities management uments on innovation activities of the Company continued. • development of revolutionary direct-acting electric drive systems for machinery with and business processes In November 2015, the Supervisory Board of the Company approved the Regulations abruptly variable load and momentum (switched reluctance motors, permanent mag- on Development and Implementation of the Program for Innovation Development and net motors); Technological Upgrade of PJSC ALROSA, as the document stipulating the procedure for • use of high-voltage gas-insulated switchgears, use of energy-efficient equipment; interaction, powers and responsibilities of the participants, as well as the key require- • use of energy efficient light sources, light-emitting-diode appliances and SOLATUBE ments for the development process and implementation of the Program for Innovation daylighting system; Development and Technological Upgrade of PJSC ALROSA. • introduction of HALFRID diesel fuel quantum activator for diesel generator plants at Nyurba Mining and Processing Division; Development of interaction Main forms of interaction: • use of gas engine fuel (methane). with external innovation • engaging contractors to carry out works in the areas of research and development environment subjects performed by ALROSA Group; • signing of bilateral agreements on cooperation in the sphere of innovations; • invitation to participate in an open innovation projects contest of PJSC ALROSA; Program for Improvement Yakutniproalmaz Research and Design Institute annually analyses the impact of PJSC • invitation of independent experts from third party organisations (including represent- ALROSA activities on the environment in terms of water consumption, emissions of pol- atives of technological platforms that are industry-specific for the Company and territo- of Environmental Friendliness rial innovation clusters as well as development institutes) to participate in consultative of Production luting substances in the atmosphere, movement of production and housekeeping waste, and land reclamation. Key projects of 2015: and advisory (collegial) bodies; • development of effective methods for reclamation of slopes in the environmental and • participation of PJSC ALROSA as a strategic partner in the Tekhnostart – 2015 con- geological conditions of Daldyno Alakitsky district; test; • search and introduction of the best technologies for recycling and disposal of used • invitation of contestants and authors/authoring teams of ecological projects to par- oils; ticipate in the Green Facets of a Diamond, a green initiatives contest; • introduction of the best waste handling technologies; • invitation to participate in consultative and advisory (collegial) bodies. • development and introduction of a comprehensive environmental monitoring system In April 2015, the Company approved the Regulations on the Procedure and Rules of In- for activities of the structural units; novative Solutions Introduction in PJSC ALROSA that made it possible for small and medium-sized businesses to deal with us through a ‘one-window’ system.

Mastering new technologies Kea areas for mastering new technologies in production: in production • improvement of mining efficiency of the existing enterprises; • development of new rough diamond mining technologies; • activities aimed at improvement of geological exploration efficiency; International cooperation Key events: • introduction of integrated information systems; and international business • implementation of projects in the sphere of research and development together with • processing; activities foreign partners; • sorting of gem-quality rough diamonds and production of polished diamonds, sorting • performance of planned agreements on international scientific and technical cooper- of industrial rough diamonds and production of diamond powders; ation; • production automation; • participation in international alliances, consortiums, strategic partnerships in the in- • construction. novation sphere.

44 Social and Environmental Report of PJSC ALROSA 2015 Our approach to sustainable development Social and Environmental Report of PJSC ALROSA 2015 Our approach to sustainable development 45 Key Performance Indicators (KPI)

Indicator 2014 2015 actual plan actual 1. Research funding and goal achievement indicator Volume of R&D financing as % of revenue 0.36 0.4 0.4 Number of R&D projects developed and integrated into production process, pcs. 28 27 27 2. Technological leadership indicators Number of patents and other E&P titles of protection documents, for the year, pcs (including 36 13 24 PJSC ALROSA and JSC Research and Production Enterprise Bourevestnik) 3. Innovation efficiency indicator Innovation introduction effectiveness indicator, RUB/RUB. 0.48 1.17 1.17 R&D introduction effectiveness indicator, RUB/RUB 1.40 1.41 1.94 4. Environmental friendliness indicator CO emission, thousand kg: 4,254 4,680 2,790 CO emissions from stationary sources, thousand kg 3,007 2,880 2,790 CO emissions from mobile sources, thousand kg 1,247 1,800 – Water extraction from the storage reservoir for needs of PJSC ALROSA, thousand cub. m 24,350 26,339 21,070 5. Energy efficiency indicator Energy consumption per carat of mined products, GJ 0.334 0.375 0.323 6. Labour productivity indicator Revenue per employee involved in core activities, RUB mn 12.21 10.67 11.22

* Predicted figure. ** The calculation of the actual economic effect for 2015 will be made in Q1 2016. *** Due to the absence of methods for determining CO emissions from mobile sources approved at the statutory level in the Russian Federation, pursuant to the letter from the Ministry of Natural Resources and Environment of the Russian Federation No. 12-47/5413 On Payment for the Adverse Effect from Mobile Sources dated March 10, 2015, no monitoring of CO emissions from mobile sources was performed in 2015.

Our achievements

Awards in the sphere The high level of innovative solutions developed by the Company was acknowledged by the Govern- of innovations ment of the Russian Federation, which, in 2015, awarded a Science and Technology Prize to a spe- and technology cialist group of the Company for the creation and large-scale commercial introduction of systems for the development of underground diamond deposits under the extreme conditions of the cryolithic zone of Yakutia.

The title of The Best Research Institution in Russia 2015 was awarded to Yakutniproalmaz Research and Design Institute of PJSC ALROSA based on results of the 100 Best Enterprises and Organisations of Russia National Contest.

A Diploma of Merit was awarded to Yakutniproalmaz Research and Design Institute of PJSC ALROSA by the National Association of Design Engineers and Surveyors, in the most innovative project contest, in the Best Design in the Education Sector category for the design of a kindergarten with an innovative natural lighting system for 240 children in the town of Mirny.

46 Social and Environmental Report of PJSC ALROSA 2015 Our approach to sustainable development Social and Environmental Report of PJSC ALROSA 2015 Our approach to sustainable development 47 ECONOMIC EFFICIENCY

Long-term economic growth is the high-priority task for the Com- pany in its capacity as a business structure and a participant in regional, national and global economic processes. Today the main economic priorities of our Company are: • ensuring efficiency through focus on the core business — diamond mining; • improvement of competitive strengths compared with those of the key players in the global rough and polished diamonds market; • increase in capitalisation and improvement of investment attractiveness of the Company; • participation in preserving the stability of industry-specific, regional, national and global social and economic systems.

48 Social and Environmental Report of PJSC ALROSA 2015 ECONOMIC PERFORMANCE RESULTS 2015 Economic performance results for the key areas of activity of the ALROSA Group

Achievement of the economic goals ny. Moreover, we significantly con- of ALROSA Group activities is one of tribute to economic development Geological exploration the key conditions behind the im- of the regions in which the Compa- plementation of our sustainable de- ny operates, ensuring employment Every year we strive to ensure that tio amounted to 113.9%. Explora- velopment strategy. for the population and substantial the reserves growth should be tion works were carried out in eight tax payments to budgets at differ- equal to the production volume. districts of the Yakutian diamondif- The main goal of our economic activ- ent levels, as well as being a major In the reporting period, ALROSA erous province, in the Arkhangelsk ities is creation of stable sharehold- consumer of machinery, equipment Group reserves increased by 43.6 region and Africa. er value and ensuring profit for our and materials, and investing in de- mn carats – the replacement ra- shareholders in accordance with the velopment of the social infrastruc- strategy and mission of the Compa- ture of said regions. 1,107,902.3 43.6 178 thousand carats are contained mn carats made up the total licences for geological survey, within ALROSA Group reserves diamond reserves growth exploration and production Key Economic Performance Indicators of ALROSA Group that conform to standards of in 2015 were held by ALROSA Group the State Reserves Committee as of the beginning of 2016* Indicators 2011 2012 2013 2014 2015 Change of the Russian Federation compared to 2014, % * Licenses of ALROSA Group include four licenses for geological survey, exploration and production of iron ore Geological exploration at the CJSC MMC Timir associated company. Total diamond reserves growth, mn carats 29.7 35.8 24.5 25.6 43.6 +70.3 Rough diamonds production Rough diamonds production, In 2015, geological exploration dition, Botuobinskaya Exploration thousand carats 34,551.4 34,420.3 36,913.9 36,212.1 38,260.5 +5.7 works were carried out by structural Expedition, Mirny Exploration Ex- mn USD 2,567.5 2,684.4 3,065.2 3,770.7 3,966.7 +5.2 units of parent company PJSC ALRO- pedition) and rough diamond min- Sales of diamond products SA (Amakinskaya Exploration Expe- ing subsidiaries. Sales of diamond products*, total, USD mn 4,454.8 4,610.7 4,945.4 5,045.0 3,554.4 –29.5 including: rough diamonds 4,273.7 4,450.2 4,794.7 4,900.6 3,437.1 –29.9 polished diamonds 181.1 160.5 150.7 144.4 117.3 –18.8 Funding of geological exploration and on-site Financial performance, RUB mn exploration works in 2015 Sales revenue 137,732.0 150,880.0 168,505.0 207,159.0 224,524.0 +8.4 Geological exploration On-site exploration Cost of sales 56,005.0 68,467.0 81,737.0 99,334.0 93,240.0 – 6.1 EBITDA 65,217.0 61,828.0 69,100.0 93,857.0 118,498.0 +26.3 Net profit 26,658.0 33,634.0 31,837.0 23,469.2 32,192.0 +37.2 6500 4000 Detailed information on the Key Performance Indicators of ALROSA Group in 2013–2015 as well as the target values of these 6,305.1 indicators for 2016 is contained in the Annual Report of ALROSA Group for 2015, pp. 22–23. 6,042.9 +4.3% * Based on management accounting data of PJSC ALROSA for 2015. 6000 2000 1,144.3 1,213.0 +6.0% 5500 0 2014 2015 2014 2015

50 Social and Environmental Report of PJSC ALROSA 2015 Economic efficiency Social and Environmental Report of PJSC ALROSA 2015 Economic efficiency 51 Production and processing Sales of diamonds in accordance with the strategic the figures of 2014 by 5.7%. Under- In the reporting year, ALROSA of industry demand. Weak demand goals, in 2015, PJSC ALROSA and its ground mines of the Company ac- Group sales of natural rough and in 2015 affected our pricing dynam- subsidiaries produced 38.3 mn car- count for one fourth of the total polished diamonds amounted to ics. Compared to 2014, prices for the ats of rough diamonds, exceeding production. USD 3,554.4 mn, which is almost entire range of diamond products of one third (29.5%) less than in 2014, the Group dropped by 15.2%. mainly due to the general lowering Rough diamond production by mining and processing divisions of ALROSA Group in 2015, thousand carats

Rough and polished diamond sales by ALROSA Group 1,950.2 in 2011–2015, USD mn 1,964.0 PJSC Severalmaz JSC Nijne-Lenskoe 4,297.3 4,454.8 4,610.7 4,945.4 5,045.0 3,554.4 3,308.9 Udachny MPD JSC Almazy Anabara 150.7 144.4 6,908.3 181.1 160.5 Mirny MPD

7,509.6 117.3 Nyurba MPD for PJSC ALROSA Nyurba

12,322.2 Aikhal MPD

Volume and cost of the rough diamonds extracted 4,273.7 4,450.2 4,794.7 4,900.6 3,437.1 by ALROSA Group in 2011–2015 2011 2012 2013 2014 2015

3,770.8 3,966.6 Rough diamonds sales Polished diamonds sales

3,065.2 2,684.3 ALROSA GROUP INVESTMENT PROGRAM 2,567.5 * Data is presented The ALROSA Group Investment Pro- to RUB 36,854.2 mn (5% less than in in accordance with gram was developed in accordance 2014), including RUB 25,668 mn of reporting under RAS with long-term rough diamond pro- investments in construction of the duction estimates and mining plans facilities associated with the core aimed at maintaining the existing activities of the ALROSA Group com- 34,551.4 34,420.3 36,913.9 36,212.2 38,260.5 level of rough diamond production panies, RUB 8,653.4 mn of invest- and progress of other activities. ments in technical upgrade and 2011 2012 2013 2014 2015 According to the results of 2015, replacement of worn out equipment investments in non-financial as- and RUB 2,532.9 mn of other capi- Volume of the rough diamonds extracted, thouthand carats Cost of the rough diamonds extracted, USD mn sets of ALROSA Group* amounted tal investments.

52 Social and Environmental Report of PJSC ALROSA 2015 Economic efficiency Social and Environmental Report of PJSC ALROSA 2015 Economic efficiency 53 Capital investments of PJSC ALROSA in 2015, RUB mn KEY PERFORMANCE INDICATORS 2015 966.7 Other capital expenses 12,150.7 Construction and 2,327.9 maintenance of current underground mines 43.6 mn carats Construction of core 20,288.0 production facilities The total growth Construction of the diamond reserves 6,644.7 Construction of facilities Technical upgrade for social purposes and replacement of worn out equipment 5,127.1 Construction of ancillary facilities 682.3 38,260.5 thousand carats 3,437.1 mn USD Diamond mining Rough diamond sales Capital investments of ALROSA Group subsidiaries and affiliates in 2015, RUB mn

1,566.2 117.3 mn USD Other capital expenses Sales of polished diamonds 3,761.3 Construction of core production facilities

Construction of ancillary 5,380.0 facilities 2,008.7 Construction Construction of facilities 224,524 mn RUB 32,192 mn RUB Technical upgrade for social purposes and replacement of worn out equipment Sales revenue Net profit 1,617.6 1.1

Detailed information on capital investments of the Group in non-financial assets in 2013–2015 is contained in the Annual Report of ALROSA Group for 2015, p. 62. 47,673 mn RUB 15,393 mn RUB STATE SUPPORT Salaries and other payments Accrued dividends to the staff In 2015, the Company received RUB the difference in tariffs for electricity. 789.4 mn in financial aid from the RUB 53.1 mn of the funds provided by state. Most of the funds (RUB 726.3 the state were spent on financial aid 2.09 RUB mn) were allocated to cover the loss- to the subsidiary farm of the Compa- es incurred in the process of provid- ny and RUB 7.3 mn were disbursed Amount of dividends calculated 4,056 pcs. per 1 ordinary share ing services to the population based on services related to the compulso- Total procurements of materials on the state-regulated utility prices; ry health insurance program. and equipment RUB 2.7 mn were used to compensate

54 Social and Environmental Report of PJSC ALROSA 2015 Economic efficiency Social and Environmental Report of PJSC ALROSA 2015 Economic efficiency 55 CREATION AND DISTRIBUTION Our approaches to distribution of economic value OF ECONOMIC VALUE Dividend policy

Since 2013, the minimum level of div- dations on payment of dividends for idend payments to our shareholders 2015 in the amount of RUB 15.393 bn, Generated and distributed direct economic value in accordance has been 35% of the net profit distrib- that is RUB 2.09 per one share with with the consolidated financial statements of PJSC ALROSA uted based on the consolidated re- the par value equal to 50 kopeks, and its subsidiaries for 2011–2015 prepared under IFRS ports under IFRS. At the meeting on which corresponds to the amount of April 28, 2016, the Supervisory Board payments in the previous year. of PJSC ALROSA approved recommen- Indicators 2011 2012 2013 2014 2015 Generated direct economic value Indicators 2011 2012 2013 2014 2015 INCOME Amount of dividends calculated 1.01 1.11 1.47 1.47 2.09* per 1 ordinary share, RUB Sales revenue* 137,732 150,880 168,505 207,159 224,524 Accrued dividends, RUB mn 7,438.6 8,175.1 10,826.5 10,826.5 15,393.0* Other operating income* 962 3,087 4,018 4,117 3,101 Receipts from sales of fixed assets** 2,085 423 189 1,147 304 *recommended amount Dividends received from affiliated organisations** 1,081 979 965 670 1,664 Interest received** 332 292 234 969 3,616 Salaries and other payments to personnel Distributed economic value OPERATING EXPENSES Mandatory contributions to the Pen- efits package including, in particular, Royalty 3,509 1,209 1,209 1,209 1,209 sion Fund of the Russian Federation social payments in accordance with Cost of sales, including 56,005 68,467 81,737 99,334 93,240 are made via a pension scheme with the forms of targeted social sup- Salaries and other payments to personnel 25,616 28,451 32,764 34,279 40,253 fixed payments in the interests of port established in the Company. In Payment for materials purchased (fuel and electricity, materials, 19,702 25,127 25,790 30,867 37,574 services, transport) all employees. Apart from the state 2015, these payments from profits pension provision, PJSC ALROSA amounted to RUB 893.4 mn. ** The data are Mineral extraction tax (MET) 7,805 8,621 10,509 14,697 23,323 provided in accordance Total administrative expenses, including 6,188 8,509 9,913 10,270 10,243 has an additional pension scheme The most significant forms of the -fi with the consolidated financial statements Salaries and other payments to personnel 3,343 5,732 5,621 5,673 5,918 for its employees through a special nancial aid include financial aid to of PJSC ALROSA Business expenses, including 1,639 2,018 2,378 2,298 2,768 Almaznaya Osen Non-State Pen- employees, reimbursement of 70% of under IFRS for Salaries and other payments to personnel 1,011 1,242 1,323 1,375 1,502 sion Fund that implements a pen- the cost of a package tour including 2010–2014, in the sion scheme with fixed payments. medical treatment and vacation for Cost of Sales, General Other operating expenses, including 19 205 24 725 20 415 23 789 22 996 and Administrative Taxes (apart from income tax, MET and contributions to social funds) 3,620 3,858 4,145 3,754 4,299 The amount of the pension to be employees and their families, reim- Expenses, and Business Expenses clauses. PAYMENTS TO SUPPLIERS received by an employee after re- bursement of return travel expens- Dividends paid 2,134 7,979 9,009 11,487 12,789 tirement depends on one or several es for employees and their families *** Detailed Interest paid 7,351 7,742 9,444 9,228 12,083 factors, such as age, length of em- including the luggage handling fee, information on the ployment and average salary dur- reimbursement of the cost of medi- secure obligations of PAYMENTS TO THE STATE BUDGET PJSC ALROSA related Income tax and other tax liabilities* 11,655 10,517 9,664 9,035 9,124 ing the year preceding retirement***. cal treatment and travel to the place to the pension schemes INVESTMENTS IN COMMUNITIES Apart from the salary, there is a ben- of treatment. with fixed payments to the Pension Fund of Social expenses*** 4,382 9,249 4,609 5,707 5,410 the Russian Federation is disclosed in the * accrued funds Indicators 2011 2012 2013 2014 2015 consolidated financial ** receipts Salaries and other payments** 29,970 35,425 39,708 41,327 47,673 statements of PJSC *** included in other operating expenses ALROSA prepared Regular payments to social funds, 4,384 6,049 6,673 7,341 9,385 under IFRS clause 2 (o) of which paid to the Pension Fund of the Russian 3,635 5,028 6,367 5,354 7,880 Pension Obligations Federation and Other Payments The consolidated financial statements of ALROSA Group for 2011–2015 prepared under IFRS are published on the corporate Made upon Retirement. website at http://www.alrosa.ru/investment/financial_reports/financial/

56 Social and Environmental Report of PJSC ALROSA 2015 Economic efficiency Social and Environmental Report of PJSC ALROSA 2015 Economic efficiency 57 Taxes Procurement activities

In 2015, the Company paid taxes and, as a major taxpayer of the Re- Peculiarities of the supply chain in our made to suppliers in the reporting pe- Detailed information to budgets of various levels and public of Sakha (Yakutia), PJSC AL- Company are defined by the specif- riod amount to RUB 80,863 mn. on the procurement structure and the non-budgetary funds of the Russian ROSA paid RUB 25,172.1 mn to the ic features and scale of the mining import substitution Federation totalling RUB 39,564 mn budget of the Republic. operations as well as remoteness of The proportion of public procurement program of the Company is contained the major production facilities of the procedures, including e-procurement, in the Annual Report Indicators 2011 2012 2013 2014 2015 Company located in Western Yaku- in 2015 amounted to 82% of the total of ALROSA Group for Total taxes paid and mandatory 24,125.1 29,128.4 26,881.2 29,923.8 39,564.0 tia. The major part of materials and volume of procurement procedures 2015, pp. 60–62. payments equipment for the enterprises is de- performed. of which paid to the budget 13,362.7 15,576.2 15,093.1 18,318.9 25,172.1 of the Republic of Sakha (Yakutia) livered by water transport during the navigation period of the Lena River There were no significant chang- (May to October) and is cyclical in na- es concerning structure of suppliers, ture. their location or relations with them Social investments in the reporting period. In accordance The largest categories of materials with our approaches, the proportion Charity activities and maintenance among the most important areas of and equipment for us are combus- (61.7%) of purchases from manufac- of social infrastructure facilities are social investment. tive and lubricating materials, metal turers and their official dealers con- products, explosives, chemical prod- tinues to be a significant part of the Indicators 2011 2012 2013 2014 2015 ucts, mining, processing and con- total number of contracts concluded Local infrastructure allowance 2,096 5,306 1,525 2,309 1,749 struction equipment, construction, in 2015. Charity expenses 1,485 3,211 2,497 2,762 2,879 electrical and other materials, motor Medicine 214 316 205 259 270 vehicles, instrumentation and control Due to US dollar rate increase and in- Education 59 87 112 136 140 devices, appliances and tools, spare voluntary import substitution policy Other expenses 528 329 270 241 372 parts, special clothing and personal of the Company, the number of for- Total: social expenses 4,382 9,249 4,609 5,707 5,410 protective equipment, construction eign suppliers decreased compared and repair works. In volume terms, to the previous period. In 2015, 121 materials and equipment deliveries pieces of foreign equipment were rein 2015 amounted to 431.8 thousand placed with domestic equivalents, tons. The total estimated payments which totalled RUB 1.4 mn.

Indicators 2011 2012 2013 2014 2015 Total number of purchases of materials and equipment, 1,489 2,154 3,152 3,578 4,056 including from: manufacturers 521 836 872 976 937 dealers and distributors 539 866 1,346 1,369 1,566 intermediaries 429 452 934 1,233 1,553 Total number of purchases of works/services, including from: 1,261 2,059 1,609 1,426 1,667 contractors 615 556 653 556 539 service providers 646 1,503 956 870 1,128 Total number of purchases of materials 2,750 4,213 4,761 5,004 5,723 and equipment and works/services of which from foreign suppliers – 65 63 75 41 Total cost of the purchased equipment and materials and works/ 38,268.2 43,441.5 41,450.0 48,701.6 54,931.0 services, RUB mn

Social and Environmental Report of PJSC ALROSA 2015 Economic efficiency 59 ENVIRONMENTAL RESPONSIBILITY

Our responsibility to the future generations requires an efficient program for the minimisation of the impact of PJSC ALROSA activities on the environment. We believe that the resources available and the lessons learnt in the sphere of environmental protection help us to reach environmental goals.

60 Social and Environmental Report of PJSC ALROSA 2015 ENVIRONMENTAL POLICY IMPLEMENTATION Our priorities

The key tasks of the Environmental Policy of PJSC ALROSA are to ensure • Technical upgrade of produc- • Transition to underground ore rational use of water and energy resources, monitoring of emissions of tion aimed toward mining machin- mining to reduce the area of dis- greenhouse gas and other polluting substances, effective recycling and ery with high emission levels, which turbed lands. disposal of waste, technical and biological reclamation of disturbed lands. will result in reduction of emissions of polluting substances and green- • Renovation and putting into op- house gas in the atmosphere. eration the treatment facilities to reduce discharge of polluting sub- Our approaches stances in water bodies.

Regulatory documents, compliance with requirements Principles Environmental activities of PJSC AL- hensive Environmental Protection ROSA are carried out in accordance Program of PJSC ALROSA for 2011– In 2015, we continued to integrate the • control over safety of technolog- with the Constitution of the Russian 2018. principles of environmental responsi- ical processes and monitoring of en- Federation, Federal Laws On Envi- bility, as set out in the Policy for Sus- vironment in the mining districts; ronmental Protection, On Protec- The Environmental Policy of the tainable Development and Corporate tion of the Atmospheric Air and On Company is integrated into sever- Social Responsibility of PJSC ALROSA, • environmentally safe disposal of Industrial and Housekeeping Waste, al strategic documents (Long-term in the Company’s activities. waste; Water Code of the Russian Federa- Development Program of ALROSA tion, regulations of the Russian Fed- Group until 2023, Policy on Sustain- • presumption of potential negative • liability for environmental pollu- eration and the Republic of Sakha able Development and Corporate impact of mining activities on the en- tion and compensation for damage; (Yakutia). Social Responsibility of PJSC ALRO- vironment, quality of life and health; SA, ALROSA ALLIANCE Guidelines) • emergencies prevention and mit- The key documents regulating envi- and is aimed at minimising the im- • strict compliance with the nation- igation of the consequences; ronmental protection activities al- pact of PJSC ALROSA production ac- al environmental protection and safe- so include the Environmental Policy tivities on the environment. ty legislation; • respect for interests of the local of PJSC ALROSA and the Compre- population and indigenous people • conducting of an environmental and dialogue with them concerning audit and introduction of an environ- any production operations affecting Environmental Management System mental management system; their traditional places of residence and use of natural resources; The Environmental Management Sys- al standard. In 2015, the Company • priority of preventive measures tem of PJSC ALROSA was introduced passed a supervisory audit, in which over the measures to mitigate neg- • free access to, and transparency in 2013 and it conforms to the ISO the validity of certificates of conform- ative environmental consequences; of, environmentally important infor- 14001:2004 international standard ance to ISO 14001:2004 was verified. mation. and GOST R ISO 14001-2007 nation- • application of the mining techniques best in terms of safety;

62 Social and Environmental Report of PJSC ALROSA 2015 Environmental responsibility Social and Environmental Report of PJSC ALROSA 2015 Environmental responsibility 63 Joining international Potential environmental risk management mechanisms and national environmental protection initiatives

In 2015, PJSC ALROSA together with Framework Convention on Climate Risk description Major risk factors Measures for preventing other Russian companies joined the Change. Cooperation of business risk development Climate Partnership of Russia initi- representatives of all countries in or- Environmental accident risk • Natural and climatic conditions • Control of all stages of the production ative signing the Russian business der to prevent global climatic prob- • human factor process statement on the negotiation pro- lems will make it possible to create • Analytical monitoring cess and adoption of a new climate mechanisms of managing the exist- Risk of non-compliance with • Tightening of the environmental • Control over all stages of the production agreement at the 21st Conference ing situation in terms of an increase requirements of Russian environmental protection legislation process, informational monitoring of of the Parties to the United Nations in greenhouse gas emissions. legislation • Acquisition of facilities (subsidiaries changes in the national legal framework and affiliates) causing substantial • Application in the Company structural damage to the environment units of changes in the legislation • Proximity of the production sites to specially protected natural areas (wildlife reserves). Environmental policy objectives implementation

Key objectives of the environmental policy

Introduction of environmental • The focus of production and business activities on rational and efficient use of natural MAIN ENVIRONMENTAL PROJECTS AND INITIATIVES resources through introduction of new technologies and innovation projects. protection administrative OF PJSC ALROSA IN 2015 management systems • Adoption of documents and policies conforming to sustainable development principles and international environmental management standards. At the end of 2015, PJSC ALROSA announced results of the first large-scale project, Green Facets of a Diamond, a green initiatives contest. Rational use of resources • Implementation of the Energy Saving and Energy Efficiency Program of PJSC ALROSA for 2014–2016 PJSC ALROSA together with the Ministry of Environmental Protection of the Republic of Sakha (Yakutia) and municipal and regional authorities proposed • Conformance to the Environmental Policy of PJSC ALROSA at all stages of the production conducting of the Green Facets of a Diamond contest. The organising committee process headed by the Chief Engineer of PJSC ALROSA considered projects submitted by 27 Reduction of negative impact • Implementation of a package of environmental protection measures in development authoring teams in seven priority categories: Production Ecology. Innovative Eco- on local ecosystems of new deposits Efficient Technologies, Waste Management, Vegetation Conservation, Biodiversity • In-process environmental monitoring in structural subdivisions of the Company. Conservation, Water Bodies Protection, Sustainable Development of Populated Localities, Ecological Education and Awareness Development. Children’s Ecological Сохранение биоразнообразия • Implementation of the Comprehensive Environmental Protection Program of PJSC Projects. All the contest applications were reviewed at a meeting of the Scientific ALROSA for 2011–2018. and Technical Council of Yakutniproalmaz Institute of PJSC ALROSA. The best • Implementation of current (now being implemented) environmental activities program in 2015 creative projects reached the final stage of the contest where winners and runners- up were announced. Seven projects were nominated for cash prizes. The contest winners were authors of two projects, recognised by the organising committee as having best taken into account applicability and had carried out the most ENVIRONMENTAL RISK MANAGEMENT careful examination of all details: “Development of a technological approach to reclamation of the first and second stage tailing dumps of PJSC ALROSA” and Environmental risk management in ural ecosystems but also to prevent “Reclamation of disturbed lands in the flood basin of the Irelyakh River”. All finalists the Company is carried out through- possible negative impacts. Effective of the contest were awarded diplomas of merit. out the entire production cycle, which environmental risk management is makes it possible not only to reduce one of the key principles of the en- environmental damage caused to nat- vironmental policy of the Company.

64 Social and Environmental Report of PJSC ALROSA 2015 Environmental responsibility Social and Environmental Report of PJSC ALROSA 2015 Environmental responsibility 65 In 2015, the following works were Udachny, and the settlement of Ai- misation of the procedure for and tion of a mining enterprise at Ver- At the beginning performed: khal; time schedule of the stripping and khne-Munskoe deposit was held. of 2016, a mining works, optimisation of the Based on results of the hearing, it public hearing • comprehensive ecological mon- • introduction of new technolo- overburden piling parameters with was decided that development of concerning itoring of the environment (atmos- gies for recycling and disposal of parallel rehabilitation of the sur- Verkhne-Munskoe deposit will have assessment phere, hydrosphere, lithosphere, used oils; face of the filled up overburden no significant negative impact on of impact on flora and fauna) in the areas of PJSC piles and utilisation of the over- the environment. environment in ALROSA production activities; • search for and introduction of in- burden for construction and main- construction novative technologies in the sphere tenance of temporary roads and as The public hearing took place in the of a mining • continuation of renovation and of handling waste production and the bedding for facilities under con- settlement of Olenyok as a part of enterprise at construction of sewage treatment consumption. struction. the Days of Mirny district celebra- Verkhne-Munskoe facilities in the towns of Mirny and tion in the Olenyoksky ulus, with deposit was held. At the beginning of 2016, a public participation of representatives of hearing concerning assessment of regional and local authorities, PJSC impact on environment in construc- ALROSA and the district population. Dialogues on ecological issues at the project design stage

In 2015, PJSC ALROSA started pre- Wild reindeer autumn migration In 2007 ALROSA STRUCTURE OF MANAGEMENT IN THE SPHERE paratory works aimed at devel- routes are located in the vicinity discovered OF ENVIRONMENTAL PROTECTION opment of Verkhne-Munskoe, a of the construction site location, Verkhne- new diamond deposit located in so measures were taken to pre- Munskoe diamond The First Vice President, Executive Di- environment makes it possible to There is an Olenyoksky Evenki National District, vent the technological process of deposit located rector of PJSC ALROSA, is responsible monitor changes over time of the environmental 170 km from the town of Udachny. ore transportation from negatively in Olenyoksky for successful management of envi- operation-specific data concerning protection section For several years, specialists of the impacting the reindeer. In the rein- District of the ronmental activities, the Chief En- environmental aspects. in each structural Company calculated and verified deer migration zone, low-angle road Sakha (Yakutia) gineer of the Company coordinates subdivision of the an environmentally-friendly meth- slopes and a special regime for the Republic. environmental works and the Occu- Each area of daily environmental Company od of developing Verkhne-Munskoe personnel going outside bounda- pational Health and Safety Depart- activities is monitored by govern- ore field, being aware of the impor- ries of the enterprise will be intro- In 2015 ment, whose structure includes the ment agencies of federal or region- tance of preserving the unique en- duced. Posts with light-reflecting ALROSA started Environmental Protection Division, al level. The supervisory authorities vironment, considered an asset of mirrors and an imposed speed lim- preparatory provides day-to-day management. exercising control over compliance the Olenyoksky District, where the it will become a mandatory require- works aimed at with the Water Code of the Russian population is engaged in reindeer ment for drivers at certain sections development of In each structural subdivision of the Federation are the Lena River Ba- husbandry, hunting and fishing as of the road. Animals cross the road the field. Company there is an environmen- sin Water Directorate of the Federal traditional subsistence activities for site between September 20 and Oc- tal protection section (designated Water Resources Agency, the Water inhabitants in northern territories. tober 16 and at this time there will specialist) responsible for monitor- Relations Department of the Rus- be no traffic at all. A ban on cull- ing compliance with requirements sian Federation and the Federal Ser- In order to minimise the potential ing wild reindeer is imposed. Migra- of the legislations, regulations and vice for the Supervision of Natural adverse impact on the fragile en- tion of animals in the vicinity of the corporate standards in the sphere of Resource Usage. vironment it was decided that con- road is monitored using radio track- environmental protection as well as struction of processing facilities at ing collars. implementation of the environmen- Environmental impact assessment Verkhne-Munskoe deposit would be tal policy of the Company. covering toxicity of the waste stored halted and the ore processed at pro- The planned subsoil and environ- at production sites of the Company cessing plant No. 12 of the Udachny mental protection activities include The annual analytical report on as- is carried out by specialists of the Mining and Processing Division where open pit mine space optimisation sessment of the impact that pro- water toxicology laboratory at the it will be transported on road trains through maximum utilisation of duction activities of the Company Institute of Biology of Irkutsk State along the all-season road. the rock strength properties, opti- structural subdivisions had on the University.

66 Social and Environmental Report of PJSC ALROSA 2015 Environmental responsibility Social and Environmental Report of PJSC ALROSA 2015 Environmental responsibility 67 The Company has in place an effi- al ecology sphere. RUB 5.972 mn KEY PERFORMANCE INDICATORS 2015 ciency assessment system for each were allocated for these purposes 5.972 area of environmental activities that in 2015. Our specialists attend semi- mn RUB were is based on the established activity nars and specialised courses and are allocated to assessment criteria goals. trained in matters of environmen- professional tal safety in the workplace and en- development Annually, we invest in profession- vironmental protection, I–IV hazard and training of al development and training of the class waste handling and utilisation. the employees employees working in the industri- working in the industrial 3, 442.5 mn RUB ecology sphere. Current environmental expenses

The high level of preparedness of the Company units responsible for environmental wellbeing was evidenced by the accident at the tailing dump of plant No. 5 in the town of Mirny

In November 2015, a landslide of backfill the landslide material in sand and clay occurred near the the tailing dump and determine 2,588.7 mn RUB tailing dump of plant No. 5 (the town toxicity of the waste. Based on Investment in the fixed capital allocated for environment of Mirny). PJSC ALROSA established the investigation results, the protection and rational use of natural resources an emergency response centre to possibility of adverse impact on the mitigate the consequences of the environment was excluded and the accident. All the necessary units analysis confirmed that the tailings and specialists were engaged in the fall under V hazard class and are not emergency response operations, a toxic. The damage by PJSC ALROSA bypass road along Anabar road was to the ecosystem is considered to created, works were carried out to be minimal. 21.4 thousand GJ Electrical energy conservation

3.3% Reduction of specific energy consumption for mining one carat

In 2015, ALROSA joined the “Climate partnership of Russia” initiative

68 Social and Environmental Report of PJSC ALROSA 2015 Environmental responsibility Social and Environmental Report of PJSC ALROSA 2015 Environmental responsibility 69 FUNDING OF ENVIRONMENTAL Breakdown of the current (operating) expenses associated PROTECTION ACTIVITIES with environmental activities in 2011–2015, based on the type of environmental activity, RUB mn.

6 Measures 2011 2012 2013 2014 2015 2011–2015 PJSC ALROSA believes that environ- ed to RUB 6,031.1 mn, which is 1.2% bn RUB were mental expenses are investments more than in 2014, while the cur- invested in TOTAL 2,135.2 2,630.9 2,637.3 2,844.0 3,187.3 13,434.7 in life and wellbeing of future gen- rent (operating) expenses increased environmental Protection of atmospheric air and climate change 350.6 122.1 126.7 86.9 84.8 771.1 prevention erations and annually invests sig- by 12.1% compared to 2014 and in- protection Sewage collection and treatment 1,406.1 1,599.0 701.6 908.3 989.3 5,604.3 nificant funds in environmental vestments in the fixed capital de- actitivies in 2015 Waste handling 338.1 155.4 324.6 352.4 382.7 1,553.2 activities. In 2015, investments in creased by 10.9%. Land, surface and underground water protection and 40.4 714.3 1,429.9 1,456.3 1,680.5 5,321.4 environmental protection amount- rehabilitation Protection of the environment against noise, vibration – 0.036 0.382 0.351 0.546 1.315 and other physical pollution Breakdown of environmental expenses Radiation safety of the environment – 0.08 – – 0.012 0.092 in 2011–2015, RUB mn Biodiversity conservation and protection of natural areas – – – 0.372 0.705 1.077 Research and development activities and projects – 39.6 44.8 27.6 15.5 127.5 Expenditure item 2011 2012 2013 2014 2015 2011–2015 to reduce negative anthropogenic impact on the environment Current (operating) expenses 2,135.2 2,630.9 2,637.3 2,844.0 3,187.3 13,434.7 Other environmental activities – 0.418 9.3 11.9 33.1 54.718 Payment for environmental protection services – 86.2 64.1 164.0 178.6 492.9 Costs of major repairs of fixed assets intended for nature 48.4 4.9 70.9 47.6 76.6 248.4 protection purposes Current environmental expenses, total 2,183.7 2,722.0 2,772.3 3,055,7 3,442.5 14,176.2 INVESTMENT IN ENVIRONMENTAL PROTECTION Investment in the fixed capital 506.1 655.1 3,904.3 2,904.8 2,588.7 10,559.0 TOTAL 2,689.7 3,377.1 6,676.6 5,960.5 6,031.1 24,735.0 PJSC ALROSA continues investing • renovation of sewage treat- in environmental activities and en- ment facilities in the towns of Mirny, vironmental protection projects. Udachny and Lensk and the settle- In 2015, funding of the Compre- terprise of PJSC ALROSA, which will Operating The total amount of the Company’s ment of Aikhal; hensive Environmental Protection constitute the basis for establish- expenses in own funds spent on environmental Program of PJSC ALROSA for 2011– ing a subsidiary company. Further environmental protection activities in 2011–2015 • construction of injection wells in 2018 totalled RUB 2,890.4 mn, most on, the treatment facilities, as non- protection amounted to RUB 10,558.9 mn. the quarry and drain water reinjec- of the funds (RUB 1,437.2 mn) were core asset of the housing and utili- increased by tion system (Internatsionalny and Ai- allocated to construction of envi- ty complex, will be handed over to In 2015, investments in environ- khal underground mines); ronmental protection facilities and municipalities in accordance with an 12.1% mental activities amounting to RUB completion of renovation and con- order of the President of the Repub- in 2015 2,588.7 mn made it possible to im- • renovation of the mine and struction of sewage treatment fa- lic of Sakha (Yakutia). Taking into plement the following projects: drain water injection system at Lev- cilities in the towns of Lensk and account our approach to responsi- oberezhny prospect; Udachny and the settlement of Ai- ble conduct of business and taking • construction of a drainage unit khal (RUB 1,157.4 mn). care of the population of the regions and pumping station at Internatsion- • expansion of dry tailings dump where the Company operates and alny and Mir underground mines; of plant No. 16 of Nyurba MPD. Currently the sewage treatment fa- its personnel, PJSC ALROSA volun- cilities are handed over by struc- tarily incurs capital expenditures on tural subdivisions of the Company the facilities that will not be oper- to the heat and water supply en- ated by the Company in the future.

70 Social and Environmental Report of PJSC ALROSA 2015 Environmental responsibility Social and Environmental Report of PJSC ALROSA 2015 Environmental responsibility 71 Payments for emissions (discharges) of polluting substances ENVIRONMENTAL PROTECTION GOALS ACHIEVEMENT and disposal of production and housekeeping waste in 2011–2015 WATER AND RATIONAL USE OF WATER RESOURCES 35.9 34.2 23.6 53.7 128.9 Rough diamond production and pro- In the reporting year, fresh wa- In 2015 the cessing volumes of PJSC ALROSA inter extraction from natural sourc- water usage level volve a significant volume of water es amounted to 21.07 mn cub. m, decreased by 78.9 77.4 64.0 85.9 70.1 usage. High levels of achievement which is 26.8% less than 28.77 mn and the Company’s status as leader cub. m of the allowable water ex- 10.5% 64.1 65.8 76.4 36.0 46.3 of the global diamond mining indus- traction in 2015, and is related to compared to 2014 2011 2012 2013 2014 2015 try engender greater responsibility the change in the initial water use figures for water resource conservation, re- (withdrawal from the Heating and Admissable payments, % Above-level payments, % Total payments, RUB mn duction of water extraction, multiple Water Supply Company and creation scale water usage in technological of a limited liability company). processes. ENVIRONMENTAL PAYMENTS The water usage level of PJSC ALRO- Water extraction sources are surface SA in 2015 amounted to 19.33 mn cub. In 2015, environmental payments of industrial and household waste (99.8%) and underground (0.2%) wa- m, decreasing by 10.5% compared to for allowable emissions (discharges) compared to 2014 amounted to ter bodies. In 2015, water extraction 2014, due to reduction in the level of of polluting substances and the 44.1%, which is connected, in the for structural units of the Company water usage for production (8.5%) and emissions (discharges) exceeding first place, with revision of the located in the Republic of Sakha (Ya- housekeeping (0.6%) needs. the permitted level and disposal of previously effective hazardous kutia) was performed at the Irelyakh, production and housekeeping waste industrial and household waste Malaya Botuobiya, Lena, Olenyok, Vi- Reduction of water use compared to amounted to RUB 85.9 mn, which certificates, based on regulations of lyuy, Taas-Yuryakh, Bolshaya Botuobi- water extraction volume is achieved is 33.4% less that in the previous the Government and the Ministry of ya, Ongkhoi and Sokhsolookh rivers, through recycling water supply and year. Reduction of payments for the Natural Resources and Environment Irelyakhskoe and Sytykanskoe wa- water reuse. Compared to 2014, re- emissions (discharges) exceeding of the Russian Federation which ter reservoirs, water reservoirs at the cycling water supply volume in 2015 the permitted level and disposal came into effect on 01.08.2014. Markha River and the left tributary increased by 3.1% and amounted to of the Khannya River, Oyuur-Yurege 140.42 mn cub. m, while water reuse Creek and lake Sordonnookh as well increased by 7.5%, amounting to 77.63 as at underground artesian wells. mn cub. m. Recycled and reused water volume amounted to 218.05 mn cub. m per year, which 11.3 times exceeds the total water extraction volume.

Specific volume of water consumption (production needs) to produce one carat in 2011–2015, cub. m/carat

0.60 Efficient production is the basis of en- 0.53 0.48 0.46 vironmentally responsible use of wa- 0.42 0.40 ter resources. 0.40 In 2011-2015, specific water consumption for production needs de- 0.20 creased by 24.5%.

0.00 2011 2012 2013 2014 2015

72 Social and Environmental Report of PJSC ALROSA 2015 Экологическая ответственность Social and Environmental Report of PJSC ALROSA 2015 Environmental responsibility 73 DISCHARGES AND WASTE well as for preparation of the fill for The proportion of used and neutral- reclamation of the northern bank of ised in-house production and con- In 2015, we continued renovation Over a half of water discharge Udachny open pit mine, the site for sumption waste amounted to 28% of sewage treatment facilities in volume (51.7%) was discharged the КСА plant, and for technical rec- of the waste generated in 2015. the towns of Mirny, Udachny and underground, 42.1% to surface lamation of abandoned sections of Lensk and the settlement of Aikhal. water bodies and 6.2% to headers, Irelyakhskaya placer. Water disposal by the Company tailing dumps and tailing ponds. in 2015 totalled 30.1 mn cub. m. Disposal and utilisation of production and housekeeping waste

Hazard class Waste Disposal and utilisation Discharge of waste water and polluting substances into surface water bodies in 2011–2015 I, II, III hazard class Mercury-containing waste and fluo- Part of the waste is transferred to a specialised enter- (0.002%) rescent lamps, waste batteries, elec- prise – Ecologiya Prom Service CJSC, for subsequent trolyte waste (sulphuric acid), oil neutralisation and disposal. 20.0 In 2011-2015, product waste (waste oils of differ- Part of the waste is neutralised at internal enterprises: ent grades), laboratory waste. used petroleum products are utilised as a fuel for boiler discharge 16.7 16.8 houses, for lubrication of road construction equipment 15.4 of polluting and pumping equipment, in bitumen-concrete mixture 16.0 substances production; waste oils, sludge, oil and other petrole- 14.5 um-contaminated filters are disposed using Forsazh-2M 12.7 contained modern mobile units. 12.0 in waste water in surface water IV hazard class Scrap tires and air tubes, wood scrap, Part of the waste is utilised at the Company’s own en- bodies decreased (0.126%) weld slag, ash and slag waste from terprises: tires are used for reinforcing side slopes of coal combustion, waste from me- roads, arranging lawns; wood scrap is stored and used 8.0 by 26.2%. chanical and biological waste water for housekeeping needs, ash and slag waste is spread 6.5 6.0 5.6 treatment, other housekeeping waste on roads and car testing tracks in winter. 4.6 4.8 (sweepings). Subject to an agreement, some parts of tires and air 4.0 tubes are transferred to CJSC Ecologiya PromService for disposal; solid housekeeping waste and other municipal waste is moved to an authorised waste landfill.

0.0 Rubber-metal waste, black metal Some waste is stored at production sites in specifically 2011 2012 2013 2014 2015 V hazard class (99.872%) scrap, overburden rock, tailings, paper designated locations, some is given to other enterpris- Discharge of waste water into surface Discharge of pollution agents into surface and cardboard waste from clerical and es, some is used in production activities: overburden water bodies (mn cub. m) water bodies (thousand tons) record keeping activities, kitchen and and tailings are used for arrangement of dams and earth catering waste, wood scrap, non- fills for dredges, construction works, technical reclama- contaminated broken glass, other tion of disturbed lands, road bedding and maintenance. In handling production and house- throughout the Company totalled waste from the mining facilities keeping waste, the Company aims 82,639,358.8 tons. at reducing volumes and using new technologies for neutralisation and Most waste (99.998%) is IV and V disposal to minimise negative im- hazard class waste (barren rock and pact on the environment. tailings) posing little threat to the environment. Structural units of PJSC ALRO- SA generated 95 types of waste In the reporting year we used in 2015. Waste generation during 22,745,656.1 tons of V hazard class 2015 decreased compared to 2014 waste for construction of roads by 8,080,003.7 tons (8.9%) and (road bedding), sites and dams as

74 Social and Environmental Report of PJSC ALROSA 2015 Environmental responsibility Social and Environmental Report of PJSC ALROSA 2015 Environmental responsibility 75 Specific volume of waste generation Emissions of polluting substances Specific volume of polluting to produce one carat in 2011–2015, t/carat in the atmosphere in 2011–2015, substances emissions in the thousand tons atmosphere per mining of one carat – 3,100 in 2011 2015, thousand tons/carat 3,055 99.9 % 3,000 of waste generated by structural 2,879 10.0 0.30 0.30 0.30 2,900 subdivisions of 7.0 0.28 0.27 6.3 6.6 PJSC ALROSA is IV 5.6 0.26 2,800 and V hazard class 8.0 5.5 2,748 wastes (saline and non-saline 0.20 2,700 2,663 barren rock and 6.0 2,608 2,600 tailings) that do not significantly 4.0 impact on natural 2,500 0.10 3.0 ecosystems. 2.6 2.4 2.4 2.4 2.0 2,400

2,300 0.0 0.00 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015

Gaseous and liquid substances Solid substances EMISSIONS

PJSC ALROSA strives to reduce neg- At the first stage of the Concept The Company implements short and • reduction in the number of die- ative impact on the environment implementation an NGV refill sta- long-term activities aimed at reduc- sel and petrol internal combustion from emissions of polluting sub- tion was constructed. The Company tion of negative impact: engines through conversion of ve- stances in the atmosphere. started conversion of vehicles, min- hicles to compressed and liquefied ing and road construction machin- • reduction in the use of non-re- natural gas; The Company developed and, in ery to gas fuel; natural gas vehicles newable energy sources through the 2015, adopted the Concept of in- were purchased under the technical use of vacuum solar collectors, in- • reduction in energy consumption troducing an action plan on cars, upgrade program. troduction of solar lighting system, (oil, coal, diesel fuel) for processing mobile vehicles and diesel power installation of solar panels for gen- and housekeeping needs through plants switching to liquefied natural During the reporting period, emis- erating electricity; replacement of the fuel used by gas (hereinafter referred to as the sions of polluting substances in the boiler plants with natural gas. Concept), which will reduce emis- atmosphere from stationary sourc- sions of harmful substances into the es amounted to 9.4 thousand tons, atmosphere and noise impact on the which is 104% compared to 2014, environment. while emissions from stationary sources in the fuel and energy sector was 88% compared to 2014.

76 Social and Environmental Report of PJSC ALROSA 2015 Environmental responsibility Social and Environmental Report of PJSC ALROSA 2015 Environmental responsibility 77 GREENHOUSE GAS EMISSIONS Groups of PJSC ALROSA structural subdivisions and processes generating the most significant volumes Climate change is a global problem, the Action Plan on Development of of carbon dioxide emissions, 2014–2015 the solving of which should involve the Legal and Regulatory Framework. all industrial enterprises that have In 2013, PJSC ALROSA reaffirmed an impact on the atmosphere its ongoing commitment to the Groups of structurals by emissions generation, % along with both global and state problem of climate change by participation developing the Guidelines for In September 2013, the President Calculating the Volume of Carbon 1.2 0.5 0.8 0.4 of the Russian Federation signed a Dioxide Emissions from Stationary 5.7 5.8 Decree On Reduction of Greenhouse and Mobile Sources of PJSC ALROSA 7.9 6.5 Gas Emissions and the Government Enterprises (hereinafter referred to issued an executive order approving as the Guidelines). 38.2 41.5

2014 2015 The Guidelines are aimed at ensur- Among the measures taken that led ing measurement and recording of to reduction of direct emissions of greenhouse gas emissions from the СО2, it is worth mentioning the fol- technological equipment, processes lowing: 46.5 45.4 and production activities of structural subdivisions of the Company, which • upgrade of the heavy vehicles will contribute to further develop- fleet at the Lensk production site, ment of the corporate greenhouse gas which led to reduction of diesel fu- Termal power Mining Transportation Geological Other Capital emissions management system. After el consumption; entrerprises and processing and procurement survey expeditions Construction the end of the 2014 calendar year, trial plants division Division calculations of greenhouse emissions • reduction in fuel consumption from structural units of PJSC ALROSA due to reduction in the number of were made. vehicles rented by the heating and water supply enterprise; Emissions generating processes, % In 2015, greenhouse emissions sources were inventoried and the • decommissioning of the boiler calculation of greenhouse emissions house at the airport in the town of 0.6 3.4 5.1 for 2014 was adjusted. Mirny; 1.0

Based on the Company performance • handover of the portable auto- results in 2015, greenhouse gas matic boiler (town of Lensk) from emissions calculated in accordance the balance sheet of Mirny Automo- 33.6 31.3 with the Guidelines totalled 905.5 bile Roads Division (structural sub- 2014 2015 thousand tons (100.2% compared divisions of the Company) to new to 2014 and 74.1% compared to the ownership under the Lensk Town 65.1 62.6 base year), of which: Heating and Electric Networks En- terprise LLC; • 853.8 thousand tons of direct greenhouse gas emissions; • reduction in consumption of natural gas at Mirny Mining and Pro- • 51.8 thousand tons of other cessing Division, which is due to Stationary fuel Fuel combustion Mining activities Methane emission greenhouse gases (methane, nitro- natural and climatic conditions. combustion for vehicles when excavating gen oxide) in CO2 equivalent.

78 Social and Environmental Report of PJSC ALROSA 2015 Environmental responsibility Social and Environmental Report of PJSC ALROSA 2015 Environmental responsibility 79 ENERGY CONSERVATION Specific energy consumption for the mining of one carat, 2011–2015, G J/carat

0.34 The Energy conservation and energy efficiency improvement program of PJSC 149,358 0.334 In 2015, specific 0.33 ALROSA for 2014–2016, in conditions of large-scale energy resource consumption, thousand RUB 0.323 0.323 energy resources allows us to achieve sustainable and effective use of these resources, as well as were allocated 0.32 0.317 consumption to to minimise the possible negative impact on the environment. to energy 0.31 produce one carat 0.30 The Concept of energy conservation and increased energy efficiency of PJSC conservation and 0.298 decreased by 3.3% 0.29 ALROSA for 2013–2021 allows us to set the long-term objectives in the field of energy efficiency 0.28 sustainable energy consumption. improvement 2011 2012 2013 2014 2015 activities Implementation of technical measures for energy conservation The Federal Law On Energy Con- • introduction of innovative SO- and improvement of energy efficiency in 2011–2015 servation and Energy Efficiency LATUBE solar lighting system at the Improvement, the State Program design stage of a new construction Areas Measures 2011 2012 2013 2014 2015 of the Russian Federation Ener- facility; Electric energy • Installation of variable frequency drives, infrared 57.2 37.1 21.9 7.1 21.4 conservation heaters, motion sensors, energy-efficient lamps and starting thousand thousand thousand thousand thousand gy Conservation and Energy Effi- regulators GJ GJ GJ GJ GJ ciency Improvement for the Period • gradual replacement of motor • Installation of line-conditioning filters, optimisation of up to 2020, as well as the devel- fuels by natural gas (the goal of power equipment operations, regulation of lighting systems, thermal screens, and supply-exhaust ventilation oped internal regulatory documents this project, on which activity com- • Replacement of worn pumps, ventilators, drying are conceptual for the Company in menced in 2014, is the transfer to furnaces, and energy-efficient compressors terms of implementation of key ini- use of natural gas in mining, engi- Thermal energy • Installation of thermal power consumption meters 23.6 13.8 19.8 1.3 13.5 conservation • Automation of heating station performance monitoring thousand thousand thousand thousand thousand tiatives aimed at rational use of nat- neering, public transport and pow- GJ GJ GJ GJ GJ ural resources. er engineering facilities which are Fuel saving • Installation of fuel consumption meters, installation of 39.3 8.3 14.5 21.5 12.8 involved in production activities at ovens and spent machine oil-fired boilers thousand thousand thousand thousand thousand GJ GJ GJ GJ GJ The Company is striving to conserve Mirny, Udachny, Aikhal, Lensk and Water saving • Introduction of new technologies and equipment – – 14.5 7.7 238.6 energy resources through imple- Verkhne-Munskoe production sites); (KÄRCHER car wash stations, non-contact tap and shower thousand thousand thousand mentation and introduction of in- panels) cub. m cub. m cub. m novative methods and technologies. • connection to the Orto-Nakhara • Optimisation of water supply configuration village (Lensk District) centralised Priority activities of PJCS ALROSA energy supply. aimed at energy conservation are PROTECTION OF LAND RESOURCES as follows: In 2015, we significantly increased funding for energy conservation As part of the Comprehensive Program of Measures for Environmental Protec- • use of high-voltage switchgears and energy efficiency improve- tion aimed at the restoration of disturbed land and technical and biological with SF6 gas insulation; ment, the sum of financial invest- recultivation, the Company invested RUB 61.3 mn in 2015. Reclamation of land ments amounted to RUB 149,358 was carried out in Olenyok, Mirny, Suntar and Nyurba districts. • introduction of energy conser- thousand, from which RUB 12,273 vation equipment at all production thousand were allotted toward ful- The total area of disturbed and reclaimed land, 2011–2015., ha sites; filment of organisational measures and RUB 137,085 thousand went to- 3,000.0 In 2011-2015, 2,438.3 2,853.0 2,500.0 • use of energy efficient light ward technical initiatives. 2,394.3 reclaimed lands 2,000.0 sources and LED technologies; 1,932.5 1,570.9 area totaled 1,500.0 1,343.9 1,307.2 1,443.4 1,414.3 1,132.3 8,373.9 ha 1,000.0 500.0 0.0 2011 2012 2013 2014 2015

Area of disturbed lands, ha Area of reclaimed lands, ha

80 Social and Environmental Report of PJSC ALROSA 2015 Environmental responsibility Social and Environmental Report of PJSC ALROSA 2015 Environmental responsibility 81 BIODIVERSITY PRESERVATION ENVIRONMENTAL ACTIVITY OF SUBSIDIARIES OF PJSC ALROSA

PJSC ALROSA developed a set of mental Protection for 2011–2018, Key Activities and Environmental Performance Indicators of PJSC ALROSA measures to provide the most fa- in 2015 financial support for biodi- Subsidiaries in 2015 vourable conditions for preservation versity preservation was RUB 6.6 of biological diversity in the territo- mn. These funds were distributed ry of the primary region where the as follows: RUB 3.9 mn toward the PJSC SEVERALMAZ PJSC ALROSA-Nyurba JSC ALMAZY ANABARA Company operates – in the Repub- running of the Living Diamonds of • RUB 12.9 mn were assigned toward the • In 2015, expenses for environmental • The environmental management sys- lic of Sakha (Yakutia). Yakutia nature park and RUB 2.7 mn implementation of environmental pro- conservation measures, including pay- tem in accordance with ISO 14001:2004 tection activities. ments for emissions and disposal of in- and GOST R ISO 14001-2007 Rus- toward reservoir fish stocking. • The payments for emissions, discharg- dustrial waste amounted to RUB 13.1 mn, sian national standard was implement- The Company does not operate in es and industrial and household waste which exceeded the figure from the pre- ed, non-profit organisation certificates the territories with special conserva- The Living Diamonds of Yakutia disposal amounted to RUB 22.6 mn, the vious year by 1.85 times. were issued by the National Certifica- majority of which went towards payment • During 2015, a survey and creation of a tion Chamber. tion area status at either a federal or nature park is a unique large-scale for industrial waste disposal (overburden pilot plant reinjection site for mineralised • Implementation of the Environmental regional level, and it complies with project created in 2009 with the fi- equating to hazard class V waste). brines of Nyurba and Botuobinsky open Measures Program of JSC Almazy Anabara the legal requirements for environ- nancial support of PJSC ALROSA in • An inspection of the environmental pit mines were carried out. Following a for 2013–2016. management system at PJSC Several- state-expert-conducted review, project • Implementation of the Program for En- mental conservation and compen- partnership with the Ministry of Na- maz was carried out. documentation for the construction and vironmental Baseline Assessment Study satory measures at the plant design ture Protection. The park is inhab- • Public consultations with the local res- production of the reinjection site will be and Environmental Monitoring in the Ar- and facility construction stages. ited by: musk oxen, yaks, red deer, idents of Primorsky District and the state developed. ea Affected by Mining Industries. environmental expertise on the project • In 2015, an up-to-date biological waste • Industrial waste disposal (transport spotted deer, bears, peacocks and for development of sand and Shocha treatment station – the ЛКОУ-600 (local and forwarding, construction and min- As part of the implementation of rabbits. Recently the park acquired sand-and-gravel mix deposits. sewage treatment plant) model with an ing waste) at the special-purpose facili- the PJSC ALROSA Comprehensive four reindeer which were brought • Operational environmental monitor- estimated cost of RUB 211 mn, was put ty, taking into account types of waste and ing in the form of natural ecosystems ob- into operation at the Nakyn crew camp. storage methods, and the use of waste in Program of Measures for Environ- from the Olenyok district. servations: air, water and land resources • In 2015, the state environmental ex- enterprise construction works. monitoring was carried out. pert review of the Engineering project • The carrying out of biological reculti- ALROSA-Nyurba Diamond Mining En- vation of disturbed land. terprise was carried out. Botuobinskaya pipe. Open pit mining up to a depth of –330 m; received positive feedback from the state committee of environmental experts (approved by Order No. 749 dated 01.09.2015 of Administration of Rosprirodnadzor (Federal Service for Supervision of Natural Resource Usage) for the Republic of Sakha (Yakutia)). • The work on monitoring and geological environment protection (groundwater monitoring) was continued in order to study the mode, dynamics, groundwater resources characteristics and the condition of the geological environment.

82 Social and Environmental Report of PJSC ALROSA 2015 Экологическая ответственность Social and Environmental Report of PJSC ALROSA 2015 Environmental responsibility 83 SOCIAL RESPONSIBILITY

The social policy of PJSC ALROSA revolves around activity aimed at the harmonisation of relationships between employees, employer and society. Key principles of the Company’s social policy are as follows: • consistency and transparency of decisions made by governing bodies of the Company on the provision, preservation or re- striction of all kinds of social support for workers; • prioritisation of the interests of the employee majority with the preservation of special conditions and compensation for socially disadvantaged workers of the Company; • legal binding of decisions made, non-discrimination, respect and observance of human rights.

84 Social and Environmental Report of PJSC ALROSA 2015 Социальная ответственность HSE Our Approach While implementing our activity in • Company management’s inter- ALROSA’s chief OSH MANAGEMENT SYSTEM the field of OSH we have introduced est in creating healthy and safe engineer is a comprehensive approach based on working conditions; responsible for In running a large number of hazardous production facilities and using various OHSMS is the following principles: • forming a sustainable staff mo- the development, harmful substances in technological processes, PJSC ALROSA is fully aware of Occupational • priority of life and health of the tivational mechanism for safe be- implementation, its responsibility for protection of the lives and health of workers involved in Health and Safety employees over the production ac- haviour in the workplace. maintenance production activities. Increased attention will be given to occupational health Management tivity results; and continuous and safety issues. System improvement of Maintaining the highest standards in the field of labour, industrial and the OHSMS environmental safety is a strategic objective of the ALROSA Group, and the With the increase of the scope of Responsibility for the development, realisation of the workers’ right to health and safety during production activity underground mining works it is es- implementation, maintenance and is the Company’s first priority. pecially important for the Compa- continuous improvement of the ny to foster safe behaviour skills in OHSMS is entrusted to the Compa- workers and to introduce a work cul- ny’s chief engineer who is direct- In order to achieve the strategic in this area. OHSMS is developed in ture in which employees and con- ly subordinate to the Occupational guidelines, in 2015 work on the accordance with the requirements tractors will learn how to safeguard Safety Department of PJSC ALROSA. improvement of the integrated Oc- of the current legislation of the Rus- their lives and health. cupational Health and Safety Man- sian Federation and international agement System (OHSMS), covering standards OHSAS 18001:1999, ILO- all divisions and management lev- OSH 23001/ILO-OSH 2001. Key areas of OSH activity in 2015 els of the Company was continued. The main functions of the OHSMS Areas Main activities Our approach to security is deter- are to predict changes in industrial Liability insurance 129 hazardous production facilities of PJSC ALROSA were registered in the State regis- mined by the PJSC ALROSA Policy and occupational safety conditions, ter of hazardous production facilities in 2015, all of which are insured for civil liability. in the area concerning occupation- to devise measures for improvement All Company’s employees are insured against industrial accidents and occupational dis- al health and safety via which the of emergency tolerance, to organ- eases. primary objectives for creating safe ise safe working practices, in terms and favourable conditions for work of their coordination, control and Ensuring a safe working A substantial part of the existing professional activity of our employees is connected to and underlying OHSMS are defined. promotion. The key document of environment activities entailing a high probability of injury or a high risk of occupational diseases. At OHSMS is the Regulations on the the end of 2015, the number of employees of PJSC ALROSA involved in jobs with harmful and/or hazardous working conditions amounted to 16,163 people, of which 3,576 were OHSMS of PJSC ALROSA is a Compa- Occupational Health and Safety women. The terms of the valid collective bargaining agreement specify the required lev- ny standard laid out in a set of doc- Management System of PJSC AL- el of human resource for working in harmful and/or hazardous conditions, along with uments on the regulation of activity ROSA. necessary equipment resources (company work clothing, safety shoes, necessary means of highly efficient personal and collective protective equipment, therapeutic-preventive nutrition, communication means, etc.). Annually, the Company implements activities for improving staff sanitary and living conditions.

86 Social and Environmental Report of PJSC ALROSA 2015 Social responsibility Social and Environmental Report of PJSC ALROSA 2015 Social responsibility 87 Areas Main activities ing activities: loading and un- • Auxiliary mine rescue teams Staff participation Staff participation in the OSH management implies the involvement of the Company’s loading works and placement made up of 253 people with rescu- in the OSH management employees in all the processes of the OSH policy implementation, as well as allocation of cargos; working with tools er status and the right to perform of personal responsibility of each employee. and devices; using heat net- rescue operations were created works; using heating electrical and passed their initial certification Personnel training Annually the Company’s managers and specialists using hazardous production facilities in the field of OSH of the Company, undergo pre-certification development, training and certification at the plants; when performing electric within the structural subdivisions of HR Training Centre (HRTC) and training facilities of PJSC ALROSA. welding and gas welding works, the Company. The teams are formed working at height, in construc- for the localization and containment Risk assessment, Operation of hazardous production facilities of PJSC ALROSA is a key risk factor in the oc- tion. of emergencies at dangerous indus- control and monitoring currence of accidents, injuries and incidents. In accordance with the provisions outlined trial facilities during the initial peri- in the Regulations on the OSH system of PJSC ALROSA, the assessment of the risk of ac- • An external audit was carried out od. cident is carried out at each stage of the hazardous production cycle: 1) at the stages of layout or design of a hazardous facility; 2) at the stage of commissioning of a hazard- to verify compliance with the re- ous facility; 3) at the stage of operation or reconstruction. There is an Emergency Re- quirements of standards introduced • The analysis of the performance sponse Plan at all Company hazardous production facilities of hazard classes I, II and III. in 2014 in terms of providing work- of the safety management system in In order to increase the level of industrial control, as well as to take measures for prevention of accidents, injuries and incidents, the Company has adopted corporate stand- ers with special work clothes and the structural subdivisions of PJSC ards for conducting monitoring and preventive inspections. protective equipment: the law on ALROSA was performed, and it was The practice of registering, investigating and reporting on work accidents in PJSC AL- issuing of free work clothing, regu- decided that an external audit of ROSA complies with the requirements of the Russian labour law and recommendations of the International Labour Organisation. In order to analyse the dynamics and causes lations on work clothing and protec- OHSMS functioning be conducted, of injuries, the Company conducts ongoing monitoring of both absolute and relative in- tive equipment provision. In 2015, with the assistance of an expert or- dicators characterising the level of industrial injuries in PJSC ALROSA. RUB 282,514 thousand were spent ganisation in 2016. on work clothing (from which: RUB 68,125 thousand went on protective equipment, RUB 142,681 thou- Key activities in the field of OSH in 2015 sand went on work clothing, RUB 35,771 thousand on hand protec- • In accordance with the Feder- − changes were made to the Oc- tion, and RUB 35,937 thousand on al Law On Special Assessment of cupational Health and Safety safety shoes). Working Conditions, a special as- Management System in terms sessment of the working condi- of informing all concerned Com- tions of PJSC ALROSA workplaces pany subdivisions on the list of was completed in 2015. In 2014– dangerous industrial facilities 2015 assessment was carried out at used by the structural subdivi- 17,250 work places in which 31,037 sions; persons are employed; expenses for special assessment of working con- − additions were made to the Reg- ditions amounted to more than RUB ulations on the auxiliary mine 61.5 mn. Materials derived from the rescue teams (ARS) in terms of assessment results formed the basis creation of an auxiliary rescue on which measures for improvement service at the hazardous produc- of working conditions at work plac- tion facility; es of the Company are developed. − changes were made to the local • As part of PJSC ALROSA’s OHSM regulations of PJSC ALROSA re- improvement measures, the follow- lating to implementation of the ing organisational and technical ac- Interdisciplinary regulations for tivities were performed in 2015: labour protection in the follow-

88 Social and Environmental Report of PJSC ALROSA 2015 Social responsibility Social and Environmental Report of PJSC ALROSA 2015 Social responsibility 89 PARTICIPATION AND TRAINING OF THE PERSONNEL PERFORMANCE INDICATORS IN THE FIELD OF OCCUPATIONAL SAFETY AND HEALTH In 2015, we could not maintain general tendency of industrial inju- One of the main tools for prevention health committees (commissions) Profalmaz the occupational injuries indicator ries has declined over the past five of accidents, incidents, industrial in- are created on a parity basis accord- Trade Union at the level of 2014. However, the years. juries and occupational diseases is ing to the number of management representatives a preventive control in the field of representatives of the Company’s participate in OSH exercised by prompt detection structural subdivisions and the Level 1 control more than RUB 1.1 bn amount –9.3% decline of the injury of violations and adoption of meas- Profalmaz Trade Union. When ex- inspections of financing of OSH activities in severity rate ures to eliminate them. amining each incident, the repre- in ALROSA’s 2015 sentatives of trade union bodies subdivisions The main element of the operation- exercise overall control in terms of al monitoring is a regular inspection the fulfilment of contractual obliga- 2,291 persons trained in the twofold decline of the conducted by managers of levels I, tions in accordance with the terms field of industrial, energy and work occupational disease rate II, III and IV. In implementing Level of the Collective Bargaining Agree- safety 1 control inspections in the Compa- ment in the field of occupational ny’s subdivisions, special authorised safety and health. In 2015, 473 rep- (trusted) personnel from the Profal- resentatives of Profalmaz Trade Un- maz Trade Union of PJSC ALROSA ion were registered as members of employees are actively involved. the occupational safety and health Information on the total number of accidents The institution of the authorised committees (commissions). and injuries of PJSC ALROSA workers in 2010–2015 (trusted) occupational safety personnel from Profalmaz Trade Un- During 2015, on the basis of the 35 ion is one of the key tools via which HRTC and training facilities of PJSC 31 30 27 27 the Company’s employees partici- ALROSA, 2,291 managers and spe- 26 26 24 24 24 pate in the OSHMS. The total num- cialists of structural subdivisions 25 23 ber of such authorised personnel in of the Company were trained in 21 20 18 2015 amounted to 473 persons, or the fields of energy supply security 17 1.6% of the headcount. and occupational safety and health, 15 which amounts to 23.2% of the total 12 12 10 Authorised (trusted) occupational number of this category of person- 10 9 6 7 6 7 5 5 5 safety personnel, as well as other nel. Out of the staff who received 4 4 4 5 3 2 3 3 2 2 representatives of trade union bod- training in 2015, 197 are now ful- 1 1 1 0 ies may be a part of occupational ly authorised (trusted) occupation- 0 safety and health committees (com- al safety personnel, on trade union Total number Number of group Total number of the Number of severe Number of fatal Number of of job-related accidents registreted injuries injuries injuries newly detected missions) within the Company’s sub- bodies of structural subdivisions of accidents (injured) occupational divisions. Occupational safety and the Company. deseases

2010 2011 2012 2013 2014 2015

In 17 accidents registered in the jured, including seven women who structural subdivisions of PJSC AL- received light injuries as a result of ROSA in 2015, 23 people were in- road traffic accidents.

90 Social and Environmental Report of PJSC ALROSA 2015 Social responsibility Social and Environmental Report of PJSC ALROSA 2015 Social responsibility 91 Injury rates in PJSC ALROSA in 2010–2015 LTIFR is a Lost Time Incident Frequency Rate, it is calculated for 1 mn peo- Indicators 2010 2011 2012 2013 2014 2015 ple per hour, as a ratio of the number of injuries that resulted in temporary Injury rate* IR 0.11 0.11 0.13 0.11 0.05 0.10 disability for one working day and more to the Company’s total working for 200,000 hours worked hours worked during the reporting year. Occupational disease rate ODR 0.03 0.05 0.09 0.04 0.04 0.02 for 200,000 hours worked FIFR is a Fatal Incident Frequency Rate. FIFR for 1 mn people per hour is Lost day rate** LDR 15.63 15.44 18.26 13.29 8.88 12.5 for 200,000 hours worked calculated as a ratio of fatal incidents to the Company’s total working hours Absentee rate*** AR 12,238.6 11,186.0 9,790.8 10,264.5 10,129.8 10,302.2 worked during the reporting year. for 200,000 hours worked

* The rate is calculated taking into account fatal injuries, as well as all injuries that result in disability for one day or more. ** The rate is calculated taking into account the calendar days of disability as a result of industrial injuries and occupational In 2015, fatal incidents took place at fined and approved, Regulations on diseases from the first day of the incident. the Mir underground mine of Mirny Stripping the Water Headers from *** The rate is calculated taking into account all days of temporary disability irrespective of the reasons, except for the disability due to pregnancy and delivery. Mining and Processing Division as a the Main Drainage Installation of result of machine operation with a Mir Underground Mine were devel- defective limit switch blocking the oped, organisational measures for The increase in the number of inju- dents where victims were not only work if the door is open, and at the the control over the technical con- ries in the reporting year is related drivers but also subdivision workers Mirny specialised mine construction dition of mobile mining equipment to the number of group accidents (passengers). unit of the Capital Construction Di- and mining machines, which are an that occurred during traffic acci- vision, as a result of poor works or- integral part of the Standard for Car- ganisation during the main drainage rying out Repair Works at Manufac- pipes installation. Both deceased turing Plants of PJSC ALROSA and persons were men. an occupational safety management Changes in lost-time incident frequency, frequency of fatal injuries system were developed, an extraor- and costs of activities to improve working conditions The main reasons of the fatal in- dinary briefing with the personnel and labour protection in 2010–2015. cident were violations in organi- on work with pressure pipes and sation of mine equipment repairs, shaft communications etc. was held. non-compliance with industrial 0.48 0.55 39.3 regulations in handling and mining In 2015, six accidents within the works. subsidiaries and dependent compa- 0.50 33.3 0.47 nies of PJSC ALROSA occurred with 0.45 29.9 To improve the safety of repairing consequential injuries of mild se- and installation works at mining fa- verity, which is two times less than 19.3 cilities, during the reporting year, a the number of similar cases in 2014. number of activities were carried There were no cases of severe or fa- 14.0 12.3 0.21 out, including as follows: practises tal consequences in the subsidiaries for safe installation works in recon- and dependent companies in 2015. 0.09 0.08 0.08 0.06 struction of drainage pipes were re- 0.04 0.04

2010 2011 2012 2013 2014 2015

Expenditures for occupational LTIFR, lost time incident FIFR, fatal incident health and safety measures frequency rate, frequency rate calculated per one worker per 1 000 000 hours worked per 1 000 000 hours worked

92 Social and Environmental Report of PJSC ALROSA 2015 Social responsibility Social and Environmental Report of PJSC ALROSA 2015 Social responsibility 93 INVESTMENTS IN HUMAN CAPITAL Personnel structure of PJSC ALROSA Indicators 2011 2012 2013 2014 2015 One of the main conditions for effective development of the Company Total headcount, as of the end of the reporting period, people 30,903 31,373 30,525 30,043 29,400 is stability, high professionalism and loyalty of our staff, based on a consistent Age groups, share of the total number, % social and personnel policy, confidence in our management, and social 30 years 21.7 22.2 21.8 21.5 19.9 partnership. 30–50 y. o. 54.9 54.4 53.5 53.9 54.4 over 50 y. o. 23.4 23.4 24.7 24.6 25.7 share of young people up to 30 y. o. occupying managerial positions, % 10.3 9.3 10.0 9.3 8.5 29,400 94.5% 41.5 Gender, share of the total number, % people are part of the PJSC of the Company headcount average age of our Men 61.3 61.2 64.2 64.7 65.0 ALROSA parent company work under indefinite term employees Women 38.7 38.8 35.8 35.3 35.0 headcount employment contracts ratio of women among executives, % 30.6 32.1 31.9 32.5 31.0 Categories, ratio of the total number, % 44.8% Workers 65.9 66.5 66.8 65.8 65.3 94.1% 65.3% employed in the mining Managers, specialists, employees 34.1 33.5 33.2 34.2 34.7 of the Company staff representatives of blue- complex of the Company Education, share of the total figure, % working in the Republic collar jobs amongst our Higher professional education for managers, professionals and employees 71.4 72.0 73.7 74.9 75.4 of Sakha (Yakutia) territory employees Higher and secondary vocational education for workers 32.6 30.0 27.6 29.3 29.3 10.1% Representatives of indigenous nationalities, share of the total amount, % 9.9 10.1 9.6 9.7 10.1 representatives share of indigenous nationalities among executives, % 6.3 6.7 6.7 7.0 7.6 of indigenous peoples Distribution of staff by types of employment contracts, rate of the total number of personnel, % * STAFF PORTRAIT fixed-term employment contracts – 4.8 6.1 6.1 5.5 indefinite-term employment contracts – 95.2 93.9 93.9 94.5

The territorial distribution of the Federation: the area of the Re- * Information on the * Company data for 2011 is not consolidated. Company’s* personnel is charac- public of Sakha (Yakutia) is more staff of PJSC ALROSA is presented in the terised by a high concentration in than three mn sq. km. The region absence of consolidated the territory of the Far North of is notable for extremely harsh cli- data across the ALROSA Russia – the Republic of Sakha matic conditions: more than 40% Group. The Company’s staff turnover over the last several years remains in the (Yakutia). This region covers the of the Republic’s territory is above range of 9–10%, among the enterprises of the Mining and Processing largest territory of the Russian the Arctic Circle. complex this indicator is usually twice as lower (4.8% in 2015).

Territorial distribution of PJSC ALROSA’s staff

41.4% 1% Mirny Yakutsk and other areas in the RS(Ya) 93.1% 1.3% 16.8% Other regions Districts Udachny of the Russian Federation of Western Yakutia 6.6% Other areas of 4,6% Western Yakutia Moscow 5.9% 22.4% Lensk Settlement Aikhal

94 Social and Environmental Report of PJSC ALROSA 2015 Social responsibility Social and Environmental Report of PJSC ALROSA 2015 Social responsibility 95 Staff turnover indicators in PJSC ALROSA in 2011–2015 Structure of newly hired employees, 2011–2015*

Indicators 2011 2012 2013 2014 2015 Indicators 2011 2012 2013 2014 2015 Total turnover of Company personnel, % 10.0 10.5 10.3 9.8 9.0 * The calculation Total number of newly hired employees, persons. 6,977 8,196 7,238 6,896 6,620 of staff turnover By gender*: by gender and age Share of the total number of personnel at the end of the reporting year, % 22.6 26.1 23.7 23.0 22.5 Men 12.7 12.5 12.3 11.5 11.6 groups is made on the Distribution by gender Share of the total number of newly hired employees, % Women 6.1 5.7 6.8 5.8 5.5 basis of consolidated data for 14 structural Men 79.0 77.3 80.4 82.1 84.7 By age: subdivisions of PJSC Women 21.0 22.7 19.6 17.9 15.3 up to 30 y.o. (inclusive) 14.4 16.1 14.6 15.8 14.9 ALROSA. from 30 to 50 y.o. 16.1 19.5 21.7 19.9 19.8 Distribution by age Ratio of the total number of newly hired employees, % over 50 y. o. 8.9 6.5 10.3 6.8 5.4 up to 30 y.o. (inclusive) 51.8 47.8 49.0 43.9 50.0 from 31 to 50 y. o. 42.4 44.8 44.4 49.4 45.3 over 50 y. o. 5.8 7.4 6.6 6.7 4.7 HR FORMATION AND DEVELOPMENT Indigenous peoples, persons 627 738 683 553 705 Share of the total number of newly hired employees, % 9.0 9.0 9.4 8.0 10.6 Distribution by region We consider the supreme professionalism of the staff as one of the main Ratio of the total number of newly hired employees, % competitive advantages of the Company. The health and safety of workers 6,620 The Republic of Sakha (Yakutia) 95.0 95.4 96.1 97.2 96.5 is recognised as one of the Company’s core values, and we consider funding people were Yakutsk 0.1 0.2 0.3 0.1 0.2 aimed at the development of professionalism and labour potential as strategic employeed Mirny 64.1 63.8 66.7 66.8 68.9 investments in human capital. in ALROSA’s Udachny 7.9 9.3 10.3 10.4 11.7 The main objectives of our staff management policy are as follows: enterprises in Settlement of Aikhal 16.3 14.5 10.6 12.7 10.1 • preservation and reproduction of qualified human resources; 2015 Lensk 6.5 7.6 8.2 7.1 5.6 • improvement of the selection process system, distribution and retention Moscow 1.4 1.4 1.2 0.8 1.4 of staff; Other regions of the Russian Federation 3.7 3.2 2.7 2.0 2.1 • development of internal staff training system; The structure of newly hired employees by type of employment contract • attraction and retention of local workers; Ratio of the total number of newly hired employees, % • development of staff assessment system; By indefinite-term employment contracts 41.0 37.7 32.5 27.3 20.6 • improvement of the staff incentive program, maintaining the achieved By fixed-term employment contracts (for the period of an employee’s 59.0 62.3 67.5 72.7 79.4 absence, an internship period, vacations, rotation based work) level of social benefits and compensations; • improvement of work on advancement of young professionals * The structure of newly hired employees based on gender and age is calculated for 14 major subdivisions of PJSC ALROSA, and personnel reserve creation. the total number of which amounts to more than 80% of the total number of the Company’s personnel.

Our main efforts in today’s reality for the development and realisation of a qualified personnel deficit are of their professional abilities. aimed at creation of a professional and competent staff body, efficient In 2015, the subdivisions of PJSC AL- harnessing of its labour potential, ROSA employed 6,620 people, 1,366 provision of favourable conditions of them – on the basis of indefinite for workers and equal opportunities term employment contracts.

96 Social and Environmental Report of PJSC ALROSA 2015 Social responsibility Social and Environmental Report of PJSC ALROSA 2015 Social responsibility 97 Our approaches to formation and development of PJSC ALROSA personnel The company staff has the opportu- ing, retraining and advanced train- nity to undertake continuous training of specialists and workers, the 212.4 The Company as a city-forming enterprise, the production infrastructure of ing thanks to the current training, Technological development pro- mn RUB invested which is located in industry-based towns, is focused on internal reserves retraining and advanced train- gram of the Company and taking in realization replenishment and development of human resources. ing system in place. This work is into account the requirements for of programs performed at the HRTC within its production. for development Key areas Sources and techniques of formation training facilities, at the Regional and training of personnel policy Technical College – an independ- In 2015, the Company significantly of our workers Planning and meeting The purpose of personnel requirements planning is the timely provision of Company struc- ent non-profit organisation, at vo- increased investments in the pro- and specialists personnel requirements tural subdivisions with the required qualified staff with a view to minimise the costs in cational schools No. 28 and 30, and grams for development and training in 2015 accordance with current, medium-term and strategic development plans of the Company. training centres in the Russian Fed- of our workers and specialists (from We meet current and additional personnel needs by means of internal and external sources. eration. Continuous training of spe- RUB 169.2 mn in 2014 to RUB 212.4 cialists and workers is carried out in mn in 2015). accordance with the Plan of train- Workforce Composition Locals receive dedicated training at the Regional Technical College – an independent non-profit organisation, vocational schools No. 28 and 30, and the Industrial vocational school in Mirny. Results of the corporate staff development system activities Employment of graduates of secondary vocational schools. of PJSC ALROSA in 2015

Employment offers to highly qualified workers on a rotational basis in the absence of a required professional and/or person with relevant qualifications in Program Training facility Results 2015 the territory of the main region for the specific activity. In 2015, 879 workers from other regions of the Russian Federation were invited to Advanced training programs • hRTC of PJSC ALROSA and its training In 2015, 6,521 managers and specialists work on a rotational basis, which amounted to 13.3% of the total number of newly facilities and 2,830 workers underwent advanced hired employees during the reporting period. • training centres in Russia training.

Recruitment of university graduates. Conducting activities aimed at familiarising grad- Provision of qualified specialists • training facilities of HRTC of PJSC In 2015, 155 managers and specialists uates from specialised universities in Russia with PJSC ALROSA, attracting the best of Vocational development for production ALROSA underwent development courses and them to work in the Company. and retraining programs • training centres in Russia vocational retraining.

Offering employment to highly qualified specialists. Among workers, 6,692 people underwent courses of vocational training, re- Training of future personnel Together with the Mirny District Department of Education, the Company implements training, as well as all types of briefings. the Comprehensive Program of PJSC ALROSA for vocational guidance in Mirny District of the Republic of Sakha (Yakutia). At the Faculty of Pre-University Training of HRTC of the Company, organised in cooperation with leading technical universities of Rus- Internships, earning an academic • training centres in and outside Russia. In 2015, 13 Company’s employees un- sia, senior schoolchildren are trained for admission to the relevant programs of leading degree dertook internships overseas, mainly on universities of the country. programs dealing with evaluation, classification and sorting of rough and pol- Targeted training for students Targeted training for students in leading universities of the country through the ished diamonds, held by the Diamond Scholarships of PJSC ALROSA and arrangement of internships at the Company’s High Council (Antwerp, Belgium). production facilities. In 2015, internships at the Company’s subdivisions were undertaken by 656 students. 140 graduates from higher and secondary vocational educational institutions were employed.

Vocational guidance The comprehensive program for vocational guidance and pre-university and pre-university training training for schoolchildren is implemented through the preparation of senior for schoolchildren schoolchildren for their enrolment into relevant programs at leading Russian universities; funding for schoolchildren – participants of the Program in Russian and regional competitions (Olympiads) as part of an agreement with leading technical universities in Russia. In 2015, the number of Program participants amounted to 172 people. RUB 765.3 thousand was spent on the Olympiads.

98 Social and Environmental Report of PJSC ALROSA 2015 Social responsibility Social and Environmental Report of PJSC ALROSA 2015 Social responsibility 99 Our Approach EFFICIENCY AND MOTIVATION INCENTIVES

In accordance with the Collective Bargaining Agreement between PJSC In 2015, the average wage level of PJSC ALROSA’s employees has exceeded the ALROSA and Profalmaz Interregional Trade Union of employees of PJSC Russian Federation average by three times, and the Republic of Sakha (Yakutia) ALROSA for 2014–2016, a paid annual leave, given to employees combining average by two times. work with higher education and secondary vocational education, can be The ratio of the minimum wage in the Company to the set minimum wage in the added to an additional study leave while retaining the average salary. main region where the Company operates (the Republic of Sakha (Yakutia)) is 1.6. PJSC ALROSA applies the principle of equal remuneration for male and female workers for work of equal value (ILO Convention 100). However, due to the fact Average annual number of hours and training expenses that our Company does not allow the employment of women in severe and haz- per employee* in 2011–2015 ardous work environments, payments to men and women, who have the same base rates, differ by the amount of fringe benefits provided in addition to wag- Managers Workers es, as a compensation (for severe and hazardous working conditions).

60 8 60 8 55.2 7.4 51.9 6.9 Remuneration of the Company’s In terms of staff wage levels, PJSC workers is differentiated depend- ALROSA occupies a leading position 6 6.0 43.8 6 102.2 44.2 ing on the workers category and among Russian mining companies. In thousand RUB 40 39.7 40 38.9 4.9 37.5 type of works; the calculation al- 2015, the average wage per Compa- is the average 33.3 4.4 4.3 4 4 so includes the factor of adverse ny employee increased by 5.3% and wage of ALROSA 27.1 3.6 3.6 25.7 3.5 impact of harmful and hazardous amounted to RUB 102.2 thousand. In employee labour conditions, certified for se- addition to the territorial regulation 20 2.7 20 2 2 verity, hazard and danger. Along of wages for employees in the Com- with working conditions incentives pany’s structural subdivisions locat- and compensations, additional pay- ed in different climatic and economic 0 0 0 0 ments are established to encourage zones, which takes into account con- 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 employees to strive for maximum sequential differences in the cost of fulfilment of their professional po- living, individual motivating factors Average number of training hours per 1 manager Average number of training hours per 1 worker tential. are also used in wage calculation. or specialist

Training expenses per 1 manager/specialist, Training expenses per 1 worker, thousand RUB thousand RUB

* Training data broken Assessment of performance of of certified employees received a down by gender are the Company’s managers and spe- positive assessment rating in terms not consolidated. cialists is made according to the of the position held. Regulations on the interviews (performance assessment) with officers The main reason for assessing work- holding a senior position and spe- ers’ performance and taking a deci- 2,830 cialists of PJSC ALROSA. In 2015, sion on career development is the workers advanced among 14 of the Company’s sub- improvement of workers’ profession- their professional divisions located at the North- al skills and taking relevant qualifi- skills in 2015 ern production sites, 2.8% of the cation examinations. In 2015, 2,830 Company’s managers, specialists workers advanced their profession- and employees underwent perfor- al skills, the share of which among mance assessment in accordance the total number of workers amount- with their current positions; 99.5% ed to 14.7%.

100 Social and Environmental Report of PJSC ALROSA 2015 Social responsibility Social and Environmental Report of PJSC ALROSA 2015 Social responsibility 101 In accordance with the principles of at creating competitive advantag- the corporate social responsibility, es of the Company as a socially ori- adopted in PJSC ALROSA, the Com- ented organisation and an attractive pany voluntarily and on its own in- employer, includes programs to sup- itiative took on a commitment to port our employees as follows: Rest socially responsible participation and Rehabilitation, Health, Culture in the life of its employees. A wide and Sport, Housing, Private Pension range of targeted programs aimed Plans.

Social payments encompassing compensations and benefits under Russian labour laws are made to all categories of the Company’s employees, regardless of their professional status and type of their agreed employment contract. Full-time employees of the Company are provided with additional benefits and guarantees as part of the corporate social programmes of PJSC ALROSA.

3,417.1 2,200 mn RUB the Company put employees and retirees of the toward implementation of social Company were examined and programs for the staff in 2015 treated in leading medical centres in Russia Change in purchasing power of PJSC ALROSA employees’ wages, compared with similar indicator in the Russian Federation and the Republic of Sakha (Yakutia) in 2010–2015, 1,330 4,927 number of minimum subsistence sets (consumer basket) * mn RUB are invested in programs RUB is a private corporate pension on health, healthy lifestyle and of PJSC ALROSA in the reporting 8.0 7.1 leisure activities for the staff year 7.0 6.8 6.6 6.0 6.0 5.6

5.0 4.5 4.3

4.0 3.8 3.9 3.8 3.8 3.8 3.5 3.7 3.4 3.2 3.3 3.0 2.9

2.0

1.0

0.0 2010 2011 2012 2013 2014 2015

for PJSC ALROSA for Russia for the Republic of Sakha (Yakutia)

* For such a calculation the subsistence minimum for the able-bodied population is applied according to data from the Federal State Statistics Service.

102 Social and Environmental Report of PJSC ALROSA 2015 Social responsibility Social and Environmental Report of PJSC ALROSA 2015 Social responsibility 103 Results from the corporate social programs implementation of PJSC ALROSA in 2015

Program Implementation mechanism Results 2015 Program Implementation mechanism Results 2015

Rest and The Company has its own centres for a year-round The total amount of funds spent in 2015 on im- Private Pension Additional pension for employees is formed in the In the reporting period, the Company trans- Rehabilitation sanatorium and health resort treatment and recre- plementation of the program was RUB 876.1 mn, Plans framework of the corporate pension plan which ferred RUB 1,185 mn to the JSC Almaznaya ation, equipped with modern medical equipment which exceeds the amount spent in 2014 by 7.1%. implies regular contributions (deductions) of the Osen Non-State Pension Fund. The number and highly qualified personnel, including the ones 14,041 persons, including employees, their chil- Company to the Private Pension Fund (PPF). Funds of participants receiving non-state pensions on the Black Sea coast of Russia. During summer dren and retirees of the Company used corporate for non-state pension provision to participants of under the pension contracts amounted to period the Company provides programs on well- vouchers for wellness and recreation. During the all categories are annually provided for in the 18,081 persons in 2015, of which 283 partici- ness and recreation for the employees’ children reporting period, 43.2% of all the program partic- Company’s budget in the form of pension contri- pants receive non-state survivors’ pensions. at the permanent children health camps. In 2015, ipants took advantage of a stay in the Black Sea butions to the corporate PPF amounting to up to The average monthly amount of the non- PJSC ALROSA continued children’s recreational health resorts. 12% of the wages fund. state pension in the reporting year increased outings to leisure resorts situated on the Black as compared to the previous year by 9.6% and Sea coast. amounted to RUB 4,927. In 2015, JSC Almaznaya Osen Non-State Pension Fund was included in the register of partici- The program is conducted on the basis of agree- Program funding in 2015, as compared with 2014, Health pants in the non-state pension fund scheme, ments forged with more than 70 leading treatment decreased by 8.6% and amounted to RUB 245.4 mn. guaranteeing the rights of insured persons to facilities as well as scientific and healthcare insti- 2,200 people, 250 of which are Company retirees have received a positive assessment from the tutions of the Russian Federation and the Republic and 100 of which are employees’ children, used Bank of Russia. of Sakha (Yakutia). The main production workers the services of the leading medical diagnostic and are prioritised to receive treatment (70% of the treatment centres. An annual periodic medical ex- total workers sent for treatment). amination is afforded to more than 20 thousand employees working in hazardous conditions. In addition to financial incentives for orary title Honoured Worker of PJSC personnel, the Company provides a ALROSA and workers awarded with non-financial motivation system the Certificate ofH onour of the PJSC Culture The Company’s Culture and Sports Complex (CSC) The investment into this program in 2015 amount- for employees, including corporate ALROSA are recorded in the Com- and Sports is represented by 14 cultural institutions, 22 sports ed to RUB 208.5 mn, which exceeds the funding awards (honorary distinction, certif- pany’s Book of Honour, and pho- centres, different classes and clubs in which ap- in 2014 by 38.6%. proximately 10 thousand people are engaged in The number of employees regularly engaged in icates of honour) and recognitions tographs of the awarded workers various activities. The program uniqueness con- sports activities from the subdivisions located in (letters of appreciation, the title of are placed on the Board of Honour. sists in the fact that cultural and sports events fi- Mirny, Udachny and Aikhal, amounted to 7,500 per- the Best in Profession, Best Innova- Awarding of the Certificate ofH on- nanced and organised by the Company have a great sons in the reporting year. influence on the creation of a favourable social en- tor and Best Inventor). Photographs, our and certificates for honorary ti- vironment not only for our employees but also for brief biographical data, characteris- tles is performed by Company heads local communities. tics of merits of holders of the hon- at an official awards ceremony.

Housing The program is based on the new approaches to In 2015, RUB 659 mn in funding was invested to- the strategic management of relationship in hous- ward the improvement of staff housing condi- Our Employee Awards ing sector and is aimed at enhancing the Compa- tions and housing provision; the main part of the ny’s staff capacity, expanding opportunities for funds (RUB 311.7 mn) was spent on construction the employees to improve their living conditions of dormitories in Mirny for 320 persons. As part of In 2015, 501 Company employees In addition to corporate awards, 32 through attracting personal funds and using cor- the program for resettlement of citizens living in received awards: 469 persons were employees of the Company went on 501 porate support tools when purchasing residen- dilapidated and hazardous housing, in 2015, the awarded the title of the Veteran of to win the Russian Federation gov- tial property. Company provided RUB 158.7 mn worth of fund- AlROSA’s ing for the construction of housing within the Re- PJSC ALROSA, and 20 employees ernment awards, and 25 employees employees public of Sakha (Yakutia). were awarded the PJSC ALROSA were given awards by the Repub- received corporate In the reporting year, according to the mortgage Certificate ofH onour. lic of Sakha (Yakutia) regional gov- lending program, the Company’s employees were awards paid mortgage interest compensation of RUB 40.4 ernment. mn.

104 Social and Environmental Report of PJSC ALROSA 2015 Social responsibility Social and Environmental Report of PJSC ALROSA 2015 Social responsibility 105 SOCIAL PARTNERSHIP AND HUMAN RIGHTS KEY PERFORMANCE INDICATORS 2015

The authorised Company employee representative is the Profalmaz Interregional Trade Union of employees of PJSC ALROSA. In 2015, the trade union organisation 81.7% was made up of 81.7% of our employees. of ALROSA’s 29,400 persons The relationship between the Company and employees in the social and labour employees are sphere is based on the principles of social partnership and enforced by the members of the the total headcount of ALROSA 5.3% guidelines set out in the collective agreement. Profalmaz Trade Average salary growth The collective agreement applies to all employees of the Company, entered into Union an employment contract, including those in temporary or part-time employment. 41.5 Geographically, the collective agreement applies to all the structural subdivisions of the Company. the average age of employees

With significant changes in the to downsizing or headcount reduc- 6,620 persons 3,417.1 mn RUB Company’s activities, in particular tion, through the corporate staff when taking decisions on reducing training structure. have been employed in ALROSA’s went toward the implementation of social the number of employees or staff The main body of social partnership subdivisions programmes for staff size and the possible termination of the parties in the Company is the of employment contracts with em- Commission for the Regulation of ployees, collective agreement rules Social and Labour Relations that is set out PJSC ALROSA’s obligation to made up of authorised party repre- inform Profalmaz Trade Union about sentatives on a parity basis. Our Approach this in written form no later than In 2015, Profalmaz Trade Union two months prior to the termina- received 11 complaints from the Due to the ratification of the Fed- the Company decided to provide its tion of employment contracts with Company’s workers on violation of eral Law On Special Assessment of employees with additional guaran- employees, and no less than three their labour rights by the employer. Working Conditions (SAWC), during tees which are not provided by the months prior, the Company shall in- All complaints have been reviewed 2015, the Company conducted a uni- legislation, namely: form the trade union and the ter- and settled by the parties at the form procedure for working condi- – to keep wages at a level not lower ritorial employment services about level of trade-union committees tions assessment in the workplace. than those of previous levels, exist- the alleged mass layoff of workers. and commissions for labour dis- As a result of the inspections, a num- ing before the special assessment of The Company and Profalmaz Trade putes without involving the Com- ber of professions have recorded a other allowances; Union collectively develop job-cre- mission for the Regulation of Social change in their designated hazard – to provide a shortened working ating measures for redundant em- and Labour Relations of PJSC AL- class in accordance with the new week for all underground workers’ ployees. The Company organises ROSA, judicial or law enforcement methodology. Currently, based on groups, regardless of the class of retraining of workers dismissed due authorities. the results of SAWC, the legislation working conditions established by provides for compulsory assurances, the results of SAWC; such as a shortened working week – to provide additional leave in ex- for employees whose working con- cess of the minimum level for cer- ditions correspond to a III–IV degree tain categories of workers engaged of hazard or dangerous working con- in underground and open-pit mining dition classification; additional an- works. nual paid leave no less than seven All the relevant alterations and addi- calendar days; surcharge for work- tions are entered into the collective ing in harmful conditions of no less bargaining agreement between the than 4% of the tariff rate. joint Resolution of PJSC ALROSA and As a result of the partnership consul- the Profalmaz Interregional Trade Un- tation with Profalmaz Trade Union, ion dated December 30, 2015.

106 Social and Environmental Report of PJSC ALROSA 2015 Social responsibility Social and Environmental Report of PJSC ALROSA 2015 Social responsibility 107 HUMAN RIGHTS SOCIAL INVESTMENTS

In accordance with the Policy on erty, social status and position, age, In accordance with regulations of the Policy in the field of sustainable development Sustainable Development and Cor- location, attitude to religion, politi- and corporate social responsibility of PJSC ALROSA, philanthropy and support porate Social Responsibility of PJSC cal views, participation or non-par- of local communities is carried out on the basis of the following principles: ALROSA, the observance of human ticipation in public associations and rights is recognised as one of the any other obligations that are not • high social value of the sponsored projects; key principles of the Company. We related to any employee’s profes- • target orientation of financial assistance and sponsorship; declare our commitment to the sional attributes. • collegial decision-making with regard to financial assistance and sponsorship observance of human rights and issues; recognise their importance and uni- The Company also does not employ • charity beneficiary interests are of top priority; versality. any persons under 16 y. o., or con- • transparency, accountability and the use for the intended purpose of the tract anyone into forced labour, and funds received by charity beneficiaries. PJSC ALROSA does not permit any it strictly enforces rules prohibiting kind of discrimination: all employ- the employment of women and per- ees have equal entitlement to ex- sons under the age of 18 at min- Actively participating in the life of lo- sports facilities, as well as social in- ercise their employment rights, ing works with harsh and dangerous cal communities, we are committed to frastructure of the regions in which regardless of sex, race, skin colour, working conditions. creating and maintaining a favoura- the Company operates, and other so- nationality, language, origin, prop- ble social climate, as well as socially cially important non-profit projects. significant values and institutions of The Company implements a coher- civil society in the regions where the ent regional policy among munici- Company operates. palities (ulus) – Shareholders of the Company, based on the principles of Social investments of the Compa- responsibility for the social and eco- ny are aimed at provision of free (as nomic situation in the region where well as under the terms of co-financ- the Company operates, guaranteeing ing with other members of non-profit employment and improvement of the projects) aid to scientific and educa- living standards of people of the Re- tional institutions, cultural, art and public of Sakha (Yakutia).

CONTRIBUTION TO DEVELOPMENT OF REGIONS. SUPPORT OF LOCAL COMMUNITIES

Social investments by ALROSA contractual obligations and within * The data is provided Group aimed at support of medi- the framework of the Financial and in accordance with the consolidated cine, and educational charity pro- Sponsor Support Program and the financial reports of jects, as well as support of social Regional Development Sub-Pro- PJSC ALROSA made in accordance with the infrastructure in regions where the gram. Programs are an efficient IFRS for 2015. Company operates etc. amounted tool for interaction with people of to RUB 5.4 bn in 2015.* the region where the Company operates, with governmental agen- Social investments in PJSC ALRO- cies and non-profit organisations. SA are made mostly within the

108 Social and Environmental Report of PJSC ALROSA 2015 Social responsibility Social and Environmental Report of PJSC ALROSA 2015 Social responsibility 109 INTERACTION WITH NATIONAL COMMUNITIES Total amount of gratuitous financial aid provided by the Company in 2015 amounted to RUB 2.7 bn. Activities of the Company’s subdivi- RUB 40 mn to the Administration of ALROSA’s sions and its subsidiaries affect the in- Olenyoksky Evenki national district enterprises 351.9 RUB mn 225.4 RUB mn deliv- 184.1 RUB mn are terests of the people of the Sadynsky municipality for the construction of traditionally is aimed at support of ered to municipalities for the charitable donations of national nasleg of Mirny district, the the Ethnocultural centre in the village support tribal educational institutions territories’ infrastructure de- the Company to sports national Anabarsky ulus and nation- of Olenyok. communities of velopment and construc- communities and clubs. al Olenyoksky ulus, where Dolgans, reindeer herders tion of socially important Evenki, Evens and other representa- In order to provide employment to lo- and fishermen non-profit facilities. tives of indigenous minorities of the cal rural residents (in the villages of North live. Arylakh, Syuldyukar and Taas-Yurakh), the Company structure includes a mul- Key activities resulting from PJSC ALROSA gratuitous The Company’s enterprises tradition- tipurpose farm – the Novy Sovkhoz. financial aid in 2015 ally support tribal communities of The farm is mainly engaged in the pro- reindeer herders and fishermen: an- duction and supply of organic prod- Stakeholders Approaches/ Assigning of aid nual financial assistance is provided ucts – milk, eggs and meat to satisfy Management for agricultural activities, support and the needs of employees of the Com- development of traditional fishing and pany as part compensation for harm- Government of the Re- Agreement on Social and In the reporting year, the Company performed its obligations in a public of Sakha (Yakutia), Economic Development sound manner under the Agreement on Social and Economic Devel- hunting activities, procurement of off- ful and hazardous working conditions. cultural, sport, medical of the Republic of Sakha opment of the Republic of Sakha (Yakutia) up to 2020 having trans- road vehicles, fishing gear and hunting The farm also supplies its products to and educational institu- (Yakutia) up to 2020 ferred RUB 521 mn to the non-profit organisation Target Fund for equipment. In 2015, for the purpos- kindergartens and schools, and sells tions of the Republic of Future Generations of the Republic of Sakha (Yakutia). Sakha (Yakutia) es of charity PJSC ALROSA transferred it to district inhabitants.

Individuals and legal en- Financial and Sponsor In 2015, the Company provided targeted financial aid to cultur- tities, municipalities of Support social program al, medical, sports and educational institutions, as well as to ad- the regions where the ministrations of municipalities. Among the largest non-profit Company operates, lo- projects funded by the Company were the construction of the edu- Our Approach cal communities and cational and laboratory buildings of the Polytechnical Institute of non-profit organisations North-Eastern Federal University in Mirny and vocational school No. 30 in Aikhal, construction of the new rehabilitation centre for teen- Since the beginning of the develop- work placements in mining produc- agers in Kharyskhal, construction of a school and kindergarten in ment of Verkhne-Munskoe ore field tion and, accordingly, a regular in- Ulakhan Kyuel village of Churapchinsky ulus, and the repair of the in 2015, the Company manifested its come and social security. Budget city hospital in Udachny. In total, the Company allocated RUB 2.4 bn for gratuitous aid within interest in industrial and socio-eco- replenishment of Olenyoksky ulus the Financial and Sponsor Support Program in 2015. nomic development of Olenyoksky with tax revenues will significantly Evenki National District of the Re- increase the local community qual- Nine municipalities Regional agreements In 2015, nine districts of the Republic of Sakha (Yakutia) most public of Sakha (Yakutia), the main ity of life and give rise to the social of Western Yakutia in the framework of the of which are located in Western Yakutia – the main area of PJSC population of which are Evenki, and economic development of the Regional development ALROSA activity – were granted financial aid of RUB 81.7 mn mainly sub-program under the for the implementation of agricultural and traditional fishing and Yukagirs and Nganasans (Maiats), region. Financial and Sponsor hunting activities, and charitable contributions for children. leading a nomadic life due to the As a crucial point, the Company al- Support Program traditional subsistence of reindeer so ensured that locals could contin- herding. At the meeting held by rep- ue traditional agricultural and cattle Non-profit organisations Implementation of During the reporting year we continued supporting the independent resentatives of the Company, man- breeding activities, as natural eco- that previously were socially responsible non-profit organisation, consisting of kindergartens that were agement of Udachny MPD declared systems will not be violated, in ac- structural subdivisions restructuring principles previously part of the PJSC ALROSA structure. In 2015, the Company its willingness to provide the pop- cordance with the project of new of the Company transferred RUB 866.6 mn to the Almazik ANO ulation of the national region with deposit development.

110 Social and Environmental Report of PJSC ALROSA 2015 Social responsibility Social and Environmental Report of PJSC ALROSA 2015 Social responsibility 111 INDEPENDENT AUDITOR’S REPORT

112 Social and Environmental Report of PJSC ALROSA 2015 Independent auditor’s report Social and Environmental Report of PJSC ALROSA 2015 Independent auditor’s report 113 ANNEXES

114 Social and Environmental Report of PJSC ALROSA 2015 Annex 1. + Direct impact of the Aspect SCOPE OF MATERIAL ASPECTS + Indirect impact of the Aspect

Material Aspects Aspect Scope within the Company Aspect Scope outside the Company Key stakeholder groups PJSC ALROSA PJSC ALROSA- JSC Almazy PJSC Local communities Government Customers Suppliers Competitors/ (parent company) Nyurba Anabara * Severalmaz (including municipal authorities (consumers of the of goods and services industry- authorities) primary products) specific community Mirny District Nyurbinsky Anabarsky, Arkhangelsk, Republic Arkhangelsk Republic RF RF Abroad RF Abroad of the Republic District of the Bulunsky, the Arkhangelsk of Sakha Region of Sakha of Sakha Republic of Sakha Zhigansky Region (Yakutia) (Yakutia) (Yakutia), Moscow (Yakutia) Districts of the Republic of Sakha (Yakutia) Geological exploration and deposit development + + + + + + + + + + +

Production efficiency improvement + + + + + + + + + + + + + Technical upgrade and replacement of worn out + + + + + + + + equipment Sustainable development management in the context + + + + + + + + + + + + + of the Company’s strategy Risk management system + + + + + + + + + + + + + Labour protection and ensuring safe production + + + + + + +

Products marketing and sales network expansion + + + + + + + + + + Sales policy of the Company + + + + + + + + + + International cooperation + + + + + + + + Financial and economic performance of the Company + + + + + + + + + + + + +

Investment Program + + + + + + + + + Innovation Development + + + + + + + + + + and Technological Upgrade Program Rational use of natural resources + + + + + + + + Compliance with national + + + + + + + + and international environmental legislation Environmental management system + + + + + + + + and environmental policy implementation Contribution of the Company to development + + + + + + + + of the region Support of local communities + + + + Social policy + + + + + + + + Remuneration system Formation of human resources. + + + + + + Staff training and development

* Including JSC Nizhne-Lenskoe

116 Social and Environmental Report of PJSC ALROSA 2015 Annex 1. Scope of material aspects Social and Environmental Report of PJSC ALROSA 2015 Annex 1. Scope of material aspects 117 Annex 2. G4 GRI CONTENTS INDEX for the Main version prepared in accordance with GRI G4 Sustainability reporting guidelines Indicators Report page number and other references External assurance G4-12 Organisation’s supply chain ECONOMIC EFFICIENCY. General Standard Disclosures Creation and distribution of economic + value, p. 56 G4-13 Significant changes during the reporting period ABOUT ALROSA GROUP. Indicators Report page number and other references External regarding the organisation’s size, structure, Production chain and geography, pp. 20–21 + assurance ownership, or its supply chain ECONOMIC EFFICIENCY. Creation and Strategy and Analysis distribution of economic value, p. 59 G4-14 Report whether and how the precautionary principle ENVIRONMENTAL RESPONSIBILITY. G4-1 Statement from the most senior decision-maker ADDRESS BY THE PRESIDENT OF PJSC is applied by the organisation Environmental policy implementation, – of the organisation publishing the report about the ALROSA, pp. 6–9 + pp. 62–63 relevance of sustainability to the organisation and the organisation’s strategy for addressing sustainability G4-15 List externally developed economic, environmental OUR APPROACH TO SUSTAINABLE and social charters, principles, or other initiatives DEVELOPMENT. Ethics and anti-corruption G4-2 Description of key impacts, risks, and opportunities OUR APPROACH TO SUSTAINABLE to which the organisation subscribes or which it activities, pp. 40, 42 + DEVELOPMENT. Integration of sustainable endorses ENVIRONMENTAL RESPONSIBILITY. development goals in activities of the + Environmental policy implementation, p. 64 Company, pp. 29–30 ALROSA Group Annual Report for 2015, G4-16 List memberships in associations (such as industry OUR APPROACH TO SUSTAINABLE associations) and national or international advocacy DEVELOPMENT. pp. 88–96 + organisations Ethics and anti-corruption activities, p. 40 Organisation profile Stakeholder engagement, p. 33 Identified Material Aspects and Boundaries G4-3 Name of the organisation ABOUT THIS REPORT, p. 10 + G4-4 Primary brands, products, and services ABOUT ALROSA GROUP. G4-17 Report outline ABOUT THIS REPORT. p. 10 + Production chain and geography, pp. 18–19 G4-18 Process for defining the report contents and the ABOUT THIS REPORT. OUR APPROACH TO SUSTAINABLE + + DEVELOPMENT. Ethics and anti-corruption Aspect Boundaries. Reporting principles Material aspects, pp. 10–11 activities, p. 41 G4-19 List of the material aspects ABOUT THIS REPORT. + G4-5 Location of the organisation’s headquarters ABOUT ALROSA GROUP. Material aspects, p. 12 + Production chain and geography, pp. 20–21 G4-20 Aspects scope within the organisation ANNEX 1. Scope of material aspects, + G4-6 Number of countries where the organisation operates, ABOUT ALROSA GROUP. pp. 116 –117 and names of countries where either the organisation Production chain and geography, pp. 20–21 G4-21 Aspects scope outside the organisation ANNEX 1. Scope of material aspects, + has significant operations or that are specifically + pp. 116 –117 relevant to the sustainability issues covered in the report G4-22 Effect of any restatements of indicators provided No significant restatements of indicators in previous reports and the reasons for such provided in previous reports. + G4-7 Nature of ownership and legal form ABOUT ALROSA GROUP. + restatements General information, p. 18 G4-23 Significant changes from previous reporting periods ABOUT THIS REPORT. + G4-8 Markets served (including geographic breakdown, ABOUT ALROSA GROUP. in the Scope and Aspect Boundaries Outline of the report, pp. 10–11 sectors served, and types of customers and Production chain and geography, p. 20 + beneficiaries) Stakeholder Engagement G4-9 Scale of the organisation ABOUT ALROSA GROUP. Key performance results, p. 24 G4-24 List of stakeholder groups engaged by the OUR APPROACH TO SUSTAINABLE ECONOMIC EFFICIENCY. Economic organisation DEVELOPMENT. Stakeholder engagement, + + performance results 2015, pp. 50–52 pp. 31–33 Creation and distribution of economic G4-25 Basis for identification and selection of stakeholders OUR APPROACH TO SUSTAINABLE value, pp. 56–57 with whom to engage DEVELOPMENT. Stakeholder engagement, + G4-10 Number of employees ABOUT ALROSA GROUP. p. 31 Key performance results 2015, p. 24 G4-26 Approach to stakeholder engagement, including OUR APPROACH TO SUSTAINABLE SOCIAL RESPONSIBILITY. + frequency of engagement by type and by stakeholder DEVELOPMENT. Stakeholder engagement, + Investments in human capital. group pp. 31–33 Staff portrait, pp. 94–95 G4-27 Key topics and concerns that have been raised OUR APPROACH TO SUSTAINABLE G4-11 Percentage of total employees covered by collective SOCIAL RESPONSIBILITY. through stakeholder engagement, and how the DEVELOPMENT. Stakeholder engagement, + labour agreement Investments in human capital. + organisation has responded to those key topics and pp. 31–33 Social partnership and human rights, p. 106 concerns, including through its reporting

118 Social and Environmental Report of PJSC ALROSA 2015 Annex 2. GRI G4 contents index Social and Environmental Report of PJSC ALROSA 2015 Annex 2. GRI G4 contents index 119 Indicators Report page number and other references External Specific Standard Disclosures assurance General information about the report Material Aspects EMS and indicators Report page number, other references, notes External G4-28 Reporting period for which the information is provided ABOUT THIS REPORT. PJSC ALROSA assurance + Outline of the report, p.10 Geological exploration and ABOUT ALROSA GROUP. deposit development Key performance results 2015, p. 22 G4-29 Date of the publication of the previous sustainable ABOUT THIS REPORT, p. 10 + ECONOMIC EFFICIENCY. development report + Economic performance results 2015, pp. 50–52 G4-30 Reporting cycle ABOUT THIS REPORT, p. 10 + ALROSA Group Annual Report for 2015, G4-31 Contact person for questions regarding the report or CONTACT INFORMATION, p. 141 pp. 41–43 + its contents Improving of production ECONOMIC EFFICIENCY. Economic G4-32 GRI contents index Annex 2. GRI CONTENTS INDEX, efficiency performance results 2015, pp. 50–51 + + pp. 118 –127 ALROSA Group Annual Report for 2015, pp. 41–43 G4-33 Assurance ABOUT THIS REPORT. Assurance of the report, p. 11 Technical upgrade and ECONOMIC EFFICIENCY. Economic + INDEPENDENT AUDITOR'S REPORT, replacement of worn out performance results 2015, pp. 53–54 + pp. 112–113 equipment Corporate governance Sustainable development G4-1 OUR APPROACH TO SUSTAINABLE management in the context of DEVELOPMENT. Integration of sustainable the Company’s strategy development goals in activities of the Company, G4-34 Corporate governance structure of the organisation OUR APPROACH TO SUSTAINABLE + p. 28 DEVELOPMENT. Management in the ALROSA Group Annual Report for 2015, sphere of sustainable development, p. 39 + pp. 26–29 ALROSA Group Annual Report for 2015, p. 88 Risk management system G4-2 OUR APPROACH TO SUSTAINABLE DEVELOPMENT. Integration of sustainable G4-38 Composition of the superior body of corporate OUR APPROACH TO SUSTAINABLE + development goals in activities of the company, governance and its committees DEVELOPMENT. Management in the pp. 29–30 sphere of sustainable development, + pp. 36–37 Labour protection and ensuring safe production ALROSA Group Annual Report for 2015, G4 Aspect. Occupational G4-DMA SOCIAL RESPONSIBILITY. HSE, pp. 85-90 + pp. 113 –115 health and safety G4-39 Report whether the Chairman of the superior body OUR APPROACH TO SUSTAINABLE G4-LA5. Percentage of total SOCIAL RESPONSIBILITY. HSE, p. 90 of corporate governance is also an executive officer DEVELOPMENT. Management in the + workforce represented in sphere of sustainable development, p. 38 formal joint management + Ethics and Fair Practice – worker health and safety committees G4-56 Values, principles, standards and norms of behaviour OUR APPROACH TO SUSTAINABLE G4-LA6. Types of injury, SOCIAL RESPONSIBILITY. HSE, pp. 91-93 in the organisation DEVELOPMENT. Ethics and anti-corruption injury rate, occupational activities, pp. 40-42 diseases rate, lost day rate, PJSC ALROSA Corporate Governance absentee rate and work- + Code, http://www.alrosa.ru/documents/ related fatalities for the total устав-и-иные-внутренние-докумен- workforce by gender and ты/#2013 + region PJSC ALROSA Corporate Ethics Code, G4-LA7. Workers with high SOCIAL RESPONSIBILITY. HSE, p. 86 http://www.alrosa.ru/documents/устав-и-и- incidence or high risk of + ные-внутренние-документы/#2013 diseases related to their ALROSA ALLIANCE Guidelines, http:// occupation sales.alrosa.ru/rough-diamonds/long-term- Products marketing and sales G4-4 OUR APPROACH TO SUSTAINABLE contacts/?lang=ru network expansion DEVELOPMENT. Stakeholder engagement, p. 32 + G4-57 Internal and external mechanisms for seeking advice OUR APPROACH TO SUSTAINABLE ALROSA Group Annual Report for 2015, on ethical and lawful behaviour DEVELOPMENT. Ethics and anti-corruption + pp. 26–32 activities, Intra-corporate ethics, p. 42 G4 Aspect. Labelling of G4-DMA OUR APPROACH TO SUSTAINABLE G4-58 Internal and external mechanisms for reporting OUR APPROACH TO SUSTAINABLE products and services DEVELOPMENT. Ethics and anti-corruption + concerns about unethical or unlawful behaviour and DEVELOPMENT. Ethics and anti-corruption + activities, pp. 40–41 matters related to organisation’s unfair practices activities, p. 42 G4-PR3. Type of products OUR APPROACH TO SUSTAINABLE and services information DEVELOPMENT. Ethics and anti-corruption required by the organisation’s activities, pp. 40–41 procedures and percentage + of significant product and service categories subject to such information requirements

120 Social and Environmental Report of PJSC ALROSA 2015 Annex 2. GRI G4 contents index Social and Environmental Report of PJSC ALROSA 2015 Annex 2. GRI G4 contents index 121 Material Aspects EMS and indicators Report page number, other references, notes External Material Aspects EMS and indicators Report page number, other references, notes External PJSC ALROSA assurance PJSC ALROSA assurance G4-PR4. Total number of OUR APPROACH TO SUSTAINABLE G4 Aspect. Water G4-DMA ENVIRONMENTAL RESPONSIBILITY. + incidents of non-compliance DEVELOPMENT. Ethics and anti-corruption Environmental policy implementation, pp. 62–64 with regulations and voluntary activities, p. 40 G4-EN8. Total water ENVIRONMENTAL RESPONSIBILITY. codes concerning products + withdrawal by source Environmental protection goals achievement. and services information Water and rational use of water resources, p. 73 + and labelling by types of Annex 4. ENVIRONMENTAL OUTCOMES, consequences p. 131 G4 Aspect. Compliance G4-DMA OUR APPROACH TO SUSTAINABLE G4-EN10. Percentage and ENVIRONMENTAL RESPONSIBILITY. assurance DEVELOPMENT. Ethics and anti-corruption + total volume of water recycled Environmental protection goals achievement. activities, p. 40 and reused Water and rational use of water resources, p. 73 + G4-PR9. Monetary value of OUR APPROACH TO SUSTAINABLE Annex 4. ENVIRONMENTAL OUTCOMES, significant fines for non- DEVELOPMENT. Ethics and anti-corruption p. 131 compliance with laws and activities, p. 40 G4 Aspect. Discharges and G4-DMA ENVIRONMENTAL RESPONSIBILITY. – + regulations concerning the waste Environmental policy implementation, pp. 62–64 provision and use of products and services G4-EN21. NOx, SOx and ENVIRONMENTAL RESPONSIBILITY. other significant air emissions Environmental protection goals achievement, Sales policy of the Company G4-6, G4-8 ABOUT ALROSA GROUP. + pp. 76–77 + Production chain and georgaphy, pp. 18–20 Annex 4. ENVIRONMENTAL OUTCOMES, International cooperation G4-15, G4-16 OUR APPROACH TO SUSTAINABLE p. 132 DEVELOPMENT. Ethics and anti-corruption + G4-EN22. Total water ENVIRONMENTAL RESPONSIBILITY. activities, p. 40 discharge by quality and Environmental protection goals achievement. Financial and economic performance of the Company destination Discharges and waste, p. 74 + Annex 4. ENVIRONMENTAL OUTCOMES, G4 Aspect. Economic G4-DMA ECONOMIC EFFICIENCY. p. 49 p. 133 + effectiveness G4-EN23. Total weight of ENVIRONMENTAL RESPONSIBILITY. G4-ЕС1. Direct economic ECONOMIC EFFICIENCY. Creation and waste by type and disposal Environmental protection goals achievement. value generated and distribution of economic value, pp. 57–59 + method Discharges and waste, pp. 74–75 + distributed Annex 4. ENVIRONMENTAL OUTCOMES, p. 130 Innovation Development OUR APPROACH TO SUSTAINABLE G4-EN24. Total number and In 2015, the Company did not become aware of and Technological Upgrade DEVELOPMENT. Innovative development, – Program pp. 43–45 + volume of significant spills any significant spills in its subdivisions. ALROSA Group Annual Report for 2015, G4-ММ3. Total amounts of ENVIRONMENTAL RESPONSIBILITY. pp. 73–78 overburden, tailings, and Environmental protection goals achievement. Rational use of natural resources sludges and their associated Discharges and waste, pp. 74–75 + risks Annex 4. ENVIRONMENTAL OUTCOMES, p. 130 G4 Aspect. Biodiversity G4-ММ1. Land area (owned ENVIRONMENTAL RESPONSIBILITY. or leased, and managed Environmental protection goals achievement. Compliance with national and international environmental legislation for production activities or Protection of land resources, p. 81 + extractive use) disturbed or G4 Aspect. Compliance G4-EN29. Monetary value Annex 4. ENVIRONMENTAL OUTCOMES, rehabilitated assurance of significant fines and total p. 134 number of non-monetary G4-ММ2. The number and ENVIRONMENTAL RESPONSIBILITY. + percentage of total land Environmental protection goals achievement. sanctions for non-compliance plots identified as requiring Biodiversity preservation, p. 82 + with environmental laws and biodiversity management regulations plans G4-SO3. Total number and OUR APPROACH TO SUSTAINABLE G4-EN14. Number of IUCN Annex 4. ENVIRONMENTAL OUTCOMES, percentage of subdivisions DEVELOPMENT. Ethics and anti-corruption Red List species and national p. 132 assessed for risks related to activities, p. 42 + conservation list species with corruption and the significant habitats in areas affected + risks identified by the operations of the G4-SO4. Communication and OUR APPROACH TO SUSTAINABLE organisation, by level of training on anti-corruption DEVELOPMENT. Ethics and anti-corruption + extinction risk policies and procedures activities, p. 42 G4 Aspect. Energy G4-DMA ENVIRONMENTAL RESPONSIBILITY. Environmental management system and environmental policy implementation Environmental protection goals achievement. + Energy conservation, p. 80 G4 Aspect. Energy G4-EN2. Percentage of Annex 4. ENVIRONMENTAL OUTCOMES, G4-EN6. Reductions of ENVIRONMENTAL RESPONSIBILITY. the materials used that are p. 130 + energy consumption Environmental protection goals achievement. + recycled input materials Energy conservation, p. 81

122 Social and Environmental Report of PJSC ALROSA 2015 Annex 2. GRI G4 contents index Social and Environmental Report of PJSC ALROSA 2015 Annex 2. GRI G4 contents index 123 Material Aspects EMS and indicators Report page number, other references, notes External Material Aspects EMS and indicators Report page number, other references, notes External PJSC ALROSA assurance PJSC ALROSA assurance G4-EN3. Energy consumption ENVIRONMENTAL RESPONSIBILITY. G4-ММ8. Number and PJSC ALROSA does not have any enterprises within the organisation Environmental protection goals achievement. percentage of the company’s or sites where artisanal and small-scale mining Energy conservation, p. 81 + operating sites where takes place. Annex 4. ENVIRONMENTAL OUTCOMES, artisanal and small-scale p. 130 mining takes place on, or – G4 Aspect. Emissions G4-EN15. Direct greenhouse ENVIRONMENTAL RESPONSIBILITY. adjacent to, the site; the gas emissions by weight Environmental protection goals achievement. + associated risks and the Emissions, pp. 78-79 actions taken to manage and mitigate these risks G4 Aspect. General G4-EN31. Total environmental ENVIRONMENTAL RESPONSIBILITY. information protection expenses and Funding of environmental protection activities, + G4-ММ9. Sites where In 2015, PJSC ALROSA did not become aware of investments by type pp. 70–71 resettlements took place, any resettlements that took place for any reason. the number of households – Contribution of the Company to development of the region resettled in each, and how their livelihoods were affected G4 Aspect. Indirect economic G4-DMA OUR APPROACH TO SUSTAINABLE in the process impacts DEVELOPMENT. Integration of sustainable + G4-ММ10. Number and ALROSA Group Long-Term Development development goals in activities of the Company, percentage of enterprises Program up to 2023 contains no plans to close + pp. 27–28 with closure plans/closed any mining enterprises. G4-ЕС7. Development and ECONOMIC EFFICIENCY. Creation and G4 Sector Specific Aspect. G4-DMA ENVIRONMENTAL RESPONSIBILITY. impact of infrastructure distribution of economic value, p. 56 Emergency preparedness Environmental policy implementation, p. 68 + investments and gratuitous SOCIAL RESPONSIBILITY. Contribution + SOCIAL RESPONSIBILITY. HSE, pp. 86–88 services to development of regions. Support of local communities, pp. 109–110 Social policy Support of local communities Social policy +

G4 Aspect. Local G4-DMA SOCIAL RESPONSIBILITY. Social investments, G4 Aspect. Employment G4-DMA OUR APPROACH TO SUSTAINABLE communities p. 109 DEVELOPMENT. Integration of sustainable development goals in activities of the Company, G4-SO1. Percentage SOCIAL RESPONSIBILITY. Contribution p. 28 of subdivisions with to development of regions. Support of local SOCIAL RESPONSIBILITY. Investments in implemented local communities, pp. 109–110 + + human capital. HR formation and development, community engagement, p. 96 impact assessments, and SOCIAL RESPONSIBILITY. Investment in human development programs capital. Social partnership and human rights, G4 Aspect. Rights of G4-ММ5. Total number of SOCIAL RESPONSIBILITY. Interaction with pp. 106–107 indigenous and small- enterprises taking place in national communities, p. 111 G4-LA2. Payments and SOCIAL RESPONSIBILITY. Investments in numbered peoples or adjacent to indigenous benefits provided to full-time human capital. Efficiency and motivation peoples' territories, and employees incentives, pp. 101-105 + number and percentage of – ANNEX 3. Social outcomes, pp. 128–129 technological operations or sites where there are formal agreements with indigenous G4-LA12. Structure of the KEY PERFORMANCE RESULTS 2015. peoples’ communities governing bodies and the Key outcomes of the Company in the sphere of main categories of staff by sustainable development in 2011–2015, p. 24 + G4-ММ6. Number and In 2015, PJSC ALROSA did not become aware sex, age, and their belonging SOCIAL RESPONSIBILITY. description of significant of any disputes relating to land use, customary to minority groups Investment in human capital, pp. 94–95 disputes relating to land use, rights of local communities or indigenous – customary rights of local peoples. G4-LA13. Ration of basic SOCIAL RESPONSIBILITY. Investment in human communities and indigenous salary and remuneration of capital. Efficiency and motivation incentives, – peoples women to men p. 101 G4-ММ7. The extent to which In 2015, PJSC ALROSA did not become aware G4 Aspect. Relations G4-ММ4. Number of strikes In 2015, PJSC ALROSA did not become aware of between employees and and lock-outs exceeding one any strikes or lock-outs in its subdivisions. grievance mechanisms of any complaints filed or court proceedings + were used to resolve initiated with respect to land use, customary managers week's duration by regions disputes relating to land use, rights of local communities or indigenous – where the Company operates customary rights of local peoples. G4 Aspect. Economic G4-ЕС3. Coverage of the ECONOMIC EFFICIENCY. Creation and communities and indigenous effectiveness organisation's defined benefit distribution of economic value, p. 57 + peoples, and the outcomes and pension plan obligations Remuneration system SOCIAL RESPONSIBILITY. Investments in human capital. Efficiency and motivation + incentives, p. 101

124 Social and Environmental Report of PJSC ALROSA 2015 Annex 2. GRI G4 contents index Social and Environmental Report of PJSC ALROSA 2015 Annex 2. GRI G4 contents index 125 Material Aspects EMS and indicators Report page number, other references, notes External PJSC ALROSA assurance Formation of human resources

G4 Aspect. Employment G4-LA1. Total number and SOCIAL RESPONSIBILITY. Investments in rate of new employee hired human capital. Staff portrait. pp. 94–97 + and employee turnover by age group, gender, and region G4 Aspect. Markets presence G4-ЕС5. Ratios of standard SOCIAL RESPONSIBILITY. Investments in entry level salary by gender human capital. Efficiency and motivation compared to local minimum incentives, pp. 101–102 + wage at significant locations of the organisation’s operations Staff training and development

G4 Aspect. Training and G4-DMA SOCIAL RESPONSIBILITY. Investments in education human capital. HR formation and development, + p. 96 G4-LA9. Average hours SOCIAL RESPONSIBILITY. Investments in of training per year per human capital. HR formation and development, + employee by gender, and by p. 100 employee category ANNEX 3. Social outcomes, p. 128 G4-LA11. Percentage of SOCIAL RESPONSIBILITY. Investments in employees receiving regular human capital. HR formation and development, performance and open pit p. 100 + development reviews, by gender and by employee category. G4-LA12. Structure of the ABOUT ALROSA GROUP. Key outcomes governing bodies and the of the company in the sphere of sustainable main categories of staff development in 2011-2015, p. 24 by sex, age groups, those OUR APPROACH TO SUSTAINABLE + belonging to minority groups DEVELOPMENT. Management in the sphere and other diversity features of sustainable development, p. 37 SOCIAL RESPONSIBILITY. Investment in human capital, p. 95

126 Social and Environmental Report of PJSC ALROSA 2015 Annex 2. GRI G4 contents index Social and Environmental Report of PJSC ALROSA 2015 Annex 2. GRI G4 contents index 127 Annex 3. Social investments in PJSC ALROSA personnel SOCIAL OUTCOMES* Areas 2009 2010 2011 2012 2013 2014 2015 RUB mn RUB mn RUB mn RUB mn RUB mn RUB mn RUB mn TOTAL 2,858.5 2,560.5 3,924.1 3,366.1 4,104.3 3,383.6 3,417.1 Personnel structure, rate of turnover, salary Personnel training and development 72.5 70.7 102.8 129.2 127.6 175.8 219.1 Personnel training and upgrade qualifications 68.5 68.5 100.7 120.8 119.3 169.2 212.5 Indicators 2009 2010 2011 2012 2013 2014 2015 (including briefings) Headcount as of the end of the reporting period, 32,562 31,026 30,903 31,373 30,525 30,043 29,400 Managers and specialists 31.2 23.7 28.6 45.6 45.0 50.4 70.7 people Workers 37.3 44.8 72.1 75.2 74.3 118.8 141.8 Average headcount, people 33,238 31,291 30,295 31,183 30,287 29,796 29,501 Pre-university occupational guidance for 4.0 2.2 2.1 2.4 2.3 2.4 2.0 Personnel gender structure, % schoolchildren men 60.3 60.9 61.3 61.2 64.2 64.7 65.0 Expenses associated with the Comprehensive 2.6 1.3 1.3 1.3 1.2 1.2 1.2 Occupational Guidance Program of PJSC ALROSA women 39.7 39.1 38.7 38.8 35.8 35.3 35.0 in the Mirny District of the Republic of Sakha (Yakutia) Personnel age structure, % Expenses associated with holding regional academic 1.4 0.9 0.8 1.1 1.1 1.2 0.8 under 30 years 19.8 20.9 21.7 22.2 21.8 21.5 19.9 competitions (under agreements with higher education 30–50 years 57.7 57.3 54.9 54.4 53.5 53.9 54.4 institutions) over 50 y. o. 22.5 21.8 23.4 23.4 24.7 24.6 25.7 Corporate scholarships to students under contracts 6.3 6.1 4.2 4.6 Employees turnover, % 9.2 9.0 10.0 10.5 10.3 9.8 9.0 Health care and healthy lifestyle 742.7 749.0 978.5 1,091.3 1,164.6 1,236.4 1,330.0 Average salary, RUB thousand 40.2 45.9 62.9 79.1 89.8 97.1 102.2 Health Program, total 161.5 146.7 181.5* 219.9* 235.6 268.4 245.4 Under voluntary health insurance contracts 155.0 139.8 173.7 190.6 167.3 189.2 168.1 Under direct contracts with healthcare centres 5.0 5.3 6.1 27.5 5.8 4.1 3.9 Medical Centre services 0.0 0.0 0.0 0.0 60.9 75.1 73.4 PJSC ALROSA staff training including employees vaccination 1.5 1.6 1.7 1.8 1.6 1.6 0.0 Rest and Rehabilitation Program 501.9 518.9 672.3 720.4 791.0 817.7 876.1 Managers, specialists 2009 2010 2011 2012 2013 2014 2015 Leisure trips (including organised children’s 231.6 242.2 261.8 287.3 300.2 315.4 338.8 Total headcount by categories as of the end of the 11,005 10,517 10,545 10,521 10,142 10,287 10,191 recreational activities) reporting period, people Health and leisure centres at production sites 270.3 276.7 410.5 433.1 490.8 502.3 532.0 Completed training and upgrade qualifications, people 2,480 3,092 5,737 9,204 9,378 6,494 6,689 (including organised children’s recreational activities) Average training hours per person 17.8 22.6 33.3 51.9 55.2 39.7 44.2 Culture and Sports Program 79.3 83.4 124.7* 151.1* 138.0 150.4 208.5 Expenses on training and upgrade qualifications, 2,8 2,3 2,7 4,3 4,4 4,9 6,9 Housing Program 1,078.1 1,244.1 1,344.9 950.8 823.5 918.4 659.0 RUB thousand per person 2.8 2.3 2.7 4.3 4.4 4.9 6.9 Capital investments (construction and purchase of 971.6 967.2 1,148.8 453.0 435.2 647.2 517.0 housing stock) Workers 2009 2010 2011 2012 2013 2014 2015 Compensation to the employees provided with 48.8 191.6 144.9 201.4 76.5 43.0 23.4 Total headcount by categories as of the end of the 21,557 20,509 20,358 20,852 20,383 19,756 19,209 housing (exemption from liabilities) reporting period, people Assistance provided to the employees by the 49.9 31.2 19.0 0.8 106.3 51.0 71.4 Completed training and upgrade qualifications, briefings, 8,452 7,173 8,178 8,611 8,989 9,490 9,522 Company people Transactions execution costs 3.9 21.6 18.9 19.4 15.9 5.3 4.3 Average training hours per person 25.2 24.0 25.7 27.1 37.5 38.9 43.8 Mortgage lending program (compensation of mortgage 0.0 9.2 10.3 27.6 41.3 42.3 40.4 Expenses on training and upgrade qualifications, interest) RUB thousand per person 1.7 2.1 3.5 3.6 3.6 6.0 7.4 Flats repairing 3.9 23.3 3.0 2.5 0.0 0.0 2.5 Housing construction compensations to the 0.0 0.0 0.0 246.1 0.0 0.0 0.0 employees Miscellaneous (losses due to housing exchange) 0.0 0.0 0.0 0.0 148.3 129.6 Other investments 20.1 20.7 21.6 22.3 23.5 22.6 24.0 Purchase of kits for newborns 4.1 3.0 3.3 3.0 3.8 3.0 4.0 New Year gifts 16.0 17.7 18.4 19.1 19.7 19.6 20.0 Contributions to PPF Almaznaya Osen 945.1 476.0 1,476.3 1,172.4 1,965.1 1,030.3 1,185.0

* 2009–2011 scholarships payment data are not consolidated. ** The Medical Centre of PJSC ALROSA, in its capacity as a structural subdivision of the Company, began operating in the second half of 2012. *** Adjustments made due to changes in the accounting policy. * The information contained in the tables of the annex refers to PJSC ALROSA. **** Investments in the Housing Programme are presented without considering the amounts associated with the gratuitous transfer to municipalities of the housing stock that was formerly on the balance sheet of the Company.

128 Social and Environmental Report of PJSC ALROSA 2015 Annex 3. Social outcome indicators Social and Environmental Report of PJSC ALROSA 2015 Annex 3. Social outcome indicators 129 Annex 4. EN8 Total water withdrawal by sources ENVIRONMENTAL OUTCOMES* Indicators 2011 2012 2013 2014 2015 mn cub. m mn cub. m mn cub. m mn cub. m mn cub. m Total water withdrawal from natural sources, namely: 27.028 26.782 22.954 24.350 21.061 EN2 Percentage of the materials used that are recycled input materials the Irelyakh River 0.041 0.091 0.192 0.356 0.000 Recycled input materials used to manufacture the primary products the Malaya Botuobiya River 0.339 0.310 0.304 0.341 0.283 Irelyakhskoe water reservoir 12.067 12.645 9.956 10.460 9.579

Indicators 2009 2010 2011 2012 2013 2014 2015 Sytykan water reservoir, hydro system on the Sytykan River 5.603 5.736 5.931 6.082 5.503 thousand thousand thousand thousand thousand thousand thousand water reservoir on the Oyuur-Yurege stream 6.953 5.888 4.253 4.726 3.885 tons tons tons tons tons tons tons water reservoir on the Markha River 1.670 1.614 1.521 1.440 1.409 Overburden 989.103 1,667.500 5,240.600 5,105.783 1,226.487 8,549.227 76.530 buffer water storage reservoir on the left tributary of the Khannya 0.248 0.234 0.243 0.278 0.288 Nonsaline overburden – – 311.426 277.236 – – 8,632.729 River Tailings 251.600 273.200 311.200 279.000 404.600 – 14,016.138 Wells 0.047 0.042 0.045 0.078 0.048 Limestone and dolomite – – 163.000 137.500 311.100 – – the Lena River 0.022 0.024 0.013 0.012 0.011 lumps (overburden) the Olenyok River 0.001 0.001 0.001 0.0005 0.001 Waste oils 1.755 1.419 0.899 0.848 1.105 1.087 1.037 artesian well No. 116-E 0.014 0.015 0.014 – 0.000 Scrap tires 0.015 0.171 0.008 0.003 1.368 3.966 – the Sokhsolookh River 0.006 0.006 0.029 0.027 0.048 Scrap tires 0.426 0.597 0.553 0.826 0.918 0.413 0.496 the Sordonnokh Lake 0.006 0.006 0.004 0.013 0.000 Ferrous scrap metal 0.123 0.001 0.110 0.085 0.118 0.116 0.112 the Vilyuy River 0.011 0.011 0.011 0.008 0.005 the Taas-Yuryakh River 0.004 0.004 0.004 0.0004 0.000 EN3 Direct energy consumption by primary energy sources the Bolshaya Botuobiya River 0.002 0.002 0.002 0.002 0.002 the Ongkhoi River – 0.159 0.431 0.526 0.000 Networks of the heat and water supply enterprise of PJSC ALROSA 1.345 – – – – Indicators 2009 2010 2011 2012 2013 2014 2015 thousand thousand thousand thousand thousand thousand thousand Other organisations 0.210 0.002 0.000 0.000 0.000 GJ GJ GJ GJ GJ GJ GJ Total water withdrawal 28.583 26.784 22.954 24.350 21.061 Electric power generated by a HPP 5,749.5 5,744.9 5,461.3 5,542.3 5,457.7 5,422.4 5,340.9 Natural gas 7,286.4 7,772.4 6,171.7 6,509.0 6,480.6 6,976.1 6,055.7 Oil 2,116.6 1,467.6 629.2 496.6 329.5 303.1 226.4 EN10 Percentage and total volume of water recycled and reused Diesel fuel 1,109.7 854.0 830.7 880.4 831.6 829.5 809.3 Coal 398.4 206.4 165.2 153.3 157.0 139.9 122.6 Indicators 2009 mn 2010 mn 2011 mn 2012 mn 2013 mn 2014 mn 2015 mn cub. m cub. m cub. m cub. m cub. m cub. m cub. m

Water reuse (multiple use), 209.79 198.19 231.09 226.38 229.53 208.36 218.05 EN4 Indirect energy consumption by primary energy sources including: recycling water supply 145.36 121.56 153.46 149.17 150.57 136.17 140.42 water recycling 64.43 76.63 77.63 77.21 78.96 72.19 77.63 Indicators 2009 2010 2011 2012 2013 2014 2015 Withdrawal of mineralised water from the 13.78 12.63 12.07 13.24 11.54 12.71 12.13 thousand thousand thousand thousand thousand thousand thousand underground aquifers GJ GJ GJ GJ GJ GJ GJ Total water withdrawal 31.32 30.38 28.58 26.78 22.95 24.35 21.07 Coal-fired boilers 249.8 101.4 102.2 103.5 108.5 89.5 77.5 Oil-fired boilers 1,844.8 1,290.7 654.6 547.8 399.4 392.5 305.4 Gas-fired boilers 5,443.1 5,565.5 5,147.5 5,415.6 5,404.6 5,906.8 5,308.3 Electric boilers 2,264.0 2,067.6 1,787.3 1,757.8 1,470.3 1,491.1 1,387.2

* The information in the Annex is presented by the data of the subdivisions of PJSC ALROSA located in the Republic of Sakha (Yakutia).

130 Social and Environmental Report of PJSC ALROSA 2015 Annex 4. Environmental outcome indicators Social and Environmental Report of PJSC ALROSA 2015 Annex 4. Environmental outcome indicators 131 EN14 Number of IUCN Red List species and national EN22 Total water discharge by quality and destination conservation list species with habitats in areas affected by the operations of the organisation, Indicators 2009 2010 2011 2012 2013 2014 2015 by level of extinction risk mn cub. m mn cub. m mn cub. m mn cub. m mn cub. m mn cub. m mn cub. m

Total discharge to surface water bodies 22.32 19.84 16.67 16.78 15.44 14.46 12.66 Contaminated (untreated) 0.00 0.77 0.60 0.91 0.41 0.00 0.00 Species CONSERVATION LEVEL Contaminated (undertreated) 22.19 19.04 16.05 15.85 15.02 14.45 12.65 International Union Degree of extinction Red Book of the Red Book of the Treated to standard quality 0.13 0.03 0.02 0.02 0.01 0.01 0.01 for Conservation of risk based on the Russian Federation Republic of Sakha Water discharge to tailing ponds and 4.41 5.29 3.87 3.16 2.45 1.88 1.88 Nature (IUCN) IUCN criteria* (Yakutia) storage tanks Moor frog + Water discharge to subsurface 14.50 15.28 15.44 14.70 14.26 13.65 15.55 Viviparous lizard + Baikal teal + LC + + Lesser white-fronted goose + LC + + Peregrine falcon + LC + EN23 Total weight of waste by type and disposal method White-tailed eagle + LC + + Information on generation, use, neutralisation and disposal of industrial Golden eagle + + Osprey + + and household waste by PJSC ALROSA enterprises in 2015 Hooded crane + LC + + Far-Eastern curlew + LC + + Bewick's swan + + Indicators Total Waste by hazard class (thousand tons) Whooper swan + Class I Class II Class III Class IV Class V** Terek sandpiper + Waste at the beginning of the reporting 10.292 0.000 0.002 0.145 0.013 10.132 year Red-footed falcon + Generation of waste during the reporting 82,639.358 0.013 0.018 1.569 104.407 82,533.351 Common crane + year Gadwall + Received from other organisations 0.781 0.000 0.028 0.211 0.007 0.535 Little curlew + Waste utilised 22,745.656 0.000 0.000 1.037 93.608 22,651.011 Siberian mole + Waste neutralised 0.044 0.000 0.009 0.006 0.006 0.023 Otter + Transferred to other organisations 18.750 0.013 0.035 0.715 10.346 7.641 Musk ox + namely: for use 1.684 0.000 0.005 0.523 0.015 1.140 for neutralisation 6.825 0.013 0.030 0.185 5.428 1.169 for storage 2.777 0.000 0.000 0.006 0.082 2.689 for burial 7.464 0.000 0.000 0.000 4.821 2.643 EN21 NOx, SOx and other significant air emissions by type Disposal of waste at the burial sites of 59,222.576 0.000 0.000 0.003 0.000 59,222.573 and weight the Company Waste at the end of the reporting year 59,235.389 0.000 0.004 0.167 0.148 59,235.070 Indicators 2009 2010 2011 2012 2013 2014 2015 tons tons tons tons tons tons tons

Emissions of pollutants into the 8,114.1 8,158.9 8,592.4 8,135.1 8,734.8 9,020.6 9,420.7 atmosphere, total namely: suspended substances 2,252.3 2,537.4 3,029.2 2,651.8 2,443.5 2,450.3 2,383.0 gaseous and liquid substances 5,861.8 5,621.5 5,563.2 5,483.3 6,291.3 6,570.3 7,037.7 including: sulphur dioxide 944.9 721.6 502.5 471.4 413.0 392.4 405.8 carbon oxide 2,868.1 2,878.3 3,037.1 3,008.6 2,897.2 3,006.6 2,789.8

nitrogen oxides (calculated on the basis of 1,455.1 1,461.6 1,444.7 1,446.4 1,462.4 1,502.7 1,562.1 * LC extinction risk category covers the least endangered species in accordance with the categories and criteria of IUCN NO2) Red List, version 3.1, 2000. Red Books of the Russian Federation and the Republic of Sakha (Yakutia) contain no information hydrocarbons (without volatile organic 207.9 141.9 149.5 128.4 1,047.6 1,266.5 1,880.9. on the level of extinction risk to species. compounds) Indicators 2009 2010 2011 2012 2013 2014 2015 ** The amount includes RUB 888 thousand of compensation for the damage to land resources as a result of a petroleum products spill that occurred due to a traffic accident; the amount of the compensation was calculated using special volatile organic compounds 208.8 257.5 291.2 298.9 300.4 341.2 336.6 methodology other gaseous and liquid pollutants 177.0 160.6 138.2 129.5 170.7 60.9 62.4

132 Social and Environmental Report of PJSC ALROSA 2015 Annex 4. Environmental outcome indicators Social and Environmental Report of PJSC ALROSA 2015 Annex 4. Environmental outcome indicators 133 EN29 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations

Indicators 2009 2010 2011 2012 2013 2014 2015

Number of fines for non-compliance with 1 1 1 2 3 3 0 environmental laws and regulations Total amount of fines imposed for non- 16.0 70.5 4.0 50.0 938.0 * 4,161.0 0.0 compliance with environmental legislation, RUB thousand

EN31 Total environmental protection expenses and investments by type Information about environmental impact related payments

Indicators 2009 2010 2011 2012 2013 2014 2015 RUB mn RUB mn RUB mn RUB mn RUB mn RUB mn RUB mn Payments for admissible emissions 36.5 29.5 44.9 51.9 59.1 46.4 39.8 (discharges) of pollutants and disposal of industrial and household waste including: for discharges to water bodies 1.4 0.9 0.7 0.6 0.6 1.5 1.5 for emissions into the atmospheric air 1.7 1.9 1.9 2.2 1.8 1.6 1.3 for disposal of industrial and household 33.4 26.7 42.3 49.1 56.7 43.3 37.1 waste Payments for above-limit emissions 39.0 99.7 25.2 27.0 18.3 82.5 46.1 (discharges) of pollutants and disposal of industrial and household waste including: for discharges to water bodies 29.3 22.5 12.3 15.6 10.8 11.7 7.5 for emissions into the atmospheric air 3.2 2.4 2.7 4.3 2.4 2.5 0.4 for disposal of industrial and household 6.5 74.8 10.2 7.1 5.1 68.2 38.1 waste

134 Social and Environmental Report of PJSC ALROSA 2015 Annex 4. Environmental outcome indicators Social and Environmental Report of PJSC ALROSA 2015 135 GLOSSARY OF TERMS AND ABBREVIATIONS IUCN Red List of Threatened Species rangements for the organisation is a List of endangered plant and an- to pay fixed contributions to an in- TERMS imal species indicating their global dependent organisation (fund) and conservation status, developed by have no legal obligations or obliga- Philanthropic work is voluntary activ- Stakeholders mean individuals and the International Union for Conser- tions arising out of the practice to ities of the Company to transfer with- legal entities or groups of persons vation of Nature. pay additional contributions in case out seeking profit (gratuitously or on affecting activities or affected by the fund does not have sufficient as- preferential terms) of any property activities of the Company and hav- Local suppliers are organisations or sets to pay employees all the bene- to citizens or legal entities, including ing a right, in accordance with the persons supplying products or ser- fits relating to performance of their money, free of charge performance of law and international conventions, vices to the reporting organisation duties in the current and prior pe- work, provision of services and provi- to bring claims against the Company and located in the same geograph- riods. sion of other assistance. directly. The stakeholders include ical market as the reporting organ- shareholders of the Company, inves- isation (i. e. no interstate payments Defined benefit pension plans are Safe working conditions mean the tors, employees, suppliers, contrac- to supplier are made). In geograph- retirement compensation plans, working conditions, under which tors, consumers, trade unions and ical terms, “local” in respect of pro- except for defined benefit pension there is no exposure to harmful and other public organisations, public curement activities of the Company plans. hazardous workplace factors or the authorities and local self-govern- means “in the Russian Federation”. level of such exposure does not ex- ment bodies, mass media, residents Occupational accident means an ceed the established norms. of the area where the Company op- Local population means the popula- event in which an employee was in- erates, etc. tion of a certain area without taking jured or suffered some other health Stakeholder engagement means into account its ethnic composition impairment in the course of per- activities of the Company aimed at Corporate social responsibility and cultural particularities. formance of the duties under an identifying expectations and con- (CSR) means a philosophy of behav- employment contract within the cerns of the stakeholders and in- iour and a concept of building of its Local community means individ- territory of production facilities of volving the stakeholders in the activities by a business community, uals and population groups living the Company or going to the place decision-making process. companies and certain represent- and/or working in all areas exposed of work or coming from the place atives of the business community to economic, social or environmen- of work on the transport provided Payments and benefits mean di- aimed at meeting the expectations tal impact (positive or negative) of by the Company and which result- rect payments by the organisation of stakeholders for the purpose of subdivisions of this organisation. ed in transferring the affected em- to an employee, payment for the sustainable development. The local community comprises ployee to another job, a temporary services rendered to an employee the people living in the vicinity of or permanent occupational disabil- or reimbursement for the expens- Corporate social program means these subdivisions and remote iso- ity or death. es incurred by an employee; sever- activities voluntarily carried out by lated settlements affected by these ance pay amounts exceeding the the Company in the social, econom- subdivisions. Non-financial report means an minimums specified by the legisla- ic and environmental spheres, which available, reliable and balanced de- tion, payments due to suspension are systemic and aimed at satisfy- Motivation means a mechanism af- scription of the key aspects of ac- of production, additional payments ing the needs of the Company stake- fecting the increase in labour effi- tivities of the Company and results due to workplace injuries, survivor holders. ciency and productivity, the process achieved in the areas related to val- benefits and extra paid days off. of stimulating an employee or group ues, goals and sustainable develop- Collective agreement means a legal of employees to engage in the ac- ment policy as well as to the issues Global Reporting Initiative GRI de- instrument regulating social and la- tivities aimed at achieving any goals of the greatest interest to key stake- notes an independent organisation bour relations at the enterprise and of the organisation. holders. This is a public tool of in- whose mission is to develop and dis- specifying the bonuses and guaran- forming shareholders, employees, seminate the globally applicable tees provided at the expense of the Defined contribution pension plans partners and other stakeholders on Sustainability Reporting Guidelines. funds of the employer. are retirement compensation ar- how and at what pace the Company

136 Social and Environmental Report of PJSC ALROSA 2015 Glossary of terms and abbreviations Social and Environmental Report of PJSC ALROSA 2015 Glossary of terms and abbreviations 137 implements the economic stability, control and documentation of envi- services and social protection of Personnel turnover is the number social wellbeing and environmental ronmental aspects, environmental personnel. of employees that left the organi- integrity goals specified in its mis- impact and environmental hazards. sation voluntarily or were dismissed sion or strategic development plans. They also include the costs of waste Social partnership is a relationship for other reasons (violation of la- PJSC ALROSA issues a social and en- handling, treatment, environmen- between employees (representa- bour discipline and by agreement of vironmental non-financial report. tal improvement and environmen- tives of employees), employers (rep- the parties). tal damage remediation. resentatives of employers), public Labour protection means the sys- authorities and local self-govern- Injury rate, injuries refer to damage tem of ensuring safety of life and PJSC ALROSA primary activities ment bodies aimed at alignment of to an employee’s health caused by health of employees at the work- region is the Republic of Sakha (Yaku- interests of employees and employ- an occupational accident that re- place, including legal, social, eco- tia) of the Russian Federation where ers with regard to regulation of la- sulted in occupational disability. nomic, organisational, technical, the Company is registered as a legal bour relations and other relations sanitary, medical, rehabilitation and entity, where the main production directly linked to them. Sustainable development is a con- other activities. facilities are located and where over cept developed by the United Na- 90% of its employees work. Social programs are voluntary actions recognising the role of business Environmental activity and re- tivities of the Company aimed at in sustainable development of soci- source conservation means an ar- Risk means a threat of adverse im- providing development opportuni- ety. The concept of development of ea in which the Company develops pact of external and internal factors ties and incentive to the personnel, the world community that provides and implements programs aimed at on achievement of the Company’s creation of favourable working con- for considering interests of not only reducing its environmental impact. corporate goals. ditions, development of corporate the present generations but also of culture, support of the local com- the future generations (introduced Local community development Senior executives are top managers munity and charity; they have sys- at the Earth Summit in Rio de Janei- assistance programs are the social of the Company occupying the sen- temic nature, related to the business ro in 1992). programs of the Company imple- ior managerial positions (President, strategy and are focused on satisfy- mented on a voluntary basis and Vice Presidents, and heads of struc- ing balanced requests of its various aimed at contributing to develop- tural subdivisions). stakeholders. ment of the local community. Certification means confirmation of Occupational disease means a dis- conformity of quality to the level re- ease which emerged and developed quired by a quality standard. due to systematic and prolonged exposure of an employee to the GRI reporting framework is a global workplace factors peculiar to the non-financial sustainability report- occupation or the conditions pecu- ing system encompassing economic, liar only to certain industry. environmental and social performance of the organisation. The Occupational disease is a disease system includes Sustainability Re- caused by workplace conditions or porting Guidelines, protocols and activities (e. g., stress or exposure to sector specific supplements. harmful chemicals) or a workplace injury. Social policy of an enterprise means activities of employers, managers Environmental protection costs are and employees aimed at preserving all the expenses associated with and/or changing their social status, environmental protection incurred satisfying their needs, alignment of by or on behalf of the organisation interests, implementation of rights with a view to prevention, reduction, and social guarantees, provision of

138 Social and Environmental Report of PJSC ALROSA 2015 Glossary of terms and abbreviations Social and Environmental Report of PJSC ALROSA 2015 Glossary of terms and abbreviations 139 ABBREVIATIONS CONTACT INFORMATION JSC – Joint-Stock Company ANO – Autonomous non-commercial organisation PJSC ALROSA JSC – Joint-Stock Company ARS – auxiliary mine rescue teams Office:6, ul. Lenina, Mirny, Republic of Sakha (Yakutia), 678170, Russia MPD – Mining and Processing Division Telephone: +7 (41136) 9-00-21, +7 (41136) 3-01-80 SRC – State Reserves Commission Fax: +7 (411-36) 3-04-51 GEE – geological exploration expedition E-mail: [email protected] HPP – hydro power plant CSR – corporate social responsibility Office:10/12, 1st Kazachy Pereulok, Moscow, 119017, Russia MinPrirody – Ministry of Natural Resources and Environment of the Russian Telephone: +7 (495) 620-92-50, +7 (495) 411-75-25 Federation Fax: +7 (495) 411-75-15 IUCN – International Union for Conservation of Nature E-mail: [email protected] IFRS – International Financial Reporting Standards MTS – material and technical resources Office:8, ul. Ammosova, Yakutsk, Republic of Sakha (Yakutia), 677018, MET – mineral extraction tax Russia R&D — research and development works Telephone: +7 (411-2) 42-18-15 RW – Research works Fax: +7 (411-2) 42-33-28 PPF – private pension fund E-mail: [email protected] UAE – United Arab Emirates EIA – environmental impact assessment Corporate website: http://www.alrosa.ru UN – United Nations PJSC – Public Joint-Stock Company Social Services and Regional Development Department HSE – Health, Safety and Environment Telephone: +7 (411-36) 3-24-06 HWSP – heat and water supply enterprise Government and Public Relations Department Rosprirodnadzor – Federal Service for Supervision of Natural Resource Usage Telephone: +7 (411-36) 9-02-62 RS (Ya) – Republic of Sakha (Yakutia) RF – Russian Federation Yakutniproalmaz Institute SAWC – Special assessment of working conditions 39, ul. Lenina, Mirny, Republic of Sakha (Yakutia), 678170, Russia, OHSMS – Occupational health and safety management system Social and Economic Research Laboratory USA – United States of America Telephone: +7 (411-36) 9-08-28 HRTC – Human Resources Training Centre [email protected] RSA – Republic of South Africa

GRI – Global Reporting Initiative WDC – World Diamond Council ISO – International Organisation for Standardisation

140 Social and Environmental Report of PJSC ALROSA 2015 Glossary of terms and abbreviations Social and Environmental Report of PJSC ALROSA 2015 Contact information 141