2018 SUSTAINABILITY REPORT THE NEW NORNICKEL: STRATEGY IN ACTION SUSTAINABILITY REPORT NORNICKEL 2018 SUSTAINABILITY 102–50 102–54 The 2018 Sustainability Report of Nornickel Group (the “Report”) has been prepared in accordance with the GRI Standards, Comprehensive option, and is a report on the progress of compliance with the United Nations (UN) Global Compact principles that discloses the policy of MMC Norilsk Nickel (the “Company” or “Nornickel”) towards achieving the UN Sustainable Development Goals up to 2030.

In producing the Report, the following documents were The Company’s Social Policy Department and a 2018 SUSTAINABILITY REPORT also used: GRI Mining and Metals Sector Supplement, dedicated working group along with the key units Guidance on Social Responsibility ISO 26000:2010, supervised the preparation of the Report. The Report Reference Performance Indicators of the Russian Union has also been approved by MMC Norilsk Nickel’s of Industrialists and Entrepreneurs (RSPP), AccountAbility Management Board and Board of Directors. Standards AA1000SES (2015) and AA1000AP (2018). THE NEW Other sources of information about Nornickel Group: The Company has been publishing annual non-financial • corporate website https://www.nornickel.com; reports since 2003. • Nornickel’s ESG Strategy and ESG Databook at https:// NORNICKEL: The Report covers activities of Norilsk Nickel Group www.nornickel.com/investors/esg/; (“Nornickel Group”), including MMC Norilsk Nickel and • annual reports at https://www.nornickel.com/investors/ entities in the corporate structure. reports-and-results/; 2018 AR STRATEGY • interactive version of the 2018 Sustainability Report 102–48 WEB Information provided herein was collected via the at http://csr2018.nornik.ru/home/. corporate reporting framework and special information IN ACTION requests in line with the GRI requirements and with regard to the materiality analysis results. The Report contains updates of the data for previous years, which is indicated in the text.

Each year, the Company’s Report undergoes external assurance procedures, including independent APPROVED APPROVED professional assessment of the Report’s compliance by the Board of Directors by the Management Board with the GRI Standards and the RSPP public verification procedure. of MMC Norilsk Nickel of MMC Norilsk Nickel Minutes No. GMK/14-pr-sd of 27 May 2019 102–32 Minutes No. GMK/14-pr-sd of 27 May 2019 As part of the United Nations Conference on Trade and Development intergovernmental body (UNCTAD) from the Russian side, Nornickel is pilot-testing performance indicators quantifying companies’ contribution to APPROVED achieving the UN Sustainable Development Goals. by the Audit and Sustainable Development Committee of the Board of Directors Minutes No. 4 of 21 May 2019 Contents

01 02 03 07 Statement of the President Highlights About Norilsk Nickel Regional development and Chairman of the 6 Group 120 Management Board 8 5 The company's contribution to the Overview development of local communities 8 120 Assets Development of local communities 9 123 Core companies Assessment of social programmes 04 and business units 128 10 Strategy Transport accessibility 22 Production chart 129 08 12 Awards and Key social and environmental Context accolades 24 projects 14 131 Mission and values 26 Corporate strategy 26 09 Sustainable development goals 30 Appendices 132

GRI Content Index 133 Scope of data collection 05 142 Map of material GRI topics Management (aspects) 42 144 Stakeholder dialogue minutes WEB GRI indicators Sustainability management 146 Stakeholder recommendations WEB 44 06 UNCTAD indicators Economic efficiency Compliance with the UN Global Compact 155 Opinion of RSPP Council on Non-Financial Reporting 54 161 74 List of abbreviations Stakeholder engagement 158 57 Human rights Independent assurance report 76 Glossary WEB 166 Supply chain management 65 Labour relations 80 Innovations 72 Anti-corruption 98 10 Transparency 73 Environment Contacts 102 168 2018 SUSTAINABILITY REPORT 5

Statement of the President and Chairman of the Management Board 102–14

The year 2018 was in many ways important for an all-time low. The management of the Company views Nornickel. First, we prepared for major production occupational safety and zero workplace fatalities as its growth associated with the commissioning of new key strategic objective and keeps running dedicated mining capacity, expansion of concentration facilities health and safety programmes. and greenfield development. Second, we launched a number of large-scale modernisation and environmental As for production, 2018 saw an increase in the output initiatives, the most important of which was the Sulphur of our key metals, primarily copper, thanks to the Project at our Copper Plant. overall improvement in production efficiency. After we reconfigured our production facilities, we were able I believe that we owe our last year’s success to both to almost completely abandon the practice of low- favourable market for our metals and real progress margin third party feedstock processing and increase achieved in labour productivity improvement. I am the output of nickel and copper from the Company’s sure that Nornickel will continue enhancing production Russian feedstock. As a result, our revenue and EBITDA efficiency, while our best management practices, unique grew 28% and 56% to USD 11.7 bn and USD 6.2 bn know-how, and digitalisation efforts will drive up the respectively, making Nornickel one of the most profitable Company’s value no less than our vast ore reserves do. companies among global diversified mining majors. Strong performance in 2018 and current macroeconomic Last year we made great progress in developing human trends strengthen our robust position and secure capital, our key resource. Similar to other business areas, investments in sustainable development, primarily in we are working towards boosting staff performance and environmental initiatives. engagement and developing a safety culture. Nornickel maintains traditionally high social security standards In 2018, we launched the second stage of our ambitious guaranteed by a new collective bargaining agreement environmental programme, which will help us to achieve signed between the Company and its employees a fourfold reduction of sulphur dioxide emissions in 2018. The document preserves and standardises in Norilsk by 2023. The Company plans to halve its employees’ rights and benefits, as well as enhances emissions in the settlement of Nickel (Kola Peninsula) them by offering extended health insurance coverage already by the end of 2019. To this end, we started and adding other companies of Norilsk Nickel Group constructing a concentrate separation facility in 2018 to to the agreement. reduce the throughput at our Smelting Shop.

Nornickel’s high social security benefits cement its All what is said above proves that after Nornickel leading position among the industry’s most attractive joined the UN Global Compact in 2016 it has remained employers. Wages and salaries, which the Company truly committed to the Ten Principles of the UN always pays in time, remain among the highest industry- Global Compact in the areas of human rights, labour, wide and average over RUB 111,000. environment and anti-corruption. Nornickel has always strived to keep pace with change and keeps looking Health and safety is another domain that saw some to seize new development opportunities. With projects major changes. In 2018, we reinforced the trend towards launched in 2018, Nornickel is well positioned to become reduction in the number of production-related accidents. a technology leader in the mining sector both nationally For the first time in the Company’s history, Polar Division and internationally. The new strategic cycle we are saw zero fatalities in the reporting year. The lost time currently entering will make Nornickel a growth story in injury frequency rate (LTIFR) decreased by 48%, reaching the eyes of the investment community. The new strategic cycle we are currently entering will make Nornickel a growth story in the eyes of the investment community.

Vladimir Potanin President, Chairman of the Management Board MMC Norilsk Nickel 6 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 7

Highlights 102–7

Environment Development of local communities

32.5 3,098 457,000 115.6 30.9 410 RUB bn TJ m3 RUB bn RUB bn social projects environmental fuel and energy savings increase in effluent volumes payments to budgets spent on social worth expenditures and costs resulting from energy treated to standard quality of various levels1 programmes, charity, and in 2018 consumption reduction at treatment facilities social infrastructure in 2018 389.1 and energy efficiency since 2017 improvement initiatives RUB mln in 2018 funded since 2014 2018 115.6 as part of the World of New Opportunities programme 2017 100.3

Labour The Company’s position in the industry2

48% 22% RUB 7,500 2,220 mt of ore Nornickel supplies its improvement of LTIFR increase in occupational health and added to the average salary measured and indicated products to countries safety expenses resources 34

2018 0.23 2018 10,563 2018 111.6

2017 0.44 2017 8,708 2017 104.1

No. 1 No. 1 No. 4 palladium refined nickel platinum producer No. 4 No. 8 No. 11 producer producer (10% market rhodium producer cobalt producer copper producer (39% market (23% market share) share) (8% market share) (3% market share) (2% market share) share)

1 Tax and non-tax payments include all taxes paid, net of VAT and dividend income tax, as well as insurance payments and customs duties. 2 In terms of refined metals production for nickel, palladium, platinum and rhodium markets, and in terms of mining for copper and cobalt markets. 8 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 9

About Norilsk Nickel Group

Overview 102–1 102–2 Assets 102–4

Norilsk Nickel Group is In 2018, the Company accounted Production units of the Group are located in three Bystrinsky GOK is located in the Gazimuro-Zavodsky 1 Russia’s leading metals for 0.7% of Russia’s GDP, 2.6% of countries — Russia, Finland and South Africa. District of the Trans-Baikal Territory and is linked to other regions by rail. and mining company, the the national industrial output, 11.4% Its core businesses are based in Russia and have a world’s largest producer of of metals production, and 2.6% of vertically integrated structure. Three main production In Finland, Norilsk Nickel operates Norilsk Nickel sites in Russia are: Harjavalta (part of the Group), the country’s only nickel palladium and refined nickel, Russia’s exports. • Polar Division of MMC Norilsk Nickel (“Polar Division”); refining plant. and one of the biggest • Kola Mining and Metallurgical Company (“Kola MMC”); producers of platinum, In South Africa, the Company owns 50% of Nkomati, Nornickel is the largest industrial player in the • Bystrinsky Mining and Processing Plant (“Bystrinsky a nickel mine developed jointly with African Rainbow copper and cobalt. On top Russian region of the Arctic, generating over 5.7% of GOK”), which in 2018 started ramp-up towards the Minerals. of that, the Group produces its GDP. Around 60,000 of the Company’s employees target parameters. permanently reside and work beyond the Arctic Circle. MMC Norilsk Nickel runs a global network of rhodium, silver, gold, iridium, The Company’s Polar Division is located on the Taimyr representative and sales offices in Russia, China, the ruthenium, selenium, For the purposes of the 2018 Sustainability Report Peninsula (Krasnoyarsk Territory) beyond the Arctic USA, and Switzerland. (the “Report”), Norilsk Nickel Group shall refer to MMC Circle. It is linked to other regions by inland waterways tellurium, and sulphur. Norilsk Nickel and the entirety of operations forming (the Yenisey River), marine transport (the Northern Sea In addition to geology, energy, logistics, and support Norilsk Nickel Group. Unless otherwise specified or Route) and air transport. businesses, the Group comprises Gipronickel Institute, required by the context, the terms “Company”, “Group”, an R&D facility based in St Petersburg with branches in “Nornickel” or “the Group companies” shall mean Norilsk Kola MMC is located on the Kola Peninsula beyond the Norilsk and Monchegorsk. In total, the Group counts over Nickel Group. Quantitative indicators for certain areas Arctic Circle. It is the leading industrial facility of the 80 companies. of sustainable development pertain to the Group’s Murmansk Region and is completely integrated into the specific operations in accordance with the Scope of Data transport infrastructure of the Northwestern Federal Collection appendix. District.

1 See also the 2018 IFRS financial results, page 47 at https://www.nornickel.com/investors/disclosure/financials/. 10 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 11

Core companies and business units

PRODUCTION EXPLORATION TRANSPORT AND LOGISTICS SUPPORT FUNCTIONS

POLAR DIVISION NORILSKGEOLOGIYA POLAR TRANSPORT DIVISION PECHENGASTROY

KOLA MMC VOSTOKGEOLOGIYA ARKHANGELSK TRANSPORT DIVISION KOLABYT

GRK BYSTRINSKOE INTERGEOPROEKT MURMANSK TRANSPORT DIVISION NORILSK SUPPORT COMPLEX

MEDVEZHY RUCHEY KRASNOYARSK TRANSPORT DIVISION NORILSKNICKELREMONT

BYSTRINSKY TRANSPORT DIVISION POLAR CONSTRUCTION COMPANY

RESEARCH AND DEVELOPMENT FUEL AND ENERGY NORDSTAR AIRLINES NORNICKEL — SHARED SERVICES CENTRE YENISEY RIVER SHIPPING COMPANY GIPRONICKEL INSTITUTE TAIMYRENERGO PSMK NORILSK AIRPORT NORILSKGAZPROM TAIMYR FUEL COMPANY LESOSIBIRSK PORT ARCTIC-ENERGO KRASNOYARSK RIVER PORT NORILSK-TAIMYR ENERGY COMPANY NORILSK AVIA TAIMYRGAZ¹

NORILSKTRANSGAZ

DISTRIBUTION AND SALES FOREIGN ASSETS MMC NORILSK NICKEL’S NORILSKENERGO (MMC NORILSK HEAD OFFICE NICKEL’S BRANCH)

NORMETIMPEX NORILSK NICKEL HARJAVALTA MMC NORILSK NICKEL’S HEAD OFFICE METAL TRADE OVERSEAS AG NKOMATI

NORILSK NICKEL ASIA LTD. (HONG KONG)

NORILSK NICKEL USA, INC.

NORILSK NICKEL METALS TRADING (SHANGHAI) CO., LTD.

1 Taimyrgaz was reorganised and merged with Norilskgazprom on 1 March 2019. 12 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 13

Production chart

PRODUCTION OF COPPER-NICKEL SULPHIDE CONCENTRATION PRODUCTION SALES

Deposit Mine Concentrator Concentrate, Smelting Refinement Refinement (of converter matte precious metals)

• OKTYABRSKOYE • ZAPOLYARNY MINE • TALNAKH • COPPER COPPER PGM CONCENTRATOR GULIDOV OWN SALES DEPOSIT CONCENTRATOR*** CONCENTRATE PLANT** KRASNOYARSK NETWORK

TAIMYR SITE TAIMYR NON-FERROUS

• TALNAKHSKOYE • KOMSOMOLSKY MINE*** FEEDSTOCK METALS PLANT* • NICKEL THIRD-PARTY NADEZHDA DEPOSIT CONCENTRATE METALLURGICAL • MAYAK MINE • NORILSK PLANT**/*** • NORILSK-1 DEPOSIT CONCENTRATOR • PYRRHOTITE • TAIMYRSKY MINE*** CONCENTRATE

• OKTYABRSKY MINE*** * Precious metals are refined by Gulidov Krasnoyarsk Non- • SKALISTY MINE*** Metals Ferrous Metals Plant (Krastsvetmet), which is • NICKEL not part of Norilsk Nickel • PALLADIUM Group. Concentrates are processed into saleable • COPPER metals under a tolling • ZHDANOVSKOYE • KAULA- • ZAPOLYARNY • COPPER-NICKEL • SMELTING SHOP • PLATINUM agreement between DEPOSIT KOTSELVAARA CONCENTRATOR CONCENTRATE (NICKEL) Norilsk Nickel Group and KOLA SITE KOLA MINE • COBALT the plant. • ZAPOLYARNOYE • NICKEL TANK-HOUSE REFINEMENT SHOP • RHODIUM ** Production facilities DEPOSIT COPPER-NICKEL • MONCHEGORSK**/*** (MONCHEGORSK)*** implementing flagship • IRIDIUM • SEVERNY CONVERTER MATTE projects under the • KOTSELVAARA MINE*** • RUTHENIUM comprehensive METALLURGICAL DEPOSIT • environmental programme. SHOP**/*** CONVERTER • SILVER MATTE, *** Production facilities • SEMILETKA • GOLD DEPOSIT CONCENTRATE implementing Nornickel’s COPPER-NICKEL • SELENIUM major investment projects. For more details, please • TELLURIUM see the interactive version of this report and the 2018 NICKEL REFINING • SULPHUR annual report. AR-2018 PLANT IN • SODIUM HARJAVALTA SULPHATE **** Open pits: FEEDSTOCK (FINLAND) Verkhneildikansky* (since THIRD-PARTY THIRD-PARTY • SODIUM 2018), Bystrinsky-2 (since

HARJAVALTA CHLORIDE 2018), Medny Chainik (planned), Yuzhno- NORILSK NICKEL NORILSK NICKEL Rodstvenny (planned).

CHITA • BYSTRINSKOYE • BYSTRINSKY • BYSTRINSKY • MAGNETITE, COPPER, DEPOSIT**** GOK CONCENTRATOR*** GOLD CONCENTRATE

GEOLOGICAL EXPLORATION SERVICE SUBSIDIARIES SERVICE SUBSIDIARIES (FUEL AND ENERGY, TRANSPORT, LOGISTICS, SUPPORT AND OTHER BUSINESSES)

R&D R&D 14 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 15

Key social and environmental projects

SOCIAL PORTRAIT ZERO NEGATIVE OF A CITY RESIDENT ENVIRONMENTAL SURVEY IMPACT CAMPAIGN Social and economic partnership Pechengsky District ENVIRONMENT PROTECTION AND Transport SUSTAINABLE DEVELOPMENT IN THE NORTH VII ENVIRONMENTAL Quality of life FORUM (ORGANISER) Murmansk Region Culture MURMANSK Pasvik Nature Sports HARJAVALTA Reserve MONCHEGORSK

Education ANNUAL RELEASE OF VALUABLE FISH Lapland WE ARE THE CITY! SOCIAL Biosphere Environment SPECIES INTO WATER TECHNOLOGIES FORUM (ORGANISER) BODIES Reserve RUSSIAN JUNIOR AND ADULT CROSS-COUNTRY SKIING CHAMPIONSHIP Social and economic partnership ST PETERSBURG (GENERAL SPONSOR) agreement with regional authorities VIII INTERNATIONAL FORUM ZERO NEGATIVE ENVIRONMENTAL ARCTIC: TODAY AND THE FUTURE IMPACT CAMPAIGN (PARTNER) World of New Opportunities charitable Taymyrsky programme ANNUAL RELEASE OF VALUABLE FISH Dolgano-Nenetsky SPECIES INTO WATER BODIES Municipal District

Cooperation with nature reserves Tver Region

RELOCATION TO REGIONS WITH FAVOURABLE Corporate volunteer programme CLIMATIC CONDITIONS

CURLING ARCTIC CUP INTERNATIONAL COMPETITION Putoransky State Let’s Do It environmental marathon MOSCOW Nature Reserve DUDINKA Agreement with the Federal RUSSIAN ICE HOCKEY FEDERATION (PARTNER) ALL RUSSIAN FEDERATION Agency for Ethnic Affairs (FAEA) OF DANCE SPORT AND NORILSK RUSSIAN FUTSAL ASSOCIATION (GENERAL ACROBATIC ROCK'N'ROLL on cooperation aimed at providing (PARTNER) support to the indigenous peoples of PARTNER) NORILSK DEVELOPMENT AGENCY INCREASE OF THE TAIMYR HPP the North CASCADE CAPACITIES RUSSIAN OLYMPIC COMMITTEE (PARTNER) NIGHT HOCKEY LEAGUE (GENERAL PARTNER) RECONSTRUCTION OF NORILSK AIRPORT SULPHUR PROJECT ENVIRONMENTAL RECONSTRUCTION OF BRIDGES INITIATIVE FOOTBALL UNION OF RUSSIA (PARTNER) WORLD LEGENDS HOCKEY LEAGUE (PARTNER) IN THE NORILSK INDUSTRIAL DISTRICT PROGRAMME TO BUILD LOCAL TREATMENT FACILITIES RUSSIAN CURLING FEDERATION RELOCATION TO REGIONS WITH CSKA PROFESSIONAL FAVOURABLE CLIMATIC CONDITIONS ZERO NEGATIVE ENVIRONMENTAL ARCTIC DAYS IN MOSCOW FEDERAL IMPACT CAMPAIGN FORUM (PARTNER) OUR HOME AND MY HOME EMPLOYEE HOUSING PROGRAMMES LAND REHABILITATION PROGRAMME SARATOV MULTIMEDIA ART MUSEUM (PATRONAGE ASSISTANCE) WE ARE THE CITY! SOCIAL TECHNOLOGIES ANNUAL RELEASE OF VALUABLE FORUM (ORGANISER) FISH SPECIES INTO WATER BODIES Saratov Region GOLDEN MASK THEATRE FESTIVAL (PARTNER) NORILSK NICKEL FUTSAL CLUB (GENERAL SPONSOR) SOCHI

ZAPOLYARYE HEALTH RESORT

ROSA KHUTOR SKI RESORT (SPONSORSHIP) AGREEMENT ON SME SUPPORT Krasnoyarsk CORPORATE SPORTS AGREEMENT TO SUPPORT COMPETITIONS AND DEVELOP THE VOLUNTEER Territory MOVEMENT IN THE TRANS-BAIKAL TERRITORY

ANNUAL RELEASE OF VALUABLE FISH SPECIES INTO WATER BODIES Trans-Baikal Territory KRASNOYARSK Relict Oaks State KRASNOYARSK ECONOMIC FORUM (GENERAL PARTNER) Reserve

SCIENCE FESTIVAL IN KRASNOYARSK

29TH INTERNATIONAL WINTER UNIVERSIADE IN KRASNOYARSK IN 2019 (GENERAL PARTNER) CHITA

FEDERATION OF NORTHERN FIRST TECHNOLOGICAL CLUSTER MULTISPORT RACES FOR KIDS IN THE TRANS-BAIKAL TERRITORY KRASNOYARSK TERRITORY REGION OVERVIEW

Area Population Industry 2,366,800 2,876,360 • Non-ferrous metallurgy • Mining km2 people • Solid fuel–based power and hydropower generation

Mineral resources

Iron ore Coal Crude Gold oil ore

KEY AREAS OF COOPERATION WITH THE KRASNOYARSK TERRITORY

Economic Social Environmental

• Cooperation on major investment • Improvement of the existing sports • Implementation of cutting-edge projects in the Krasnoyarsk infrastructure and construction of green technologies Territory new state-of-the-art facilities in the • Reclamation and landscaping of • Heat and power supply to the Krasnoyarsk Territory urban territories communities and companies of • Support for vocational and • Development of Taimyr’s specially the Norilsk Industrial District supplementary education protected natural areas • Implementation of the Northern • Implementation of the World of New • Organisation and backing of Supply Haul programme in the Opportunities programme, supporting environmental campaigns Arctic and promoting regional public • Development of transport and the initiatives telecommunication infrastructure • Construction of modern housing and utilities, city and village improvement initiatives

NORNICKEL’S PERFORMANCE IN THE KRASNOYARSK TERRITORY

55.9 54,286 104,241 2,480,681.7 RUB bn people1 RUB RUB thousand taxes and other headcount average monthly employee-related social payments salary expenses

1 The Krasnoyarsk Territory and the Norilsk Industrial District. Photo: Stolby National Nature Sanctuary, Krasnoyarsk Territory MURMANSK REGION REGION OVERVIEW

Area Population Economy 144,900 757,600 • Mining industry • Metallurgy km2 people • Fishing industry

Mineral resources

Iron ore Copper Nickel Cobalt ore ore ore

KEY AREAS OF COOPERATION WITH THE MURMANSK REGION

Economic Social Environmental

• Implementation of investment • Implementation of the World of • Cooperation on environmental projects in the region New Opportunities programme, protection, preservation of the • Development of production supporting and promoting regional Kola Peninsula’s natural ecology capacities public initiatives and landscapes • Social and economic development • Ensuring heat supply to communities • Development of ecotourism of municipalities that are home to across Kola MMC’s footprint in the nature park of the Rybachy Kola MMC’s production sites • Development of social and Sredny Peninsulas • Development of the transport entrepreneurship • Organisation and backing of infrastructure in the Arctic environmental campaigns

NORNICKEL’S PERFORMANCE IN THE MURMANSK REGION

10.6 12,579 82,443 377,799.5 RUB bn people RUB RUB thousand taxes and other headcount average monthly employee-related social payments salary expenses

Photo: Lapland State Nature Biosphere Reserve, Murmansk Region TRANS-BAIKAL TERRITORY REGION OVERVIEW

Area Population Industry 431,900 1,072,800 • Mining • Production and distribution of electricity, gas and water km2 people • Non-ferrous metallurgy • Machinery and equipment manufacturing • Food production

Mineral resources

Uranium Copper Tungsten Cobalt ore ore ore ore

KEY AREAS OF COOPERATION WITH THE TRANS-BAIKAL TERRITORY

Economic Social Environmental

• Bystrinskoye Deposit development. • Training of mining industry employees • Development of the Relict Oaks Over the first 10 years of Bystrinsky • Support and development of the State Reserve located in the GOK operation, the Company volunteer movement region plans to contribute around RUB 18 • Improvement of urban areas bn to the territory’s budget in tax payments • Improvement of Bystrinsky GOK’s transport accessibility

NORNICKEL’S PERFORMANCE IN THE TRANS-BAIKAL TERRITORY

1.2 3,382 86,882 5,667.6 RUB bn people RUB RUB thousand taxes and other headcount average monthly employee-related social payments salary expenses

Photo: Maloe Leprindo Lake in the mountains of the Trans-Baikal Territory NEW GROWTH OPPORTUNITIES 04 October 2018. Dedicated to meeting the growing demand for battery materials STRATEGY used in electric vehicles, the strategic partnership between BASF and Nornickel became a landmark event for achieving sustainable development goals. As BASF’s new production facility will be constructed adjacent to Nornickel's refining facility in Harjavalta, Finland, this will provide BASF with exclusive 24 Context access to local nickel and cobalt supplies. 2020 will see about 300,000 electric vehicles per year using batteries 26 Mission and values with components produced as part of the partnership between Nornickel and BASF. 26 Corporate strategy 30 Sustainable development goals 24 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 25

Strategy Standard/initiative Nornickel International Platinum Group Metals Association Member

International Information Security Research Consortium Member Context MMC Norilsk Nickel considers social responsibility and commitment to the principles of sustainable Nickel Institute Member. Since 2017, Nornickel’s Head of Marketing has 102–15 development as key operational priorities for business been chairing the Institute’s Board of Directors Significant impact of large companies on the development development, community and investor relations, and of regional and national industries, as well as their environmental impact management. World Wildlife Fund (WWF) Ranking among the leading environmentally responsible integration at the global level has made business a key mining companies in Russia according to the WWF player in addressing modern challenges. The Company became one of the first Russian National Association of International Information Secu- Member and supporter companies to sign up, in 2005, to the Social Charter rity Norilsk Nickel Group is a leader of Russia’s metals and of the Russian Business adopted by the Russian Union mining industry. The Company meets the Russian and of Industrialists and Entrepreneurs (RSPP). In 2016, Security Charter for Critical Industrial Facilities Charter developer, member and signatory global economy’s growing demand for materials required Norilsk Nickel Group joined the UN Global Compact, to manufacture products that are vital for improving the which marked the transition to a new strategic FTSE4Good Index Inclusion in the FTSE4Good Emerging Index quality of life. development cycle. Sustainalytics Assigned independent ESG ratings The Company’s products are supplied to 34 countries Supporting the United Nations’ Sustainable MSCI and are in high demand in power generation, electronics, Development Goals and sharing the UN’s call to transportation, mechanical engineering, construction, transform the business to the benefit of society, Social Charter of the Russian Business adopted by the Member and signatory consumer goods, healthcare, food, chemical and other environment and the future of the planet, Nornickel RSPP industries. started implementing its Long-Term Development Strategy until 2023, which drives its ambition to Anti-Corruption Charter of the Russian Business adopt- Member and signatory ed by the RSPP As one of the largest employers and taxpayers in Russia, grow further as an advanced, cost efficient and Nornickel plays an important role in the social and environmentally responsible company. RSPP Responsibility and Transparency index and Sus- One of the index leaders (in 2014, 2015, 2016, 2017, economic development of the regions where it operates. tainable Development Vector index and 2018)

RSPP Committee on Corporate Social Responsibility and Member NORNICKEL’S SUPPORT FOR SUSTAINABLE DEVELOPMENT INITIATIVES AND STANDARDS Demographic Policies 102–12 102–13 Environmental Charter of the Krasnoyarsk Territory Signatory

Standard/initiative Nornickel GRI Gold Community Organisational member UN and International Labour Organisation conventions Declaring support and aligning its by-laws accordingly

UN Global Compact Supporting officially

National Global Compact Network Association (Russia) Member Nornickel’s products for better quality of life, The most common electronic products use nickel, Sustainable Development Goals of the UN 2030 Declaring support and aligning governance practices Agenda accordingly environmental improvements and green economy copper, platinum, palladium, rhodium, iridium, ruthenium, cobalt, gold, silver and other metals produced by the ISO 9001:2015 Compliance of Gipronickel Institute's management The Taimyr unique resource base seems to be made to Company. system with the standards respond to the challenges facing humanity in the 21st century. It will be impossible to reduce air pollution in urban areas ISO 14001:2015 Compliance of MMC Norilsk Nickel, Kola MMC, as planned or combat climate change as set out in the and Norilsk Nickel Harjavalta management systems ISO 9001:2015 Playing a vital part in contributing to the reduction of air Paris Agreement unless hybrid cars with PGM catalysts with the standards pollutant emissions, platinum group metals (PGM) are are used extensively in the coming decades. In the long OHSAS 18001:2007 Compliance of MMC Norilsk Nickel and Norilsk Nickel used as catalysts for the production of key chemicals, run, roads will be dominated by fully electric vehicles Harjavalta management systems with the standard including agricultural fertilisers, that are essential for using lithium-ion batteries with high content of nickel and providing the planet’s growing population with foods. cobalt, as well as by hydrogen vehicles using platinum in ISO 26000:2010 Declaring support and providing reports Platinum and palladium along with their co-metals are their fuel cells. Electric vehicles will transform the global widespread in medicine, particularly in its forefront areas nickel and PGM industries. As the world’s leading sup- GOST R ISO 26000-2012 Declaring support and providing reports such as oncology and production of pacemakers and plier of these metals, Nornickel is uniquely positioned to AA1000AP, AA1000SES Declaring support and providing reports other implants. contribute to this change. 26 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 27

Development of renewable energy is also impossible Our mission The next development cycle will be centred around environmentally friendly production. In 2018, the Company without stainless steel, nickel alloys and fibreglass an unprecedented RUB 150 bn environmental launched the large-scale Sulphur Project at Polar Division’s as key structural materials used in wind and solar Through the efficient use of natural resources and equity, initiative focusing on the reduction of emissions and Copper Plant as part of its environmental programme. farms or without special conductive pastes for solar we supply mankind with non-ferrous metals, which cell surfaces. However, high-quality stainless steel make the world a more reliable place to live in and help cannot be made without nickel; fibreglass cannot be people realise their aspirations for development and produced without equipment that uses platinum and technological progress. Roadmap to advanced, efficient and environmentally friendly production rhodium, and no conductive paste for solar batteries is made without silver. Apart from renewable generation, metals produced by Nornickel are essential for envi- Corporate strategy ronmentally friendly energy storage systems that use nickel- and cobalt-based batteries or gases (hydrogen Adopted in 2013, Nornickel’s corporate strategy primarily AFTER 2022 or methane) which are stored and processed also aims to unlock the resource potential of the Taimyr and 2019 using PGM. Kola Peninsulas, improve the Company’s operating Optimisation of the smelting Promising growth projects: efficiency and raise the quality of investment and capital shop capacity utilisation • Southern Cluster project aiming Reconfiguration programme The Company provides comprehensive support for management. In 2013–2017, MMC Norilsk Nickel ran to decrease SO2 emissions at the production ramp-up to completed: the green economy both in Europe and worldwide and a number of strategic initiatives that fundamentally 6+ mtpa reaffirms its commitment to sustainable use of resourc- changed the Company’s technological landscape • Nickel Plant shut down • Upgrade and capacity es and its status as a responsible global supplier of and can rightly be considered unique and pioneering. • Talnakh Concentrator and expansion at Talnakh materials for sustainability purposes. In 2017, the Company completed the first cycle of Nadezhda Metallurgical Plant Smelting Shop Concentrator–3 its development strategy. As a result, Polar Division facilities upgraded upgraded dramatically its concentration facilities and Severonickel 102–16 reconfigured its metal production processes with Mission and values Kola Nickel Plant shut down. This significantly reduced MMC Polar Division The Company focuses on developing a group- environmental footprint of the Company in the region. wide corporate culture of mutual respect, trust 2019 and openness shared by its every employee. The In 2018, the Company reaffirmed its ambition to grow Completion of the upgrade corporate culture ensures effective implementation further as an advanced, efficient and environmentally and expansion of nickel of the Company’s strategy based on sustainable responsible company and presented Nornickel’s refining capacities development principles.1 strategic priorities in sustainable development and growth areas for the medium and long terms. Blue-sky projects: feasibility studies at greenfield 2017–2024 deposits, including Maslovskoye Deposit, Nornickel’s corporate values Focus on the intensive Chernogorskoye Deposit development of mining and the southern part of operations at Talnakh to Norilsk-1 Deposit. achieve 20% growth by 2025 EFFICIENCY RELIABILITY GROWTH

Delivering against our targets Ability to address any challenges Effective production ramp- 2023 in due time and at minimum to ensure success for the up and upgrade, leverage of cost business groundbreaking technologies and Implementation of development of our people the comprehensive environmental programme aiming at 75% reduction of SO2 emissions in the Norilsk RESPONSIBILITY PROFESSIONALISM COLLABORATION Chita Project Industrial District Desire to honour our Ability to ensure Commitment and ability of commitments and take on a sustainably strong our employees to achieve responsibility for our decisions performance goals and objectives through teamwork Commissioned Gradual ramp-up to design capacity by 2020 Projects under the framework programme

Promising projects under assessment 1 See also the Business Ethics Code at www.nornickel.com/Investors/Internal Documents and Policies. NORNICKEL’S STRATEGIC PRIORITIES

• 20% LTIFR reduction each year • 15–20% growth in metals output in the long term • Zero work-related fatalities (2025+)

• Implementation of the • Mining projects at the comprehensive environmental existing deposits of the programme aiming at a 75% Talnakh Ore Cluster, reduction in SO2 emissions in the development of the Norilsk Industrial District Southern Cluster, and construction of Talnakh Concentrator–3

FOCUS ON SAFETY AND LONG-TERM PRODUCTION GROWTH ENVIRONMENT BASED ON THE EXISTING ASSETS

EFFICIENCY ANALYSIS OF NEW IMPROVEMENT GROWTH OPPORTUNITIES

• 5–8% growth in metals • Evaluation of potentially output in the short term the world’s largest greenfield PGM cluster, • Strict cost control to keep a unique blue-sky cost growth below partnership project (Arctic the inflation rate Palladium) • Up to 15% increase in labour productivity (2020 vs 2017) 30 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 31

CURRENT COSTS AND CAPITAL EXPENDITURES FOR THE MOST RELEVANT UN SDGS The mid-term strategic priority for the Company is 2018 non-financial performance AS A SHARE OF 2018 CONSOLIDATED REVENUE an efficiency improvement programme covering highlights: its entire production chain. Key focus areas of the programme are upgrade and reconfiguration of production facilities, introduction of new standards • dramatic improvements in industrial and processes, innovative management approaches, safety and health: in 2018, the lost and comprehensive digitisation and automation time injury frequency rate (LTIFR) of production processes. The programme aims at Breakdown of current costs Number of UN SDG-focused decreased from 0.44 to 0.23, down and capital expenditures by projects improving efficiency, increasing labour productivity, most relevant SDG, % boosting industrial safety and transforming corporate by 48% y-o-y, reaching the Company’s culture. In 2018–2021, Nornickel plans to invest about record low and remaining below RUB 5.3 bn in digital technology alone. the average across the metals and 0.7 8.5 0.5 8 mining peers. Over 2013–2018, LTIFR 4.8 10.3 MMC Norilsk Nickel will continue increasing its share in 6.7 2.2 new market segments and industries that are likely to dropped by 65%; 7 generate demand for its products in the future. One of 4 3 such fast growing industries is production of materials • production launch and phased 2 for electric vehicles and batteries. capacity ramp-up at Bystrinsky GOK, 6 a cutting-edge high-tech facility 3 103–2 7 When working towards its strategic development compliant with high environmental, 66.3 priorities, the Company factors in non-financial risks and technological and social standards; principles of human rights and environment protection: • launch of the Sulphur Project at • unconditional respect for human rights; Polar Division’s Copper Plant,

• comprehensive measures to support indigenous the Company’s most ambitious peoples of the North; green initiative aimed at dramatic improvements in the regional • lower impact on the climate; 0.2 environment. 0.1 14.2 • alternative energy development (where applicable). 2.2 0.5 1.4 1.0 1.8 Sustainable development goals non-financial reports for 2016 and 2017, the Goal 3 Company disclosed key sustainability targets and Goal 4 In 2015, the United Nations adopted the 2030 Agenda performance against relevant UN SDGs. for Sustainable Development, setting 17 Sustainable Goal 6 Development Goals (SDG) for the global community As the next step of integrating the UN SDGs, 78.6 Goal 7 and 169 associated targets as enablers of the SDG the Company grouped its major projects and Goal 8 achievement. Since the SDGs cannot be achieved by programmes by SDG. For this purpose, 12 SDGs Goal 9 the efforts of only governments or public organisations, were selected on the basis of a survey conducted Current costs and capital 19.1% share of UN SDG-related expenditures for the most relevant Goal 10 the UN encourages businesses to focus on the SDGs in among stakeholders. The SDG-based grouping UN SDGs as a share of 2018 costs in 2018 revenue. their operations. “Business is a vital partner in achieving helped determine actual and budgeted costs per consolidated revenue, % G oals 11 and 12 the Sustainable Development Goals. Companies can project/programme and assess the Company’s actual Revenue contribute through their core activities, and we ask non-financial performance. The results achieved will companies everywhere to assess their impact, set be used in 2019 to analyse and prioritise SDGs and ambitious goals and communicate transparently about concentrate efforts on priority SDGs. National and the results” (Ban Ki-moon, United Nations Secretary- international contexts of achieving such SDGs will General). also be analysed to assess their impact on business- related risks and opportunities. 103–2 Nornickel fully supports the 2030 Agenda for The chart below presents current costs and capital Sustainable Development and the UN SDGs, expenditures for the most relevant SDG-related consistently integrating them into the Company’s projects as a share of the Company’s consolidated strategy and everyday operations. In its public revenue for 2018. 32 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 33

Nornickel’s contribution towards the achievement of the UN SDGs 103–2

UN SDG SDG target SDG integration Key initiatives and projects Achievements of 2018 Plans for 2019 in Nornickel’s implemented by Nornickel Strategic corporate priority governance framework

3.4 By 2030, reduce by one third Occupational Health 1. Implementation of health 5. Air protection projects (activities) premature mortality from non- and Safety Policy improvement and wellness required by the Environmental Action 24,631 employees 24,485 employees communicable diseases through programmes for employees and their Plan (EAP, section I) other than the and their family members covered by and their family members to be prevention and treatment and Environmental Impact families1 Sulphur Project2 the health improvement and wellness covered by health improvement promote mental health and well- Assessment Policy programmes and wellness programmes being 2. Voluntary health insurance for 6. Water conservation projects Occupational Health employees and their families1 (activities) required by the and Safety Policy 3.6 By 2020, halve the number Environmental Action Plan (EAP, 18,854 employees 50,510 employees of global deaths and injuries from 3. Comprehensive environmental section II)2 of the Group companies and their of the Group companies and their road traffic accidents programme for the Norilsk Industrial family members covered by voluntary family members to be covered by District (the Sulphur Project) 7. Waste management projects health insurance plans voluntary health insurance plans 3.9 By 2030, substantially reduce integrated into the Roadmap to (activities) required by the the number of deaths and illnesses Reduce Air Pollutant Emissions in Environmental Action Plan (EAP, from hazardous chemicals and Norilsk (approved by Deputy Prime section III)2 air, water and soil pollution and Minister of the Russian Federation on contamination 28 December 2018) and the Fresh Air national project2 4. Implementation of current occupational safety measures (providing employees with individual and collective protective equipment, special food and milk, maintenance of health centres, first-aid posts, medical units, mandatory checkups, health and safety training and skills improvement, etc.)1

4.4 By 2030, substantially increase Strategy 1. Training and development of Norilsk 3. The World of New Opportunities the number of youth and adults Nickel Group’s employees3 charity programme: grants for 87,462 employees 312 students who have relevant skills, including Equal Opportunities educational institutions and projects3 covered by training, including to be covered by Norilsk technical and vocational skills, Programme 2. Corporate scholarships for university vocational training, retraining, and Nickel’s corporate scholarship students and internships with Norilsk skills improvement programmes for employment, decent jobs and 3 entrepreneurship Nickel Group's companies 311 students covered by Norilsk Nickel’s corporate scholarship programmes

25 projects supported under the World of New Opportunities programme

¹ Part of the Public Health domain (Russia’s National Projects). ² Part of the Environment domain (Russia’s National Projects). 3 Part of the Education domain (Russia’s National Projects). 34 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 35

UN SDG SDG target SDG integration Key initiatives and projects Achievements of 2018 Plans for 2019 in Nornickel’s implemented by Nornickel Strategic corporate priority governance framework

6.3 By 2030, improve water quality Environmental Policy 1. Implementation of investment 2. Water conservation projects by reducing pollution, eliminating projects aimed to improve (activities) required by the dumping and minimising release water management (water cycle Environmental Action Plan (EAP, of hazardous chemicals and optimisation, wastewater treatment section II)1 materials, halving the proportion etc.) and water supply1 of untreated wastewater and substantially increasing recycling and safe reuse globally

7.1 By 2030, ensure universal Strategy 1. Rollout of the Automatic System for 3. Delivery of investment projects ASCAPC design documents and cost ASCAPC rollout at Copper Plant, access to affordable, reliable and Commercial Accounting of Power aimed to develop power and heat estimates for the PD units developed Nadezhda Metallurgical Plant, modern energy services Consumption (ASCAPC) across Polar generation, power grids and heat and approved Komsomolsky and Skalisty mines Mission and values Division (PD)1 networks2 and Common Storage Facilities 7.3 By 2030, double the global

rate of improvement in energy 2. Implementation of energy efficiency Renewable Energy 3,098 TJ efficiency and energy saving projects (initiatives) fuel and energy savings resulting Sources Policy 13 MW required by the Energy Saving and from energy consumption increase in installed generation Energy Efficiency Programme and/ reduction and energy efficiency and transformer capacities or the Programme for Improving improvement initiatives Performance and Reducing Per Unit Costs1 10 MW increase in installed generation and transformer capacities

8.2 Achieve higher levels of Human Rights Policy 1. Ensuring decent compensation for 5. Implementation of health and economic productivity through labour3 safety activities required by the RUB 111,600 28 social facilities diversification, technological Working Conditions Comprehensive Plan for Labour average monthly salary to be commissioned after upgrading and innovation, Policy 2. Securing employees’ involvement in Conditions Improvement, Labour renovation social partnerships3 including through a focus on high- Occupational Health Protection, Health and Recreation 81% value added and labour-intensive and Safety Policy 3. Programmes to improve the social Activities, and Occupational Safety employees covered by collective sectors agreements and living conditions for employees 6. Ensuring employees’ involvement Freedom of of Norilsk Nickel Group 8.4 Improve progressively, Association Policy in improvement of the health and 3 through 2030, global resource 4. Implementation of current safety system 25 social facilities efficiency in consumption and Policy Regarding commissioned after renovation occupational safety measures 7. Delivery of the Operating Unit’s production and endeavour to Support for Small (providing employees with individual decouple economic growth from and Medium investment projects (concentration and collective protective equipment, and downstream) environmental degradation, in Enterprises special food and milk, maintenance accordance with the 10-Year Environmental Policy of health centres, first-aid posts, Framework of Programmes on medical units, mandatory checkups, Sustainable Consumption and Environmental health and safety training and skills Production, with developed Impact Assessment improvement, etc.) countries taking the lead Policy

¹ Part of the Environment domain (Russia’s National Projects). 2 Part of the Housing & Urban Environment domain (Russia’s National Projects). 3 Part of the Labour Productivity and Employment Support domain (Russia’s National Projects). 36 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 37

UN SDG SDG target SDG integration Key initiatives and projects Achievements of 2018 Plans for 2019 in Nornickel’s implemented by Nornickel Strategic corporate priority governance framework

8.5 By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value 8.8 Protect labour rights and promote safe and secure working environments for all workers, including migrants, in particular women, and those in precarious employment

9.1 Develop quality, reliable, Strategy 1. Upgrading and retooling Talnakh 4. Research and development (R&D) Norilsk Airport’s infrastructure to sustainable and resilient Concentrator to increase its total and feasibility studies aimed to 1,081 m be upgraded infrastructure, including regional Mission and values ore capacity to 18 mtpa update Norilsk Nickel Group’s of Norilsk Airport’s runway and trans-border infrastructure, to Development Strategy, expand renovated Local Community 2. Projects aiming to develop local support economic development Relations Policy production and protect the 13 MW and human well-being, with a communities’ infrastructure environment2 On 21 September 2018, Norilsk increase in installed generation focus on affordable and equitable Policy Regarding (including transport accessibility Airport received a certificate of and transformer capacities access for all Support for Small and improvement): 5. Investments in the development compliance from the Federal Air of transportation and logistics Medium Enterprises • projects implemented under public- Transport Agency 9.4 By 2030, upgrade assets 38 infrastructure and retrofit industries private partnerships (PPP)¹ On 29 October 2018, the airport R&D and feasibility studies to be to make them sustainable, with 6. Construction and reliability received a certificate of compliance completed • projects implemented under improvement of the fibre optic increased resource-use efficiency agreements with local with the Federal Aviation communication line (FOCL) Requirements from the Federal Air and greater adoption of clean administrations¹ 1 and environmentally sound in Norilsk Transport Agency technologies and industrial 3. Delivery of investment projects processes, with all countries taking aimed to develop power and heat action in accordance with their generation, electrical grids and heat 10 MW respective capabilities networks increase in installed generation and transformer capacities 9.5 Enhance scientific research, upgrade the technological capabilities of industrial sectors 69 in all countries, in particular R&D and feasibility studies developing countries, including completed encouraging innovation and substantially increasing the 318 hours/year number of research and FOCL downtime development workers per 1 million people and public and private research and development spending by 2030

1 Part of the Housing & Urban Environment domain (Russia’s National Projects). 2 Part of the Environment, Science, and Digital Economy domains (Russia’s National Projects). 38 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 39

UN SDG SDG target SDG integration Key initiatives and projects Achievements of 2018 Plans for 2019 in Nornickel’s implemented by Nornickel Strategic corporate priority governance framework

10.7 Facilitate orderly, safe, regular Equal Opportunities 1. Implementation of the complementary 3. Implementation of the Cooperation Complementary corporate and responsible migration and Programme corporate pension plan for former Agreement between the Russian 545 former pensions to be paid to mobility of people, including employees moving from the Norilsk Ministry of Regional Development, employees former through the implementation Industrial District Krasnoyarsk Territory, Norilsk were paid complementary corporate 667 of planned and well-managed Municipality and MMC Norilsk Nickel pensions employees

migration policies 2. Relocation assistance to new to relocate people living in employees1 Norilsk and Dudinka (Krasnoyarsk 533 apartments 450 apartments Territory) to Russian regions with acquired to relocate people to be purchased to relocate better climate and socioeconomic to regions with better climate people to regions with better conditions and socioeconomic conditions climate and socioeconomic conditions 4. Implementation of the Our Home and My Home social programmes 316 people (purchase of apartments covered by the new employee for employees in various Russian relocation assistance programme regions)

11.6 By 2030, reduce the adverse Environmental Policy 1. Comprehensive environmental 3. Waste management projects per capita environmental impact programme for the Norilsk Industrial (activities) required by the of cities, including by paying District (the Sulphur Project) Environmental Action Plan (EAP, special attention to air quality integrated into the Roadmap to section III)2 and municipal and other waste Reduce Air Pollutant Emissions in 4. Other environmental protection management Norilsk (approved by Deputy Prime activities required by the Minister of the Russian Federation Environmental Action Plan on 28 December 2018) and the Fresh (EAP, section IV)2 Air national project2 2. Air protection projects (activities) required by the Environmental Action Plan (EAP, section I) other than the Sulphur Project2

12.2 By 2030, achieve the Information Policy 1. Comprehensive environmental 3. Waste management projects sustainable management and Regulation programme for the Norilsk Industrial (activities) required by the efficient use of natural resources District (the Sulphur Project) Environmental Action Plan (EAP, Biodiversity integrated into the Roadmap to section III)2 12.4 By 2020, achieve the Conservation Policy Reduce Air Pollutant Emissions in environmentally sound 4. Other environmental protection Environmental Policy Norilsk (approved by Deputy Prime activities required by the management of chemicals and Minister of the Russian Federation on all wastes throughout their Environmental Action Plan (EAP, 28 December 2018) and the Fresh section IV)2 life cycle, in accordance with Air national project2 agreed international frameworks, and significantly reduce their 2. Air protection projects (activities) release to air, water and soil in required by the Environmental Action order to minimise their adverse Plan (EAP, section I) other than the 2 impacts on human health and the Sulphur Project environment 12.5 By 2030, substantially reduce waste generation through prevention, reduction, recycling and reuse

1 Part of the Labour Productivity and Employment Support domain (Russia’s National Projects). 2 Part of the Environment domain (Russia’s National Projects). 40 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 41

UN SDG SDG target SDG integration Key initiatives and projects Achievements of 2018 Plans for 2019 in Nornickel’s implemented by Nornickel Strategic corporate priority governance framework

12.6 Encourage companies, especially large and transnational ones, to adopt sustainable practices and integrate sustainability information into their reporting cycle

15.1 By 2020, ensure the Environmental Policy 1. Cooperation with nature reserves conservation, restoration and (support for research and educational sustainable use of terrestrial and Environmental Impact projects at the Pasvik, Lapland, inland freshwater ecosystems Assessment Policy and Relict Oaks nature reserves, and their services, in particular Biodiversity Joint Directorate of Taimyr Nature forests, wetlands, mountains and Conservation Policy Reserves, etc.)1 drylands, in line with obligations under international agreements 15.5 Take urgent and significant action to reduce the degradation of natural habitats, halt the loss of biodiversity and protect and prevent the extinction of threatened species by 2020

16.5 Substantially reduce Anti-Corruption Policy 1. Implementation of anti-corruption 2. Raising awareness of its anti- corruption and bribery in all their measures in operating Russian corruption practices among of Norilsk 100% of operating 100% of operating forms subsidiaries of the Group Nickel Group’s employees business units business units are implementing will be implementing anti- anti-corruption activities corruption activities

100% employees 100% employees of Norilsk Nickel Group’s employees of Norilsk Nickel Group’s are made aware of its anti-corruption employees will be aware of practices its anti-corruption practices

17.16 Enhance the Global Environmental Policy 1. Cooperation with federal legislative 3. Reporting on the Company’s Reporting on the progress Partnership for Sustainable and executive authorities, civil contribution towards the achievement 21 resulting from accession to the Development, complemented by Environmental Impact society institutions, and the of the UN SDGs in line with the working bodies (committees, expert UNGC multi-stakeholder partnerships that Assessment Policy business community UNCTAD guidance and working groups, etc.) established mobilise and share knowledge, by civil society organisations and expertise, technology and 2. Support for volunteering: activities 4. UN Global Compact (UNGC) public authorities where Norilsk financial resources, to support the implemented under agreements membership and related reporting Nickel Group is represented with local administrations achievement of the Sustainable 5. Support for corporate volunteering Development Goals in all 3,700 volunteers countries, in particular developing supported by Norilsk Nickel Group countries Reporting on the progress resulting from accession to the UNGC

1 Part of the Environment domain (Russia’s National Projects). LEADERSHIP IN INNOVATION Nornickel is on Forbes’ Top 100 Most Innovative Companies list. The Company 05 is committed to digitisation of every production stage. Most of the Company’s MANAGEMENT processes will be digitised and automated by 2020.

44 Sustainability management

• 44 Corporate governance • 47 Operational sustainability management • 50 Remuneration • 51 Employee performance management system • 52 Risk management framework • 53 Corporate security • 54 Information technologies

54 Economic efficiency 57 Stakeholder engagement

• 57 Stakeholders and interaction mechanisms • 60 Dialogue with shareholders and investors • 60 Dialogue with employees • 62 Dialogue with authorities and non-profit organisations • 64 Environmental dialogue • 65 Dialogue in public non-financial reporting

65 Supply chain management

• 66 Supply • 68 Product quality and supply reliability • 71 Dialogue with business partners

72 Innovations 73 Transparency 44 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 45

Management STATEMENT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS’ AUDIT AND SUSTAINABLE DEVELOPMENT COMMITTEE 102–20 102–21 Sustainability management

Corporate governance At Nornickel, sustainability is at the core of our business. Our commitment to this cause means that we pursue

102–26 • sound, bona fide and efficient management of the our business goals in a socially responsible manner, Nornickel’s corporate governance Company’s day-to-day operations by executive making sure our footprint leaves a positive impact on the framework is designed to take bodies accountable to the Board of Directors and community. into account and balance the the General Meeting of Shareholders; interests of shareholders, the Nornickel’s sustainability goals are advanced through • compliance with the Russian laws and the a range of initiatives and programmes designed to Board of Directors, managers national laws of the countries of operation; and employees, as well as other enhance corporate governance practices, further stakeholders. • corporate social responsibility; upgrade production, mitigate environmental impact and • strong business ethics; drive social development. In our efforts, we focus on The Company’s approach to projects that will benefit the well-being of communities corporate governance, its • zero tolerance to corruption and effective anti- key principles and the by- corruption measures; across our operations. laws serving as a basis for an • full, transparent, reliable and timely disclosure; The Company’s sustainability agenda is steered by the effective governance framework Board of Directors and the Audit and Sustainable Development Committee (the Committee). draw on the applicable Russian • robust internal controls, internal and external laws, including the Corporate audits; The Committee is responsible for overseeing environment, social and governance (ESG) Governance Code recommended • active collaboration with investors, creditors, matters, risk management and internal control systems, and annual reporting. It also by the Bank of Russia. and other stakeholders in order to increase reviews the Group’s quarterly risk reports, along with those of the Corporate Trust Service Company’s assets and market capitalisation. on human rights and other violations reported by the employees. 102–25 Nornickel’s governance 102–27 102–28 Nornickel has a set of internal regulations in place that address such areas as human rights, framework relies on the following These principles are reflected in Nornickel’s official environment protection, industrial safety, stakeholder and local community engagement, principles: documents, including the Charter, Regulations and corruption prevention. Our activities are aligned with the best global practices and • equitable and fair treatment of on the Board of Directors, Information Policy standards, including ISO 14001, ISO 9001, ISO 26000 and OHSAS 18001. every shareholder; Regulations, Anti-Corruption Policy, and other by-laws. All these documents are available on We regularly inform our stakeholders and the general public about all aspects of our • support for the shareholders the Company’s website.1 operations. We have been reporting on our sustainability performance since 2004, with to let them exercise their rights both recent and historical data available on our website. and lawful interests in the most Pursuant to MMC Norilsk Nickel’s Charter, reasonable and convenient its governing bodies are: Nornickel’s Long-Term Development Strategy until 2023 drives our ambition to grow further manner; • the General Meeting of Shareholders, the as an advanced, efficient and environmentally responsible company. With these goals • professionalism and leadership Company’s supreme governing body; being the key deliverables for the Company and the Committee going forward, we will of the Board of Directors, and • the Board of Directors, a collegial governing also ensure a continued focus on transparency of our business, keeping our stakeholders involvement of independent body in charge of strategic management of the duly informed of all sustainability-related aspects of our operations. At the same time, we directors in governance; Company and oversight of its executive bodies’ will keep reinforcing our sustainability governance by embedding more efficient practices • strategic management by activities; and tools. the Board of Directors, its • the Management Board and the President that efficient control over executive represent the collegial and sole executive bodies bodies, and oversight of the Roger Munnings of the Company, respectively, and manage its Chairman of the Board of Directors’ Audit risk management and internal daily operations. control framework; and Sustainable Development Committee

1 https://www.nornickel.com/investors/disclosure/corporate-documents/. 46 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 47

GOVERNANCE STRUCTURE 102–18 102–20 The Board of Directors has four committees: Audit of Directors met on a quarterly basis to review the and Sustainable Development Committee, Strategy Company’s financial results, strategy implementation Committee, Budget Committee, and the Corporate progress, the management’s HSE reports, and Governance, Nomination and Remuneration Committee. operational performance reports. In 2018, the Board of Directors of MMC Norilsk Nickel considered election election 102–19 102–29 102–31 102–33 102–34 175 matters, including 79 transaction approvals, In overseeing the Company’s management, financial 70 corporate governance matters, 11 economic and AUDIT GENERAL MEETING INDEPENDENT and business affairs, the Board of Directors may instruct financial matters, 2 social and environmental matters, COMMISSION OF SHAREHOLDERS AUDITOR the executives on individual matters and monitor and 13 other matters. implementation of resolutions and tasks. Authorised executives are vested with powers and responsibilities The President and the Management Board are the reporting reporting to address economic, environmental and social issues Company’s executive bodies. In the reporting period,

election and may delegate their powers to other employees the position of the Company’s President was held based on their competences and functions. by Vladimir Potanin who concurrently chaired the Company’s Management Board. As at end of 2018, The Board of Directors meets as and when required, Vladimir Potanin held the position of the President INTERNAL but at least once every six weeks. In 2018, the Board (CEO before 2015) for 6 years and 13 days. CONTROL AND RISK election MANAGEMENT UNIT

MANAGEMENT BOARD reporting

election Committees Directors Chairman Share of directors of the Board of Directors Independent Non- Independent Non-

reporting executive executive election Audit and Sustainable PRESIDENT, reporting Development 5 + + 60% 40% CHAIRMAN OF THE Committee reporting MANAGEMENT BOARD Budget Committee 5 + 60% 40% Strategy Committee 5 + 60% 40% Corporate Governance, Nomination 5 + + 60% 40% reporting and Remuneration Committee election election BOARD OF DIRECTORS

Operational sustainability All executive efforts are coordinated by the CORPORATE GOVERNANCE, management Management Board, the President and the following NOMINATION AND REMUNERATION executive committees: the Budget Committee under COMMITTEE The governing and executive bodies of the Management Board; the Charity Committee, MMC Norilsk Nickel and its subsidiaries are Health, Safety and Environment Committee, STRATEGY in charge of implementing the Company’s Investment Committee, and the Nomination and COMMITTEE sustainability goals and objectives within the Remuneration Committee. BUDGET scope of their functions and in accordance with 1 COMMITTEE the legislation and internal regulations. Nornickel’s management systems are aligned with best international practices and standards. For many AUDIT AND SUSTAINABLE The Company has created an extensive regulatory years, the Company has been successfully running DEVELOPMENT COMMITTEE framework of over 20 internal documents to help the Corporate Integrated Quality and Environmental integrate sustainability aspects into the Company’s Management System (CIMS). In 2017, Nornickel management practices and day-to-day operations kicked off an efficiency improvement programme of its functional units. seeking, among other things, to introduce

reporting reporting reporting innovative management approaches.

CORPORATE INTERNAL AUDIT SECRETARY DEPARTMENT

1 Please see the corporate website at https://www.nornickel.com/investors/disclosure/corporate-documents/. 48 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 49

OPERATIONAL MANAGEMENT 102–18 102–20

SENIOR EXECUTIVES UNITS SUSTAINABILITY BY-LAWS

SAFETY

• Operating Unit • Health and Safety Strategy MANAGEMENT FIRST VICE • Strategy and Business • Occupational Health and Safety Policy BOARD PRESIDENTS Development Unit • Social and Working Conditions Standard for employees of MMC Norilsk Nickel and the entirety of its Russian operations forming the Norilsk Nickel Group • Investor Relations • Corporate health and safety standards Department • Corporate Governance, Asset Management and Legal Affairs Unit • Unit of Economics and Finance ENVIRONMENT • HR, Social Policy and Public PRESIDENT, Relations Unit • Environmental Policy CHAIRMAN OF THE SENIOR VICE • Biodiversity Conservation Policy MANAGEMENT PRESIDENTS • Government Relations Unit • Environmental Impact Assessment Policy BOARD • Non-industrial Assets and • Renewable Energy Sources Policy Energy Unit • Corporate Security Unit • Internal Control and Risk Management Unit • Executive Office SOCIETY • Sales, Procurement and Innovation Unit • Business Ethics Code • Human Rights Policy • State Secret Protection, • Freedom of Association Policy Mobilisation and Special • Indigenous Rights Policy VICE PRESIDENTS Communications Department • Local Community Relations Policy • Equal Opportunities Programme • Working Conditions Policy • Anti-Corruption Policy • Quality Assurance Policy • Information Policy Regulation • Charity Regulation Internal Audit Department • Policy Regarding Support for Small and Medium Enterprises 50 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 51

Company Compliance of the External audits Certification Certification area According to the Company’s Charter, decisions indicators of the Company/divisions/subsidiaries management system in 2018 body on remuneration and reimbursement payable and link an employee’s performance to their with international to the Company’s President and members of pay level. standards the Management Board are reserved to the PJSC MMC ISO 9001:2015, Surveillance audit Bureau Veritas Production, project Board of Directors. The total remuneration of The reporting year saw the Company continue Norilsk Nickel ISO 14001:2015 Certification management, storage, the President1 and members of the Management implementing the performance assessment (BVC) delivery, including by sea, and 2 sales (nickel, copper, cobalt, Board consists of the base salary and bonuses subsystem of the automated enterprise precious materials, sulphur, (a variable part). Bonuses are linked to the management system. By the year-end, the system selenium, tellurium) Company’s performance, including both financial ran at 19 Nornickel’s divisions and subsidiaries. Kola MMC ISO 9001:2015, Surveillance audit Bureau Veritas Mining and processing of ore, (EBITDA, free cash flow) and non-financial In 2019, the Company expects to roll it out across ISO 14001:2015, Certification production of nickel, copper, indicators (workplace injury rates, labour its energy assets and transport divisions. OHSAS 18001:2007 (BVC) cobalt, their compounds, precious metal concentrates, productivity). sulphuric acid Competency management Gipronickel ISO 9001:2015 Recertification audit Societe R&D, design, engineering Employee performance management Institute Gene­rale de surveys, engineering and system In 2018, the corporate competencies model was Surveillance environmental activities, used to assess candidates at the recruitment stage, (SGS) project management in mining, concentration and Performance management evaluate employee performance and potential, and smelting, and relevant 103–3 404–3 add them to talent pool. The outcome of evaluating inspection methods; the managerial and leadership potential served as development of standards for non-ferrous metal industry The Company put in place the performance a key criterion for selecting managers with strong products and their inspection management system five years ago, with career growth prospects. methods; development of assessment relying on a variety of key reference standards for the 103–3 composition of non-ferrous performance indicators (KPIs), including metal industry products occupational safety, operating efficiency and In 2018, the Company continued to train the Norilsk Nickel ISO 9001:2015, Recertification audit DQS GmbH Manufacturing of nickel and capital management. In 2018, the KPI-based Head Office’s executives and high-potential Harjavalta ISO 14001:2015, (DQS&UL) cobalt products assessment covered 9,800 employees. managers from its facilities based on their OHSAS 18001:2007 individual development plans, with 50 of the latter The system helps streamline evaluation criteria, completing the operating efficiency training at Murmansk ISO 27001:2013 Certification audit British Standards Freight transport by sea Transport Division Institution (BSI) enables the management and employees to align Moscow’s Skolkovo School of Management. WEB of MMC Norilsk the current year’s priorities with performance Nickel

Remuneration

Remuneration of members of the supreme • additional remuneration of USD 50,000 for governing body COMPETENCY ASSESSMENT IN 2018 membership in a committee of the Board of Directors; Competencies Participants Outcome 102–35 102–36 102–37 Principles and mechanics of remunerations due to • additional remuneration of USD 150,000 for Assessment of potential, current Managers from a number of the Group’s 455 managers listed as those with a executives are set out in the Charter, Regulations on chairing a committee of the Board of Directors; performance and development key organisations high career growth potential the Management Board, and other by-laws of the prospects of middle and top • reimbursement of expenses incurred by managers Company.1 The system of remunerations applicable directors in discharge of their duties. in the Company is continuously and directly A 360-degree competency review 270 unit heads of the Head Office Development activities, tools monitored by the Board of Directors. using an updated model and methods selected for the participants The Annual General Meeting of Shareholders The Board of Directors’ annual remuneration is for 2018 established remuneration for the Assessment of professional 722 managers Areas for personal and professional competencies for line managers development identified set out in the Remuneration Policy for Members of Chairman of the Board of Directors, an employed at mining operations the Board of Directors1 approved by the General independent director, in the amount of Meeting of Shareholders. The annual remuneration USD 1,000,000 per year, paid on a quarterly basis for non-executive directors includes: in equal instalments in roubles at the exchange • base remuneration of USD 120,000 for the Board rate of the Bank of Russia on the last business day 2 membership; of the reporting quarter.

1 Total annual remuneration of the highest-paid officer (President) is not disclosed due to the confidential nature of information. 1 https://www.nornickel.com/investors/disclosure/corporate-documents/. 3 For the remuneration amount, please see the 2018 Annual Report. 2 This amount is after taxes withheld in accordance with the applicable Russian laws. 52 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 53

In 2019, the Company will proceed with the Its approach to risk management is outlined in its Nornickel was one of the first metals companies • The Company helped stage the Regional Transport diagnostics and management of professional Corporate Risk Management Policy, Corporate in Russia to start using the business continuity Security Forum attended by the representatives of the skill development across its facilities, building Risk Management Framework Regulations, Risk management system and develop relevant plans. The Krasnoyarsk Territory Government and Krasnoyarsk a professional competency model for a number Management Regulations, and other by-laws. Group companies drafted more than 20 continuity Transport Prosecutor's Office. of functional and production divisions, defining The Company holds training sessions on risk plans for catastrophic production risks to describe • In 2018, the Company held four drills and 123 training knowledge and skills requirements for each management for its employees and managers at interaction procedures for business units, measures exercises together with the Federal Security Service, position, and developing a set of test questions various levels. to support or resume production, rehabilitate or EMERCOM and the Russian Ministry of Defence. to assess professional competencies of employees. reconstruct the affected assets in case of adverse 102–30 events with an extremely low probability. • The Company implemented a comprehensive Risk management framework Nornickel continuously manages its risks security framework at the all-weather Bobrovy Log in all business areas and at all governance When it comes to risk management development in Fun Park (Krasnoyarsk), the main venue of the Winter 102–30 102–15 levels. Strategic risks are the responsibility 2019, the Company plans to expand the continuity Universiade 2019. The Company continuously manages risks that of the Company’s Board of Directors and management scope to cover non-production risks, • Ongoing is the project to set up a system of analytical affect its strategic and operational goals. These senior executives who are also in charge of such as IT, security and staffing risks, and improve risk situation centres to be further integrated with regional efforts include identification and assessment of key operational risks, while other significant management components in strategic and operational Secure City systems. external and internal risks in terms of their impact on operational risks are managed by heads of planning, as well as in other areas. WEB key financial and non-financial metrics, along with business units and subunits. The corporate risk The reporting year’s milestones include the creation the development and implementation of response management framework (CRMF) implementation Corporate security of the National Association of International Information and minimisation measures. and improvement initiatives are spearheaded Security actively backed by Nornickel. by the Company’s Vice President and Head of Nornickel is a global metals and mining leader and a The Company’s risk management framework relies Internal Controls and Risk Management and its strategically important company in most regions where In April 2018, Nornickel presented its in-house developed on the principles and requirements of Russian Risk Management Service. The latter submits it operates. This makes corporate security a priority area Information Security Charter for Critical Industrial and international laws and professional standards, its quarterly reports to the Board of Directors’ for the Company that seeks to ensure safe and smooth Facilities at the information security forum in Germany including the Corporate Governance Code Audit and Sustainable Development Committee operation of its facilities. and the OSCE’s cyber security conference in Rome. The recommended by the Bank of Russia, ISO 31000 for review. document was approved by 13 countries. (Risk Management) and COSO ERM (Enterprise Risk Development and implementation of group-wide security Management – Integrated Framework). measures fall under the remit of the Corporate Security Going forward, Nornickel plans to set up and finance Unit, acting in line with the Russian laws, applicable research grants in international information security. international regulations, internal standards and guidelines. The reporting year saw the Company adopt a number of key regulations on the information security of Nornickel's KEY RISKS OF NORNICKEL 102–15 The corporate security system is structured and assets and operations: managed based on a number of targeted programmes • Freedom of Association Policy; to maintain economic, corporate, information, facility • Regulation on the Personal Data Protection STRATEGIC RISKS and transportation security along with transparency in procurement and contractor selection. The Company Commission; pays special attention to supporting socially significant • Price risk • FX risk • Regulation on the Commission for Critical Information investment and environmental projects. WEB • Market risk • Investment risk Infrastructure Categorisation. • Risk of toughened environmental requirements 205–3 A landmark achievement in 2018 was no confirmed incidents of corruption, which was attained through a comprehensive approach to corporate security and a OPERATIONAL RISKS zero tolerance policy towards corruption.

• Workplace injury risk • Social risk Nornickel is actively engaged in public-private • Information security risk • Risks related to changes in legislation and law partnerships to maintain high security levels and enforcement practices • Technical and production risk enhance social stability at its facilities in the regions of • Compliance risk • Climate risks operation. • Risk of power blackouts at production and - risk of insufficient water resources • Also, the Company is enhancing cooperation with law social facilities in the Norilsk Industrial District - soil thawing risk (NID) enforcement and supervisory authorities. Nornickel representatives participate in public and advisory boards of the Ministry of Internal Affairs, Investigative Committee, Transport Prosecutor's Office and the Federal Security Service, and in interagency working groups. 54 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 55

Information technologies Nornickel won the 16th National The Company honoured its commitments, providing As at the year-end, the Company had credit ratings from IT Leader Award 2018 in the Non-Ferrous timely and full payments to the budgets of all levels. the three leading international rating agencies and the 1 Nornickel leverages information technologies (IT) to Metallurgy category for introducing Tax and non-tax payments to budgets of various levels Russian RAEX: continuously improve its production and business personnel and machinery positioning and totalled RUB 115.6 bn, increasing by RUB 15.3 bn y-o-y. • Fitch Ratings: BBB–/Stable; processes. While constructing new capacities and expanding the existing ones, the Company introduces radiocommunications systems at Zapolyarny The Company's stable financial position is confirmed by • Standard & Poor's: BBB–/Stable; advanced automatic systems to boost process efficiency, Mine. investment grade ratings from Moody’s, and S&P Global • Moody's: Baa3/Positive; safety and manageability, optimise costs and increase and Fitch. productivity. Overall, the reporting year saw the The automation system installed at the mine • Expert RA: ruААА/Stable. Company implement over 40 IT projects, including: scans individual tags of employees and self- In January 2018, Moody's upgraded Nornickel's credit • the Technology Breakthrough operating excellence propelled machinery and allows for wireless rating to Ваа3 (investment grade) and raised its outlook In February 2019, Moody's upgraded Nornickel's credit initiative; communication with each employee via their from stable to positive following an increase in Russia's rating to Ваа2, outlook stable, following an increase in personal phones. It also features an anti- country ceilings for foreign currency debt to the same Russia's country ceilings for foreign currency debt to the • Mining Control projects to allow for the online control Baa3 level and a change in the outlook on Russia’s same Baa2 level and an upgrade in Russia’s sovereign collision technology informing the driver of mining operations; rating from stable to positive. credit rating to Baa3 (investment grade), outlook stable. of getting close to the deployed staff or • the Economics and Finance Unit’s strategic IT initiatives. equipment. Also, Nornickel received the highest creditworthiness rating according to the Russian national scale (ruAAA, In 2018, the Company launched the SAP operations control The staff or equipment location data is outlook stable) from the RAEX (Expert RA) rating centre to support the systems running at the Company's continuously transmitted to the control room agency. facilities. WEB ensuring real-time coordination of actions in case of emergencies. The Company's cutting-edge IT platform facilitates the introduction of advanced technologies and opens up new digitalisation opportunities. Nornickel runs FINANCIAL HIGHLIGHTS pilot projects to implement potentially effective digital character recognition, big data and internet of things. In tools and solutions. 2018 saw the launch of Nornickel 2019, the lab will expand its scope of work to add new Digital Lab, a platform that helped test more than projects to the pipeline and pilot launch the designed Indicator 2014 2015 2016 2017 2018 10 technologies, including simulation modelling, optical solutions. Revenue, RUB bn 456.0 506.1 548.6 536.8 728.9

Gross profit, RUB bn 238.0 277.0 270.8 268.6 406.3 Economic efficiency of investment projects, this helped reduce our CAPEX EBITDA, RUB bn 218.2 247.3 257.3 236.4 389.2 by 22% to USD 1.6 bn. In 2019, the Company will make 103–2 investment decisions on a number of promising growth EBITDA margin, % 48 50 47 44 53 Economic efficiency is essential projects. We also expect to see further positive effects for the Company to meet its from our programme to increase labour productivity. Net profit, RUB bn 93.4 104.0 167.4 127.4 187.8 strategic goals and deliver on its We estimate our CAPEX for 2019 at USD 2.2–2.3 bn. Dividends paid,2 RUB bn 159.9 154.2 86.7 176.2 218.9 commitments to shareholders, employees, local communities and Thanks to higher output and metal prices, the Assets, RUB bn 739.8 974.5 998.3 958.3 1,059.5 other stakeholders. Company's consolidated revenue went up by 28% to 3 USD 11.7 bn, while EBITDA rose by 56% to USD 6.2 bn Total CAPEX, RUB bn 49.9 103.3 113.6 116.7 99.2 In 2018, the Company embarked on driven by stronger revenues, the launch of Bystrinsky the second stage of its ambitious GOK and a decrease in operating costs as a result of environmental programme, our ongoing efforts to improve operating efficiency. launching initiatives to upgrade EBITDA margin stood at 53%, which is one of the best infrastructure, accelerate results among global diversified metals and mining digitalisation, etc. A year before, we companies. had completed the construction of Bystrinsky GOK and reconfigured production capacities. Coupled with shifting deadlines for a number

1 Includes all taxes paid, net of VAT and dividend income tax, as well as insurance payments and customs duties. 2 Dividends paid during the periods, excluding payouts on quasi-treasury stock. ³ Includes costs paid in Russia for new construction projects, expansion, retrofit or upgrade of existing facilities, acquisition of machinery and equipment, R&D and other expenses, as well as housing and amenity construction. 56 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 57

1 DIRECT ECONOMIC VALUE GENERATED AND DISTRIBUTED 201-1 Stakeholder engagement government authorities, local communities, Russian and international non-profit organisations. The Company Indicator, RUB bn 2014 2015 2016 2017 2018 Stakeholders and interaction identifies stakeholders based on the extent to which mechanisms they interact, share interests and communicate with 1. Direct economic value generated 470.8 521.2 554.9 541.0 734.6 Nornickel. 102-42 102-43 102-40 102-21 2. Economic value distributed, including: 464.9 554.2 512.7 519.0 684.6 MMC Norilsk Nickel bases its Stakeholder engagement principles and procedures are Operating expenses 162.0 175.7 194.6 194.1 228.5 interaction with stakeholders set out in MMC Norilsk Nickel's Business Ethics Code.3 around making an ongoing Community investments and charity2 2.7 7.0 7.4 17.7 12.9 dialogue with various groups a The Transparency Policy of MMC Norilsk Nickel aims Payroll and other employee remuneration 87.4 104.5 114.2 120.4 128.8 part of the Company's day-to- to provide stakeholders with complete and accurate and benefits, including payroll taxes day operations, all in accordance information about the Company's activities and ensure Payments to providers of capital (interest, with the AA1000AP,1 AA1000SES2 proper feedback. 165.2 222.0 133.4 128.6 243.1 dividends) and GRI standards. Nornickel's Gross tax payments, excluding payroll taxes 47.6 45.0 63.1 58.3 71.3 key stakeholders are employees, shareholders, investors, business 3. Economic value retained (1–2) 5.9 – 32.9 42.2 22.0 50.0 partners, national and local

307-1 419-1 103-2 When calculating dividends, MMC Norilsk Nickel STAKEHOLDER MAP⁴ In 2018, budgets of various levels saw the Group accounts for the cyclical nature of the metals market and companies pay RUB 39.6 mln in fines under 334 imposed for the need to maintain a high level of creditworthiness. Company sanctions, including 29 for environmental impact, 22 for As a result, the amount of dividends may change employees breach of labour laws, and 283 imposed on other depending on the Company’s operating profit and Russian and international sports organisations 3.0 Shareholders and investors grounds. WEB leverage. Non-profit organisation 2.5 Investment banks (brokers)

2.0 Dividend policy Analytical and rating agencies DIVIDENDS PAID, RUB BN Industry unions 1.5 MMC Norilsk Nickel’s Dividend Policy aims to balance 1.0 the interests of the Company and its shareholders, 218.9 Business associations Suppliers and contractors 2018 enhance the Company's investment case and market 0.5 capitalisation, and ensure respect of shareholder 176.2 Local communities and civil society 0.0 rights. 2017 organisations across the Company's Customers geographies 86.7 The Company put in place the Regulations on the 2016 State-run educational institutions Russian Federation Council Dividend Policy approved by its Board of Directors to in the Company's regions of operation ensure transparency on how dividends are calculated 154.2 2015 and paid out. Territorial offices of federal government Russian State Duma 159.9 agencies 2014 Local authorities Russian Government

Regional government authorities Federal ministries, agencies and services Russian Trilateral Effect of the stakeholder Commission on the on Nornickel Group Regulation of Social and Labour Relations Effect of Nornickel Group’s operations on the stakeholder

1 AA1000 AccountAbility Principles Standard. 2 1 Calculated on an accrual basis under the IFRS. The Company used an in-house calculation methodology developed in line AA1000 AccountAbility Stakeholder Engagement Standard. with the GRI Standards. 3 Please see the corporate website at https://www.nornickel.com/investors/disclosure/corporate-documents/. ² Excluding CAPEX. 4 The map was put together based on surveying 78 of the Company's managers and employees, as well as external stakeholders. 58 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 59

Stakeholders Key interests of Interaction mechanisms Key interaction events Stakeholders Key interests of Interaction mechanisms Key interaction events stakeholders in 2018 stakeholders in 2018

Personnel Federal authorities

• Company employees • Social benefits and • Joint commissions, • Signing a new Collective • Russian Federation • Regulatory improvement • Working and expert groups, • Signing an agreement guarantees committees and working Agreement with the Council in different areas commissions and committees with the Federal Agency • Favourable working groups Company’s employees for • Russian State Duma • Environmental impact • Public events for Ethnic Affairs (FAEA) 2018–2021 on cooperation aimed at conditions • Discussions with trade unions • Russian Government regulation • Permits and licenses and labour councils • The Leadership and providing support to the • Decent salaries • Federal ministries, • Support for domestic • Intergovernmental Management of Team indigenous peoples of the • The Company's stability • Offices for operating, social agencies and services producers commissions Motivation corporate North as an employer and labour matters • Stability in taxes workshop • Russian Trilateral • Creation of the National • Opinion polls Commission on the • Social stability support • Participating in the Youth Association of International • Corporate media, booklets, Regulation of Social across the Company's Economic Summit during Information Security with information screens and and Labour Relations geographies the Krasnoyarsk Economic Nornickel's backing boards Forum • Strengthening • Corporate intranet portals enterprises’ economic security Shareholders and investors Regional government authorities and local communities • Shareholders and • Capitalisation growth • Meetings (including one-on- • Strategy Day on investors • Dividend payments one meetings) and conference 19 November 2018 in • Regional government • Stability in taxes • Working and expert groups, • Government support for the calls London authorities commissions, committees and Kola MMC upgrade • Investment banks • Transparency of • Environmental protection councils (brokers) information and timely • Phone calls • Conference calls and a • Local authorities • Social stability support • Signing of the agreement • Analytical and rating disclosure of key facts • Emails road show following the • Territorial offices of across the Company's • Cooperation agreements to support SMEs between disclosure of IFRS financial MMC Norilsk Nickel and the agencies • The Company's federal government geographies • Development plans for statements Government of the Trans- sustainable development agencies • Support for domestic the Company's regions of Baikal Territory • An analytical review of the • State-run educational producers operation nickel and PGM markets institutions in the • Corporate and partnership • The agreements to support prepared in alliance with Company's regions of programmes and projects the volunteer movement ICBC Standard Bank were signed in 2018 with operation • Forums, conferences, fairs, the administrations of • Local communities and round table discussions Business partners Norilsk, Monchegorsk, and and civil society • Joint inspections, drills and Chita • Suppliers and • Streamlining of • Meetings, conferences, • Staging a conference for organisations in the training exercise contractors procurement procedures exhibitions, hosting Norilsk Nickel Group’s Company's regions of • Launch of the Social Portrait of a City Resident analytical • Accessibility of negotiations suppliers and contractors operation survey in the Krasnoyarsk procurement procedures • Automation of procurement • Building a single database Territory and Murmansk using SAP of contractors from all Region • Procurement announcements regions of the Company’s operation • Corporate Trust Service Russian and international non-profit organisations • Joint workshops • Business associations • Information exchange • Joint projects • Development of the Information Security • The Company’s • Product quality • Organising meetings • Participation in the • Industry unions • Removal of • Events (meetings, round table administrative barriers discussions, conferences and Charter for Critical Industrial customers • Packaging and labelling throughout the year SFCHINA 2018 industry • Non-profit organisation competitions) Facilities • Annual customer surveys exhibition • Russian and • Support for domestic • Delivery terms • Participation in the • Production audits at international sports producers • Membership in governing • Information support of • Working with customers on development of the draft Kola MMC’s sites to organisations • Stability in taxes bodies and committees transactions matters of product quality UN resolution for combating confirm compliance with • Opinions, proposals, requests • Processing customer • Environmental protection illegal production and • Sustainable growth of sustainability policies as per complaints and grievances and industrial ecology trafficking of precious sales markets customer requests metals • Meetings, conferences, fairs, • Improvement of safety exhibitions and reliability of precious • Extension of the term metals supply chains in office as chair of the • Working with customers International Nickel Institute in connection with the for Nornickel's Head of consumption and market Marketing growth prospects analysis 60 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 61

Dialogue with shareholders and investors In 2018, the Investor Relations Department kept In regulating labour relations, employee interests are In order to develop interregional social partnership, diversifying the shareholder base and attracting new represented by social and labour councils and trade Interregional Cross-Industry Association of 102-5 102-10 shareholders, organising over 350 meetings with union organisations. The Company has collective Employers “Union of Entities of the Copper and The authorised capital of MMC Norilsk Nickel is made institutional investors and an Investor Day in London decision-making bodies representing the employer, Nickel and Supporting Industries” involving six of the up of 158,245,476 ordinary shares with an aggregate followed by a road show in Europe and the USA. employees and trade unions, including collective Group’s Russian companies was established in 2018. market value of USD 29.7 bn as at 31 December 2018. bargaining commissions, labour dispute commissions, In November 2018, the Association of Employers and The Company's ordinary shares are traded mostly on Responsible investment social benefits commissions/committees, social the Trade Union of MMC Norilsk Nickel Employees the Moscow Exchange, while ADRs are traded in the insurance commissions, health and safety commissions/ interregional public organisation initiated collective electronic trading system of OTC markets of the London In recent years, the sustainable development agenda committees, social and labour relations committees, etc. negotiations to develop and sign an interregional Stock Exchange. has been gaining ground, with an increasing number of cross-industry agreement for the key players of the investors and asset managers focusing on responsible Trade Union of MMC Norilsk Nickel Employees, an copper and nickel and supporting industries for 2019– The reporting year saw minor changes in the investment. In 2018, the Company held around interregional public organisation that includes territorial 2022. The signing is slated to take place in 2019. shareholding structure. Olderfrey Holdings Ltd, the 20 target meetings with investors whose investments trade unions and trade unions of the Group companies, Company's major shareholder, increased its holding were primarily driven by environmental, social and represents the Group's employee interests on an Employee engagement survey by 4.2% to 34.6% as at the year-end. The shares of the governance (ESG) factors. In order to improve relations interregional level. The trade unions of transport and other major shareholders – UC Rusal Plс and Crispian with responsible investors and agencies that evaluate logistics divisions are members of the Yenisey Basin In 2018, for a second consecutive year, Norilsk Investments Ltd – remained unchanged at 27.8% and companies using ESG criteria, the Company created Trade Union of Water Transport Workers (Krasnoyarsk, Nickel Group organised a series of activities to 4.2%, respectively. The shares and ADRs in free float a separate section on the corporate website with all Russia). manage employee engagement. The core initiative accounted for 33.4%, owned by institutional and private pertinent information: https://www.nornickel.com/ is a survey called “Let Everyone Be Heard. What Do investors from Europe, Asia, the USA, Russia and investors/esg/. All the Group’s major facilities located in the Norilsk You Think?” that includes questionnaires and focus elsewhere. Industrial District and Murmansk Region have put in groups, covering around 75,000 employees and place social and labour councils that represent the 32 businesses of Nornickel. Its results are subject employees who are not trade union members. Chairs to review, action planning and implementation at all of the local councils make up the Social and Labour governance levels, from facilities to the Group as a ESG ASSESSMENT: THE LARGEST RATINGS AND INITIATIVES Council of MMC Norilsk Nickel and the Social and whole. Labour Council of Kola MMC. Based on the completed survey, the Company 102-41 compiled a series of initiatives to increase employee The Group companies have signed 21 collective engagement and motivate staff to boost their bargaining agreements covering 81% of Nornickel's performance. These initiatives are grouped as follows: average headcount. As at the end of 2018, 10.8% of top management, the employer's brand value, success Nornickel's total headcount were members of trade factors, performance management, and career unions, while 78% joined social and labour councils. opportunities.

The absence of strikes and lockouts involving the Company's employees highlights the effectiveness of interactions and Nornickel's social policy, in general.

INITIATIVES TO INCREASE EMPLOYEE ENGAGEMENT

Top management The employer's brand Success factors Performance Career value management opportunities Our key ESG achievements in 2018: Dialogue with employees Initiatives to increase engagement • in December 2018, the Company’s score in Social partnership framework Corporate dialogues Positive Life Experience Nornickel’s Leaders 360-degree review New compre- Sustainalytics' ESG rating went up to 69 against 58 project programme hensive training 103-2 103-3 Communication training Training sessions for in 2017; system for Nornickel’s companies run a social partnership sessions Corporate volunteer IamHR programme managers on providing programme feedback employees in the • in December 2018, ISS affirmed Nornickel's framework aimed at reconciling interests of employees Direct line with the Com- New collective bargain- talent pool pany’s vice presidents Guidebook for New Em- ing agreement Keeping employees Environmental and Corporate Governance ratings and employers on matters pertaining to the regulation ployees aware of the Com- Training course Interactions on personal Interregional cross- for mentors at 4, and Social – at 3 (1 and 10 standing for low and of social and labour relations. The Company performs matters Onboarding programme industry agreement pany’s priorities high risk, respectively); its obligations in compliance with the Labour Code Engagement workshops National conferences Social and working con- of the Russian Federation, collective bargaining at unit forums ditions at the facilities • in June 2018, the FTSE index score was confirmed at agreements, and joint resolutions. It has in place the 3.1 out of 5. Freedom of Association Policy approved by the Board of Directors. 62 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 63

Offices for operating, social and labour relations supporting socially important projects. Representatives Partners Goals of the agreement of the Company take part in parliamentary sessions and In addition to the Corporate Trust Service, the round table discussions organised by the Federation Federal Agency for Ethnic Affairs Interaction and cooperation aimed at preserving the traditions and lifestyle of the indigenous Company launched offices for operating, social and Council and State Duma of the Federal Assembly of peoples of the North, Siberia and Far East of Russia living in the regions of the Company’s operations labour relations back in 2003. They are primarily the Russian Federation, Government of the Russian tasked with response to employee queries, control Federation, Russian Union of Industrialists and Rosatom State Atomiс Energy Interaction and cooperation to implement strategic projects in the Russian region of the Arctic of their processing, and prompt resolving of conflicts. Entrepreneurs, Chamber of Commerce and Industry Corporation The offices regularly monitor the staff’s social status, of the Russian Federation, Association of Managers Government of the Trans-Baikal Support for small and medium-sized enterprises, development of partnerships with industrial enabling us to solve reported issues in a timely manner. interregional public organisation, etc. Territory organisations In 2018, the Group's units in the Norilsk Industrial Chita Administration Cooperation as part of the Year of Volunteer District ran 24 offices that received over 52,000 queries Nornickel is an active participant of conferences, and requests mostly from employees (78%), former forums and business events involving policymakers and Krasnoyarsk Administration Interaction and cooperation on projects to improve Krasnoyarsk city landmarks; employees (21%) and local communities (1%). government officials, and drafts hands-on proposals to cooperation as part of the Year of Volunteer optimise and develop the legal framework. Norilsk Administration Cooperation as part of the Year of Volunteer

QUERIES BY TOPIC IN 2018, % Starting 2017, the Company’s top management attends Monchegorsk Administration Cooperation as part of the Year of Volunteer regional authorities’ public meetings to report on 0.5 the results and plans of Nornickel. In January 2018, the Company presented its results and plans on implementing investment projects to the Economic Relocation programme Committee, Transport Prosecutor's Office and the 1.0 26.0 Social and Council headed by the Murmansk Region's Governor. Federal Security Service, and in interagency working working issues Since 2011, the Company has been contributing to groups. Legal issues Over the past year, the Company backed large a long-term targeted federal programme to relocate Production international and domestic conferences and forums: people living in Norilsk and Dudinka to other Russian In 2018, the Company systematically collaborated with: 72.5 issues • International Forum “The Arctic: Territory of Dialogue” regions with favourable climate conditions. • the Federal Security Service of the Russian Personal (Arkhangelsk, official partner); Federation on anti-terrorism and anti-sabotage issues The programme envisages relocation, in the span security of the Company's critical infrastructures (fuel • Krasnoyarsk Economic Forum (Krasnoyarsk, general of 10 years, of over 11,000 families. The Company and energy utilities, transport infrastructure, etc.); partner); participates in the programme as a benefactor, with • the Ministry of Internal Affairs of the Russian • Nevsky International Ecological Congress its donation totalling RUB 8.3 bn. Since the launch of Federation to prevent stealing of products and (St Petersburg, partner); the programme, the Company has contributed a total of RUB 6,991 bn to the Krasnoyarsk Territory budget, materials containing precious and non-ferrous Dialogue with authorities and non-profit • St Petersburg International Economic Forum including RUB 0.830 bn in 2018. metals, maintain security at public events and take organisations (St Petersburg, partner); addiction prevention measures; • Eastern Economic Forum (Vladivostok, business During 2011–2018, 7,107 families purchased apartments • the Federal Customs Service of Russia to prevent 103-2 programme partner); on the “mainland” and moved there, including cross-border smuggling of metal-bearing materials; Norilsk Nickel Group's guiding principles in 5,847 families from Norilsk and 1,260 families from • ECOTECH International Exhibition and Forum cooperating with government bodies, local authorities Dudinka.1 • the Ministry of the Russian Federation for (Moscow, official partner); and non-profit organisations are strict compliance with Civil Defence, Emergencies and Elimination of Consequences of Natural Disasters (EMERCOM) to Russian laws, regional and municipal regulations and • Murmansk International Business Week (Murmansk, Public-private cooperation on corporate security drill emergency response plans and disaster relief the social responsibility principle, collaboration, and partner). mutual respect of interests. As part of its responsibilities, the Company’s Corporate operations; Cooperation agreements Security Unit actively liaises with government • the Federal Security Service and the Ministry of Following the information transparency principle, agencies. One of the key forms of interaction is the Defence of the Russian Federation to organise Nornickel maintains an open dialogue with the In 2018, Nornickel signed a number of agreements with Unit’s participation in industry conferences, forums, multi-service tactical training sessions on the Taimyr authorities to build constructive and effective regional and local authorities as well as major Russian and business meetings with direct involvement of the Peninsula; cooperation. The Company is represented in companies. The agreements covered a wide range of legislative and executive authorities. • the Ministry of Foreign Affairs of the Russian 21 committees, commissions, expert and working social and economic issues, including infrastructure Federation to foster international information groups established by government bodies in projects. Also, the Company is enhancing cooperation with law security. association with the business community, thus enforcement and supervisory authorities. Nornickel representatives participate in public and advisory boards of the Ministry of Internal Affairs, Investigative

¹ As of January 2019. 64 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 65

Environmental dialogue • the Environmental Aspects of Industrial Development Dialogue in public non-financial NUMBER OF DIALOGUE PARTICIPANTS, PPL¹ international conference devoted to law enforcement reporting 102-43 102-46 10 20 30 40 50 60 70 80 90 100 Measures for reducing MMC Norilsk Nickel’s in regard to approved informational and technical 2018 environmental footprint are constantly on the agenda reference books on the best available technologies; Each year starting from 2003, the Company has of the Company and its stakeholders. In the course been engaging in dialogues with stakeholders while • the Environmental Legislation: Problems and of the year, both internal and public events feature drafting sustainability reports. Since 2014, these 2017 Implementation Practices workshop. environmental discussions. dialogues have been staged as part of the We Are Over the years, Nornickel has successfully used the City! social technologies forum. 2016 In 2018, the following items were on the agenda of volunteer movements to promote dialogue on various forums and platforms: environmental protection with its employees and The dialogues held during the preparation of the 2015 • sustainable development of regions; local communities. Russia declared 2018 the Year of 2018 Sustainability Report included discussion points Volunteer, and the Company launched its third Let’s related to identifying the goals and targets within the • preservation of ecosystems across the footprint of Do It environmental marathon. It spanned Norilsk, UN’s 2030 Sustainable Development agenda that 2014 production sites; Monchegorsk, the Pechengsky District, and Moscow, were most relevant for the Company’s operations • improvement of environmental laws and regulations; as well as the Trans-Baikal Territory that hosted the and non-financial reporting. External stakeholders Internal stakeholders marathon for the first time. • promotion of best practices in environmental These dialogues took place in Norilsk and protection; Monchegorsk and were attended by Nornickel DIALOGUE PARTICIPANTS BY TERRITORY, % • the Company’s environmental programmes and employees, local authorities and members of the initiatives; Nornickel’s awards and achievements: general public. The forum helped identify the UN 55 • Certificate of Honour from the Federation Sustainable Development Goals and targets most • industrial ecology problems. Council for the Company’s environmental relevant for the Company and the regions where it Murmansk achievements; operates. Region At Nornickel’s milestone event for the year — Norilsk Industrial Investor Day 2018 in London on 19 November — the • first place in the Business eaders:L District Company presented its long-term development Environmental Expenses category of a programme, which sets out environmental protection as RAEX rating agency ranking; one of the strategic priorities. 45 • top 10 position in an ESG ranking by RAEX. Ecology was also at the top of the agenda at multiple international and domestic forums backed by Nornickel and attended by government representatives, captains of industry, investors, experts, and analysts: In June 2018, Nornickel held an environmental Supply chain management KEY ELEMENTS OF NORNICKEL'S SUPPLY • Environment Protection and Sustainable campaign to mark the World Environment Day as a CHAIN Development in the North VII environmental forum; way to reduce the plants’ environmental footprint. 102-9 The smelting capacities of Nadezhda Metallurgical Supply chain is a set of interrelated • VIII International Forum Arctic: Today and the Future; Plant were suspended for 60 minutes, and Kola MMC resources and processes leveraged • Arctic Days in Moscow federal forum. idled its smelting and conversion department of the by Nornickel to create value all the SUPPLY • PROCUREMENT Metallurgical Shop at the Monchegorsk site for the way from obtaining goods, materials • PLANNING same amount of time. In the town of Nickel, one-hour and services to delivering end MMC Norilsk Nickel maintains active dialogue with shut downs were arranged on three ore-thermal products to the consumers. Supply various levels of the government and the professional furnaces and two converters of Kola MMC’s smelting chain management at Nornickel PRODUCTION community on matters of application and improvement shop. seeks to ensure continuous of the regulatory framework governing environmental operation of the Group companies, PRODUCT protection. In 2018, the most significant venues for this In late 2018, Nornickel’s two main production sites high product quality and reliability of LOGISTICS QUALITY dialogue were: Polar Division and Kola MMC joined the Zero Negative shipments to customers. MANAGEMENT • parliamentary sessions of the State Duma Committee Environmental Impact campaign, with Kola MMC idling on Ecology and Environmental Protection devoted the operation of the smelting and conversion section The Company continuously to Improvement of the Government Policy on Air and three ore-thermal furnaces on 29 November. improves the efficiency of its supply SALES Protection; Polar Division joined the environmental campaign on chain by adopting best practices 1 December. Nadezhda Metallurgical Plant's smelting and standards and through business • meetings of the joint working group made up of shop idled its second processing line for three days, process automation. the Federal Service for the Oversight of Consumer and the operation of slag cleaning furnace No. 3 was CUSTOMER Protection and Welfare (Rospotrebnadzor) and the suspended for seven days. Russian Union of Industrialists and Entrepreneurs (RSPP) representatives to discuss draft regulations on establishing and changing sanitary protection ¹ External stakeholders are representatives of regional and local authorities, communities, and non-profit organisations, while internal stakeholders refer zones; to managers of various levels from the Head Office, Polar Division, and Kola MMC. 66 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 67

Supply In 2018, based on an independent survey Nornickel strives to create an environment of shared Our procurement team together with experts from other by the RAEX rating agency and the culture, visions and values in its relationships with departments are looking into alternative technologies Given the diverse businesses and geography of Association of Procurement Directors, the suppliers. An ESG clause is incorporated into the (alternative fuel and energy sources) that can reduce operations of Norilsk Nickel Group, the supply Head of MMC Norilsk Nickel's Procurement standard agreement with suppliers and contractors. The the Company's environmental footprint and cut costs. management function is designed to fully cater to the Company adheres to a number of codes of conduct The results of this can already be used in procurement. Department was included in the list of the Company's resource needs in a timely and efficient applied by its business partners and devised by foreign The current tender procedure, in particular, includes a manner securing seamless operation of all production most prominent heads of procurement manufacturers. There is also ongoing work to develop criterion of the supplier’s readiness to participate in the units and negotiating the best available procurement according to the professional community. Nornickel's Charter for Suppliers that is expected to be Company’s alternative energy initiatives. WEB terms. signed by the Company's suppliers and contractors.

does not only give suppliers an opportunity to The importance of supply management at Nornickel is ensure seamless operation of their enterprises, but dictated by the impact it has on: CONTROL OF NON-FINANCIAL FACTORS IN SUPPLIER RELATIONS 103-2 also provides incentives for further growth. • achievement of the Company's strategic goals. The supply function plays a crucial role in the programme PROCUREMENT INITIATION to enhance efficiency and cut costs; Nornickel pays close attention to developing relations with manufacturers of equipment and materials, as • Scope of supply/work: legal and regulatory requirements of the Company, mandatory • occupational health and safety. The quality of they ensure the Company’s ability to meet its strategic sourced products and timely supplies have a material and recommended specifications of products and services, covering health, safety and environment, targets. Nornickel is committed to working with more etc. impact on occupational health and are directly linked local suppliers. To this end, it developed a centralised • Procurement documents: provisions for no signs of bankruptcy, overdue taxes and charges, and no to the workplace safety; pilot testing procedure enabling it to phase out criminal records in the biographies of top managers • 103-2 imported equipment with that manufactured locally. • Procurement policies for certain product categories may specify quality assurance procedures for environment. An environmental impact is exerted As at the end of 2018, Nornickel had 57 ongoing and supplies throughout the life cycle of sourced products 15 completed pilot tests. The Company established cross-functional commissions to determine promising (production, transportation, storage, use and PROCUREMENT PROCEDURE disposal) and is directly linked to demand planning, directions for scheduled pilot tests aimed at achieving import substitution. inventory management and logistics; • Qualification of suppliers: default risk assessment and compliance with the Company's initial requirements (scope of supply/work, specifications, etc.) • financial performance of Nornickel across the As at the end of 2018, the Company had 457 domestic footprint. As Nornickel is the only or key customer for • Corporate Security's checks into business reputation, reliability and solvency of potential and 35 foreign suppliers. counterparties many local businesses, partnership with the Group • Analysis and evaluation of bids submitted, including track record of similar projects and qualifications of key employees

CONTRACTING PROCEDURE SUPPLY MANAGEMENT • Inclusion of an anti-corruption clause in the contract • Inclusion of product and service specifications in the scope of supply/work REQUIREMENTS PLANNING FEEDBACK PROCUREMENT LOGISTICS AND SUPPLY CHANNELS MANAGEMENT CONTRACT PERFORMANCE BY SUPPLIERS

• Material and technical • Formalised procedures • Higher • See the Suppliers • Corporate Procedure for Organising and Conducting High-Hazard Operations: control over procurement plan and policies efficiency in section on contractors’ compliance with health and safety requirements • Inventory management • The Company's transportation www.nornickel.com • Control over compliance with the Company’s initial requirements (scope of supply/work, model that rules out procurement process is • 2018: supplier specifications, etc.) and environmental regulations during work and upon acceptance shortages certified for compliance conference with ISO 9001 and ISO 14001 • Procurement automation Key non-financial factors • Equal competitive Quality of products, works and services Occupational health and safety opportunities Environmental protection Legal compliance • Combating corruption and other abuses 68 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 69

Product quality and supply reliability CORPORATE INTEGRATED MANAGEMENT SYSTEM (CIMS)

FACTORS ENSURING RELIABILITY AND CONTINUITY OF NORNICKEL'S PRODUCT SHIPMENTS • Continuous enhancement of operational excellence • Competitive products and services OBJECTIVES OF CIMS • Guaranteed occupational safety, quality and reliability of supplies • Alignment with consumer needs and expectations

Efficient self-developed product delivery Close coordination between marketing, production planning and monitoring system and delivery units

• Quality Assurance Policy • Environmental Policy KEY REGULATIONS • Occupational Health and Safety Policy • Nornickel Group's internal standards Feedback loop with customers that enables Corporate cargo fleet prompt response to their proposals, inquiries, and complaints

• GOST R • ISO 9001:2015, ISO 14001:2015, OHSAS 18001:2007 KEY RUSSIAN AND • Rules and regulations of the European Union, World Trade INTERNATIONAL STANDARDS Organisation, London Metal Exchange, and Shanghai Futures ISO-certified management system Highly qualified staff Exchange in Norilsk Nickel Group

102-2 Norilsk Nickel Group has achieved utmost efficiency In 2018, Nornickel's management systems successfully Saleable products offered by MMC Norilsk Nickel’s Polar By 2020, around 300,000 electric vehicles in its production operations to provide the volumes, passed a surveillance audit, while the systems of Division include copper cathodes, technical selenium per year will be using batteries with quality, and product range1 that meet the needs of Gipronickel Institute and Norilsk Nickel Harjavalta (powder), platinum group metal concentrates (powder), society while also fully complying with all applicable were subjected to recertification audits. As part of the crude silver (powder), commercial lump sulphur, tellurium components manufactured as part of the laws and HSE requirements. second surveillance audit, Kola MMC migrated to the for thermoelectrical materials (bars) and copper- strategic partnership between Nornickel new ISO 9001:2015 and ISO 14001:2015 standards. nickel converter matte (bars). M00k copper cathodes and BASF. Environmental and quality-related goals and objectives A total of 104 employees (14 in the Head Office and 90 (GOST 859-2014 and GOST 546-2001) are certified in are in line with the Company's strategic goals and in the Group companies) underwent training in quality the GOST R certification system for compliance with the formulated in the management's resolutions based management. applicable product regulations and are registered on the on annual Corporate Integrated Management London Metal Exchange under the NORILSK brand. System performance reviews. To achieve the goals The Company has in place the Corporate Integrated Commercial products offered by Norilsk Nickel and objectives, the Company develops plans and Quality and Environmental Management System (CIMS). Kola MMC’s commercial products (electrolytic Harjavalta Oy include nickel cathodes, nickel programmes and then implements them, monitors the nickel, carbonyl nickel powder, carbonyl nickel briquettes, nickel powder, nickel salts, cobalt salts, status of target parameters, and assesses performance. pellets, electrolytic copper, electrolytic cobalt, cobalt and ammonium sulphate. Nickel brands of NORILSK concentrate, precious metal concentrates, and sulphuric NICKEL HARJAVALTA CATHODES and NORILSK NICKEL acid) do not require mandatory certification and are HARJAVALTA BRIQUETTES are registered on the London not certified against Russian regulatory standards. Metal Exchange. Products are labelled in accordance with the GOST and TU requirements. At the same time, Kola MMC’s In terms of sustainable development, the prospective cathode nickel brands of SEVERONICKEL COMBINE application areas for Nornickel metals include lithium-ion H-1Y and SEVERONICKEL COMBINE H-1 are registered batteries, electric engines for vehicles, autocatalysts, on the London Metal Exchange and Shanghai Futures electronics industry, hydrogen fuel cells and healthcare. Exchange. In the reporting year, nickel cathodes were registered on the London Metal Exchange under the In 2018, the Company faced no fines for failure to comply ¹ The Company’s products, when used as intended, fall in the category of those that change their properties almost completely: nickel is used in NORNICKEL brand. with product supply rules and requirements. WEB alloys; copper is mostly used in construction and manufacturing of electric and electronic devices; cobalt is used in electrical engineering and chemical industries as well as alloy production; platinum and palladium as chemical compounds are mainly used in autocatalysts; selenium is used in metallurgy, chemical, electrical engineering and glass industries; tellurium is used in solar batteries and photovoltaics and thermoelectrical materials; nickel and cobalt salts are used in a variety of industries. 70 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 71

REVENUE FROM KEY METAL SALES IN 2018 BY REGION, % Sales policy Customer satisfaction has improved by 6% compared to 2017. 102-4 102-6 In sales, the Company focuses on building long-term NICKEL COPPER strategic relationships with key market players. The buyers of sulphuric acid are asked to complete relevant Company’s customer base includes 434 companies, questionnaires once every three years. Compliance with 0.94 mostly industrial consumers. Nornickel sells its contractual obligations is audited and analysed on an Europe Europe products on all key markets, with its footprint spanning ongoing basis. 8.33 Asia 7.09 Asia 34 countries as at the end of 2018. 11.50 N orth and South 13.18 N orth and South The main criterion for customer satisfaction is America America When it comes to nickel products, the sales strategy focuses maintaining or exceeding the target satisfaction level 36.30 Russian 78.79 Russian on achieving a balance between supplies to stainless steel at 2.5 points (out of 3 points). Key customer satisfaction Federation and Federation and manufacturers and to other industry stakeholders. surveys must cover at least 50% of the Company’s the CIS the CIS total product sales. According to the 2018 survey, the As the world’s largest producer of palladium, the customer satisfaction level stood at 2.73 points. 43.86 Company continues to implement the strategy of entering into direct long-term contracts with end In 2018, the Company received 38 complaints and consumers to ensure sustainable and strong demand for grievances about its product or service quality and platinum group metals.1 achieved out of court settlement for 36 of them by meeting the demands of consumers (18 complaints PALLADIUM PLATINUM Customer satisfaction monitoring were deemed unfounded). As at 31 December 2018, 0.94 1.06 two grievances were being processed, with remedial Consumers of the Company's key products are surveyed action plans developed to address all 18 well-grounded Europe Europe to assess their satisfaction on an annual basis, while and 10 rejected grievances. WEB 30.62 Asia 6.18 Asia N orth and South 7.04 N orth and South America 85.72 America Russian Russian Federation and Federation and the CIS the CIS 32.58 MARKETS AND PRODUCTION VOLUMES2 35.86

2018 2019

Market description Price evolution Company’s Market outlook production volume Dialogue with business partners Dedicated to meeting the growing demand for Nickel market growing deficit growth 218.8 kt neutral reducing deficit Nornickel has always paid close attention to building battery materials used in electric vehicles, the effective cooperation with business partners both in strategic partnership between BASF and Nornickel the course of joint projects and at various economic became a landmark event for achieving SDGs Palladium market deficit growth 2,729 koz positive deficit and industry forums. and supporting green economy. As part of the long-term agreement, the Company will supply The Company's expertise and solid track record nickel and cobalt feedstock for battery production Platinum market surplus decline 653 koz cautiously positive surplus in creating powerhouse industrial businesses that in Europe. leverage cutting-edge technologies have laid the groundwork for successful implementation of projects Nornickel forms a key link in creating a global Copper market slight deficit volatility 473.7 kt neutral continued slight with partners in both traditional and emerging mechanism to ensure reliability of precious metals deficit industries. supplies. In this area, the Company successfully collaborates with the International Platinum Group In 2018, Nornickel and Russian Platinum signed a Metals Association (IPA), where it chairs the Security framework agreement on strategic partnership to set Committee, and with the United Nations Interregional up a joint venture (JV) for developing disseminated ore Crime and Justice Research Institute (UNICRI). deposits in the Norilsk Industrial District. The JV aims In particular, the Company’s cooperation with UNICRI to establish one of the world's largest PGM producers and IPA yielded a draft UN resolution on combating with the output of 70–100 t of PGMs per year. illegal production and trafficking of precious metals. ¹ For more details on the Company's sales policy, see the 2018 Annual Report. 2 For more details on the Company's key metal markets, see the 2018 Annual Report. 72 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 73

Developed by the Company’s Office for Chemical promotion of responsible consumption in the segment Transparency conference calls, and meetings with stakeholders. Forensic Analysis, the procedure for identifying the of precious metals and metal-bearing products. In 2018, Nornickel takes care with its media relations, making origin of precious metals in any product crossing the as part of the International Nickel Institute’s programme, Enhanced transparency and information availability sure to provide the Company’s position on events border gained international recognition. In the future, Nornickel and other producers jointed efforts to are the key guiding principles of MMC Norilsk Nickel (including emergencies) that call for comments from these unique identification methods can become systematically update the data on the nickel and nickel- in all of its pursuits. The Company has put in place the Company’s representatives, press conferences, an international best practice (following appropriate containing products life cycles. the Information Policy Regulations and Procedure for briefings, or press releases. validation by the European Network of Forensic Science the Interaction between MMC Norilsk Nickel’s Officers Institutes). As a member of the International Information Security and Russian and International Mass Media (updated Over the past year, the number of media publications Research Consortium, Nornickel can participate in in 2018), which govern its material disclosures to about Nornickel increased by over 27% compared to In terms of both infrastructure and methodology, crafting of the global information security agenda. stakeholders and serve as a testament to Nornickel’s 2017. In total, Russian outlets mentioned the Company Nornickel makes a significant contribution to the commitment to go beyond the mandatory disclosure 95,820 times. This rise in coverage was spread out requirements of the Russian law and regularly inform across all of the Group's geographies, with the outlets the public about its strategy and mission, policies, key focusing mainly on the social and production activities events and performance, as well as make clear the of the Company, its environmental and sporting Company’s position on certain topics. initiatives, as well as charitable projects and support for local communities. Innovations Gipronickel Institute comprises four divisions in In its application of the information policy, the St Petersburg, Norilsk, Monchegorsk and Chita. In terms Company is guided by the principles of regularity, Media coverage peaked in February, April and R&D plays a key role in of facilities and equipment, the Institute is on a par with timeliness, accessibility, reliability, completeness, September of 2018. Throughout the year, Russian implementing Nornickel’s strategic the most technologically advanced international peers. balance, and impartiality, all the while taking outlets reported on the Company’s investing activities, priorities such as reducing the In 2018, updated design documents drafted by the appropriate measures to ensure protection of its agreements with the Murmansk Region and Trans- environmental impact, improving Institute for Bystrinsky GOK were approved by Russia’s information resources. The key annual disclosure Baikal Territory, support of Universiade-2019, and the production efficiency and setting State Expert Review Board (Glavgosexpertiza). The draft events aimed at the target audiences are publication launch of the Sulphur Project, as well as social and stage for the Company’s sustainable provides for the plant to be constructed in 49 steps. of the sustainability and annual reports and charitable programmes and initiatives of Nornickel. development in medium and long presentation of Nornickel’s updated strategy and its run. In its everyday activities, Gipronickel Institute implementation progress at Investor Day. An important focus area of 2018 was the continued concentrates on the development of standard operating enhancement of the Company's social media presence Today, Nornickel operates two procedures for key shop areas, such as ore mining, The key channels used to relay information to the in light of the step-up in coverage of Nornickel’s social business units responsible for concentration, pyrometallurgy and hydrometallurgy. public, investment and expert communities are and charitable projects and especially the 2019 Winter the production development and publications on the Company’s official website Universiade in Krasnoyarsk, where the Company acted upgrade. These are Gipronickel Nornickel Digital Lab set up in 2018 has already www.nornickel.com, press conferences, briefings, as the general partner. Institute, one of Russia's largest delivered a number of projects and created prototypes research and engineering centres for digital systems. These include a copper electrolysis for mining, metallurgy, concentration short circuit detection system, a digital twin of Copper and processing of minerals, and Plant's main aisle to streamline in-shop logistics, and Nornickel Digital Lab established others. Currently, there are about one hundred initiatives in 2018 to focus on research in in the lab’s pipeline. information technologies. The Company also hires Russian and On 16 October 2018, Nornickel and Skolkovo Foundation foreign R&D and engineering signed a partnership agreement providing for Nornickel companies and Russian universities Digital Lab to be housed in the Skolkovo Innovation to carry out its projects. Centre. The lab will track new technologies and business models, collect, classify and analyse digital initiatives, To improve the quality of decisions and prototype solutions based on digital technologies. related to research and technology, According to the agreement, the Company will invest the Company established an R&D RUB 350 mln in the laboratory over 2019–2021. Panel back in 2013. PEOPLE MAKE ALL THE DIFFERENCE Nornickel received the international Randstad Award as the best employer in the metals and mining sector. The recognition came as a result of 06 Nornickel's successful HR strategy. COMPLIANCE WITH THE UN GLOBAL COMPACT

76 Human rights

• 76 Human Rights Policy • 77 Interaction with indigenous northern minorities

80 Labour relations

• 81 Employees and social policy • 91 Occupational health and safety • 97 Improvement of social and working conditions

98 Anti-corruption

• 98 Preventing and fighting corruption • 99 Corporate Trust Service

102 Environment

• 102 Environmental Management System • 104 Performance indicators • 111 Biodiversity conservation • 114 Impacts from transport operations • 115 Impacts from foreign operations • 115 Energy saving and energy efficiency 76 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 77

Compliance with NORNICKEL’S HUMAN RIGHTS PROTECTION PROCEDURES1

ANALYSIS AND the UN Global Compact COMMUNICATIONS CONTROL ASSESSMENT Human rights

Human Rights Policy CORRECTION AND REPORTING UPDATING IMPROVEMENT non-ferrous and precious metals, as well as upon shut UN GLOBAL COMPACT PRINCIPLES down of the Company’s mining operations, various production units and divisions across its locations. Businesses should Principle 1: The Company expects its contractors to uphold Interaction with indigenous northern minorities construction, maintenance and social projects in small support and respect the protection human rights as well, which is formalised in a number and separated settlements on the Taimyr Peninsula, of internationally proclaimed human rights. of internal policies. 103-2 103-3 along with delivery of social aid for indigenous Nornickel respects the rights, traditions, long-standing northern minorities and food for children of reindeer Principle 2: Businesses should make The protection of human rights is reflected in the values and interests of indigenous northern minorities herders, and other projects. sure that they are not complicit in Company's by-laws governing the HR, environmental, inhabiting the Company’s regions of operation. human rights abuses. social and other matters. Nornickel's operations and companies located in To preserve national traditions and culture of traditional settlement areas of indigenous northern indigenous northern minorities, the Company The Company's President is responsible for ensuring minorities include the Polar Transportation Branch, participates in staging the Big Agrish ethnic that Nornickel respects human rights. The Company's Norilskgazprom, Taimyrgaz and Norilsktransgaz. celebration, as well as annual professional festivals Respect for human rights is one employees are committed to respecting human rights Nornickel’s key commitments to further strengthen and for tundra inhabitants on the occasion of Reindeer of fundamental principles of and complying with the Russian and international develop relations with indigenous northern minorities Herder's Day and Fisherman's Day. Nornickel's operations. Being a laws and the Company's by-laws on human rights. that benefit both parties are set out in the Indigenous socially responsible business, a The Company has a clear management structure Rights Policy,2 which is aligned with the Indigenous and Since 2017, Nornickel has been implementing the major employer and a taxpayer alongside escalation and reporting lines to address Tribal Peoples Convention of the International Labour Comfortable Taimyr project as per its agreement with operating in the territories with a human rights. Organisation. the Taymyrsky Dolgano-Nenetsky Municipal District mature legal culture, the Company authorities. Under the project, the Company is to promotes human rights. No All of the Company’s new projects are screened for MM6 fund the building of 2,500 sq m of housing in the operations are run in and nor raw compliance with national and international legislation Representatives of the Group companies are members Tukhard settlement, where housing stock disrepair materials procured from areas and, by extension, human rights laws. These checks of indigenous northern minority commissions organised was a serious issue. Pursuant to the agreement, involved in military conflicts. span over ten of Nornickel’s functional divisions. by local authorities. Nornickel will build new and modern housing, as well The Company is mindful of human rights risks, so as a utilities and social infrastructure with a school, The Company complies with the in addition to ensuring full compliance with the Key areas of interaction with indigenous northern kindergarten, hospital, boiler, power plant, and local applicable laws of the Russian applicable requirements it also implements best minorities treatment facilities. The location for the new housing Federation and other countries practices: signs employment contracts and collective was determined by a residents meeting based on their of its presence and respects bargaining agreements, creates favourable work and Nornickel’s key projects in the Arctic are focused on lifestyle. both international standards rest conditions for its employees, including through reducing air emissions, coastal cleanup and restoration for human rights protection carrying out new social infrastructure projects of ecosystems, biodiversity preservation (including In 2018, Nornickel and the Federal Agency for Ethnic and labour standards set out in (housing, transport infrastructure, cultural and aquatic bioresources), development of transport Affairs (FAEA) signed an agreement on cooperation the International Bill of Human recreational facilities). infrastructure and Arctic shipping, ensuring transport aimed at providing support to the indigenous peoples Rights, the International Labour accessibility of the Arctic, and implementing the of the North who live in areas where the Company Organisation Declaration on Information on alleged human rights violations is Northern Supply Haul programme. Nornickel is active operates. Nornickel is supporting the Siberian Federal Fundamental Principles and Rights collected via Nornickel’s Corporate Trust Service, in promoting renewable energy sources in the Arctic, University’s work to revive the written language of at Work and the UN Guiding employee questionnaires, and sentiment surveys with the Taimyr HPP Cascade upgrade being one of the the indigenous peoples of the North as part of the Principles on Business and Human among local population. The Company guarantees Company's major investment projects. International Year of Indigenous Languages (2019). Rights. confidentiality for whistle-blowers and respondents. Report statistics are reviewed by the Audit and The Company has been supporting initiatives to In 2018, there was no record of the Company violating Nornickel takes steps to prevent Sustainable Development Committee of the Board of improve living standards of the Taimyr Peninsula's the rights of indigenous minorities. 411-1 and remedy any human rights Directors on a quarterly basis. indigenous people. The initiatives cover housing violations, if any, across its assets and operations, including In 2018, there were no incidents involving human those engaged in exploration, rights violations. No disputes with the local population

production, concentration, over land use were recorded. The Company does not ¹ For more details, please see the Human Rights Policy approved by the Board of Directors at https://www.nornickel.com/investors/disclosure/corporate- refinement, output of end plan any ramp-up in works related to acquiring land documents/#corporate-codes-and-policies. products, marketing and sales of from the population and forced relocation. 2 Approved by the resolution of the Board of Directors in February 2018. 78 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 79

RESPECT FOR HUMAN RIGHTS ACROSS NORNICKEL’S OPERATIONS

Key human rights1 Nornickel’s by-laws Nornickel’s contribution 2 2 2 Business Ethics Code Human Rights Policy Equal Opportunities Programme Conditions Policy Working Occupational Health and Safety Policy Data Policy Personal Freedom of Association Policy Support for Regarding Policy Small and Medium Enterprises Community Relations Local Policy Environmental Policy Environmental Impact Assessment Policy Biodiversity Policy Energy Sources Renewable Policy Indigenous Rights Policy

Right to life, freedom, and privacy, In 2018, the Company’s health and safety freedom from arbitrary arrest indicators were some of the best in the metals and mining industry, with LTIFR standing at 0.23 Right to health and medical assistance

Right to protection from discrimination The Company does not tolerate discrimination on any grounds

Right to freedom of association and The Company runs a social partnership collective bargaining framework, with collective agreements covering 80% of the workforce

Right to work and to fair and The average salary paid to Nornickel’s adequate remuneration employees is well above Russia's average. The Company takes steps to secure jobs for vulnerable population groups and people with disabilities

Other labour rights (fair and The Company complies with the Russian favourable working conditions, social Federation employment laws that are in line support, reasonable work schedule, with the UN documents ratified by Russia. ban on forced labour, regular paid In 2018, Randstad Award recognised vacations) Nornickel as the most attractive employer in the Russian metals and mining industry. Forced labour is forbidden

Right to education The Company runs a wide range of training courses for all of its personnel categories, providing career guidance and targeted support to educational institutions across its geographies

Protection of family, maternity and Child labour is forbidden. childhood The Company respects and protects the rights of mothers and pregnant women. Its social programmes in the fields of housing, healthcare and culture aim to support and provide leisure opportunities for families

¹ According to the International Bill of Human Rights, the Indigenous and Tribal Peoples Convention of the International Labour Organisation, and the Constitution of Russia. 2 The Company expects its contractors to also adhere to these documents. 80 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 81

Key human rights1 Nornickel’s by-laws Nornickel’s contribution 2 2 2 Business Ethics Code Human Rights Policy Equal Opportunities Programme Conditions Policy Working Occupational Health and Safety Policy Data Policy Personal Freedom of Association Policy Support for Regarding Policy Small and Medium Enterprises Community Relations Local Policy Environmental Policy Environmental Impact Assessment Policy Biodiversity Policy Energy Sources Renewable Policy Indigenous Rights Policy

Freedom of movement The Company does not restrict the freedom of movement of its employees. It reimburses round trip travel expenses and baggage fees as part of the benefits package

Right to shelter, right to own property The Company does not implement or plan to implement projects related to taking land from the population and forced relocation

Right to a healthy environment The Company continuously works to reduce its environmental footprint and implements a comprehensive environmental policy

Rights of indigenous peoples The Company supports projects aimed at preserving the traditional lifestyle and culture of Taimyr’s indigenous peoples while fostering their economic and social development

Labour relations Employees and social policy HR management assessment

103-2 103-3 Human capital is a key driving force To assess HR management and make efficient UN GLOBAL COMPACT PRINCIPLES behind the Company’s growth. In decisions, the Company continuously monitors HR recognising this, the management of metrics, analyses the structure of staff costs, labour Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining. Norilsk Nickel Group seeks to create productivity, and performance of social, adaptation and conditions that would boost employee other programmes. The Company plans to introduce Principle 4: Businesses should uphold the elimination of all forms of forced and compulsory performance and engagement, and continuous monitoring of staff engagement and labour. exercises a comprehensive approach to satisfaction. Principle 5: Businesses should uphold the effective abolition of child labour. HR management. Principle 6: Businesses should uphold the elimination of discrimination in respect of employment Staff composition and occupation. Respect for employees and their rights lies at the heart of the Group's business. Nornickel received the international Randstad The protection of human rights is Award as the best employer in the metals guaranteed in a number of the Company's and mining sector. The recognition came as a documents, including the Business result of Nornickel's successful HR strategy. Ethics Code, Personal Data Policy, Anti- Embezzlement Regulation and Human This was not the first time that Nornickel won Rights Policy. WEB this prestigious award. In 2016, the Company received Randstad's Grand Prix as the Best Employer in the Russian metals and mining ¹ According to the International Bill of Human Rights, the Indigenous and Tribal Peoples Convention of the International Labour Organisation, and the industry. Constitution of Russia. 2 The Company expects its contractors to also adhere to these documents. 82 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 83

HR MANAGEMENT HEADCOUNT OF THE GROUP'S FOREIGN PERSONNEL STRUCTURE OPERATIONS, EMPLOYEES BY CATEGORY, %

REGULATION Europe 330

• Principles and provisions of the international • Working Conditions Policy Asia 13 14.2 law, standards of the International Labour • Nornickel’s Personal Data Policy North America 10 17.3 Blue-collar Organisation, national laws of the countries of • Talent Pool Regulation employees operation • Procedure for Assessing Employee Performance White-collar • The Constitution and Labour Code of the Australia 5 employees Russian Federation Africa (South Africa) 605 Managers • Equal Opportunities Programme 68.5 • Freedom of Association Policy Africa (Botswana) 12

RESPONSIBILITY

• Board of Directors' Corporate Governance, • Social Policy Department: development and PERSONNEL STRUCTURE BY GENDER,¹ % PERSONNEL STRUCTURE BY EDUCATION, % Nomination and Remuneration Committee: implementation of the social policy, social and approval of priorities and policies and monitoring charitable programmes of the Company’s performance 29 17.4 General • HR functions of the Group companies: secondary • President: implementation of the HR strategy implementation of HR and social policies education • Senior Vice President for HR, Social Policy 18.9 Higher education and Public Relations: development and Male Undergraduate implementation of the HR strategy Female 28.3 higher education • HR Department: development and 71 implementation of the HR strategy and the social Secondary policy vocational 0.3 35.2 education Basic vocational education PRIORITIES 2 KEY PERSONNEL TURNOVER INDICATORS 401-1 • Building a skilled and balanced team • Training and developing the staff • Creating a talent pool • Implementing the social policy Indicator 2013 2014 2015 2016 2017 2018 • Improving the incentive system Employments 10,103 13,220 15,607 15,166 11,262 14,901

Employee inflow ratio,3 % 12.2 16.5 19.1 18.8 14.6 19.9

The Group's average headcount in 2018 was GROUP PERSONNEL STRUCTURE BY Separations 13,738 12,812 14,277 15,413 15,232 16,918 74,926 employees in Russian companies, and TERRITORY, % Employee turnover,4 % 12.1 11.3 10.7 10.5 10.3 10.2 975 employees in foreign subsidiaries. 66.9 Norilsk Industrial District (NID) Employee outflow ratio,5 % 16.7 15.6 17.1 19.2 20.0 22.6

The headcount decrease across the Russian operations 16.6 Kola Peninsula Industrial District (Murmansk by 3.9% y-o-y was due to the programme to improve Region) labour productivity and reduce costs. 103-2 In 2018, the Company employed 509 new permanent 4.647 Krasnoyarsk Territory (excluding NID) The Company is a major employer in the Norilsk staff members from other regions of Russia. 102-8 Industrial District and the Kola Peninsula and as such has 4.456 Trans-Baikal Territory The headcount1 of the Group’s Russian companies as a significant impact on these regions’ labour markets. 202-2 at the year-end stood at 74,960. Most of employees 6.164 Moscow and other regions of Russia The Company has no policies in place providing for the The share of top executives representing local work full time (>99%) and on the basis of unlimited preferential hiring of locals; staff selection takes into communities stood at 98.0%. Russian citizens accounted employment contracts (>96%). As at the end of 1.284 Outside Russia account candidates’ skills, qualifications, and education. for 99.6% of the Russian operations' total headcount. WEB 2018, there were 541 employees working under civil contracts.

¹ Unless otherwise specified, the indicators are hereinafter provided for the Group’s Russian operations. 2 Russian companies of the Group. 3 The ratio of new employments to total employments as at the end of the period. 4 The ratio of resignations, dismissals for breach of labour discipline, and negotiated terminations, to the average annual headcount. ¹ Including salaried employees and external part-timers. ⁵ The ratio of all separations to total employments as at the end of the period. 84 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 85

Personnel development Nornickel launched the IamHR development Indicator 2014 2015 2016 2017 2018 programme for HR professionals. The The Company views its people as its key asset and programme seeks to improve their Total training man-hours, thousand 5,079.2 5,824.1 5,666 6,630 4,508.7 keeps investing in their professional and personal Average annual hours per employee trained 93.8 92.2 80.8 70 51.6 development. Our personnel development policy focuses professional skills, strengthen interactions on creating an environment that helps fully unlock the between business and HR, and educate the Average annual training hours per employee (based on average 63.5 71.2 69.8 85 60.2 professional and creative potential of each employee staff about state-of-the-art solutions and headcount) while also fostering team spirit and commitment to the available practices in HR management. • including blue-collar employees - - 77.9 95 62.2 Company’s goals. With this in mind, the Company plans • including managers - - 72.4 83 76.7 the professional and career growth of its people, builds a • including white-collar employees - - 31.9 44 38.7 talent pool for managerial positions, trains and promotes pool members. Professional training costs, RUB mln 661.5 669.1 760 896 1,022.2 Costs per employee trained, RUB 12,220 10,589 10,841 9,459 11,687 Training

103-2 404-2 With our reconfigured production cycle, modernised The Company introduced staff training programmes Talent pool On top of that, we provided the pool members operations, new technologies and approaches, we need across all functional areas and staff categories – from with a roadmap of development activities and to make sure our employees meet the new expertise, top managers to workers. Training is an ongoing The reporting year saw the Company continue to roll recommendations on how to strengthen competencies skill and competency requirements. This is why training process that takes place throughout an employee's out the talent pool management programme at its covered by the corporate model. plays an important role in Nornickel's personnel career. Norilsk site. We launched a training and development Over the year, Polar Division and the Kola Peninsula development. programme for talent pool members and their mentors facilities introduced an SAP HCM-powered system MMC Norilsk Nickel has the Model Regulation on based on cutting-edge education technologies and a to automate and boost the efficiency of talent pool Professional Training in place, which the Group combination of classroom and online sessions. management, among other things, through the companies use a basis to develop their internal training consolidation of relevant data into a shared database. In 2018, 54 key employees, heads of regulations. production units and the Head Office of Nornickel completed an innovative operating The Group's employees can benefit from free staff efficiency training programme organised training, retraining, skills improvement, and internship DEVELOPMENT PROJECTS FOR TARGET PERSONNEL CATEGORIES jointly with Moscow's Skolkovo School of programmes funded by the Group companies. The Company engages external education providers Management. The programme aims to make (universities, professional development institutions, Target category Project Priorities Coverage production management more efficient, among in 2018, research institutes, training centres, and consultants), thousand other things, by developing key managerial and trains employees at its own corporate training employees competencies, looking into the latest centres. The Group’s key training hubs are the Norilsk technologies, approaches and best practices in Nickel Corporate University (Norilsk) and the Kola Staff Highly qualified workers Mentor Academy • Professional skills competitions 7.6 • Mentor training the area, and identifying ways to apply them. Development Centre (Monchegorsk), which provide training to more than 52,000 employees a year. • Recognition, corporate forum of mentors • Participation of Nornickel’s best workers in WorldSkills Russia

KEY PERSONNEL TRAINING INDICATORS 404-1 Line managers (foremen) Foreman University • The Foreman of the Year contest and 4 mind sport tournaments for foremen Indicator 2014 2015 2016 2017 2018 Young employees aged 18 to 35 Leader, movement • NIKоNN (mind sports and quests) 18 1 Employees covered by professional training, retraining and skill 54.1 63.1 70.0 95.0 87.5 of young profes- • Creativity (contests, festivals and КВNN) improvement, thousand sionals • Induction and Career Guidance (support • including blue-collar employees 31.5 35.3 37 54 43.3 for young employees, meetings with • including managers 13.8 18.2 22 26 27.4 school students) • including white-collar employees 8.8 9.5 11 15 16.8 • Initiatives (projects to address social issues) • The Leader of the Year annual competition for the most promising young talent teams

¹ The y-o-y decrease in 2018 is due to large-scale training held in the previous year to improve employee skills and grades of the blue-collar staff. In the reporting year, no such training was needed. 86 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 87

Career guidance, cooperation with educational take part in the Career Start-Up programme of pre- In 2018, the Company implemented the job grading best talent. Grading relies on the points factor method institutions graduation internships and work placements. The framework linking each job and related remuneration to of job evaluation that takes into account knowledge programme cooperates with 25 Russian universities. its significance for business processes. This is a key tool and skills, the complexity of tasks, and the level of The Company runs an array of programmes to attract In 2018, 311 students joined the programme, with that should help the Company to secure maximum return responsibility. and train staff. The major ones are the Career Start- 118 top-performing ones awarded Nornickel’s corporate on investment in human capital, engage and retain the Up internship programme, Conquerors of the North scholarship and 88 hired by the Company after internal case competition, and the First Arctic leadership graduation. In 2019, the Company’s facilities will offer programme. The Company’s career guidance initiatives internships to 312 students. are integrated into the relevant regional programmes REMUNERATION PACKAGE ACROSS THE GROUP'S RUSSIAN and target children and youths aged below 35. In summer 2018, more than 200 students took part in the OPERATIONS IN 2018, % Conquerors of the North team business game to try and The Company prioritises the following training areas: tackle some of the Company’s real tasks. Nornickel was • underground (subsurface) ore mining; the first metals and mining company in Russia to use this methodology with students. • mine surveying; REMUNERATION PACKAGE • mineral processing; The Company places a strong emphasis on engineering education in Russia, contributing to the promotion • mining electrification and automation; of relevant professions. In 2018, we supported • mine and underground construction; Cup Technical and Metal Cup Championship 2018, case-solving championships among students of Russian • industrial and civil construction; SALARY — 93% BENEFITS — 7% technical universities. During the contest, students dealt • ground vehicles, hoisting/conveying and road with cases related to Nornickel’s operations, gaining machinery; insight into the Company’s business processes.

• mining machinery and equipment; VARIABLE (BONUS) Also, we run a number of career guidance events for FIXED PART — 70% PART — 30% • power and electrical engineering; schools, such as the Arctic.PRO R&D marathon, ARCTIC WAVE festival of R&D discoveries, I Make competition • operation of transportation vehicles and systems. for young inventors, and the School of Urban The Company has established close cooperation with Competencies, attended by over 4,000 school children educational institutions. Its facilities invite students to annually.

REGULAR BONUS — 11% ONE OFF BONUS — 19%

Incentives and rewards

Remuneration policy goals Remuneration policy principles

• Recruitment • Internal equity — remuneration management is based • Retention on the job description and grading methodology. The Company has a unified grade system across all functions KEY COMPENSATION INDICATORS 202-1 • Encouragement of productive attitude to work • External competitiveness — remuneration is determined • Administrative efficiency and transparency based on the labour market data, with adjustments made • Compliance with legal requirements for the company's focus area, business location and job Region Remuneration Average Regional Minimum monthly Statutory grades package, monthly payroll compensation to minimum wage • Performance-based incentives — pay level is reviewed RUB thousand salary, percentage of statutory minimum RUB thousand the aggregate monthly wage,1 % subject to the annual performance assessment outcome payroll, % • Simplicity of the remuneration system — pay level calculation and review procedures are transparent, and Group average - 111.6 - - - every employee knows how to improve their remuneration Kola Peninsula Indus- 89.1 82.4 12.3 1.00 25,675 trial District (Murmansk Region)

Krasnoyarsk Territory 56.2 54.1 2.3 1.0 10,592 (excluding NID)

Moscow and other 316.3 293.5 16.6 1.82 18,781 regions of Russia

¹ Minimum wages paid by the Company are gender neutral. 88 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 89

equivalent areas, and their families; Region Remuneration Average Regional Minimum monthly Statutory The social package includes the following benefits and package, monthly payroll compensation to minimum wage compensations: • one-off financial aid in the face of certain life events, or RUB thousand salary, percentage of statutory minimum hardships; RUB thousand the aggregate monthly wage,1 % • health resort treatment and vacation to employees payroll, % and their families at subsidised prices; • additional employee pensions and other types of social guarantees under the existing collective bargaining Norilsk Industrial Dis- 118.0 107.7 65.2 1.02 29,024 • payment of return travel and baggage costs to a trict (NID) place of vacation to employees in the Far North and agreements and local regulations.

Trans-Baikal Territory 90.2 86.9 3.5 1.02 16,745 SOCIAL EXPENSES, RUB MLN

Indicator 2018 2019

AVERAGE MONTHLY SALARY IN and business improvement initiatives. The Company Plan Actual Plan NORNICKEL GROUP, RUB THOUSAND praises and distinguishes employees showing exceptional production, engineering and managerial Health resort treatment and vacations of employees 2,040 1,947 1,818 competencies by awarding those who delivered and their families Year RUB remarkable operational or management performance Reimbursement of round trip travel expenses and 3,186 3,355 3,269 and contributed a lot to advancing production. baggage fees to employees and their families 2014 75.4 Pension plans 1,186 961 1,220 2015 84.9 The best employees may be nominated for agency Housing programmes 6,760 6,252 3,113 2016 94.2 (industry) and government awards. The Company welcomes the recognition of its employees’ Relocation assistance to new employees 345 209 322 2017 104.1 accomplishments by the government and its agencies, while also distributing its own accolades for prodigious Social projects for employees (development of 600 630 657 2018 111.6 target categories, sporting events and holiday operational and management achievements, and celebrations) significant contribution to production growth. Voluntary health insurance 238 347 826

Employee awards In 2018, 4,304 Company’s employees were awarded Financial aid and additional benefits to retired and 255 201 260 for outstanding production results and many years of former employees and their families To motivate and financially incentivise its employees diligent service, including 83 and 286 honoured with Other payments and social expenses (healthcare 1,476 1,791 1,371 to work efficiently and productively, and deliver the government and ministry/ agency awards, respectively, services, severance pay, etc.). Social payments highest operational results, the Company has put in 1,664 who received awards from regional and municipal (excluding travel expenses) place a structured system of incentives and rewards authorities, 275 and 1,996 who were granted corporate Expenses related to social programmes and 16,086 15,693 12,855 of various categories and levels: government awards, and local awards of the Group companies. WEB benefits for employees ministry and agency awards, regional and municipal awards, corporate Nornickel awards, and internal Social policy awards granted by Norilsk Nickel Group companies. The social policy of Norilsk Nickel Group is Health improvement programmes implemented in a consistent manner based on the In 2018, MMC Norilsk Nickel approved its Award Policy, feedback principle. To make changes to the existing For many years, Norilsk Nickel Group has been running a require special care of the employee health, which which sets out the goals, principles, rules, requirements programmes, develop new ones and close those programme of rehabilitation and health resort treatment makes health improvement and wellness a priority of the and limitations of the Company's awarding activities. that have achieved their goals and objectives, the for its employees and their families. The harsh climate of corporate social policy. Company conducts an in-depth comprehensive the Far North and the nature of the Group's operations The Company recognises employees for their review and selects the best solutions in terms of social outstanding professional achievements and interests, economics of the Company, and the interests contribution, innovations that drive growth, add of its employees. We are constantly monitoring the Key health improvement programmes Participants economic value or boost the operating efficiency performance of our programmes to ensure timely in 2018 of a specific facility or the Group in general, efforts identification of possible weaknesses. going beyond formal agreements with the Company, Zapolyarye Health Resort (Sochi) 11,026

Kolsky Health and Spa Centre (Monchegorsk) 1,693

Non-corporate health resorts, including: 4,341

Rossiya and Belokurikha health resorts (Altai Territory) 582

Rosa Springs Health Resort (Sochi) 3,450

other non-corporate health resorts 309 90 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 91

Key health improvement programmes Participants On top of that, the Company also pays a one-time Under the programme of financial aid to retiring in 2018 relocation allowance to support the employee at the new employees, benefits are provided to employees at place of work. the time of retirement, with the amount linked to their Vacation for children (including Anapa and Bulgaria) 1,391 employment period. International vacation programme (Bulgaria, Greece) 6,180 With 379 employees joining the relocation support programme in 2018, it now boasts 1,520 participants. The Pensioner Financial Aid Fund extends financial aid Total participants 24,631 to former employees who retired prior to 10 July 2001 Sporting and mass public events programme provided they had been employed at the Company’s divisions for more than 25 years and permanently reside The Company promotes sports and healthy lifestyle to outside of the Norilsk Industrial District. The Fund relies Co-Funded Pension Plan programme by the employee within a certain period of employment solidify the corporate team spirit and maintain a positive on voluntary monthly contributions from employee with Nornickel Group (from five to ten years). The cost of work environment. It organises sporting events and salaries and equal charitable contributions from the 201-3 housing remains unchanged for the entire period of the competitions attended by its employees, their families, Company's budget. Co-Funded Pension Plan, a corporate private pension employee’s participation in the programmes. Ownership and the local community. programme, has been running since 2007. As at the rights are registered at the end of the programmes, but The Company also provides targeted assistance to its end of 2018, it saw 13,900 participants from among the employee may move in immediately after receiving The events include the annual Polar Division Olympics, former employees and their families to pay for health employees of 22 companies, with over 6,000 receiving the apartment. Kola MMC Olympics in 16 sports, Norilsk Nickel Ski Track improvement and medications, funeral services, and pensions. health marathon, “Dad, Mum and I – a Sporty Family” helping in financial distress. In 2014–2018, the apartments were purchased in corporate competition, swimming, ice hockey, futsal, The programme provides for two pension plans: Parity Moscow and Tver regions, as well as in the Krasnodar volleyball, basketball, alpine skiing, snowboarding Support of employees with disabilities and Corporate. Under the Parity Plan, pension savings Territory, with the Company seeking to buy properties competitions, and sport events dedicated to the are co-funded by the employee and the Company on located in close proximity to enhance the employees' Metallurgist Day and other high days and holidays. The Company fully complies with the legislation a par (equal) basis. The Corporate Plan is designed for living standards by developing additional infrastructure regarding employment of people with disabilities. As highly skilled employees and/or employees with highly and optimising the scope of maintenance tasks assigned To promote amateur hockey, Norilsk hosted the Night per the employment quotas that vary depending on the sought-after occupations; within this plan, the Company to the property management company. Hockey League (Northern Conference) in 2018, with region and company size, the share of such employees finances private pension plans for such employees. In 11 teams comprising Nornickel employees among the may come up to 2% of the average headcount. 2018, an average participant contribution amounted to Assistance to employees in acquiring housing participants. 2.9% of the employee’s salary or the Group’s monthly The Company takes steps to secure jobs for people with average of RUB 3,000. WEB The Company also runs the Corporate Social Subsidised The reporting year saw some 27,000 people take part in disabilities and ensure necessary working conditions, Loan Programme for Employees of Nornickel that Nornickel's sports events. Also, the Company's facilities including work and rest schedule, annual and additional Housing programmes was phased from a pilot to an ongoing project. This in Norilsk feature gyms. paid leaves, and specialised workspace equipment. programme was developed primarily as a tool to retain In the reporting period, the Company continued with its highly qualified staff, with employees at Polar Division Programmes supporting former employees and Occupational health and safety Our Home and My Home corporate social programmes and Kola MMC entitled to an interest-free loan to make a their families launched back in 2010 and 2011, respectively. down payment and to reimbursement of a certain share 103-2 of interest on their mortgage loan. Overall, more than The ongoing support of its former employees is part of Occupational health and safety is one of Nornickel’s The programmes now run as a single Our Home/My 200 employees took part in the programme. the Company’s corporate social policy. strategic priorities. The Company is aware of its Home programme covering the employees of Polar responsibility for ensuring health and safety of all Division, Polar and Murmansk Transport Divisions, Support to new employees The Company's Veterans programme has been designed employees engaged in its operations, both its own and Kola MMC and 18 more Group companies operating to support unemployed pensioners who permanently third party. in Norilsk, the Taimyrsky Dolgano-Nenetsky Municipal Nornickel provides financial support to newly employed reside in Norilsk. The terms of participation depend District and the Murmansk Region. Since the start of the staff relocating to Norilsk and the Taimyrsky Dolgano- on the employee’s length of service or permanent programme, 3,804 apartments have been granted to Nenetsky Municipal District, including young specialists, disability status. Financial aid is paid from the charitable the Company’s employees. In total, the Company has workers, engineering staff and managers. contributions made by the Company. purchased 4,348 ready-for-living apartments, including 522 in 2018. As part of the programmes, the Company The Company reimburses the following expenses of purchases ready-for-living apartments in various Russian newly employed staff: regions at its own expense and provides them to • travel expenses; eligible employees under co-financing agreements. The Company pays up to a half of the apartment cost (but in • baggage transportation; any case no more than USD 54,000), with the rest paid • living costs for the first three years. 92 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 93

Nornickel’s Occupational Health and Safety Policy gives Zero work-related fatalities and an ongoing Nornickel put in place 15 corporate occupational health • internal OHS management audits; precedence to the life and health of employees over and safety (OHS) standards: reduction in overall workplace injuries are the • activities as part of the OHS monitoring system at operational performance while also demonstrating the Company's key strategic priorities in OHS. • Prevention and Control Activities with regard to each facility, including: Company’s commitment to creating a safe and healthy Health and Safety Processes; environment and fostering sustainable employee —— multi-stage control; • Safety Behaviour Audit; motivation for safe workplace behaviour. —— ad hoc, targeted and comprehensive • Power Source Insulation; OHS inspections; HEALTH AND SAFETY MANAGEMENT • High Altitude Operations; • safety behaviour audits; • Provision of Personal Protective Equipment; • compliance and certification audits as part of the REGULATION • Safety Requirements for Boarding and Alighting OHSAS management system; Company’s Motor Vehicles during Inter-Facility • independent external audits of the corporate • Applicable Russian laws aligned with • Regulations and guidelines for all production Transportation; OHS management system and occupational safety international laws processes culture. • Occupational Health and Safety Policy • Project implementation plans and specifications • OHS Communication, Accounting and Reporting • Occupational Health and Safety Strategy for repair, construction and installation works Procedures; • 15 Corporate OHS standards • Health and safety guidelines for specific jobs Prevention of occupational diseases • Accident Investigation; • OHS sections in collective bargaining and types of work at all Company’s facilities agreements for the Group's Russian operations • Procedure for Organising and Conducting High- The Company implements measures to prevent Hazard Operations; occupational diseases. Employees undergo compulsory pre-employment, regular and ad hoc • Safety Requirements for Interaction of Vehicles and medical examinations and check-ups organised Pedestrians at Production Sites and Facilities; RESPONSIBILITY 103-3 403-1 at the Company's expense. Those that have • Hazard Identification, Assessment and Management contact with hazardous materials are subject to • Board of Directors: monitoring the Company’s • Joint OHS committees (councils) made up of of Occupational Health and Safety Risks; additional examinations held at least once in five performance on a quarterly basis and identifying management, employees, and trade union years by occupational pathology centres or other areas for improvement representatives: >67,900 employees of relevant • Management of Technical, Technological, organisations authorised to conduct pre-employment • First Vice President and COO: overseeing the Group companies, or 90% of the Company’s Organisational and HR Changes; development of initiatives and compliance with headcount and regular check-ups. These serve to assess the OHS legislation, reporting to the Board of • Authorised trade unions and staff • Requirements for Demarcation of Hazardous Areas occupational health fitness and determine if the Directors representatives in OHS: >1,000 representatives, and Visualisation of the Working Space; disease is job-related. In 2018, the Group's costs • HSE Committee: review and improvement of the >27,000 inspections, >7,200 improvement related to medical examinations and maintenance • Contractor OHS Management; OHS management system, assessment of OHS proposals of medical aid posts amounted to RUB 437.1 mln and initiatives • OHS Contest Arrangements. RUB 221.5 mln, respectively. • HSE Department: development of OHS initiatives and monitoring compliance with the 103-2 relevant legislation The Company’s facilities have their own medical aid The Company continues to improve OHS management posts to perform pre-shift and pre-trip checks and processes, among other things, by drafting and provide medical assistance to employees. implementing corporate standards. In 2018, the CERTIFICATION Company proceeded with the projects to control risks To automate the process, the Company started and implement the framework to manage technological introducing an electronic health check-up system n • Polar Division and Pechengastroy: • Norilsknickelremont: GOST 12.0.230-2007 (ILO- and organisational changes. The projects seek to build 2018, piloted at Kola MMC and GRK Bystrinskoe. GOST R 54934-2012 (OHSAS 18001) OSH 2001) an effective system to continuously identify and control • Kola MMC: OHSAS 18001 significant OHS risks and changes within the Group. The Company provides employees working in harmful and hazardous conditions with free foods, milk, The reporting year saw the Company start and other equivalent food products for therapeutic PRIORITIES implementing an automated system for OHS purposes in compliance with the applicable Russian management monitoring, with its first stage put on legislation and corporate policies. In 2018, foods • Implementation of corporate standards • Safety communication campaign stream at Kola MMC, Pechengastroy, and the Head and milk costs across the Group amounted to RUB • OHS training: over 34,300 employees of the • Prevention of occupational diseases Group companies trained in 2018, including • Safety management in contractors Office. 1,247.9 mln. 3,600 new employees and those with less than three years of experience Nornickel regularly takes preventive and control In case of hazardous production factors identified • Special assessment of working conditions measures, including: by the special assessment of working conditions, held annually; 7,800 workplaces of over • second-party OHS management audits (cross- the Company provides employees with personal 14,000 employees assessed in 2018 company audits of the Group companies involving protective equipment (PPE). • Provision of necessary personal protective equipment and its preliminary testing: average the OHS heads and experts from other Group Group's costs of around RUB 40,000 per companies). There were 45 audits in 2018; employee in 2018 94 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 95

In 2018, the Company put in place Alcoframes, guidelines, etc.) must contain safety requirements to In 2018, the Company registered one fatality that took In 2018, the lost time injury frequency contactless breath alcohol screening devices, to be met when organising and performing work. The place in 2017. The fatality was further investigated and rate (LTIFR) decreased from 0.44 to 0.23, prevent intoxicated employees from accessing Company checks compliance with these requirements recorded on the basis of a court ruling. down by 48% y-o-y, reaching the Company's production facilities. The devices are running at during each shift. Prior to commencement of work, record low and remaining below the industry Polar Division (Copper Plant), Medvezhy Ruchey, contractors’ staff receive pre-job and ad hoc health and Fatalities breakdown in 2018 by type of accident: GRK Bystrinskoe and Norilsk Support Complex. The safety briefing, including security measures set forth in exposure to hazardous substances – two incidents, average. The number of lost time injuries Company continues to work in this area. work execution plans. injuries caused by falling from heights, rockfalls in halved, from 52 to 26, while fatalities fell by mines, impact of vehicles on pedestrians and other 25%, from 8 to 6, on the back of initiatives to Contractor safety management In 2018, Nornickel developed and introduced the injuries — one incident each. ensure compliance with core occupational STO KISM 121-222-2018 standard to improve control safety requirements and improve safety Contractor operations (repair, construction and and safety of work performed by contractors at its All workplace accidents are investigated in accordance standard management. installation works at the existing facilities) are classified facilities. The standard sets out relevant requirements with the applicable Russian laws. Investigation results as high-hazard and governed by the respective applicable to contractors at the selection stage and serve as a basis for developing measures to be taken corporate standard. Work permits, operations onwards. promptly to eliminate the root causes. WEB certificates and work execution plans (process sheets,

KEY INJURY INDICATORS 403-2 HEALTH AND SAFETY PERFORMANCE INDICATORS FOR ACCIDENT PREVENTION

Indicator UoM 2014 2015 2016 2017 2018 Indicator 2013 2014 2015 2016 2017 2018

FIFR 0.07 0.12 0.11 0.07 0.05 Audits conducted: LTIFR 0.48 0.62 0.35 0.44 0.23 by health and safety committees (thousand) > 35 > 33 > 33 > 31.5 > 30.8 > 30.9 Total workplace injuries in accordance with pcs 64 88 56 60 32 Target audits conducted by managers, senior 16 7.7 8.4 6.8 8.7 9.7 the Russian labour laws specialists and committees of the Group’s facilities and business units (thousand) Fatal workplace injuries pcs 8 14 13 8 6 Ad hoc audits (thousand) 21 6.3 8.1 8.8 15.3 15.7 Minor injuries pcs 305 411 719 719 1,0431 Comprehensive audits of health and safety and 157 160 163 167 221 149 Potentially dangerous incidents2 pcs 349 976 1,845 1,711 2,270 relevant management systems Occupational diseases pcs 226 271 339 361 318 Coupons removed from the books of 6.4 4.4 3.9 3.4 2.9 2.2 employees violating health and safety Total work-related accidents among the pcs 13 19 17 16 19 requirements1 (thousand) contractors’ employees engaged at the Group’s sites, in accordance with the Employees subject to disciplinary action for 7.6 6.9 8.3 8.8 7.9 6.8 Russian labour laws2 the violation of health and safety requirements (thousand) • including fatalities pcs 5 5 7 1 2 Employees with reduced bonus payments > 17 > 14 > 15 > 15 > 13.6 > 13 Occupational health and safety expenses RUB mln 7,446 10,748 8,515 8,708 10,563 (thousand)

• including per employee RUB 95 134 106 114 141 Total (RUB mln) > 67 > 56 > 55 > 74 > 70 thousand Employees incentivised for health and safety > 7 > 5 > 9 > 5 > 5.6 > 6.4 involvement and lower workplace injury rate as per the audit results (thousand)

Total (RUB mln) > 42 > 35 > 78 > 51 > 41 > 52

¹ The increase in the number of minor injuries and potentially dangerous incidents was due to the introduction of the corporate Accident Investigation Standard, awareness-raising activities, and better understanding among employees of how reporting minor injuries and potentially dangerous incidents helps eliminate their causes and, therefore, prevent incidents with more severe implications. ¹ Removal of coupons is a preventive measure that enables the Company to register the number of gross health and safety violations which did not 2 The indicator has been recorded since 2014. cause accidents, and subject the culprits to disciplinary actions and financial penalty. 96 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 97

Engagement of employees in safety management entered into collective bargaining agreements with Improvement of social and working conditions employee representatives (including trade union 403-1 organisations). The collective bargaining agreements The Group companies operate more than 2,100 sanitary, the Murmansk Region. They completed the overhaul Most of the Group companies (including subsidiaries, contain occupational health and safety provisions and amenity, sports and fitness, catering, healthcare, of 25 social facilities and purchased 14 relocatable divisions and structural production units) put in place are in place at the companies that employ some 81% of and recreational facilities with a total area of over buildings to be used by employees to change, warm official joint health and safety committees (councils) the Group's staff. WEB 340,000 sq m. The Company is committed to providing up and take meals. The Company renovated a total of made up of the management, employee and trade comfortable social and working conditions. 7,285 sq m and improved social and working conditions union representatives. The Group companies running Emergency preparedness for 2,698 employees. such joint committees employ over 67,800 people From 2003, the Group has been implementing the (around 90% of the Group's total headcount). 403-3 103-2 programme to improve social and working conditions. Total costs amounted to RUB 645.3 mln, including The Group companies take great care in maintaining Since its launch, we have overhauled 253 social RUB 514.3 mln invested in design and overhaul, and Authorised representatives of trade unions and staff in emergency preparedness, as the Group embraces facilities and purchased 408 relocatable buildings, RUB 131.0 mln spent on equipment. occupational health and safety (1,146 employees) were mining, concentration and smelting operations, operates investing a total of RUB 4,876.2 mln.1 elected to participate in preventive activities across the over 300 hazardous production facilities, and uses The programme will be running over a mid-term horizon Group’s production units. In 2018, they took part in over various hazardous substances (toxic, explosive, oxidising, In 2018, the programme covered ten divisions and of three years, with investments in 2019–2021 to exceed 27,000 audits and submitted more than 7,200 health and etc.) in its processes. Group’s Russian companies located in Norilsk, the RUB 2,000 mln. During this time, the Company expects safety improvement proposals. Taimyrsky Dolgano-Nenetsky Municipal District, and to repair and equip over 80 social facilities. The Company complies with Federal Law No. 116-FZ On Health and safety topics covered in formal Industrial Safety of Hazardous Production Facilities dated agreements with trade unions 21 July 1997, and ensures preparedness for emergency containment and response at hazardous production ACTUAL COSTS FOR THE PROGRAMME TO IMPROVE SOCIAL AND WORKING CONDITIONS, 403-4 facilities. WEB RUB MLN The Company and most of its production units, including Kola MMC, Norilsknickelremont, Polar Construction Company, NTEK, Yenisey River Shipping Company, 828 Norilskpromtransport and Norilsk Support Complex, 645 639 541

EMERGENCY PREPAREDNESS SYSTEM AT HAZARDOUS PRODUCTION FACILITIES 396 358 363 334 272 252 228

EMERGENCY CONTAINMENT AND CLEANUP PLANS AT HAZARDOUS PRODUCTION FACILITIES 96 173

(HAZARD CLASSES 1, 2, 3) 165 157 159 98

• Agreements with • Auxiliary mine rescue • Drills involving employee • Provisioning professional emergency teams at Polar Division and and emergency rescue for emergency rescue services and Kola MMC services containment and 2010 2011 2012 2013 2014 2015 2016 2017 2018 organisations across the cleanup at hazardous 2003 2004 2005 2006 2007 2008 2009

Company’s footprint production facilities 2019 (plan)

Monthly training and exercises in near-real conditions

THE GROUP COMPANIES PUT IN PLACE SURVEILLANCE, WARNING, REPAIRS OF SOCIAL FACILITIES IN 2003–2018, 2019 (PLAN) COMMUNICATION AND SUPPORT SYSTEMS IN CASE OF EMERGENCY

5 Total Sanitary and amenity 31 4 Sports and wellness 2018 17 1 2 Catering 2019 plan Others

25 21 200

¹ Hereinafter inclusive of VAT. 98 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 99

Anti-corruption Russian companies in Norilsk Nickel Group adopt and PREVENTING AND FIGHTING CORRUPTION AT NORNICKEL implement their own anti-corruption regulations that are in line with the Company’s anti-corruption policy. REGULATION

UN GLOBAL COMPACT PRINCIPLES The Company takes all the necessary and reasonable • Anti-corruption laws of the Russian Federation • Regulation on the Conflict of Interest and other countries where the Company Commission Principle 10: Businesses should work against corruption steps to cause organisations in the corporate structure operates • Regulation on Business Gifts in all its forms, including extortion and bribery. and located outside Russia to comply with the key • Applicable international laws • Standard anti-corruption agreement (appendix to principles and requirements of the anti-corruption • Anti-Corruption Charter of the Russian Business the employment contract) policy. • Anti-Corruption Policy of MMC Norilsk Nickel • Procedure for Anti-Corruption Due Diligence on • Business Ethics Code Internal Documents at the Head Office of MMC 205-1 • Directors’ Code of Corporate Conduct and Norilsk Nickel Information Policy Regulation, etc. Preventing and fighting corruption The Company assesses corruption risks on an annual Business Ethics basis, conducting quarterly risk monitoring. In 2018, • Regulation on the Prevention and Management 103-2 corruption risk assessments were performed across of Conflicts of Interest in the Company Nornickel’s delivering on strategic goals is based on all the Group’s business units and companies. No the trust and engagement of shareholders, investors, confirmed incidents of corruption were identified. partners, employees, state, Russian and international business communities, and society in the Company's 205-2 RESPONSIBILITIES operations. Therefore, corruption of any nature is When recruited, all of the employees are familiarised unacceptable. with the corporate Anti-Corruption Policy and related • Board of Directors — determining key strategic • HR Services — organising staff training on regulations, and starting 2015, sign addenda to their priorities in countering corruption and following combating corruption The Company consistently builds the compliance employment contracts that set out anti-corruption up related activities • Corporate Security Unit — checking framework focusing on priority anti-corruption areas, key responsibilities. The Company has the e-learning • President — organising measures set to meet counterparties and candidates to vacancies, actions and the role of the governing bodies. course On Preventing Corruption in place for new the requirements and principles of the anti- responding to corruption incidents employees. As at the end of 2018, the share of corruption policy • Heads of the Group’s branches and • Corporate Relations Department — identifying companies – ensuring compliance with the Starting 2017, MMC Norilsk Nickel implements a revised employees informed about the Group’s existing and documenting risks related to corruption, principles and requirements of the Anti- Anti-Corruption Policy that applies to the Company’s corruption prevention policy is 100%. In 2018, the developing and controlling risk management Corruption Policy representatives and contractors, including foreign public dedicated training on the requirements and provisions measures officials and officials of international public organisations. of the corporate anti-corruption regulations was • Corporate Trust Service — providing prompt The respective responsibilities are stipulated in received by 3,505 people (4.72% of the Group’s response to reports of violations, abuses and agreements made with contractors or expressly provided employees as at the end of 2018). embezzlement for by the applicable laws.

FOCUS AREAS Through the efforts of its representatives, Nornickel takes active part in developing and • Prevention and management of conflicts of • Staff training in preventing and fighting implementing domestic and international policies on combating corruption. interest corruption Andrey Bugrov, the Company’s Senior Vice President, is a member of a number of top-level • Anti-corruption due diligence of by-laws • Awareness of the Company’s corruption • Counterparty due diligence to confirm their management policy among stakeholders organisations that supervise this area, in particular: reliability, solvency and financial stability; anti- • Expert Council of the Presidential Anti-Corruption Directorate; corruption clauses in contracts • Procurement procedure • B20’s anti-corruption task forces; • Government cooperation, promotion of justice and the rule of law • Expert Council on Corporate Governance at the Russian Ministry of Economic Development; • Recording and monitoring hospitality expenses, • representative of the Russian Union of Industrialists and Entrepreneurs engaged in groups and establishing criteria for acceptable business gifts committees of the Business and Industry Advisory Committee to the OECD (BIAC): the Anti- Corruption Task Force and the Corporate Governance Committee. Nornickel's anti-corruption initiatives are regularly Corporate Trust Service Anti-corruption matters are an integral part of the functions of other entities where Andrey covered in corporate press releases. The Company Bugrov serves as a member. maintains the Preventing and Fighting Corruption page 103-2 on the corporate website www.nornickel.com containing The Corporate Trust Service was established at information on anti-corruption regulations adopted, Nornickel back in 2010 to ensure prompt response to measures taken, preventive procedures introduced, reported violations, abuses and embezzlement. The legal training sessions organised and law-abidance Service's scope of responsibility covers all business awareness among staff and counterparties. WEB units of the Company and Group companies. The Service is governed by the Procedure on the Corporate Trust Service of MMC Norilsk Nickel approved by the 100 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 101

Company’s President. Report statistics are submitted to Nornickel’s Corporate Trust Service: toll-free hotline REPORTS RECEIVED IN 2018, ITEMS REPORTS CONFIRMED IN 2018, ITEMS the Audit and Sustainable Development Committee of available 24/7: +7 800 700 1941 and +7 800 700 1945, (394 ITEMS IN TOTAL) (95 ITEMS IN TOTAL) the Board of Directors and the Company’s operations email: [email protected]. on a quarterly basis. Information about the Corporate Trust Service is posted 4 The principles underlying the Corporate Trust Service on the Company's official website: www.nornickel.com, 33 16 include guaranteed confidentiality for whistle-blowers, intranet site, salary slips, calendars, posters with the 6 60 independent consideration of reports, and timely and Service’s logo. 60 17 unbiased consideration of all reports irrespective of 1 the position and employment period of the person Persons in charge of the Service have processing 12 15 mentioned therein. performance of incoming reports as their individual KPIs. 33 3 15 6 89 4 88 27

Payroll abuses C ommercial and contractual Conflict of interest abuses Production related abuses Embezzlement Breaches of job descriptions FRAMEWORK FOR REGISTERING AND REVIEWING REPORTS BY T echnology and safety abuses (excluding environment) Labour disputes THE CORPORATE TRUST SERVICE Corruption Social issues

PARTICIPANTS PROCESS 2018 STATISTICS

Audit and Sustainable Development Review of report statistics in terms of the Group’s Quarterly Committee of the Board companies, topics, breaches of Directors

Vice President for Internal Controls and Risk Corporate Trust Service Online Management performance analysis

Investigation Business units of Nornickel and the Prevention and control Group's companies measures

Director of the Internal Control Department Approval of the reports on Process control and management Corporate Trust Service operation

394 reports accepted for Initiating Assessment of investigation, investigation Substantiated implemented prevention 95 confirmed as a result of and control measures investigation Head of the Corporate Trust Service Report assessment Unsubstantiated 300 reports not confirmed

Standard processing time — 21 days 961 reports received Operator of the Registering For reports that require immediate response — 1 day Corporate Trust Service incoming reports For reports that require additional investigation — more than 21 days 102 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 103

Environment ENVIRONMENTAL MANAGEMENT AT NORNICKEL 102-30 201-2

REGULATION

UN GLOBAL COMPACT PRINCIPLES • Environmental legislation: Federal Laws on • Established maximum permissible environmental Protection of the Environment and on Protection impact and its limits Principle 7: Businesses should support a precautionary approach to environmental challenges. of Atmospheric Air, the Water Code, etc. • Plans for reducing pollutant emissions Principle 8: Businesses should undertake initiatives to promote greater environmental • Nornickel’s Environmental Policy • Plans for reducing pollutant effluents responsibility. • Environmental Impact Assessment Policy • Biodiversity Conservation Policy Principle 9: Businesses should encourage the development and diffusion of environmentally • Renewable Energy Sources Policy friendly technologies.

2018–2023 strategic cycle RESPONSIBILITIES

Targets 2020 • Board of Directors approves environmental • Production units implement environmental

• Reduction of SO2 emissions in Nickel by 50% policies initiatives and prepare federal statistical and • Significant reduction in effluents containing sulphates, • First Vice President and COO oversees corporate reports (immediate, quarterly and sodium chloride and boron/boric acid preparation of initiatives and compliance with annual) 2023 environmental laws, prepares reports for the • Health, Safety and Environment Committee Board of Directors, and assesses effectiveness analyses and improves the environmental • Reduction of SO2 emissions in Polar Division by 75% of the environmental management system management system and assesses effectiveness Environmental expenditures, RUB bn CAPEX for the Sulphur Project around RUB 150 bn by • HSE Department ensures compliance of the of initiatives 2023 Company’s operations with the applicable • Sulphur Project office environmental laws, environmental policy and Projects • Sulphur Project (Polar Division, emissions) ISO 14001:2015 and mitigates administrative and financial risks related to environment protection • Upgrade of smelting equipment, discontinuation of low-grade concentrate processing at Kola MMC (Kola MMC, emissions) • Upgrade and expansion of refining capacity and migration to chlorine dissolved tube furnace nickel powder technology (Kola MMC, emissions) • Treatment of salt effluents from nickel refining operations (Kola MMC, effluents) CERTIFICATION

• MMC Norilsk Nickel: ISO 14001:2015 • Kola MMC: ISO 14001:2015 • Norilsk Nickel Harjavalta: ISO 14001:2015

Environmental Management management initiatives with operations of other functions System (production management, finance, health and safety, etc.). This approach is beneficial both for environmental ENVIRONMENTAL MANAGEMENT PRIORITIES Nornickel’s management considers security and for overall performance across the environmental protection an integral Company. • Phased reduction of pollutant air emissions, • Involvement with environmental public-private part of the production process. primarily sulphur dioxide and solids partnership projects The Company complies with the During 2018, the Company carried out internal audits • Progressive reduction of effluents into water • Biodiversity conservation across regions of applicable laws and international within the framework of CIMS. In line with international bodies operations agreements and is committed to standards and Nornickel’s by-laws, internal audits • Development of waste disposal sites to reduce reducing emissions, on a phased were conducted by specially trained and competent human impact on the environment basis, and sustainable use of natural personnel. • Zero pollution in maritime cargo transportation resources. and vessel operation The Company has drafted and keeps updating a register • Sustainable use of natural resources and introduction of eco-friendly technologies The Environmental Management of corporate and internal auditors. WEB System is part of the Group's integrated quality and environmental management system, which enables the Group to harmonise environmental and quality 104 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 105

Precautionary approach When planning its operations, the Company ensures In 2017, a roadmap to reduce air pollutant emissions shop area upgrade at Copper Plant), timely progress on compliance with the requirements of the applicable at Polar Division in 2018–2023 was developed, with which will allow Nornickel to keep emissions down to 102-11 Russian environmental laws and regulations. Rosprirodnadzor’s approval obtained. The roadmap maximum permissible rates. In accordance with its Investment Project Risk takes into account the current state of emission sources Management Regulations, Nornickel analyses risks Environmental protection expenditures following the shutdown of Nickel Plant and completion of Official deadlines for reaching maximum permissible and assesses impacts and potential consequences reconfiguration at Polar Division's production facilities. It emission rates at Polar Division were set forth in a decree using qualified expert review during both project 103-2 307-1 covers major projects (sulphur projects at Copper Plant of the government of the Krasnoyarsk Territory. initiation and implementation. In the event material The Group’s total environmental protection and Nadezhda Metallurgical Plant, and the conversion risks are identified, mitigation initiatives are developed, expenditures stood at RUB 32.5 bn in 2018, up 117.9% and a decision may be taken to abandon the project. year-on-year. The largest spending items were current During state expert review, FEED documents for all environmental protection expenditures (RUB 19.2 bn) the projects being implemented by the Company and capital investments to ensure environmental AIR POLLUTANT EMISSIONS, KT 305-7 undergo mandatory assessment for compliance with the protection and sustainable use of natural resources applicable law. (RUB 12.6 bn). 117.45 2018 1,789.01 20.17 Other divisions and Group entities ENVIRONMENTAL COSTS AND EXPENDITURES, RUB MLN 121.90 Kola MMC 2017 Polar Division 19.25 Expenditure item 2016 2017 2018 1,705.00 132.90 Current environmental protection expenditures 15,405.17 20,907.06 19,161.00 2016 Capital investments to ensure environmental protection 9,567.83 4,981.95 12,607.28 1,787.57 15.97 and sustainable use of natural resources 169.79 2015 Charges for permissible and surplus emissions (effluents) 745.77 626.79 695.18 and disposal of production and consumption waste 1,883.24 10.49 165.44 Charges paid by the Company to remedy damages arising 4.19 244.31 1.53 2014 from non-compliance with environmental laws (excluding environmental fines) 1,828.09 14.74

Environmental expenditures and costs 25,722.96 26,760.22 32,464.99 1,700.00 1,750.00 1,800.00 1,850.00 1,900.00 1,950.00 2,000.00 2,050.00 2,100.00

In 2018, the Company paid a total of RUB 3,187,000 in environmental fines and received 35 improvement notices from 11.22 31.28 regulators. 2018 Other pollutants 1,869.62 14.51 11.40 36.36 Solids 2017 Nitrogen oxides Performance indicators To communicate its environmental efforts to the people 1,784.97 13.42 Sulphur dioxide of Norilsk, Polar Division has been running an automatic 10.12 34.05 Air protection toll-free enquiry service offering short-term forecasts on 2016 the environmental situation in the city. 1,877.97 14.30 103-2 413-2 9.84 23.90 Norilsk is the primary area affected by multifaceted To raise the stakeholders’ awareness of its large-scale 2015 operations of Polar Division. 54 pollutants are emitted environmental initiative, the Company opened a Sulphur 2,009.11 20.67 into the air in this area. The key pollutant is sulphur Project showroom in 2017. The showroom functions 11.53 26.07 dioxide accounting for 98% of all emissions. at Nadezhda Metallurgical Plant and uses the latest 2014 exhibition technology. The exhibits include: 1,947.58 23.09 Kola MMC’s operations have environmental implications • architectural models of the facilities to be used to 1,750.00 1,800.00 1,850.00 1,900.00 1,950.00 2,000.00 2,050.00 2,100.00 mostly for Monchegorsk and Zapolyarny towns and utilise sulphur dioxide emissions at the plant; Nickel settlement. The key pollutants resulting from copper and nickel feedstock processing are sulphur • building models with augmented reality elements to compounds and dust containing heavy non-ferrous demonstrate solutions and technology; metals such as nickel and copper. • interactive stands providing information about the existing projects, Polar Division, Nadezhda Reduction of air emissions (especially those of sulphur Metallurgical Plant and the Company’s environmental dioxide and dust containing non-ferrous metals) is the initiatives; key objective pursued by the Company's operational units in terms of environmental management. • screens with information videos about the projects. 106 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 107

In 2018, the Company continued its efforts to control To minimise its impact on the climate, the Company REDUCTION OF SO2 EMISSIONS AT The Group uses mostly low-carbon fuels KOLA MMC, TONNES pollutant emissions during unfavourable weather implements a long-term strategy providing for the in its production and power generation conditions. During the reporting period, a total of upgrade of its production facilities using the best processes, with natural gas accounting for 140 emission control interventions were made at available technologies, improving energy efficiency, about 90% of fuels used. The Company also Nornickel’s metallurgical operations. and implementing measures that encourage energy 36,625.46 saving and lower energy consumption. The Company’s generates renewable energy at its Taimyr On 28 December 2018, Deputy Prime Minister Aleksey strategy already addresses key non-financial risks, HPP Cascade. In 2018, the Company's HPPs 61.5% Nickel Gordeyev approved the Integrated Action Plan to including climate risks, and factors in recent trends in generated 51% of total power consumed Reduce Air Pollutant Emissions in 2019–2024 that this area. 3.5% in the Norilsk Industrial District. Electricity Zapolyarny requires Polar Division to invest a total of RUB 123.2 bn produced by the HPPs account for 44% of to cut its gross emissions by at least 75% by 2023. Nornickel has adopted a proactive approach in 35% the Group’s total power consumption. 3,711.48 Monchegorsk Additionally, the action plan provides for the Federal responding to GHG regulatory risks in Russia and 64,481.96 Budget and the Krasnoyarsk Territory Consolidated abroad by: Budget to allocate RUB 210 mln in 2019–2024 to finance • keeping record of GHG emissions; Rosprirodnadzor’s and Rosgidromet’s air monitoring activities in Norilsk and Rospotrebnadzor's social hygiene • developing and implementing a corporate GHG Use of ozone-depleting substances In 2018, the Group's pollutant emissions increased 5%, monitoring system. emission management system; while Kola MMC’s emissions went down 3.6%. • disclosing information on GHG emissions on a 305-6 Kola MMC voluntary basis; The Group neither produces nor uses ozone-depleting Implementation of emission reduction initiatives substances (ODS), except for extremely limited amounts • monitoring domestic and international climate in 2018 An upgrade project started at Zapolyarny Concentrator. used as a chemical agent for laboratory-based chemical The project provides for the construction of a facility to regulations; analysis as well as for filling and topping compressors in Polar Division separate low-grade (marketable quality) concentrate • assessing the prospects of GHG reduction. air conditioning units and carbonated water machines and high-grade concentrate and construction of a new that produce water used as a cooling agent for medium- In 2018, the Company continued bringing emissions building to dehydrate and ship low-grade concentrate to The Board’s Audit and Sustainable Development and low-temperature refrigerating equipment. The gradually down to below the maximum permissible third-party consumers. High-grade concentrate will go Committee examines climate change risk data Company reports on the use of ODS to the Russian concentration levels set for MMC Norilsk Nickel’s Polar through a new high-performance thickener and will be published in Norilsk Nickel Group’s quarterly risk Ministry of Natural Resources as required. Division. further processed at the Concentrator’s briquetting line reports. The Board of Directors reviews climate and at Kola MMC’s smelting facilities using the existing risks while discussing the Company’s Environmental Protection of water bodies One of the projects aimed at achieving this goal was technology. The project has environmental implications. Development Framework and progress reports on completed at Copper Plant's Smelting Shop. The flue When it is completed, the utilisation rate of Smelting major investment projects and treats them as a priority 103-2 306-5 gas extraction process was rearranged to bring gas Shop in Nickel will decrease substantially enough to in setting Nornickel’s targets and development strategy. The Group uses water from surface and underground from holding furnaces, slag siphons and charging doors decommission one of its ore-thermal furnaces and Climate change matters are overseen by the First Vice sources for its drinking, production and process of Vanyukov's furnaces 2 and 3 to DT-1 flue gas stack. bring sulphur dioxide emissions in Nickel down to the President and Chief Operating Officer. supply needs as well as for community and shipping With the new process introduced in 2018, nearly 11 ktpa maximum permissible level (31 ktpa). needs. Water is withdrawn in compliance with the pre- of emissions from shut-down low-height sources at 305-1 305-4 approved limits, without any major impacts on water Copper Plant (gas bleeders of matte and slag holding In Monchegorsk, the Company continued working Direct GHG emissions of Norilsk Nickel Group total about bodies. No water is withdrawn either from the Ramsar 1 baths of Vanyukov's furnaces) were eliminated and on the project named Nickel Electrowinning from 10 mt of CO2 equivalent. Wetlands or from other protected natural areas. redirected to DT-1 flue-gas stack. Estimated ground Chlorine Dissolved Tube Furnace Nickel Powder level concentrations of pollutants in Norilsk residential with 145 ktpa Electrolytic Nickel Output. The project The direct GHG emission intensity is 13.7 tonnes of CO2 The Company’s wastewater effluents generally do not areas were reduced by 2.65 permissible limit values for provides for the redesign of cathode nickel production equivalent per RUB 1 mln of consolidated revenue. exceed the pre-approved limits, including admissible sulphur dioxide and by 0.36 permissible value for lead. in Nickel Tankhouse and replacement of the existing impact limits, or have any major impact on biodiversity soluble anode electrorefining technology with nickel of water bodies and related habitats. During 2018, much work was done at Polar Division's electrowinning from chlorine solutions. The new facilities to overhaul and repair gas cleaning units, dust technology will reduce air emissions thanks to the exhausting units and dust collectors, which resulted in elimination of anode smelting. the reduction of dust emissions from stationary emission sources: Climate risk management • Copper Plant (Smelting Shop, Drying Shop, and PGM Concentrator): routine repair of dust exhausting units Climate change risks are increasingly gaining attention at Converters 2–7; of the investment and financial community. They are subject to government regulation in many countries. • Nadezhda Metallurgical Plant (Smelting Shop 1, Russia is in the process of developing its regulatory Feedstock and Charge Makeup Shop, Elemental framework in this area. As it evolves, the Company will ¹ An estimate that includes carbon dioxide (СО ) and methane (СН ) emissions. Sulphur Production Shop 1). 2 4 additionally integrate these requirements into its CAPEX The Company holds stakes in many subsidiaries so that most production processes emitting greenhouse gases fall within the Company's perimeter, i.e. plans. part of direct emissions from the fuel and energy assets will be considered indirect emissions of the production assets in so far as energy is supplied for production needs, etc. Also, when calculating its emissions, the Company takes into account its transport and logistics units that ship cargoes and commercial products for the Company’s benefit (e.g. Murmansk Transport Division). Therefore, the entire Group produces approximately the same amount of Scope 1 and 2 GHG emissions in terms of the Greenhouse Gas Protocol. 108 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 109

TOTAL WATER WITHDRAWAL,1 TOTAL WATER CONSUMPTION, TOTAL EFFLUENTS, In 2018, the Company continued implementing its plan MCM 303-1 MCM MCM to bring effluents in Norilsk gradually down to maximum permissible discharge rates for each controlled pollutant: 171.58 25.59 269.47 • local treatment plants were built at wastewater outlets 2018 2018 2018 61 and 62 of United Motor Transport Enterprise; 82.82 32.82 463.50 709.11 67.94 34.98 91.56 12.32 • multiple activities are in progress to optimise water 251.98 169.64 1.83 utilisation and disposal at Talnakh Concentrator; 2017 2017 2017 100.14 31.73 512.32 620.74 39.37 45.29 78.16 22.27 • a wastewater treatment technique was developed to treat industrial effluents in the mixed storm water 170.52 4.53 249.93 collector and utility tunnel of Nadezhda Metallurgical 2016 2016 2016 Plant; 96.41 35.53 533.67 719.02 40.60 38.67 77.76 22.59 • design documents were developed to upgrade 267.87 171.32 3.9 Copper Plant’s Cooling Tower 2; 2015 2015 2015 102.49 27.93 574.17 634.90 41.02 39.52 73.55 23.48 • pilot tests on the technology developed by Srednyaya Volga to treat Mayak Mine’s drained water delivered 274 175.38 3.67 positive results; it was decided to use this technology 2014 2014 2014 as a basis for the Mayak Mine Water Treatment 95.02 30.16 567.04 634.12 41.26 36.2 80.31 25.44 Project;

Polar Division and Norilskenergo • search for an appropriate technique is in progress to treat water from Kayerkansky Open Pit and Limestone P olar Division and Norilskenergo Polar Division NTEK mine and utility effluents from Copper Plant; work is in NTEK NTEK Kola MMC progress to develop an alternative treatment method Kola MMC Kola MMC Other business units and subsidiaries for drained water from Anhydride mine. Other business units and subsidiaries

Waste management

306-1 ММ3 103-2 In 2018, the Group’s water withdrawal2 grew 6.3% Group-wide use of recycled water increased by 73 mcm In 2018, the Group’s effluents grew by 17 mcm (11.4%) Over 90% of the Group's production waste is classified as year-on-year and totalled 356.8 mcm. This was mostly (6.6%) due to enhanced water recycling at NTEK’s TPP 2 year-on-year and reached 164.4 mcm. This was mainly hazard class 5 waste (almost non-hazardous waste). This associated with an increase in power generation and and Kola MMC. due to a 13.4 mcm increase in the discharge of standard- includes rock and overburden, tailings, and metallurgical resulting growth of water consumption to cool turbine quality treated water used to cool turbine generating slags. To minimise the environmental impact, mining generating units at NTEK’s TPP 2. Water consumed by Polar Division decreased by units at NTEK’s TPP 2. waste and tailings are stored at special waste disposal 48 mcm because Zapolyarny Mine and Norilsk sites and are used (utilised) at the Group’s facilities or by Besides, the natural inflow of mine water increased by Concentrator were transferred to the Medvezhy Ruchey The amount of effluents treated to standard quality at other licensed specialist companies. Mining waste and 2.3 mcm at Polar Division and Medvezhy Ruchey and by mine. treatment facilities grew by 457,000 m3 (7.5%). tailings are used to make filling compounds or smelting 1.3 mcm at Kola MMC. fluxes, construct and reinforce tailing dumps or railroad Reused and recycled water makes 85.7% of total water Pollutants in effluents discharged by Polar Division and groundwork, as road filling, etc. consumed by the Group. Norilskenergo (branch of MMC Norilsk Nickel) decreased by 0.3 kt to 72.7 kt. All of the Group’s waste disposal sites are listed on the national disposal site register. The sites are regularly In 2018, Kola MMC’s effluents grew 16.45% year-on-year, monitored in line with designated environmental mainly due to an increase in wastewater discharge at the programmes. Tailings pits are monitored additionally as Monchegorsk site where water intake for its production required by safety standards for hydraulic structures. needs increased. At Zapolyarny and Nickel sites, effluents increased on the back of growing discharge of Production and consumption waste is treated in mine drainage and wastewater. Pollutants discharged accordance with waste generation standards and waste grew by 5 kt as effluents increased. disposal limits.

¹ The total for Polar Division, Norilskenergo Branch and other operations of the Group includes water withdrawal from NTEK. 2 Water withdrawal is measured with flow metering instruments. 110 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 111

306-2 WASTE GENERATION AND RECYCLING, MT Indicator UoM 2014 2015 2016 2017 2018

Waste generation In-house waste recycling Pollutants in effluents, per t/RUB mln 0.308 0.302 0.352 0.404 0.319 unit

2.46 2018 Per-unit waste generation kt/RUB mln 0.077 0.066 0.061 0.059 0.042 15.71 8.31 6.70 15.79 3.38 All RUB mln figures are hereinafter given per RUB mln of consolidated revenue. 2017 23.26 8.61 3.0117.75 0.06 Biodiversity conservation Pursuant to the Russian laws, design documents 2016 for capital construction projects, including field 22.57 10.61 15.18 4.97 0.09 103-2 development, must have a section describing Nornickel recognises the importance of biodiversity and environmental protection and monitoring initiatives 2015 seeks to minimise any potential negative environmental to track changes across the ecosystem resulting from 22.27 11.37 13.22 5.59 impact of its operations. The Company’s approach is ongoing development, construction or accidents. documented in its Biodiversity Conservation Policy approved by the Board of Directors. The Company has field development, mine liquidation 2014 23.07 12.10 12.13 6.11 and land rehabilitation project documents in place Its focus areas include land rehabilitation, cooperation for all of its deposits, with special provisions made with nature reserves, and reproduction of aquatic for rehabilitation activities. The project design Polar Division Kola MMC Other business units and subsidiaries bioresources. The Let’s Do It environmental marathon documents provide for layouts, slopes, hydraulic and plays an increasingly important role and brings together irrigation structures, and other technical measures. thousands of Company employees and local community Importantly, the Company’s deposits are in commercial members to support nature reserves, clean up certain development, exploration or production test stages In 2018, the Group generated 1.2 mt less waste than and decreased utilisation of overburden rock to areas, transplant young trees, and carry out other with liquidation or abandonment not expected until in 2017. The 7.55 mt reduction of waste generation at rehabilitate depleted open pits. environmental initiatives. 2050. Polar Division and 1.96 mt decrease in waste recycling is explained by the spin-off of Zapolyarny Mine (both In 2018, Norilsk Nickel Group re-used 70% of all Nornickel supports programmes aimed to study and The Company complies with all applicable regulations the underground and open-pit mines) and Norilsk produced waste and is committed to increasing this preserve rare and endangered species listed on for land rehabilitation and other environmental Concentrator, which were transferred to Medvezhy share. WEB Russia’s Red Data Book, including Siberian bighorn protection initiatives associated with field development, Ruchey. sheep, polar bears, lesser white-fronted geese and construction and other operations. Per-unit indicators of environmental impact others. The year-on-year reduction of waste generation at Kola MMC in 2018, specifically the 0.3 mt decrease in Most per-unit environmental impact indicators of the Land rehabilitation overburden generation and the 0.5 mt decline in waste Group show consistent downward trends. reuse, was due to the shutdown of open-pit operations The Company is developing Oktyabrskoye, Talnakhskoye and Norilsk-1 Deposits on the Taimyr Peninsula, Zhdanovskoye, Zapolyarnoye, Kotselvaara and Semiletka Deposits on the Kola Peninsula, and Bystrinskoye Deposit in the Trans-Baikal Territory. Indicator UoM 2014 2015 2016 2017 2018

Per-unit air emissions t/RUB mln 4.404 4.077 3.530 3.438 2.643

Per-unit water withdrawal thousand m³/RUB mln 0.772 0.689 0.599 0.625 0.489

Per-unit water consumption thousand m³/RUB mln 3.109 2.808 2.668 2.500 1.937

Per-unit effluents thousand m³/RUB mln 0.319 0.277 0.262 0.275 0.226 112 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 113

ММ1 DISTURBED AND REHABILITATED LAND AREA IN 2018, HA¹ Nornickel traditionally takes part in urban greening Kola Peninsula projects in Norilsk, Dudinka, Monchegorsk, Zapolyarny, Indicator Total Including and Nickel. The disturbed area reclamation programme The Company cooperates with the Lapland and Pasvik is implemented in cooperation with local authorities and Nature Reserves in multiple areas. The key ones are during mining during during disposal of during volunteers and seeks to clean up and improve public environmental monitoring and vegetation restoration in construction solid domestic and other spaces and areas around motorways, protect water the vicinity of Kola MMC's production sites. industrial waste activities bodies and water reserves, and revamp tourist camping Total disturbed area, beginning 14,889.43 13,225.82 428.95 66.34 1,168.32 sites. The Pasvik State Nature Reserve is featured as one of period of the Wetlands for the Shadow List of Ramsar Sites In 2003, Kola MMC started implementing a land under the name of Fjarvann — Schaanning’s Field Base. Total rehabilitated area 31.70 31.70 0.00 0.00 0.00 rehabilitation programme as advised by nature It covers a total area of over 14,000 ha. Pasvik is the Total disturbed area in the 0.10 0.10 0.00 0.00 0.00 reserves. In just 14 years, Kola MMC had over one only Russian nature reserve holding the EUROPARC reporting period million trees and bushes planted over an area of about Federation’s certificate, which is awarded to the best Total disturbed area, end of 14,915.33 12,724.32 430.75 591.84 1,168.40 100 ha, including as part of a pilot project to restore protected areas worldwide. Such certification is an period damaged land adjacent to the Company’s production important condition for international cooperation with site in Monchegorsk implemented jointly with Kola foreign nature reserves. Science Centre of the Russian Academy of Sciences. Since 2006, the Pasvik Nature Reserve has been ENVIRONMENTAL PROTECTION AND MONITORING MEASURES TAKEN DURING Cooperation with nature reserves carrying out an assessment of the natural environment THE DEPOSIT LIFE CYCLE 304-3 ММ1 in the area of Pechenganickel Plant (including 304-1 304-2 Zapolyarny, Nickel and their suburbs, as well as the Kola MMC is located 15 km from the Pasvik Nature Pasvik State Nature Reserve), and developing a long- ENVIRONMENTAL MONITORING OF CHANGES IN THE ECOSYSTEM COMPONENTS Reserve and 10 km from the Lapland Biosphere term environmental monitoring programme. The reserve Reserve, while Polar Division's sites are some 80– is also working on several projects that received grants 100 km away from the buffer zone of the Putoransky under the World of New Opportunities charitable Prospecting Exploration Pilot Commercial Abandonment or Shutdown Nature Reserve. Bystrinsky GOK is located 160 km away programme. The projects seek to reach out to Russian enhanced recovery and production production development from the Relict Oaks State Reserve (the Trans-Baikal and Norwegian audiences and cover a variety of topics, testing of remaining reserves Territory). At present, the Company’s operations do including traditional use of natural resources, raising not produce any significant impact on areas that are environmental awareness among schoolchildren, and in relative vicinity to the nature reserves and areas of promoting research. In 2018, the Company donated a high biodiversity value outside protected areas. The mobile environmental laboratory that is based on a four- Company’ cooperation with nature reserves focuses on wheel drive KAMAZ vehicle and fully adapted to work in developing research and technology and supporting the Arctic conditions. their social, volunteering and environmental awareness Environmental measures taken: protection of air, subsoil resources, plant and programmes. Pasvik’s Visitor Centre, which was built with support animal species, habitats, water resources, water life, land resources and soil; of the Company, is an international platform for waste management Taimyr Peninsula academic forums and educational activities focused on environmental protection issues. The Putoransky State Nature Reserve has been on Waste removal the UNESCO world heritage list since 2010. It is one of With an area of 278,000 ha, the Lapland State Nature State and public environmental review and disposal, the biggest nature reserves in Russia with a total area Biosphere Reserve is one of the largest protected Environmental Impact Assessment (EIA): land rehabilitation of over 1,887,000 hectares. The reserve is part of the areas in Europe and also one of Russia's oldest nature and improvement Joint Directorate for Taimyr Nature Reserves, which also reserves (founded in 1930). In 1985, it was included in • review of layout options and technology; measures includes the Taimyrsky and Big Arctic reserves, as well the UNESCO Network of Biosphere Reserves. • environment analysis and environmental impact assessment; as the Purinsky and Severozemelsky natural protected areas. In 2002, Kola MMC and the Lapland Biosphere Reserve • potential negative impact mitigants provided for in the monitoring programme; signed contracts for the development of a methodology • public discussions with local communities. The Joint Directorate for Taimyr Nature Reserves to reclaim disturbed natural environments in the areas implements environmental projects selected under affected by permanent emissions from Severonickel Nornickel’s World of New Opportunities charitable Plant and monitoring of the Monchegorsk District and the programme to support socially important initiatives. Lapland Biosphere Reserve. Research results provided a The projects focus on raising environmental awareness, basis for further rehabilitation of disturbed lands and for environmental protection, engagement of local sanitary and fire protection improvements in forest areas. communities, land improvement, and landscaping. The Company supported creation of multiple ecotrails, In 2018, the Company helped Taimyr’s nature reserves including the first ecotrail for children called “A Curious to organise environmental raids and transport research Child out in the Woods,” and publication of books on ¹ Medvezhy Ruchey was included in the reporting perimeter in 2018. groups to remote locations. the reserve founders. 114 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 115

In the Rybachy and Sredny Peninsulas Natural Parks, Reproduction of aquatic bioresources Impacts from foreign operations Norilsk Nickel Harjavalta’s main environmental environmental routes and information facilities are impact consists in the emissions of ammonia developed on the territory covering over 83,000 ha The Company provides annual financing for the Norilsk Nickel Harjavalta has necessary environmental (NH3) and nickel (Ni), and discharges of nickel, 2– + under an agreement between the Company and the measures to breed valuable fish species, including permits and an integrated management system sulphates (SO4 ) and ammonia ions (NH4 ) Murmansk Region Government. those listed on Russia’s Red Data Book, and release certified to ISO 9001, ISO 14001, and OHSAS 18001. them into natural water bodies. Every year, certain Trans-Baikal Territory populations of juvenile Siberian sturgeon and grayling are released into the Yenisey River in the Krasnoyarsk The oak grove in the Gazimuro-Zavodsky District is Territory; Atlantic salmon is released into the Umba ENVIRONMENTAL IMPACT METRICS OF NORILSK NICKEL HARJAVALTA Siberia’s only grove of natural origin that has survived River in the Murmansk Region. Specialised fish farms to the present day. The grove spans 30,000 ha and is and research institutions are engaged in taking these Indicator 2016 2017 2018 located along the Argun River. As part of the agreement measures. Another “green” project to restore and with the region's government, Nornickel provides financial preserve the fish population will be implemented in Industrial wastewater (thousand m³) 771 899 988 aid in effectively protecting and exploring the ecosystems the Trans-Baikal Territory. within the Relict Oaks State Reserve. The Company financed the acquisition of video monitoring devices and Pollutants in industrial wastewater (t) camera traps for the reserve. It also plans to help put in • Ni 0.4 0.5 0.6 2– 22,457 25,853 30,189 place research facilities and run educational programmes • SO4 for children and adults. WEB + 49.5 60.3 70 • NH4 (rebased to nitrogen)

Total water consumption (mcm)* 10.9 11.1 11.8

Impacts from transport operations WEB Total air pollutant emissions (t) 71.6 70.7 85.2

• Ni 1.6 1.7 1.2 70 69 84 Fleet Transported products Social and environmental responsibility Outcome • NH3

Waste generation (kt) 7.0 5.5 2.8 Group’s own fleet Products of the Group com- Compliance with international conventions, No significant panies codes, guidelines, Russian laws, regulations and environmental requirements impact produced Products procured to meet Waste disposal (kt) 0.8 0.8 1.1 the Group’s internal needs Four freight-forwarding licences, all by the Company's environmental permits in place freight and personnel Commercial and social cargo transportation Multi-stage control from the Group companies, Power consumption (GWh) 180 182 209 other transportation participants and supervisory bodies Security and industrial health and safety Power consumption for heating/cooling (GWh) 130 145 150 management systems in place at facilities

Steam consumption (GWh) 225 235 327 Fleet chartered by Norilsk Nickel Group’s Compliance of the fleet's environmental the Group's Metal products parameters with the requirements of Trade Overseas international environmental conventions Environmental expenses, USD mln 2.7 1.0 0.7

* Over 95% is water withdrawn from surface sources (Kokemäenjoki River).

In 2018, Norilsk Nickel Harjavalta met all permit Energy saving and energy efficiency requirements for emissions, discharges and waste disposal volumes. Lower waste volumes resulted 103-2 from switching to the Company’s feedstock that The Company’s distinguishing feature is that most is less contaminated with impurities as compared of its production facilities and workforce operate to third-party materials. The increase in effluents and live in the harsh Arctic climate. Nornickel uses and pollutant emissions was driven by the growing an integrated approach to the energy infrastructure output. development, combining goals of reliability 116 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 117

improvement with those of low-carbon economy. solar, geothermal and wind energy is constrained FUEL CONSUMPTION BY THE GROUP, TJ Nornickel makes continuous efforts to reduce by geographic factors, such as long polar night and consumption of such fuels as diesel fuel, coal and unsteady wind intensity. Indicator 2014 2015 2016 2017 2018 natural gas, as well as to provide its subsidiaries with reliable and efficient energy sources in the long term. Development of the fuel and energy assets is Fuel consumption 162,301 161,710 172,425 156,568 148,910 governed by the Fuel and Energy Development The Company’s priority renewable source of energy Strategy and the Programme to Upgrade, Revamp and Natural gas 146,200 145,266 151,081 134,709 129,335 is hydropower generated at the Ust-Khantayskaya Replace the Norilsk Industrial District’s Power Facilities and Kureyskaya HPPs (481 MW and 600 MW of through 2025. For the purposes of implementing a Coal 4,417 4,170 2,132 1,460 1,660 installed capacity respectively). These unique HPPs uniform R&D policy and meeting the targets of the are among the world's northernmost ones constructed Fuel and Energy Development Strategy, the Company Diesel fuel and fuel oil 11,684 12,274 15,423 15,221 13,788 in the Arctic. The use of other renewables such as established an energy section with its R&D Council. Gasoline and aviation fuel1 – – 3,789 5,178 4,127

NORNICKEL’S FUEL AND ENERGY ASSETS

To achieve its energy development goals and targets, operating for over 40 years. The new units boast • NTEK • Norilsktransgaz supplies electric power, heat and water to Norilsk and all facilities in transports natural gas and the Company runs investment projects approved by better reliability and a service life of at least the Norilsk Industrial District condensate produced the Investment Committee. In 2018, the Company 50 years. by Norilskgazprom and continued to enhance the reliability of generating • Taimyrgaz Taimyrgaz equipment, grid and gas transportation infrastructure The Company was also implementing its Polar Division develops the Pelyatkinskoye Gas Condensate Deposit and boost gas output. Energy Saving and Energy Efficiency Programme for • Arctic-Energo 2013–2018, which was approved by Polar Division’s • Norilskgazprom is Kola MMC's default The Ust-Khantayskaya HPP is implementing a large- First Deputy Director and Chief Engineer. develops the Severo-Soleninskoye Gas Condensate Field, supplier based in Yuzhno-Soleninskoye Gas Condensate Field, and Messoyakhskoye Monchegorsk scale project to replace equipment in hydroelectric Gas Field units. The fourth unit was commissioned in 2018. Each year, the Company develops and implements In 2012, the Company made a decision to replace organisational and technical action plans to save fuel, adjustable blade hydroelectric units that had been heat, power and water.

ELECTRICITY AND FUEL RESOURCES THROUGHPUT AND CONSUMPTION BY THE GROUP, FUEL AND ENERGY SAVINGS RESULTING FROM ENERGY CONSUMPTION REDUCTION TJ 302-1 302-3 AND ENERGY EFFICIENCY IMPROVEMENT INITIATIVES, TJ 302-4

No. Indicator 2014 2015 2016 2017 2018 No. Indicator Polar Division NTEK Kola MMC

1 1 Fuel consumption 162,301 161,710 172,425 156,569 148,910 1. Total savings 1,674 378 1,046

2 Energy from renewable sources (HPPs) 11,900 17,027 11,856 12,414 14,877 including

3 Electricity and heat procurement from 15,547 15,528 8,968 10,483 10,931 1.1. Electric power 315 8 206 third parties 1.2. Heat in water and steam 220 217 25 4 Electricity and heat sales to third parties 20,440 17,918 19,882 19,503 18,926 1.3. Fuels 1,138 152 815 5 Group's total energy consumption 169,308 176,347 173,367 159,962 155,792 (1 + 2 + 3 – 4) including

Energy intensity, GJ/RUB mln2 371 348 316 298 214 1.3.1. Coal 0 22 22

1.3.2. Natural gas 1,138 130 0

1.3.3. Diesel fuel and fuel oil 0 0 793

¹ The 2017 figures were revised due to adjustments in the calculation methodology and actual data on diesel fuel and fuel oil consumption. 2 RUB mln of consolidated revenue. 1 Consolidated data has been reported since 2016. SUPPORT AND DEVELOPMENT OF SPORTS For many years, MMC Norilsk Nickel has provided support to the international university sports movement. Since 2015, the Company has been a general partner to the 2019 International Winter Universiade in Krasnoyarsk. In total, Nornickel contributed in excess of RUB 2.1 bn to the 07 2019 Winter Universiade. REGIONAL DEVELOPMENT

120 The Company's contribution to the development of local communities

• 121 Budget payments • 121 Employment of local population • 122 Cooperation development

123 Infrastructure development 123 Development of local communities

• 123 Charitable programmes • 125 Corporate volunteer programme • 125 Norilsk Development Agency • 126 Support for sports projects • 128 Support for cultural projects

128 Assessment of social programmes

129 Transport accessibility 120 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 121

SPENDING ON SOCIAL, CHARITABLE AND SOCIAL INFRASTRUCTURE PROGRAMMES, 103-2 Regional development RUB MLN 203-1

Nornickel is one of the major The Company makes a significant contribution to the 3,771 549 2019P 25,285 S ocial programmes and employers and taxpayers in development of local communities by implementing a benefits for employees 12,855 6,511 1,439 1 range of social programmes that address current and 160 Russia. Charity 203-1 potential future issues. 4,417 1,583 2018A 30,897 Sponsorship (sports projects) 15,693 7,185 1,224 795 Repair and maintenance of 1,514 1,463 social infrastructure 203-1 2018P 29,890 Investments in social projects THE COMPANY'S CONTRIBUTION TO THE DEVELOPMENT OF LOCAL COMMUNITIES 16,086 5,736 3,892 1,200 and social infrastructure development 203-1 1,349 1,582 2017 25,979  Breakthrough infrastructure 203-2 projects The Group's operations as a backbone of local economies 14,405 6,738 1,138 767 1,407 1,329 2016 23,616 CONTRIBUTION DEVELOPMENT INFRASTRUCTURE 11,294 5,250 1,738 2,598 TO ECONOMIC OF LOCAL DEVELOPMENT DEVELOPMENT COMMUNITIES 1,044 1,555 2015 18,276 8,593 3,536 1,303 2,246

• Budget payments • Bridge • Regular charitable • Employment of local reconstruction programmes Budget payments population • Land improvement • Support for sports • Сooperation • Housing construction and culture projects TAX AND NON-TAX PAYMENTS¹ TO LOCAL, REGIONAL AND FEDERAL BUDGETS, RUB BN development • Construction and • Corporate • Development of reconstruction of volunteering social infrastructure sports, cultural, • Vocational training Budget 2014 2015 2016 2017 2018 as part of the Group entertainment and sponsorship operations (power, research facilities • Norilsk Development Total tax and non-tax payments, including 79.2 88.7 91.5 100.3 115.6 transport, food retail) • Provision of access Agency Federal budget 13.5 11.9 14.1 14.3 18.3 to high-speed Internet connection Krasnoyarsk Territory consolidated budget 37.1 43.6 41.6 47.8 55.9 in Norilsk Norilsk budget 4.1 5.5 4.7 5.0 5.2

Murmansk Region budget 7.0 8.2 7.8 8.2 10.6

Trans-Baikal Territory budget2 – – – 0.9 1.2

Changes in the tax and non-tax payments for 2018 The main target audience of career guidance events were due to the higher income tax (on the back of are children and young people under 35 years old. The Company’s key regions of Murmansk Region, the Tazovsky District of the increased revenue) and property tax (as a result of The Company builds partnerships with educational operation in Russia include the Yamal-Nenets Autonomous Area, and the Gazimuro- growing CAPEX), as well as the planned payroll budget organisations and engages young workers, while cities of Norilsk and Monchegorsk, Zavodsky District of the Trans-Baikal Territory. increase. also providing robust support for talented teachers, the Taimyrsky Dolgano- Saratov hosts Nornickel’s Shared Services Centre. engineering training and whipping up interest in Nenetsky Municipal District In the Tver Region, the Company is engaged in the Employment of local population engineering and blue-collar jobs. of the Krasnoyarsk Territory, construction of housing for its employees under My the Pechengsky District of the Home and Our Home programmes. As the major employer across its footprint, the To reduce unemployment, MMC Norilsk Nickel and Company provides ample career guidance and job Norilsk Employment Centre signed an agreement aimed opportunities for local communities, including younger at retraining those out of work for the most needed population groups. blue-collar jobs.

1 Tax and non-tax payments include all taxes paid, net of VAT and dividend income tax, as well as insurance payments and customs duties. ¹ The information presented in this section refers to the Company's Russian operations. 2 Payments to the Trans-Baikal Territory budget have been presented separately since 2017. 122 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 123

Cooperation development UNEMPLOYMENT IN KEY Infrastructure development development of educational infrastructure. While COMMUNITIES,1 % delivering these initiatives, the Company is As part of its social and economic partnership The Company is actively involved in the development committed to creating a barrier-free environment agreements signed in 2009 and 2016, the Company Norilsk 0.7 and renovation of social infrastructure, looking to for individuals with mobility impairments, including has been cultivating cooperation with the companies create accessible and comfortable environments physically challenged and elderly people, pregnant of the Krasnoyarsk Territory and the Murmansk Region. for working and living in the regions. Nornickel women, etc. Krasnoyarsk 0.8 Integration of local businesses into the Group’s Territory sponsors improvement of public areas, supports production chain (mainly through long-term contracts) construction and renovation of sports facilities, The Company's expenses on social infrastructure makes a sizeable contribution to the development of Taimyrsky 0.9 transport infrastructure and housing, and promotes development projects totalled RUB 3.6 bn in 2018. the regions of operation, particularly by supporting Dolgano-Nenetsky Municipal District small and medium-sized businesses. KEY SOCIAL INFRASTRUCTURE DEVELOPMENT PROJECTS IN 2018 Murmansk 1.5 Region Region Focus area Projects 2.1 Zapolyarny Krasnoyarsk Land improvements Architectural lighting at the Kommunalny Bridge over the Yenisey River, a land- Territory mark structure in Krasnoyarsk 2.2 Improvement of left embankments of the Yenisey River and Kacha River and Monchegorsk adjacent territories Installation of smart bus stops fitted out with safety and surveillance systems, 2.5 mobile chargers, Wi-Fi hotspots and other capabilities in Krasnoyarsk Nickel Landscaping of the Dolgoye Lake embankment in Norilsk

Sports Construction of a multi-purpose sports and recreation centre for team sports in Norilsk Development of a golf field in Krasnoyarsk COOPERATION DEVELOPMENT IN FIGURES Education Supporting the Development Laboratory for Dynamic Mining and Processing QC System with the Siberian Federal University

Indicator Across Transportation Reconstruction of road bridges in Norilsk Reconstruction of Norilsk airport the Krasnoyarsk Territory the Murmansk Region Housing Implementation of the Comfortable Taimyr project to construct housing in Tukhard, Taimyrsky Dolgano-Nenetsky Municipal District Procurement tenders for goods and services held by the 1,516 673 Company Trans-Baikal Territory Land improvements Reconstruction of Dekabristov Square in Chita Improvement of public areas in the Trans-Baikal Territory Locally awarded procurements as a share of tenders held 57.7 49.5 by the Company, %

The Group’s spending on local procurements, RUB mln 12,503.8 1,792.8 Development of local communities

including Charitable programmes Partnership, Innovations and Development are three focus services 9,434.8 1,579.8 areas of the World of New Opportunities programme. Since 2014, the Company has been implementing materials 2,209.7 213 World of New Opportunities, a charitable programme Partnership focuses on supporting volunteer initiatives food supplies 859.3 0 to encourage and promote sustainable development of local activists, fostering new skills and developing of local communities. The programme is designed to local expertise. develop soft skills in local communities, demonstrate and introduce new social technologies, support Its key initiatives comprise: and promote public initiatives, and encourage • workshops on social design, expert review and as- Podsolnukh store chain cross-sector partnerships. sessment of projects/programmes, creative thinking, and social engineering; The Podsolnukh store chain, a part of Norilsk Nickel cereals, dairy products, meat, canned foods, eggs, In 2018, after the commissioning of Bystrinsky Group, takes its fair share of the retail market in the sugar, etc.) that are offered at substantially lower GOK in the Trans-Baikal Territory, the World of • a socially responsible initiatives competition; Norilsk Industrial District with nine stores, including prices than in other regional stores. The average retail New Opportunities geography expanded to cover • School of Urban Competencies for schoolchildren; one hypermarket. The SKU range of the chain prices in the Podsolnukh store chain grew notably the Gazimuro-Zavodsky District, which now hosts includes socially significant goods (vegetables, fruit, slower than the official inflation rate. Nornickel's Socially Responsible Initiatives Competition, • We Are the City! social technologies forum; Arctic.PRO R&D marathon and School of Urban • School of Urban Event Managers for local activists; Competencies. • We Are the City! PicNick urban event. WEB ¹ As at the end of the reporting year. 124 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 125

All events arranged by the Company activity and sports, and so did new forms of recreation Vocational training sponsorship Hope charity foundation helping stray animals. Leading served to raise charity awareness in for both children and adults; roles were played by the volunteers who participated Every year Polar Division provides financial support to in Let’s Do It, Nornickel’s environmental marathon. local communities and encourage public- • strong partnerships were established; Norilsk's institutions of secondary and higher vocational private partnerships. In 2017, the Socially • a pool of local social engineering and project education by buying books and specialised equipment Started as a local movement in Monchegorsk in 2015, Responsible Initiatives Competition, which assessment experts was formed; for students, contributing to the maintenance works, the Let's Do It environmental marathon transformed aims to support public initiatives, received and thus improving the quality of training. The Company into a large year-round event uniting thousands of • travel grants were established for community leaders primarily focuses on the training of specialists for the employees, local volunteers and concerned citizens 426 project bids, 116 of which were to participate in regional and national conferences and most in-demand jobs. from across the regions where the Company operates. approved for funding. The pool of grants forums and grow professionally; totalled RUB 125 mln. As part of the marathon, the Company organises • social technologies. Corporate volunteer programme clean-up days, shoreline garbage collection initiatives, bush and tree planting, support of natural reserves, Volunteering is a vital part of the Company's corporate and eco-friendly lifestyle workshops. Another focus area, Innovations, centres around the The World of New Opportunities charitable culture as it unites employees based on shared values implementation of advanced technologies, R&D potential programme shows the Company's and helps identifying and developing employee The Plant of Goodness programme won prizes and innovations in engineering. Its target audience are commitment to migrating from the paternalistic competencies that are essential for the purposes at several prominent Russian and international schoolchildren, university students and adult activists model to social partnerships and active of sustainable development, particularly mobility, competitions, receiving acclaims from the expert interested in science and frontier technologies. responsibility and leadership. community. WEB community involvement. A competition-based Its key initiatives comprise: approach helps selecting the most interesting In 2018, about 400 initiatives were carried out in Norilsk Development Agency1 • Arctic.PRO R&D marathon; projects, achieving specific results in social Moscow, Norilsk, the Kola Peninsula, and Chita as issues and using social investments in the part of the Plant of Goodness corporate volunteer Activities of the Norilsk Development Agency are yet • FabLab R&D creativity laboratories; most efficient way. Along with providing programme. Volunteers participate in environmental another example of how the regional social policy is • Science 0+ festival in Krasnoyarsk and Murmansk; financial assistance, the Company shares activities, such as clean-up campaigns, master classes implemented and how the government and businesses and other training events, hospital clowning, charitable collaborate in social impact areas. WEB • I Make young inventors competition. knowledge with the programme participants runs, performances and fairs. In addition, the Company and creates an environment for the launched an employee personal donation programme The Agency’s mission is to lay the foundation for The third focus area, Development, targets active citizens development of community initiatives and that collected nearly RUB 4.3 mln in 2018. accelerated development of the city's service economy and SMEs with the goal of addressing local communities' support of innovative ideas. as a way of improving Norilsk's living standards and social issues with the benefit of business processes. In 2018, Andrey Urgant presented his volunteer play promoting local products and services on external entitled Travel Notes about Nornickel Volunteers. markets. The Norilsk Development Agency is a long- Its key initiatives comprise: Targeted charitable support Income from ticket sales was donated to the House term partnership project of Nornickel, Norilsk municipal • Social Entrepreneurship training course; with Tail animal shelter in Monchegorsk and the Giving authorities and Vladimir Potanin Foundation. The Company continued providing targeted charitable • Convention of Social Entrepreneurs from the North. WEB donations in response to special requests from organisations. In 2014, Polar Division and Kola MMC The World of New Opportunities programme had the set up dedicated charity committees to review such CORPORATE VOLUNTEER PROGRAMME: 2018 HIGHLIGHTS following social impact: requests. Certain donations are also approved by • local communities became the driving forces of social the Company's management. The Company supports Initiatives Results/participants activity and change; entities dealing with vulnerable groups of population (veterans of World War II, disabled people, multi- Andrey Urgant’s Travel Notes аbout Nornickel Volunteers 50 corporate volunteer actors • more young people were involved in community affairs; child families, children with special needs, financially RUB 361,540 collected for charity • new services emerged in education, culture, physical disadvantaged citizens) and finances the participation Let’s Do It environmental marathon 375 environmental campaigns and initiatives of local non-profit organisations and institutions in 43 corporate environmental teams various sports competitions, creativity contests, etc. 25,000 trees planted 12,000 local residents participated

Personal donations RUB 4,295,303 collected for charity

Catch the Eco Wave environmental quest 450 participants 78 environmental teams

Dobronickel festival 1,500 employees and their family members participated

Norilsk, Run with Me! charity run 3,300 participants RUB 930,000 collected for charity

¹ For more details on the Norilsk Development Agency activities, please visit www.arnorilsk.ru. 126 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 127

The Agency's key focus areas are as follows: The Agency also developed the first-ever municipal • Business (Norilsk as a city of developed service programmes for the promotion of tourism in Norilsk and economy); the Taimyrsky Dolgano-Nenetsky Municipal District in Ice Hockey Federation of Russia General partner 2019–2025. • Development (Norilsk as a city of modern selling spaces); The plans for 2019 are to launch an SME Business • Tourism (Norilsk as a city attractive for tourists); Navigator website, organise training courses for entrepreneurs, develop a sketch design of the Arctic • Social and Cultural Projects (Norilsk as a city of rich Museum of Contemporary Art, establish a vocational Night Hockey League General sponsor social and cultural life). training infrastructure for the tourism industry personnel, assist in the establishment of tourist In 2018, the Agency carried out a total of 21 projects information centres, etc. and 35 initiatives that involved 46,470 people. The 1 Norilsk Development Agency is a partner to more than Support for sports projects CSKA professional basketball club General sponsor 100 organisations. As an active supporter of sports, Nornickel sponsors Among its 2018 achievements were a spatial major Russian and international sports organisations development concept for the city of Norilsk, a website and provides financing for the upgrade of sports for the Ready-Made Business and Franchising Centre, facilities, construction of sports schools and and a survey entitled the City Resident's Social Portrait. playgrounds. Russian Curling Federation General partner

SUPPORT OF SPORTS ORGANISATIONS AND COMPETITIONS WCT Arctic Curling Cup international competition General partner

Russian Olympic Committee Partner

All Russian Federation of DanceSport and Acrobatic Partner Rock'n'Roll

International University Sports Federation (FISU) Partner

Rosgonki and Sochi Autodrom Partner

Football Union of Russia Official partner

Russian Futsal Association General partner 29th International Winter In 2018, several large projects were implemented by the Universiade in Krasnoyarsk Company in the run-up to the 2019 Winter Universiade in (2–12 March 2019) Krasnoyarsk: • a large-scale upgrade of the Bobrovy Log Fun Park, For many years, MMC Norilsk Nickel has provided including a comprehensive renovation of its secutrity Norilsk Nickel Futsal Club General sponsor extensive support to the international university sports systems; movement. Since 2015, Nornickel has been a general partner to the 2019 International Winter Universiade in • establishment of a landscaped park along the Krasnoyarsk. Bazaikha River in Krasnoyarsk; • sponsorship of training courses for mid- and top-level According to current estimates, the Company will spend managers and volunteers involved in the preparation over RUB 2.1 bn to organise and hold the 2019 Winter for the Winter Universiade; Universiade. ¹ For more details please see the online version of the Report at www.nornickel.com. • promotion of the 2019 Winter Universiade in the media. WEB 128 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 129

Support for cultural projects large-scale event arranged as part of the Inclusive The Company also makes a monthly report on the Public-private partnerships are assessed at different Museum project (Russian cities); social climate in the regions of its operations and management levels to support optimal sustainability Cultural projects are an integral part of the Company’s participates in competitions to have its initiatives decisions in the regions where the Company • Museum 4.0 Competition to support national general strategy to improve the quality of life independently assessed and publicly recognised. operates. museums (Russia); across the regions of operation. Consistent efforts in this area are integrated into the World of New • Museum Leaders professional development Opportunities programme, activities of the Norilsk programme as part of the Museum. Power of Development Agency and other initiatives. the Place initiative. The event was attended by ASSESSMENT OF PUBLIC-PRIVATE PARTNERSHIP PROJECTS 30 representatives from 16 Russian cities (Moscow). Project/agreement lifecycle stage The Follow up Siberia! project was short- In 2018, Andrey Urgant presented his Travel Notes listed by the Eventiada IPRA Golden World about Nornickel Volunteers, a unique play featuring Awards, the largest communications award volunteers as leading actors. The play became a Strategy Planning Implementation Follow-up in Eastern Europe. This cross-cultural link between the Year of Volunteers and the Year of Social impact     initiative was launched by Nornickel in the Theatre in Russia. run-up to the 29th International Winter Efficiency for the Company     Universiade 2019 in Krasnoyarsk. Assessment of social programmes Top management involve- Review by the Board Review by the Annual reporting Report by the Management ment in impact assessment of Directors and the Management Board’s Board on implementation Management Board Budget Committee and impact Along with holding corporate events and competitions 103-2 103-3 attracting tens of thousands of employees and their The Company has a comprehensive assessment system Assessment of regional-level     families each year, the Company also supports for social programmes and projects in place. The key impact prominent all-Russian cultural projects. In 2018, such criterion used to select social projects for implementation Assessment of project-level     projects were: is their social impact, i.e. effects they have on various impact aspects of life and society. The social impact is assessed • Follow up Siberia! international cross-cultural Integration in KPIs   throughout the lifecycle of the programme or project initiative in support of the 29th International Winter implemented and upon their completion. Assessment Universiade 2019; tools vary from targeted stakeholder surveys and opinion • Golden Mask festival, the main annual theatrical studies to actual performance indicators, including those event in Russia, held in Chita for the first time. set out in the programme specifications or social and The Zabaikalsky Regional Drama Theatre hosted economic cooperation agreements. famous directors, scriptwriters, theatre and cinema stars. The festival programme also included Nornickel’s strong social and environmental Transport accessibility workshops; commitment involves a framework of social programmes and benefits going far beyond the • Dancing Sky pan-Russian dancing competition minimal statutory programmes required by law. When (Norilsk); Murmansk Transport Division developing and implementing its social policy, the (Murmansk terminal) • Intermuseum 2018 international festival (Moscow); Company carries out the following: • Nordic Character: Green Screen international • assessment of social climate in teams through environmental and social cinema festival (Nickel, designated meetings on social and labour issues; Arkhangelsk Transport Division the Murmansk Region); • annual employee engagement surveys; Polar Transport Division • Living Classics young readers competition; • annual polls among social programme participants (Dudinka Port) (health resort treatment, children’s vacation, • а series of meetings with prominent art NordStar professionals from Europe, the USA and Russia corporate gifts programmes, cultural, entertainment Norilsk Nickel’s transportation and logistics Norilsk Airport as part of the Culture Unlimited. Dialogues and sports events); assets include: Norilsk Avia with Present-Day Cultural Leaders programme • quarterly surveys and annual assessment of My • sea-going fleet in ownership: 6 heavy-duty ice-class vessels; (Moscow); Home/Our Home and Corporate Subsidised Loan Yenisei River Shipping Company housing programmes; • river fleet in ownership: 556 vessels • 3rd Taburetka International Literature Festival (including 161 self-propelled vessels and 395 (Monchegorsk, the Murmansk Region); • regular performance assessment of the World of towed vessels); • Centres for Social Innovation in Culture, a New Opportunities charitable programme; • traction and rolling stock in ownership: 118 container flatcars, 1 switch locomotive, competition aimed at finding and promoting 1 Yermak electric locomotive, and 1 2М62 • performance assessment of the social projects Lesosibirsk Port successful social and cultural models (Russia); financed with the Company's grants (at the diesel locomotive; • Museum for Everyone!, a pan-Russian inclusive financing decision stage, during the monitoring and • aircraft fleet in operation: 18 helicopters operated by Norilsk Avia and 15 planes Krasnoyarsk River Port initiative aimed at creating a comfortable museum implementation). operated by NordStar Airlines. Krasnoyarsk Transport Division environment for each visitor. This is the second Bystrinsky Transport Division 130 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 131

With its reliable state-of-the-art transport company operates its own search and rescue fleet infrastructure, Nornickel is capable of meeting any and takes part in emergency response missions on Awards and accolades 103-3 freight logistics challenges and ensures continuity and internal water routes of the Yenisey Basin. sustainability of operations and well-being of local communities. Murmansk Transport Division is responsible for local Awards of MMC Norilsk Nickel shipments in the lower reaches of Yenisey, to the • Leaders of Corporate Charity in Siberia regional The Company's dry cargo fleet provides year- north of Dudinka Port. Dudinka Port receives foods Safety and security: competition award (the Company’s Convention round freight shipping services between Dudinka, and delivers socially important cargoes for local • letter of gratitude from the Russian Union of Industrialists and Entrepreneurs (RSPP) for a significant of Social Entrepreneurs from the North project Murmansk, Arkhangelsk, Rotterdam, and Hamburg sea residents, including indigenous peoples of the North, contribution to improving industrial safety regulations won the Best Programme to Promote Local ports while also covering other destinations. ships cargoes for the Russian Emergency Situations and creating a favourable investment climate; Communities category); Ministry and transports residents of remote coastal • 16th National IT Leader Award 2018 in the Non- • Leaders of Corporate Charity in Siberia regional The is used to transport gas areas. Yenisey tanker Ferrous Metallurgy category for introducing competition award (Kola MMC won the Evaluation condensate from the Pelyatkinskoye Gas Condensate personnel and machinery positioning and of Charity Approach special category); Deposit to European ports and other destinations. Destinations covered by NordStar Airlines include radiocommunication systems at Zapolyarny Mine. • letter of gratitude from the Russian Cerebral Palsy more than 30 Russian and CIS cities. With passenger Football Federation for supporting athletes with Dry cargo transported by the Company's fleet traffic in excess of 1 million people per year, NordStar Environment: disabilities. amounted to 1.4 mt in 2018, up 7.7% year-on-year. operates year-round direct flights from Norilsk to • letter of recognition from the Russian President for the Transportations by the Yenisey tanker rose to 222 kt, over 10 destinations in Russia and annually reaffirms contribution to the Year of the Environment in Russia; Non-financial reporting: a 37.2% increase year-on-year. its status of Russia’s major air carrier. In 2018, the air • certificate of honour from the Federation Council for • RSPP’s 2017 Leaders of Russian Business: carrier transported 1.44 million passengers. It offers a major contribution to reducing the environmental Dynamics and Responsibility contest (winner in The Company and other companies of the Group regular and charter flights and transports passengers impact; the High Quality of Reporting on Sustainable handle cargo in the ports of to interregional budget subsidised destinations, with Development nomination); Dudinka, Murmansk, • ranked by RAEX rating agency as the winner of Lesosibirsk and Krasnoyarsk. tickets sold at reduced tariffs. the Business Leaders: Environmental Expenses • winner of the 21st Annual Report Competition held nomination; by the Moscow Exchange and RCB Media Group in the Best CSR and Sustainability Report category; (Polar Transport Division) is the world’s is the only air operator capable of Dudinka Port Norilsk Avia • Best Environmental Volunteer Team (Let’s Do It only port flooded every year during spring high water responding to both industrial and social emergencies environmental marathon award). • MarCom international public reporting award (the and accessible by both sea and river vessels. Its in the region (the Norilsk Industrial District and the Company’s Sustainability Report received the Platinum Awards Statuette in the Best Report and cargo turnover in 2018 increased 9.3% year-on-year. Taimyrsky Dolgano-Nenetsky Municipal District). The Society: the Best Design nominations); Company meets regional demand for passenger and • Vladimir Putin, President of the Russian Federation, Bystrinsky Transport Division is responsible for the commercial traffic, including emergency ambulance • RAEX rating agency's award (the Sustainability honoured Nornickel’s employees with government Report won the Best Design of CSR Report operation and maintenance of the 227 km Naryn flights as part of search and rescue operations awards for the construction of a fibre optic category); (Borzya) — Gazimursky Zavod railway line (Trans- spanning up to 280 km from Norilsk Airport. communication line between Novy Urengoy and Baikal Territory). According to regulations, emergency flights are a Norilsk; • Deloitte's Green Frog Award for the Sustainability Report; mandatory condition for all air transportation services • Annual Innovation Time 2018 award (Follow Up Yenisey River Shipping Company transports in the region, including long-haul flights. Siberia! international communication initiative won • 2017 Sustainability Report short-listed for socially important cargoes to destinations across the Project of the Year in the Mass Media and Mass Corporate Register Reporting Awards 2019 (CRRA Communications category); 2019). the Krasnoyarsk Territory. During the short period of In 2018, the third construction season, the upgrade spring floods, it delivers fuels and lubricants, food of Norilsk (Alykel) Airport's runway was finally • grand prize of the Skolkovo Trend Award 2018 for and other goods to locations with limited transport completed. Today, the runway meets the latest flight corporate educational initiatives; Corporate governance and innovations: accessibility on the Podkamennaya and Nizhnyaya safety requirements. It was reconstructed while the • HR Brand of the Year award by HeadHunter and • Nornickel is on Forbes’ Top 100 Most Innovative Tunguska rivers and in other areas, including Dikson, airport continued its operations, which had never RBC Media Group (the corporate volunteering Companies list; programme won the Big Heart nomination); Russia’s northernmost settlement. The shipping been done before either in Russia or abroad. • Nornickel is a Top 10 company in the ESG ranking • Russia’s Best Employers ranking by HeadHunter by RAEX; and RBC Media Group (winner in the Best Employer • 8th All-Russian Corporate Governance Forum in the Russian metals and mining industry category); award (Roger Munnings, Chairman of the Audit • GRADUATE AWARDS 2018 (the Company's School and Sustainable Development Committee, won the of Urban Competencies project won the nation- Chairman of the Audit Committee nomination); wide competition as the Best Schoolchildren • Extel Survey 2018 award (Sergey Malyshev, Engagement Programme); Nornickel’s Senior Vice President, recognised as • ranked fifth by RAEX rating agency in the Business the best CFO in the European metals and mining Leaders: Social Partnership category; industry); • Leaders of Corporate Charity (special award for the • Extel Survey 2018 award for the Best Corporate IR efficient management of charitable programmes); among European and Russian metals and mining companies; • Leaders of Corporate Charity in Siberia regional competition award (ranked first for the consistent • Best Corporate Website winner at the 2018 approach to corporate charity management); Corporate & Financial Awards. 2018 SUSTAINABILITY REPORT 133

Appendix 1 GRI Content Index 102-55

1

GRI Indicator Page Excluded information/comments UN sustainable 09 standard number development goal APPENDICES GRI 101: Foundation (2016)2 GRI 102: Organisational profile General Disclo- 102-1 8 – – sures (2016) 133 Appendix 1 102-2 8, 69 – – GRI Content Index 102-3 168 – – 142 Appendix 2 102-4 9, 70 – – Scope of data collection 102-5 60 – –

102-6 70 – – 144 Appendix 3 Map of material GRI topics (aspects) 102-7 6 2018 Consolidated Financial – Statements: www.nornickel.com/ Investors/Reports and Results Appendix 4 146  102-8 WEB – 8 GRI indicators 82, 102-9 65 – – Appendix 5 155  102-10 60 2018 Consolidated Financial – UNCTAD indicators Statements (page 47): www.nornickel. com/Investors/Reports and Results 158 Appendix 6 102-11 104 – – List of abbreviations 102-12 24 – –

Appendix 10 161  102-13 24 – – Opinion of RSPP Council on non-financial reporting Strategy 102-14 5 – – Appendix 11 166  102-15 24, 52 – – Independent assurance report

¹ For the SDG Mapping Service, GRI Services reviewed that the disclosures included in the content index are appropriately mapped against the SDGs. The service was performed on the Russian version of the report. 2 See the About the Report section. 134 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 135

GRI Indicator Page Excluded information/comments UN sustainable GRI Indicator Page Excluded information/comments UN sustainable standard number development goal standard number development goal

Ethics and integrity Stakeholder engagement

102-16 26 – 16 102-40 57 – –

102-17 – Code of Business Conduct of MMC – 102-41 61 – 8 Norilsk Nickel (page 13): www.nornickel. com/Investors/Internal Documents and 102-42 57 – – Policies 102-43 57, 65 – – Corporate governance 102-44 WEB – – 102-18 46, 48 – – Reporting practice 102-19 47 – – 102-45 – 2018 Consolidated Financial – 102-20 45, 46, 48 – – Statements (page 63): www.nornickel. com/Investors/Reports and Results 102-21 45, 57 16 102-46 65, 142, 144 2017 Sustainability Report (pages – 102-22 – 2018 Annual Report (page 165): 5, 16 128 and 130): www.nornickel. www.nornickel.com/Investors/Reports com/Sustainability/Reporting on and Results/2018 Sustainability

102-23 – 2018 Annual Report (page 161): 16 102-47 145 – – www.nornickel.com/Investors/Reports and Results/2018 102-48 Back of the front page – –

102-24 – 2018 Annual Report (page 158): 5, 16 102-49 – There are no changes in the reporting – www.nornickel.com/Investors/Reports and Results/2018 102-50 Back of the front page – – Policy for Development and Approval of Voting Recommendations in respect 102-51 – June 2018 – of Candidates to the Board of Directors of MMC Norilsk Nickel (pages 3–5): 102-52 – Annual – www.nornickel.com/Investors/Internal Documents and Policies 102-53 168 – –

102-25 44 2018 Annual Report (pages 186 and 16 102-54 Back of the front page – – 190): www.nornickel.com/Investors/ Reports and Results/2018 102-55 133 – –

102-26 44 – – 102-56 161, 166 – –

102-27 44 – 4 Economic performance

102-28 44 2018 Annual Report (page 163): – GRI 103: 103-1 142, 144 See also the Scope of Data Collection – www.nornickel.com/Investors/Reports Management appendix in the interactive version of and Results/2018 Approach (2016) the Report

102-29 47 – 16 103-2 30, 32, 54 – 1, 5, 8, 16

102-30 52, 103 – – 103-3 51, 131 – –

102-31 47 – – GRI 201: 201-1 56 – 2, 5, 7, 8, 9 Economic 102-32 1 – – Performance 201-2 WEB , 103 Risks posed by climate change are not 13 (2016) measured financially 102-33 47 – – 201-3 90 – – 102-34 47 – – 201-4 – The Group did not receive significant – 102-35 50 – – government grants for the 12 months ended 31 December 2018 102-36 50 – –

102-37 50 – 16

102-38 – Not disclosed for personal data – protection reasons 102-39 – – 136 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 137

GRI Indicator Page Excluded information/comments UN sustainable GRI Indicator Page Excluded information/comments UN sustainable standard number development goal standard number development goal

Market presence Water

GRI 103: 103-1 142, 144 See also the Scope of Data Collection – GRI 103: 103-1 142, 144 See also the Scope of Data Collection – Management appendix in the interactive version of Management appendix in the interactive version of Approach (2016) the Report Approach (2016) the Report

103-2 30 – 1, 5, 8, 16 103-2 30, 32, 107 – 16

103-3 51 – – 103-3 51, 131 – –

GRI 303: 303-1 108, 146 – 6 GRI 202: 202-1 87 – 1, 5, 8 Water (2016) Market Presence (2016) 202-2 83 – 8 303-2 147 – 6

Indirect economic impacts 303-3 148 – 6, 8, 12

GRI 103: 103-1 142, 144 See also the Scope of Data Collection – Biodiversity Management appendix in the interactive version of GRI 103: 103-1 142, 144 See also the Scope of Data Collection – Approach (2016) the Report Management appendix in the interactive version of 103-2 30, 32, 120 – 1, 5, 8, 16 Approach (2016) the Report 103-2 30, 32, 99, 111 – 16

103-3 51, 131 – – 103-3 51, 131 – –

GRI 203: Indirect 203-1 121 – 2, 5, 7, 9, 11 GRI 304: 304-1 113 – 6, 14, 15 Economic Impacts Biodiversity (2016) (2016) 203-2 120 – 1, 2, 3, 8, 10, 17 304-2 113 – 6, 14, 15

Anti-corruption practices 304-3 112 – 6, 14, 15

GRI 103: 103-1 142, 144 See also the Scope of Data Collection – 304-4 WEB – 6, 14, 15 Management appendix in the interactive version of Approach (2016) the Report – MM1 112 – 3, 12, 14, 15 – MM2 – There are no such sites 6, 14, 15 103-2 30, 32, 98, 99 – 16 Emissions 103-3 51, 131 – – GRI 103: 103-1 142, 144 See also the Scope of Data Collection – GRI 205: 205-1 98 – 16 Management appendix in the interactive version of Anti-corruption Approach (2016) the Report (2016) 205-2 98 – 16 103-2 30, 32, 99, 111 – 16 205-3 53 None 16 103-3 51, 131 – – Energy GRI 305: 305-1 107 – 3, 12, 13, 14, 15 GRI 103: 103-1 142, 144 See also the Scope of Data Collection – Emissions (2016) Management appendix in the interactive version of 305-2 – The Company did not assess indirect 3, 12, 13, 14, 15 Approach (2016) the Report energy-related GHG emissions. 305-3 – Regular GHG emission reporting to 3, 12, 13, 14, 15 103-2 30, 32, 99, 115 – 16 authorities is not required by law

103-3 51, 131 – – 305-4 107 – 13, 14, 15

GRI 302: 302-1 116, 153 – 7, 8, 12, 13 305-5 – The Company did not assess indirect 13, 14, 15 Energy (2016) energy-related GHG emissions. 302-2 – Reporting not required by law 7, 8, 12, 13 Regular GHG emission reporting to authorities is not required by law 302-3 116 – 7, 8, 12, 13 305-6 107 Emissions negligible 3, 12, 13

302-4 117 2018 Annual Report (page 133): 7, 8, 12, 13 305-7 105, 150 – 3, 12, 13, 14, 15 www.nornickel.com/investors/reports- and-results/#2018

302-5 – Not applicable to the Company’s 7, 8, 12, 13 products 138 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 139

GRI Indicator Page Excluded information/comments UN sustainable GRI Indicator Page Excluded information/comments UN sustainable standard number development goal standard number development goal

Effluents and waste Occupational health and safety

GRI 103: 103-1 142, 144 See also the Scope of Data Collection – GRI 103: 103-1 142, 144 See also the Scope of Data Collection – Management appendix in the interactive version of Management appendix in the interactive version of Approach (2016) the Report Approach (2016) the Report

103-2 30, 32, 99, 109, 115 – 16 103-2 30, 32, 91, 93 – 16

103-3 51, 131 – – 103-3 51, 92, 131 – –

GRI 306: 306-1 109, 149 – 3, 6, 12, 14 GRI 403: 403-1 92, 96 – 8 Effluents and Occupational Waste (2016) 306-2 110, 151 – 3, 6, 12 Health and Safety 403-2 94, 96 No breakdown of injury rates by 3, 8 (2016) gender due to the lack of centralised 306-3 – There are no significant spills 3, 6, 12, 14, 15 records

306-4 – There are no such waste or waste 3, 12 403-3 96, WEB – 3, 8 transportation 403-4 96 – 8 306-5 107, 147 – 6, 15 Training and education Environmental compliance GRI 103: 103-1 142, 144 See also the Scope of Data Collection – GRI 103: 103-1 142, 144 See also the Scope of Data Collection – Management appendix in the interactive version of Management appendix in the interactive version of Approach (2016) the Report Approach (2016) the Report 103-2 30, 32, 81, 84 – 16 103-2 30, 32, 99, 104, 108 – 16 103-3 51, 128, 131 – – 103-3 51, 131 – – GRI 404: 404-1 84 No breakdown by gender due to the 4, 5, 8 GRI 307: 307-1 56, 104 – 16 Training and lack of centralised records Environmental Education (2016) Compliance (2016) 404-2 84 – 8

Environmental сompliance 404-3 51 – 5, 8

GRI 103: 103-1 142, 144 See also the Scope of Data Collection – Freedom of association and collective bargaining Management appendix in the interactive version of Approach (2016) the Report GRI 103: 103-1 142, 144 See also the Scope of Data Collection – Management appendix in the interactive version of 103-2 30, 32, 66, 67, 99 – 16 Approach (2016) the Report 103-3 51, 131 – – 103-2 30, 32, 60, 99 – 5, 8, 16 Employment 103-3 60, 131 – – GRI 103: 103-1 142, 144 See also the Scope of Data Collection – Management appendix in the interactive version of GRI 407: Freedom 407-1 – There are no violations 8 Approach (2016) the Report of Association and Collective 103-2 30, 32, 60, 81, 83, 99, – 5, 8, 16 Bargaining (2016) 128 Rights of indigenous peoples 103-3 51, 60, 81, 128, 131 – – GRI 103: 103-1 142, 144 See also the Scope of Data Collection - GRI 401: 401-1 83, WEB – 5, 8 Management appendix in the interactive version of Employment Approach (2016) the Report (2016) 401-2 154 – 8 103-2 30, 32, 77, 99 – 1, 5, 8, 16 401-3 WEB Information is provided about 5, 8 employees on maternity leave and/or 103-3 77, 131 – – child care leave GRI 411: Rights 411-1 77 There are no violations 2 of Indigenous Peoples (2016)

– MM5 – The Group does not have any formal 1, 2 arrangements with indigenous northern minorities 140 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 141

GRI Indicator Page Excluded information/comments UN sustainable GRI Indicator Page Excluded information/comments UN sustainable standard number development goal standard number development goal

Local communities Emergency preparedness

GRI 103: 103-1 142, 144 See also the Scope of Data Collection – GRI 103: 103-1 142, 144 See also the Scope of Data Collection – Management appendix in the interactive version of Management appendix in the interactive version of Approach (2016) the Report Approach (2016) the Report

103-2 30, 32, 99, 120 – 1, 5, 8, 16 103-2 30, 32, 96 – 16

103-3 51, 131 – – 103-3 51, 131 – –

GRI 413: 413-1 – Such programmes are implemented – – MM3 109, 152 – 3, 6, 12 Local Communities in 4 out of 74 (5.4%) Group entities (2016) operating in Russia (the Company's Closure planning Head Office, Kola MMC, Polar Division, and Nornickel — Shared Services GRI 103: 103-1 142, 144 See also the Scope of Data Collection – Centre) within the reporting perimeter Management appendix in the interactive version of Approach (2016) the Report 413-2 104 – 1, 2 103-2 30, 32 – 1, 5, 8, 16 – MM6 77 None 1, 2 103-3 51, 131 – – – MM7 – No disputes 1, 2 – MM10 – The IFRS financial statements reflect – Supplier social assessment a decommissioning provision for 9% of the operations within the reporting GRI 103: 103-1 142, 144 See also the Scope of Data Collection – perimeter. As at 31 December 2018, Management appendix in the interactive version of this provision stood at RUB 23,415 mln Approach (2016) the Report

103-2 30, 32, 66, 67 – 5, 8, 16

103-3 51, 131 – –

Public policy

GRI 103: 103-1 142, 144 See also the Scope of Data Collection – Management appendix in the interactive version of Approach (2016) the Report

103-2 30, 32, 62 – 5, 8, 16

103-3 51, 131 – –

GRI 415: 415-1 – No contributions were maid to political 16 Public Policy goals (2016)

Socioeconomic compliance

GRI 103: 103-1 142, 144 See also the Scope of Data Collection – Management appendix in the interactive version of Approach (2016) the Report

103-2 30, 32, 56 – 5, 8, 16

103-3 51, 131 – –

GRI 419: 419-1 56 – 16 Socioeconomic Compliance (2016) 142 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 143

Appendix 2 1 Scope of data collection 102-46 103-1

GRI topics MMC Norilsk Foreign assets2 Exploration Production Research and Support Fuel and Transport and Distribution Other business Nickel’s Head development functions energy logistics and sales units of the Office Group

Economic performance3

Market presence4

Indirect economic impacts

Energy5

Water

Biodiversity

Emissions

Effluents and waste

Environmental compliance

Supplier environmental assessment

Employment6

Occupational health and safety

Training and education7

Freedom of association and collective bargaining

Rights of indigenous peoples

Local communities

Anti-corruption practices

Assessment of suppliers and contractors by social criteria

Socioeconomic compliance

Closure planning

Emergency preparedness

1 The scope of data collection is set in such a way as to describe all of the Group’s material impacts. The scope has not undergone any significant Information is collected on all companies of the business block changes compared to the previous reporting period. The Report provides results for all the companies within the scope against each aspect. In addition information is collected on key companies of the business block to the Occupational Health and Safety, the working group has classified the following aspects beyond the Group as material: Anti-Corruption, Product and Service Quality Compliance, Emergency Preparedness. These have been described in the Report by disclosing the Company’s approaches to implementation of responsible practices in its supply chain. The detailed table including the names of the Group companies and branches can be found in the interactive version 2 For the purposes of data collection, foreign assets mean Norilsk Nickel Harjavalta. of this Report. WEB ³ As regards pension plans, the reporting perimeter includes only the Group’s business units benefiting from the Co-Funded Pension Plan. ⁴ As regards nationality, the reporting perimeter includes all business units of the Group. ⁵ As regards energy conservation, the reporting perimeter includes Polar Division, Kola MMC and NTEK. 6 As regards benefits offered to employees, the reporting perimeter includes onlyolar P Division and Kola MMC. 7 As regards staff assessment, the reporting perimeter includes only the Head Office, Polar Division, Kola MMC and Pechengastroy. 144 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 145

Appendix 3 102-47 1 Map of material GRI topics (aspects) 102-46 103-1 1. Economic performance

2. Market presence

3. Indirect economic impacts

4. Anti-corruption practices

5. Energy

5 6. Water 14 11 7. Biodiversity

8. Sulphur dioxide and solid emissions2 2 22 17 9. Greenhouse gas (GHG) emissions 4 1 20 23 18 10. Emissions of ozone-depleting substances (ODS) 16 13 21 11. Emissions of other substances

12. Effluents3 8 12 26 25 9 13. Waste 24 15 3 14. Supplier environmental assessment 7 15. Environmental compliance 19 6 16. Employment

17. Occupational health and safety

10 18. Training and education

19. Freedom of association and collective bargaining

20. Human rights: Rights of indigenous peoples4

21. Local communities

22. Supplier social assessment Immaterial but relevant Economic aspect topic 23. Public policy Integral assessment of materiality for stakeholders Material topic Environmental aspect and materiality of impacts by 24. Socioeconomic compliance the Group companies Material topic with the highest Social aspect priority 25. Emergency preparedness

Aspect materiality increased following the poll 26. Closure planning

2 Topics 8–11 are covered by the GRI Emissions standard. 3 ¹ In order to update the materiality matrix, the Company polls external and internal stakeholders, monitors mass media coverage and stakeholder Topics 12–13 are covered by the GRI Effluents and Waste standard. dialogues, and holds interviews with top executives. Stakeholders were polled in 2018 (as part of the 2017 Sustainability Report preparation process). 4 Topic 20 is covered by the GRI Rights of Indigenous Peoples standard. 146 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 147

Appendix 4 Water sources 306-5 303-2 GRI indicators Branches and subsidiaries Scale of impact associated Scale of impact associated Environmental performance with the Group companies’ with the Group companies’ water withdrawals effluents Total water withdrawal 303-1 Polar Division of MMC Norilsk Nickel Water withdrawals from the Water bodies of the Yenisei Yenisei River, water bodies of River and Norilo-Pyasinskaya Indicator, mcm Total water Including Polar Transport Division of MMC Norilsk Nickel the Norilo-Pyasinskaya water water system are used to withdrawal: system and the Kara Sea do discharge wastewater Krasnoyarsk Transportation Branch of MMC Norilsk Nickel not affect the environment and from from effluents natural from municipal and from cannot change the ability of surface under- from third water other water utilities Norilsk- Norilsknickelremont the ecosystem to perform its water ground parties inflow (excluding Taimyr functions bodies sources Norilsk-Taimyr Energy Polar Construction Company Energy Company) Company1 Norilsk Support Complex Group’s total 2018 356.79 254.28 28.275 21.28 44.15 8.84 96.70 Norilskgeologiya 2017 335.64 233.46 31.88 20.67 40.59 9.04 93.58 Taimyr Fuel Company 2016 328.44 230.45 33.24 15.42 40.82 8.51 98.99 Taimyrgaz1 2015 348.52 254.92 28.66 21.15 34.84 8.94 96.44 Yenisey River Shipping Company 2014 351.96 258.93 31.16 21.07 31.84 8.96 94.08 Norilsk Airport Includ- Polar 2018 82.82 0.02 0.00 15.68 22.41 0.00 44.71 Norilsk-Taimyr Energy Company ing: Division and Norilskenergo 2017 100.14 0.02 0.00 15.07 29.44 0.00 55.61 Norilskpromtransport 2016 96.41 0.02 0.00 9.78 26.15 0.001 60.46 Norilsk Trading and Production Association 2015 102.49 0.02 0.00 15.48 28.60 0.00 58.39 Murmansk Transport Division of MMC Norilsk Nickel Withdrawals do not affect the Effluents are discharged water sources (water bodies of into the water bodies of the 2014 95.02 0.02 0.00 15.38 23.57 0.00 56.05 Kola MMC the Barents Sea basin) Barents Sea basin Norilsk-Taimyr 2018 269.47 241.23 28.24 0.00 0.00 0.00 0.00 Energy Company 2017 251.98 220.42 31.57 0.00 0.00 0.00 0.00

2016 249.93 216.68 33.24 0.00 0.00 0.00 0.00

2015 267.87 239.21 28.66 0.00 0.00 0.00 0.00

2014 274.00 242.84 31.16 0.00 0.00 0.00 0.00

Kola MMC 2018 32.82 11.75 0.00 0.03 12.39 8.65 0.00

2017 31.73 11.60 0.30 0.04 11.11 8.68 0.00

2016 35.53 12.39 0 0.11 14.63 8.40 0.00

2015 27.93 12.84 0 0.12 6.19 8.79 0.00

2014 30.16 13.04 0 0.13 8.22 8.77 0.00

¹ Included in water withdrawal from Norilsk-Taimyr Energy Company. ¹ Taimyrgaz was reorganised and merged with Norilskgazprom on 1 March 2019. 148 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 149

Water recycled and reused 303-3 Total effluents1 and pollutants discharged 306-1

Indicator, mcm Total water Including Water Indicator, mcm or kt Total Including Pollutants in used recycled and effluents, effluents, kt reused as mcm utility water production including percentage insufficiently contaminated treated to standard of total treated untreated standard clean quality at (without water water recycled water used, % treatment treatment) reused facilities

Group’s total 2018 1,412.13 20.08 1,392.04 31.46 1,178.47 85.7 Group’s total 2018 164.45 30.96 34.26 6.59 92.60 232.367

2017 1,342.07 18.53 1,323.54 32.64 1,105.40 84.8 2017 147.55 28.63 33.52 6.13 79.26 216.63

2016 1,463.81 20.72 1,443.09 36.73 1,219.70 85.8 2016 143.55 29.81 26.94 5.26 81.54 192.99

2015 1,421.41 21.29 1,400.12 40.13 1,275.62 92.6 2015 140.45 29.71 27.73 5.92 77.1 153.1

2014 1,417.80 25.02 1,392.75 39.41 1,269.55 92.3 2014 145.62 30.90 28.55 5.47 84.0 140.52

Includ- Polar Division 2018 463.50 12.13 451.37 29.25 389.50 90.4 Includ- Polar Division and 2018 34.98 3.69 28.69 1.86 0.72 72.661 ing: ing: Norilskenergo 2017 512.32 11.81 500.51 30.49 426.18 89.1 2017 45.29 6.28 33.40 4.96 0.66 73

2016 533.67 12.09 521.58 34.43 442.82 89.4 2016 38.67 6.42 26.83 4.71 0.73 71.83

2015 574.17 12.51 561.66 37.7 478.07 89.8 2015 39.52 6.01 27.54 5.18 0.78 76.92

2014 567.04 11.41 555.63 37.38 473.59 90.1 2014 36.20 5.94 25.43 4.13 0.70 67.47

Norilsk- 2018 709.11 1.00 708.12 1.11 578.17 81.7 Norilsk-Taimyr 2018 91.56 0.00 0.00 0.00 91.55 1.36 Taimyr Energy Company Energy 2017 620.74 1.00 619.74 1.05 503.43 81.3 2017 78.16 0.00 0.00 0.01 78.15 0.392 Company 2016 719.02 1.79 717.24 1.03 607.85 84.7 2016 77.76 0.00 0.00 0.003 77.76 1

2015 634.9 2.34 632.56 0.89 537.68 84.8 2015 73.55 0.00 0.00 0.00 73.55 0.48

2014 634.12 6.96 627.15 0.93 525.9 83.1 2014 80.31 0.00 0.00 0.00 80.31 0.27

Kola MMC 2018 171.58 1.75 169.82 0.00 158.59 92.4 Kola MMC 2018 25.59 25.47 0.13 0.00 0.00 148

2017 169.64 1.79 167.85 0.00 157.47 92.8 2017 22.27 22.25 0.02 0.00 0.00 142.925

2016 170.52 1.9 168.62 0.17 150.72 88.5 2016 22.59 22.59 0.00 0.00 0.00 119.32

2015 171.32 1.79 169.53 0.00 146.67 85.6 2015 23.48 23.48 0.00 0.00 0.00 75.62

2014 175.38 1.93 173.45 0.00 150.48 85.8 2014 25.44 24.60 0.84 0.00 0.00 72.68

The Group’s total reused and recycled water is 339.1% of its water withdrawal. This percentage is the largest for Polar Division (505.6%) and Kola MMC (483.3%), and stands at 215.0% for Norilsk-Taimyr Energy Company.

1 Effluents are measured instrumentally with certified gauges and also based on the Calculation ofater W Consumption and Water Discharge Guidelines and other indirect indicators as approved by the territorial office of the Federal Water Resources Agency. 150 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 151

NOx, SОx and other significant air emissions, including their type and weight1 305-7 Total weight of waste by type and disposal method, mt 306-2

Indicator, kt Group’s total Polar Division Norilsk- Kola MMC Indicator Total, mt Including Taimyr Energy Company Polar Division Kola MMC Total amount 2018 1,926.63 1,789.01 11.69 117.45 Waste-related Generation 2018 30.72 15.71 8.31 2017 1,845.55 1,705.00 11.51 121.88 activity 2017 31.93 23.26 8.61 2016 1,936.44 1,787.57 8.2 132.9 2016 33.27 22.57 10.61 2015 2,063.52 1,883.24 6.33 169.79 2015 33.64 22.27 11.37 2014 2,008.27 1,828.09 9.74 165.44 2014 35.17 23.07 12.1 Including: NOx 2018 11.22 0.61 8.02 1.76 Waste input from third parties1 2018 3.07 3.04 0 2017 11.40 1.56 7.88 1.23 2017 0.03 0.03 0 2016 10.12 1.52 6.89 1.12 2016 0.04 0.03 0 2015 9.84 1.64 6.32 1.18 In-house waste recycling 2018 21.63 15.79 2.46 2014 11.53 1.61 8.11 1.12 2017 20.76 17.75 3.01 SO 2018 1,869.62 1,764.65 0.002 104.82 2 2016 20.15 15.18 4.97 2017 1,784.97 1,675.85 0.003 109.07 2015 18.81 13.22 5.59 2016 1,877.97 1,758.18 0.003 119.72 2014 18.24 12.13 6.11 2015 2,009.11 1,853.92 0.008 155.05 In-house waste treatment1 2018 0.0062 0.0001 0.0060 2014 1,947.58 1,797.18 0.044 150.20 2017 0.0005 0.0001 0.0003 Solids 2018 14.51 5.55 0.003 7.57 2016 0.0003 0.0001 0.0002 2017 13.42 6.06 0.004 6.87 Waste transfer to third parties 2018 1.52 0.03 0.01 2016 14.3 6.18 0.006 7.38 (for recycling or treatment) 2017 0.07 0.04 0.02 2015 20.67 8.95 0.006 10.61 2016 0.09 0.03 0.01 2014 23.09 9.68 0.007 11.76 2015 0.041 0.024 0.017

2014 0.044 0.027 0.017

Waste transfer to third parties 2018 1.64 0.08 0.00 (for disposal) 2017 0.11 0.07 0

2016 0.11 0.07 0.0002

2015 0.049 0.049 0.0003

2014 0.04 0.04 0

Waste disposal at in-house waste 2018 10.97 3.72 5.83 disposal sites 2017 12.67 7.08 5.59

2016 13.54 7.88 5.66

2015 14.75 8.99 5.76

2014 16.81 10.84 5.97

¹ Air pollutant emissions are determined on the basis of the Environmental Monitoring and Industrial Control data: emissions are calculated as per the applicable methodologies using data on feedstock and equipment running time, through sampling and analysing flue gases, direct measurements with gas analysers, etc. ¹ Calculated since 2016. 152 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 153

Waste management in 2018 by hazard class and waste type, t ММЗ Total energy consumption by Norilsk Nickel Group, TJ 302-1

Indicator, t Hazard Hazard Hazard Hazard Incl. Hazard Incl. mining Total Incl. hazard No. Indicator 2016 2017 2018, Incl class 1 class 2 class 3 class 4 mining class 5 waste and classes 1–4 total waste tailings waste and (% of total) electric heat tailings power (hot water and steam) Generation 62.704 1,125.651 15,235.915 1,190,610.718 0.000 29,517,073.601 25,026,726.550 30,724,108.589 3.93 1 Fuel used to generate heat and electric power1 172,425 156,569 148,910 х х 2 Waste input 0.000 14.109 1,426.789 18,071.807 0.000 3,054,711.069 2,965,332.940 3,074,223.774 0.63 and for other purposes, TJ from third parties (1) including х х Polar Division 27,816 26,021 24,429 х х In-house 0.000 1,100.176 2,852.541 1,487.927 0.000 21,627,645.963 16,533,911.770 21,633,086.607 0.03 waste Norilsk-Taimyr Energy Company 123,075 107,514 103,203 х х recycling Kola MMC 9,677 9,794 8,932 х х

(2) including х х In-house 0.000 18.714 5,991.824 94.062 0.000 59.097 0.000 6,163.697 99.04 waste coal 2,132 1,460 1,660 х х treatment natural gas 151,081 134,709 129,335 х х

Waste transfer 63.835 23.157 2,840.073 724.468 0.000 1,518,368.434 1,464,683.000 1,522,019.967 0.24 diesel fuel and fuel oil 15,423 15,221 13,788 х х to third parties (for recycling gasoline and aviation fuel 3,789 5,178 4,127 х х or treatment) 2 Energy from renewable sources (Group’s HPPs) 11,856 12,414 14,877 14,480 396

Waste transfer 0.000 0.771 2.841 55,402.776 0.000 1,586,162.267 1,500,649.936 1,641,568.655 3.38 to third parties 3 Electric power and heat procured from third parties 8,968 10,483 10,931 10,688 243 (for disposal) 4 Electric power and heat sold to third parties 19,882 19,503 18,926 3,572 15,355

Waste 0.000 0.000 282.052 1,150,554.404 0.000 9,818,987.367 9,594,798.654 10,969,823.824 10.49 5 Total energy consumption by the Group (line 1 + line 2 + 173,367 159,962 155,792 х х disposal at line 3 — line 4) in-house waste disposal sites Electric power and heat consumption by the Group companies, TJ

Indicator 2016 2017 2018, Including total electric heat (hot power water and steam)

Electric power and heat consumption by the Group companies 65,221 61,963 63,691 33,242 30,449

including

Polar Division 41,684 35,936 34,040 14,954 19,085

Norilsk-Taimyr Energy Company 6,887 6,489 6,446 4,245 2,201

Kola MMC 9,990 12,528 12,112 9,189 2,923

HPP share in total electric power consumption in the Norilsk 38.0% 43.6% – 51.4% – Industrial District

HPP share in total electric power consumption by the Company 35.7% 37.6% – 43.6% –

HPP share in total energy consumption by the Company 18.2% 19.6% 22.7% – –

1 Including fuel used to generate electric power for Norilsk. 2 All the Group companies, including transportation, logistics and support functions. 154 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 155

Social performance Appendix 5 UNCTAD indicators Benefits for employees of Polar Division 401-2

UNCTAD indicator Page Disclosure Information/comments Benefits Full-time work Temporary work1 Seasonal work Part-time status work full-time part-time full-time part-time full-time part-time A Economic indicators work work work work work work A.1 Revenue and/or A.1.1: revenue 56 Disclosed – (net) added value 2 2 2 2 3 reimbursement of vacation + + + + + + – A.1.2: added value – Disclosed RUB 506,162 mln travel expenses (incl. return fare)

All kinds of financial aid + + + + + + + A.1.3: net added value – Disclosed RUB 462,808 mln

Health resort treatment + + – – – – – and vacations A.2 Payments to the A.2.1: taxes and other 121 Disclosed VAT is not included in taxes since this tax is indirect Government payments to the and actually paid by end consumers of products and Vouchers for children’s + + – – – – – Government services rather than by the reporting entity. VAT is also wellness recreation tours excluded from the calculation of profit (loss) and is not disclosed in the Income Statement Pension plans + + – – – – – RUB bn Termination benefits (apart + + +4 +4 +4 +4 +4 Total for 2018 from those prescribed by Income tax 49.9 the applicable law) Insurance contributions 25.9 Property tax 6.1 Others 33.7 Total 115.6

Benefits for employees of Kola MMC

5 6 A.3 New investment/ A.3.1: green 104 Disclosed The expenditures in question make 4.45% Benefits Full-time work Temporary work Seasonal work Part-time expenditures investment of the Company's consolidated revenue for 2018 work full-time part-time full-time part-time full-time part-time A.3.2: community 121 Disclosed The expenditures in question make 4.2% of the work work work work work work investment Company's consolidated revenue for 2018

reimbursement of vacation + + + + – – – A.3.3: total – Disclosed RUB 204.9 mln travel expenses (incl. return expenditures on The expenditures in question make 0.03% of the fare) research and Company's consolidated revenue for 2018 development All kinds of financial aid + + + + – – –7 A.4 Local supplier/ A.4.1: percentage of – Partially Data is collected for materials and supplies only. Health resort treatment + + + + – – –7 purchasing local procurement disclosed and vacations As for other procurement categories, there is programmes no centralised data collection broken down by Vouchers for children’s + + + + – – –7 the location of suppliers. Materials and supplies wellness recreation tours procured from Russian suppliers make 82.8% of total procurements in this category Pension plans + + + + – – –7 B Environmental indicators Termination benefits (apart + + + + – – – from those prescribed by B.1 Sustainable use B.1.1: water recycling 148 Disclosed – the applicable law) of water and reuse

B.1.2: water use 146 Disclosed The ratio between water withdrawal and net added efficiency value is 0.771 thousand cu m/RUB mln

B.1.3: water stress 146 Disclosed No water is withdrawn in water-scarce areas

¹ Work under a fixed-term employment contract. B.2 Waste B.2.1: reduction of 151 Disclosed In 2018, waste generation decreased by 1.21 mt management waste generation 2 According to the collective bargaining agreement and local regulations, such categories of employees are not excluded from benefits; however, in y-o-y from 31.93 mt to 30.72 mt. The ratio between practice, travel expenses are not reimbursed since no vacation is granted to such employees. waste generation and net added value went down 3 According to the local regulations such categories of employees are excluded from the reimbursement of expenses associated with relocation. from 0.103 kt to 0.066 kt/RUB mln 4 According to the collective bargaining agreement and local regulations such categories of employees are not excluded from the reimbursement of expenses associated with relocation, it is practically possible. No severance pay is provided by mutual agreement. 5 Work under a fixed-term employment contract. 6 At Kola MMC, there is no seasonal work; employees do not work seasonally. 7 In-house employees doing bywork can be granted benefits by their primary employer. 156 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 157

UNCTAD indicator Page Disclosure Information/comments UNCTAD indicator Page Disclosure Information/comments status status

B.2.2: waste reused, 151 Disclosed In 2018, the amount of waste recycled increased by 0.87 C.2.2: expenditure – Disclosed Expenditure on employee training per year per re-manufactured and mt y-o-y from 20.76 mt to 21.63 mt. The ratio between on employee train- employee: recycled waste recycling and net added value went down from ing per year per Total: RUB 13,643 per employee 0.067 kt to 0.045 kt/RUB mln employee Blue-collar employees: RUB 6,549 Managers: RUB 42,675 B.2.3: hazardous 152 Disclosed In 2018, hazard classes 1–4 waste generation increased waste by 1,915.24 t y-o-y from 1,205,119.75 t to 1,207,034.99 t. White-collar employees: RUB 17,862 The ratio between such waste generation and net added C.2.3: employee 86, 87 Partially Data is disclosed on wages and remuneration value went down from 3.91 t to 2.61 t/RUB mln wages and benefits disclosed package (excluding insurance contributions); the with breakdown by data disclosed is broken down by region. There is B.3 Greenhouse gas B.3.1: greenhouse gas 107 Disclosed While the absolute value of the indicator remained employment type and no statistics on wages and benefits broken down emissions emissions (scope 1) flat, the relative amount of scope 1 greenhouse gas gender by labour contract type, employment type, age or gender emissions decreased from 32.54 t to 21.68 t of CO2 equivalent per RUB mln of net added value C.3 Employee health C.3.1: expenditures on 94 Disclosed Expenditures on employee health and safety make and safety employee health and 1.45% of the Group's consolidated revenue B.3.2: greenhouse – Not disclosed The Company did not assess indirect energy-related safety gas emissions GHG emissions. Regular GHG emission reporting to (scope 2) authorities is not required by law C.3.2: frequency/ 94 Partially The Report discloses information about the occupa- incident rates of oc- disclosed tional injury rate and lost day rate in accordance with B.4 Ozone-depleting B.4.1: ozone-deple­ 107 Not disclosed Emissions negligible cupational injuries the GRI requirements. The lost day rate is calculated substances and ting substances and on the basis of days, not hours, lost (as required by the chemicals chemicals GRI)

C.4 Coverage C.4.1: percentage of 61 Disclosed – B.5 Energy B.5.1: renewable 153 Partially The Report discloses the amount of electric power of collective employees covered consumption energy disclosed generated by HPPs and its share in total energy agreements by collective agree- consumption. The current metering system does not ments allow for the disclosure to be made in full compliance with UNCTAD guidelines. Along with in-house generation, Nornickel Group purchases electric power D Institutional area from third parties connected to Russia’s unified energy system (the share of electric power purchased on the D.1 Corporate D.1.1: number of Disclosed Number of the Board of Directors meetings: 45 wholesale electricity market is 27.5%) governance Board meetings and Attendance rate: 100% The Company accounts for 72.5% of total electric disclosures attendance rate power consumption in the Norilsk Industrial District For more details please see the Energy Conservation and Efficiency section and the Electric Power and Heat D.1.2: number and Disclosed The proportion of women on the Board of Directors is Consumption by the Group Companies table on page percentage of female 7.69% (1 out of 13 members) 153 of the Report Board members Share of renewable energy in total energy D.1.3: Board members Disclosed 2018 Annual Report (page 158): consumption: by age range www.nornickel.com/Investors/Reports and Results/2018 Total: 6,954,031 thousand kWh HPP-generated: 3,587,627 thousand kWh (51.6%) Electric power sold to retail consumers and third D.1.4: number of Disclosed Number of meetings of the Audit and Sustainable parties: meetings of the Development Committee: 18 Total: 837,224 thousand kWh audit committee and Attendance rate: 97% HPP-generated: 431,929 thousand kWh attendance rate

B.5.2: energy – Disclosed In 2018, the ratio between total energy consump- D.1.5: compensation: 50 Partially The Report discloses the total amount of compensa- efficiency tion by the Group and net added value was total compensation disclosed tions paid to the members of the Board of Directors. 0.337 TJ/RUB mln per Board member Personal compensations are not disclosed for confi- (both executive dentiality reasons and non-executive С Social area directors)

C.1 Gender equality C.1.1: proportion of – Partially HR records are not broken down by category or D.2 Anti-corruption D.2.1: amount of fines WEB Disclosed – women in managerial disclosed gender practices paid or payable due positions The proportion of women on the Management Board is to settlements 31% (4 out of 13 members)

С.2 Human capital C.2.1: average hours 84 Disclosed – of training per year D.2.2: average hours WEB Partially No records are kept on the length (in hours) of anti- per employee of training on anti- disclosed corruption training. Reporting in the Company is based corruption issues per on the GRI standards; it means the Report discloses the year per employee number and proportion of employees trained in anti- corruption policies and practices 158 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 159

Appendix 6 EMERCOM Ministry of the Russian Federation for Civil Defence, Emergencies and Elimination of Consequences of List of abbreviations Natural Disasters

VAT Value added tax ADRs American depositary receipts

NID Norilsk Industrial District JSC Joint-stock company

OJSC Open joint-stock company GDP Gross domestic product

UN United Nations PMRU Paramilitary mine rescue unit

LLC Limited liability company FOCL Fibre optic communication line

OECD Organisation for Economic Cooperation and Development TJ Terajoule

PJSC Public joint-stock company UNGC UN Global Compact

OHS Occupational health and safety MMC Mining and metallurgical company

MPE Maximum permissible emissions GOK Mining and processing plant

KPID Kola Peninsula Industrial District GOST State standard

AML/CTF Anti-money laundering/counter-terrorism financing GRK Exploration company Mining company RBC RosBusinessConsulting Group Norilsk Nickel Group RSPP Russian Union of Industrialists and Entrepreneurs HPP Hydropower plant RF Russian Federation PPP Public-private partnership BoD Board of Directors VHI Voluntary health insurance PPE Personal protective equipment EU European Union ММ Mass media PD Polar Division CIS Commonwealth of Independent States IT Information technology JSC Joint-stock company CIMS Corporate Integrated Quality and Environmental Management System USA United States of America KPI Key performance indicators EMS Environmental Management System CSR Corporate social responsibility CHPP Combined heat and power plant IPA International Platinum Group Metals Association FZ Federal law PGM Platinum group metals UNESCO United Nations Educational, Scientific and Cultural Organization IUCN International Union for Conservation of Nature UNICRI United Nations Interregional Crime and Justice Research Institute IFRS International Financial Reporting Standards 160 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 161

BVC Bureau Veritas Certification Appendix 10 Opinion of RSPP Council on Non-Financial Reporting 102-56 EBITDA Earnings before interest, taxes, depreciation and amortisation Opinion of the RSPP Council on Non-Financial Reporting on Norilsk Nickel Group’s 2018 Sustainability Report for the purposes of public verification ERP Enterprise resource planning

ESG Environmental, social and governance

FIFR Fatal injury frequency rate

FISU International University Sports Federation

HCM Human capital management

ISO International Organization for Standardization

GRI Global Reporting Initiative

LTIFR Lost time injury frequency rate

OHSAS Occupational Health and Safety Assessment System

R&D Research and development

SDG Sustainable Development Goal

SGS Societe Generale de Surveillance

SLA Service Level Agreement

UNCTAD United Nations Conference on Trade and Development 162 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 163

The Council on Non-Financial Reporting of the This opinion has been prepared for MMC Norilsk achieving the UN Sustainable Development Goals. the HR, environmental, social and other matters. The Russian Union of Industrialists and Entrepreneurs Nickel. The Company may use it for both corporate and Information is presented on recertification audits Report also focuses on the respect of employees’ (the “Council”) established as per the Management stakeholder communication purposes by publishing the for compliance with international standards of the social and labour rights, offering them a competitive Bureau’s Resolution dated 28 June 2007, reviewed, at original version without any changes. quality and environmental management system. Also salary, social benefits, decent working conditions, the request of MMC Norilsk Nickel (the “Company”, the included is information on the employee performance professional development, and career growth. It “Group”, “Norilsk Nickel”) Norilsk Nickel Group’s 2018 CONCLUSIONS management and competence assessment systems, describes the procedures in place for identifying human Sustainability Report (the “Report”). and the risk management system. The Report informs rights violations, stating that no such violations were Based on the review of the Report and the information that the Company has adopted a number of regulations recorded in the reporting period. It covers key areas The Company requested the RSPP to arrange for publicly available on the Company’s official website, on the information security of Nornickel's assets and of Nornickel's interaction with indigenous northern the public verification of the Report, with the Council and following a collective discussion of the results of operations. It also identifies focus areas and outlines minorities and the Company's relevant commitments set on Non-Financial Reporting providing an opinion the Report’s independent assessment undertaken by the Company’s efforts in preventing and combating forth in its Indigenous Rights Policy. In 2018, Nornickel on the materiality and completeness of the Report’s the members of the Council on Non-Financial Reporting, corruption, including the corruption risk assessment and the Federal Agency for Ethnic Affairs (FAEA) information about the Company’s operations from the Council confirms as follows. performed across the Group’s business units. signed a cooperation agreement to provide support to the perspective of the Social Charter of the Russian indigenous northern minorities who reside in the areas Business. The Charter sets out key principles of Norilsk Nickel Group’s 2018 Sustainability Report Business partnerships. The Report presents a where the Company operates. responsible business conduct aligned with those covers the key areas of responsible business stakeholder map together with the description of key of the UN Global Compact, as well as domestic and conduct in accordance with the principles set out stakeholder engagement mechanisms and initiatives. It Environmental protection. The Report includes international CSR standards. in the Social Charter of the Russian Business, and specifies the details of meetings with institutional and information on starting the second stage of the provides sufficient information about the Company’s target investors focused on responsible investment, Company’s environmental programme, approving From 29 April to 20 May 2019, the Council members operations in relation thereto. and the launch of a dedicated section of the corporate the Integrated Action Plan to Reduce Air Pollutant reviewed the content of the Company’s Report and website with a view to improving investor relations Emissions at Polar Division in 2019–2024, and issued this Opinion in accordance with the Council's The recommendations made by the Council following and those with ESG assessment agencies. The Report launching a concentrator upgrade project at Kola MMC. Procedure for Public Verification of Corporate Non- the public verification of Norilsk Nickel Group’s prioritises personnel development and describes It presents details on the environmental management Financial Reports. 2017 Report were largely implemented in the 2018 respective management approaches and programmes system and efforts to manage the climate impact, Report. In particular, the report offers more detailed implemented in employees’ interests, as well as reduce greenhouse emissions, save energy, improve The Council members possess all the required comments on changes in indicators and provides health and safety strategy and performance. It also energy efficiency and develop the Company’s energy competencies in corporate responsibility, sustainable additional references to information sources, covers social partnership framework across the Group infrastructure. It traces changes in quantitative development and non-financial reporting, comply including the annual report. The report also addresses and discloses information on feedback channels indicators associated with the Company's environmental with the ethical requirements for independence and the performance of the Norilsk Development Agency, for employees. The Report provides information on impact, broken down by key facilities, including its impartiality, and provide their personal expert opinion covers the sustainability efforts of the Board of supplier relations with a focus on equal competition, foreign asset Norilsk Nickel Harjavalta, as well as rather than the opinion of organisations they represent. Directors' dedicated committee, and provides more corruption control, and feedback channels. It states environmental expenditures and costs. The Report information on the alignment of the Company's that ESG requirements are incorporated into standard evaluates the impact of the Company's vehicle fleet as The Report was assessed based on the below-listed activities with the UN 2030 Agenda for Sustainable master agreements with suppliers and contractors, and insignificant and describes Nornickel's approaches to criteria of information completeness and materiality. Development. presents information on the monitoring of contractors’ biodiversity conservation, land rehabilitation and other compliance with health and safety requirements when environmental protection initiatives associated with Information is considered to be material if it reflects The Company’s 2018 Report contains relevant carrying out the work, as well as on incorporating a field development, construction and other operations. the company's efforts to implement the principles of information relating to the below-listed aspects of binding anti-corruption clause into supplier agreements. It offers insights into cooperation with nature reserves, responsible business conduct set out in the Social responsible business conduct. It also provides information on quality assurance employee involvement in environmental initiatives, and Charter of the Russian Business (see www.rspp.ru). measures, customer satisfaction monitoring, new environment-related interaction between the Company Economic freedom and responsibility. The Report formats of interaction with regional authorities, and broader community. Completeness implies that the company provides a presents the Company’s operational and financial continuous engagement in expert and consulting comprehensive overview of its operations, including results, highlighting its contribution to Russia’s economy working groups established by government authorities Contribution to the development of local the underlying values and strategic benchmarks, and its engagement in the Arctic. It notes the rise in to implement socially important projects, as well as on communities. The Report highlights the Company's governance systems and structures, accomplishments the output of key metals and revenue driven by greater close interaction with business associations and NPOs. contribution to the development of local communities and key results, and the stakeholder relationship production efficiency across the board. Information It describes strategic partnerships with Russian and as the largest taxpayer and employer and also framework. is provided on the commissioning of advanced foreign organisations set up with a view to achieving as participant of important regional and federal Bystrinsky GOK and the launch of the Sulphur Project sustainable development goals and promoting green programmes and major infrastructure projects. It The procedure for the public verification of the Report at Polar Division's Copper Plant. Other highlights economy, and covers cooperation in creating a global specifies the key focus areas of implementing social factors in the Company’s application of international include a significant improvement in health and safety mechanism to ensure reliability of precious metals and economic agreements with government authorities reporting frameworks; this Opinion does not, however, performance. The Report outlines the Company's supplies and addressing the global information security in five regions across the Group’s footprint (Krasnoyarsk purport to assess the Report’s compliance with such strategic priorities. It states that Nornickel embarked agenda. Territory, Murmansk Region, Trans-Baikal Territory, Tver international frameworks. on the second stage of its environmental programme, Region and Saratov Region). It presents information launching initiatives to upgrade infrastructure, Human rights. The Report covers regulatory and on key socially important economic and environmental The Company is responsible for the information and accelerate digitalisation, and other projects. The managerial aspects of the Company’s respect of human projects implemented in these regions and covers statements provided in the Report. The accuracy of the Report discloses the Company’s corporate governance rights, noting that Nornickel has a Human Rights Policy the details of fostering cooperation with local Report’s information is beyond the scope of the public structure and approaches to sustainable development in place and that the principle of respecting human businesses. The Report notes the Company’s career verification procedure. management. It highlights Nornickel’s contribution to rights is set out in the Company's by-laws governing guidance focus seeking to facilitate the employment 164 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 165

of population, including young people. It discloses The Report outlines Nornickel’s strategic priorities and production, electricity generation) and smaller units, its further participation in national projects, such as the the performance results of the Norilsk Development we regard this data as material for the stakeholders. such as Bystrinsky GOK. Environment, the Digital Economy, and the Smart City Agency and provides the list of key social infrastructure However, the Company’s strategy deserves a more initiatives, going forward. This would enable a more development projects of 2018. It details the results of detailed disclosure in the sustainability report, and it is The Report contains information on Nornickel’s complete understanding of the Company's social and the World of New Opportunities charitable programme therefore recommended to use more references to the efficiency improvement programme seeking, among environmental impact as one of the major players in the across three focus areas — Partnership, Innovations, sources where the relevant information is presented in other things, to introduce innovative management Russian business market. and Development, along with major projects more detail (e.g. the annual report). Cross-references in solutions. In future reporting cycles, it is advisable to implemented by the Company as the General Partner the Company's public reports ensure a more complete give more detailed information on the achievements in The RSPP Council on Non-Financial Reporting hereby of the 29th International Winter Universiade 2019 in disclosure of material information without a significant this area, including the set of KPIs related to sustainable takes a positive view of this Report, supports the Krasnoyarsk. It also addresses the Plant of Goodness increase in the size of reports, while also enabling development. Company’s commitment to responsible business corporate volunteer programme, describes approaches comparability of information contained in different practices, notes consistency in developing the reporting to the assessment of social programmes and public- sources. Taking into account the Company's active role in process, and confirms that Norilsk Nickel Group’s 2018 private partnerships, and discloses information on implementing national priorities as stated in the Sustainability Report has passed the public verification social spending. The Report reflects the results of the inventory of Report, it would be useful to provide more details on procedure. significant projects and programmes in line with the UN Final provisions 2030 Agenda for Sustainable Development. Nornickel is advised to continue disclosing information on the Information in the Report generally reflects the progress towards the UN 2030 Agenda for Sustainable Company’s consistent work towards the integration Development, using it among other criteria for of corporate social responsibility and sustainable assessing implementation of the goals and objectives of development principles into its business practices. The the Company's strategic priorities. Report contains a significant amount of information RSPP Council on Non-Financial Reporting about the Company’s impact on the society and The Report states that the Company’s by-laws provide environment, its strategy and policies in the key focus for the control over compliance with the anti-corruption areas, and the effect of the related programmes. It clause in agreements with suppliers and contractors, covers the main focus areas and formats of stakeholder as well as their implementation of the work safety engagement, including those used as part of the recommendations. It is advised that future reports reporting process. describe the Company's impact on their business ethics, and social and environmental responsibility The Report was prepared using internationally and practices in more detail. It would be useful to provide domestically recognised reporting tools (e.g. the examples of how ESG aspects are monitored as part of GRI Standards, Comprehensive option, GRI Sector assessing the reliability of business partners, and how Disclosures and the RSPP Reference Performance the latter implement relevant policies and standards Indicators), which ensures comparability of the Group's into their business practices. Taking into account the information with that of other Russian and international new practice of the Company's adherence to the codes companies. The Report is also in line with the UN Global of conduct devised by foreign manufacturers, it seems Compact and the UN 2030 Agenda for Sustainable reasonable to describe the Company's experience in Development. this area going forward.

The 2018 Report is the Company’s fifteenth non- The Report highlights the Company’s high degree financial report, which demonstrates its determination of transparency and the use of various formats of to consistently develop reporting processes and stakeholder engagement. It would be appropriate to enhance transparency. The Company uses various add a description of how feedback from stakeholders forms of independent assessment and confirmation of is used in management practices, namely in improving disclosed information (professional audit and public business processes and refining social programmes. verification). This reflects the Company’s commitment In particular, this also applies to disclosing the results to keeping stakeholders informed and maintaining the of the Company’s Social Portrait of a City Resident high quality of disclosures. analytical survey in the Krasnoyarsk Territory and the Murmansk Region. RECOMMENDATIONS The Company's reports generally provide full While acknowledging the Report’s strengths, the information on energy consumption and environmental Council calls attention to some aspects of disclosures’ impact across all key divisions. To improve this area of materiality and completeness, which should be disclosure, it is further advised to report on the relevant addressed in the future reporting cycles. performance of support functions (transportation, gas 166 NORILSK NICKEL GROUP’S 2018 SUSTAINABILITY REPORT 167

Appendix 11 1 Independent assurance report 102-56

¹ The auditor of the Sustainability Report was approved by the Senior Vice President for HR, Social Policy and Public Relations. 168 NORILSK NICKEL GROUP’S

Contacts 102-3 102-53

Head Office

Address: 15, 1st Krasnogvardeysky Drive, Moscow, 123100, Russia Telephone: +7 (495) 787-76-67 E-mail: [email protected]

Social Policy Department

Svetlana Ivchenko, Head of Department Telephone: +7 (495) 786-83-90

Nornickel on social media https://www.facebook.com/NornickelRU/ https://twitter.com/NornikOfficial https://vk.com/nornickel_official https://www.youtube.com/user/NornikOfficial https://www.instagram.com/nornickel_official feeds.feedburner.com/nornik/AIDB

Norilsk through the eyes of its residents http://norilskfilm.com/