Statement of the President and Chairman of the Management Board

Dear shareholders, investors, consumers, colleagues, and other readers of this report,

102–14
2020 was a year of unprecedented challenges for our Company and businesses across the globe. However, in the face of the global pandemic, we were able to protect the health and safety of our employees and effectively adapt the Company’s business processes to the new reality.

Today, I can confidently state that COVID-19 has failed to make a significant impact on Nornickel’s operating and financial performance. We made every effort to support regions across our footprint in tackling the pandemic. The Group provided generous assistance to local authorities, healthcare institutions, and small and medium-sized businesses along with educational institutions and non-profit organisations to become Russia’s No. 1 industrial company by COVID-19 spending.

The fuel spill incident at HPP-3 was an important lesson for us, revealing the need to thoroughly review Nornickel’s risk management model and climate risks in particular, and introduce more demanding environmental KPIs for executives.

Nevertheless, I would like to praise the management for the concerted effort in eliminating the fuel spill consequences and the effective cooperation with government agencies and other stakeholders that helped prevent a major environmental disaster in the Arctic. Within a short time, the spill was fully contained, and pollution of Lake Pyasino was avoided. By October 2020, the clean-up of the accident site was mostly completed with 90% of the leaked fuel collected and all contaminated soil removed.

The Company’s executive structure saw a major overhaul at all levels. We created a Risk Management Committee under Nornickel’s Management Board chaired by me. Additionally, an Environmental Department was set up with relevant responsibilities transferred from the operating unit. A new role of Deputy Director for Industrial Safety and Environmental Protection was established at Polar Division. On top of that, we created a business unit responsible for continuous environmental monitoring with the right to suspend production if violations are revealed. These and other structural changes are intended to strengthen internal environmental controls and ensure environmental safety.

To facilitate effective interaction with all stakeholders, the Company has established the position of Senior Vice President for Sustainable Development and created a Sustainable Development Department. We place special emphasis on cooperating with the regions hosting our production sites and those bordering the areas that are home to indigenous peoples of the North. 

Nornickel has started developing a comprehensive ESG Strategy that will clearly define objectives for each area of environmental protection. Its main provisions were unveiled at the Investor Day in December 2020.

We are committed to maintaining our leading positions in carbon intensity per unit of output and plan to stay at the bottom quartile of the global nickel production in terms of carbon dioxide emissions per nickel unit. The global transition to a green economy offers a unique opportunity for the Company to become a key player in metals markets leading the way in terms of low-carbon growth.

2020 saw continued implementation of Sulphur Programme 2.0. In December 2020, we shut down Kola MMC’s smelting shop in Nikel, helping to eliminate 100% of sulphur dioxide emissions in the Russia-Norway border area. This and other environmental initiatives will contribute to an 85% reduction in sulphur dioxide emissions in the Murmansk Region by the end of 2021.

As a socially responsible employer, Nornickel fully observed its social partnership commitments, maintained wage levels, and avoided lay-offs during the pandemic. During the shutdown of Nickel Plant in Norilsk, we provided a full package of social benefits to the shop personnel, including comfortable relocation to other sites, retraining and pension plans. We work continuously to improve our OHS performance and maintain injury rates below the global industry average. The Company management views occupational safety excellence and zero injuries as key strategic objectives.

By signing a cooperation agreement with three organisations representing the interests of over 90% of indigenous minorities in Russia’s North, Siberia and the Far East, Nornickel has demonstrated its intention to pursue sustainable non-ferrous metals production. Nornickel's programme to support indigenous peoples until 2024 is consistent with the Company's strategic commitment to reduce the environmental impact of its mining activities. The programme was developed following a comprehensive ethnological expedition conducted as part of a large-scale independent assessment of the Company’s environmental footprint launched in 2020. 

The Company has a strategy in place aimed at deploying advanced digital technologies to create a customer-oriented supply chain. Last year, we implemented two major initiatives to this end – issued metal secured tokens on the Atomyze platform and joined the Responsible Sourcing Blockchain Network (RSBN)_*. Going forward, these projects will help maximise supply chain transparency in the metals and mining industry, which is in line with the Company’s general policy of ensuring operations transparency.

Besides identifying areas that need further development, the challenges we had to deal with in 2020 confirmed our strategic adherence to the principles and goals of sustainable development with a focus on the principles of the UN Global Compact, signed by the Company in 2016. We will continue implementing major projects and initiatives to enhance efficiency and deliver strong financial and non-financial results for our shareholders, investors, employees, local communities and other stakeholders.