SOCIAL AND ENVIRONMENTAL REPORT 2015 ALROSA* is a Russian Group of diamond mining companies that occupies a leading position in the industry and has the largest rough diamond reserves in the world. The Group accounts for one third of the reserves and more than a quarter of the production of the global rough diamonds market. The key areas of activity, comprising the focus of the major strategic efforts of the Group, are deposits exploration, mining, processing and sales of rough diamonds. The core activities of ALROSA Group are concentrated in two regions of the Russian Federation, namely the Republic of Sakha (Yakutia) and the Arkhangelsk Region, as well as on the African continent. The majority of ALROSA Group revenue comes from selling rough diamonds. Rough diamonds are sold under long-term agreements to Russian and foreign diamond cutting companies. The rough diamond segment accounts for about 90% of the total Group revenue. *For the purpose of this Report, ALROSA Group means PJSC ALROSA and its subsidiaries. INTRODUCTION ADDRESS BY THE PRESIDENT 2 4 6 OF PJSC ALROSA 6 OUR APPROACH ENVIRONMENTAL INDEPENDENT ABOUT THIS REPORT TO SUSTAINABLE RESPONSIBILITY AUDITOR’S 10 DEVELOPMENT 61 REPORT 27 ENVIRONMENTAL POLICY 112 IMPLEMENTATION INTEGRATION OF SUSTAINABLE 62 DEVELOPMENT GOALS IN ACTIVITIES OF THE COMPANY FUNDING OF ENVIRONMENTAL 28 PROTECTION ACTIVITIES 70 1 STAKEHOLDER ENGAGEMENT 31 ENVIRONMENTAL PROTECTION GOALS ABOUT ALROSA GROUP ACHIEVEMENT MANAGEMENT IN THE SPHERE 73 7 17 OF SUSTAINABLE DEVELOPMENT GENERAL INFORMATION 34 ANNEXES 18 115 ETHICS AND ANTI-CORRUPTION Annex 1. PRODUCTION CHAIN ACTIVITIES 40 SCOPE OF MATERIAL ASPECTS AND GEOGRAPHY 116 18 INNOVATIVE DEVELOPMENT Annex 2. KEY PERFORMANCE RESULTS 2015 43 G4 GRI CONTENTS INDEX 22 118 5 Annex 3. SOCIAL OUTCOMES 128 SOCIAL RESPONSIBILITY 85 Annex 4. 3 ENVIRONMENTAL OUTCOMES HSE 130 86 ECONOMIC EFFICIENCY GLOSSARY OF TERMS 49 INVESTMENTS IN HUMAN CAPITAL AND ABBREVIATIONS 94 136 ECONOMIC PERFORMANCE RESULTS 2015 SOCIAL INVESTMENTS 50 CONTACT INFORMATION 109 141 CREATION AND DISTRIBUTION OF ECONOMIC VALUE 56 ADDRESS BY THE PRESIDENT OF PJSC ALROSA Dear readers, the general development of the dia- increasing underground mining pro- ronmental responsibility principles mond industry. Despite the difficul- duction. Implementation of all the through investing in health and en- We would like to draw your atten- ties, we achieved solid results at the said projects was necessary for fur- vironmental protection. tion to the PJSC ALROSA’s Social end of the year reaching the goals ther strategic development of the and Environmental Report for 2015. set for geological exploration, pro- ALROSA Group. We made more considerable ef- The fifth public sustainable devel- duction and sale of rough diamonds. forts towards ensuring environ- opment report reflects essential as- Despite the significant drop in de- mental wellbeing in the regions pects of economic, environmental The Company continues to make mand and prices for rough and where the Company operates. As and social impacts of the Compa- significant investments in geolog- polished diamonds in 2015, our a result of these efforts, there ny and our approaches to manag- ical exploration aimed at resource rough and polished diamonds sales was created a concept on intro- ing the said impacts. base expansion. In 2015, geological amounted to USD 3,554.4 mn ow- ducing an action plan for cars, exploration and on-site exploration ing to our effective sales system mobile vehicles and diesel power We keep strictly adhering to stra- expenses amounted to about RUB based on long-term contracts. In plants switching to liquefied nat- tegic guidelines, mission and op- 6.3 bn and the ALROSA Group re- the reporting year, the number of ural gas which will reduce emis- erating principles of the Company. source base grew by 43.6 mn carats. long-term customers of the Compa- sions of harmful substances into ALROSA Group, as always, aims to In 2015, our enterprises increased ny grew from 47 to 54. The general the atmosphere. Moreover, the assume leadership in natural di- rough diamonds production to 38.3 market conditions and depreciation Company developed Guidelines on amonds production based on re- mn carats, which exceeded the level of the Russian Rouble against the calculating the volume of carbon source base expansion, a focus on of 2014 by 6% and made it possible US Dollar had a double effect on dioxide emissions from stationary the rough diamond business, and for us to retain the leading position ALROSA Group making it possible and mobile sources of PJSC ALRO- an increase in production efficiency in the industry. to compensate the negative con- SA enterprises. The said measures through innovation and implemen- sequences of the decrease in sales contribute to further development tation of a new social responsibili- In 2015, we put into operation the through gross revenue growth, im- of the corporate greenhouse gas ty model. Botuobinsky open pit mine, a new prove profitability and earn a net emissions management system. deposit that yielded about 1 mn profit of RUB 32.2 mn . The reporting year became for us carats for the Company over the We continue implementation of the remarkable in terms of production course of the year, we performed a Increased scale of ALROSA Group Comprehensive Environmental Pro- capacity and potential resource large-scale technical upgrade and operation and development of pro- tection Program of PJSC ALROSA for growth as well as challenging in modernisation of our production en- duction and economic platforms 2011–2018. The total environmen- terms of macroeconomic trends in terprises and addressed the issue of allow us to follow social and envi- tal expenses of the Company in 6 Social and Environmental Report of PJSC ALROSA 2015 Social and Environmental Report of PJSC ALROSA 2015 7 2015 amounted to over RUB 6 bn. employees can undergo a medical solving the tasks of timely acquir- cooperation and constructive de- Most of the funds were allocated examination and receive treatment ing highly qualified staff, reducing cisions. I express my sincere grati- to capital investments in construc- in the leading healthcare centres workplace injury rate and introduc- tude to the management team and tion of environmental protection fa- in Russia, in the reporting year over ing international standards in man- workers of our enterprises for their cilities, sewage treatment facilities, 14 thousand employees of the Com- agement processes of the Company. high professionalism and dedicat- land rehabilitation and R&D sup- pany received health resort-based ed work as well as readiness to face port of environmental protection treatment and preventive treatment I am grateful to our shareholders challenges and perform tasks of any activities. in corporate healthcare institutions, and business partners for fruitful complexity. over 18 thousand participants of Among the pressing problems at non-state pension schemes are the focus of the Company’s atten- paid an additional corporate pen- President of PJSC ALROSA tion, there are still the issues sur- sion. Our investments in personnel Andrey Zharkov rounding occupational health and in 2015 totalled RUB 3.4 bn. safety. In general, the workplace in- jury rate in the Company shows a Social investments of PJSC ALROSA downward trend. Based on results of in the reporting year totalled RUB 2015, the lost-time injury frequen- 2.7 bn. RUB 521 mn was transferred cy indicator amounted to 0.45 per 1 to the Trust Fund for Future Genera- mn hours worked. The occupation- tions (non-profit organisation) in ac- al safety targets are included in the cordance with voluntary obligations system of key performance indica- of the Company to fund construc- tors of the ALROSA Group devel- tion of facilities for social needs in oped within the framework of the the Republic of Sakha (Yakutia). Long-Term Development Program of the ALROSA Group until 2023. In 2015, the Company provided targeted financial aid to cultural, The Company, as always, performs medical, sports and educational in- in good faith its obligations as a re- stitutions as well as administrations sponsible employer. In 2015, the aver- of municipalities. In accordance with age salary of PJSC ALROSA employees the Regional Development program grew by 5.2%, three times exceed- and regional agreements with nine ing the average salary in the Russian districts of Western Yakutia, the an- Federation and two times the aver- nual financial aid of RUB 81.7 mn age salary in the Republic of Sakha was provided for agricultural and (Yakutia). PJSC ALROSA invests in traditional fishing and hunting ac- professional development of its per- tivities as well as conducting char- sonnel: the average training time per ity campaigns for children. employee in 2015 totalled 44 hours. The Company has in place a collec- We have a lot of work ahead. In tive bargaining agreement stipulating the short and medium term we will an expanded benefits and guarantees be addressing the issues concern- package for our employees. ing development of underground mines and new deposits, introduc- In 2015, we implemented all the tion of innovative technologies, de- planned initiatives within the frame- velopment of sales and marketing, work of corporate social programs. disposal of non-core assets and Every year, over two thousand our cost improvement. We will be also 8 Social and Environmental Report of PJSC ALROSA 2015 Social and Environmental Report of PJSC ALROSA 2015 9 ABOUT THIS REPORT The information on financial per- nancial statements under IFRS, a formance as well as the informa- relevant note is included in the Re- PJSC ALROSA Social and Environ- is to inform wide audience on the The Report for tion contained in the About ALROSA port. mental Report 2015 (hereinafter re- Company performance results dur- 2015 is prepared Group section (unless otherwise ferred to as the Report) is the fifth ing the reporting period in line with in accordance specified) refers to the entire AL- In relation to some general indica- public sustainable development re- the selected strategy and targets.