MOMENTUM
OF RENEWAL
Annual report
CONTENT
2022
Nornickel
ABOUT NORNICKEL
STRATEGIC REPORT
BUSINESS
OVERVIEW
SUSTAINABLE
DEVELOPMENT
CORPORATE
GOVERNANCE
SHAREHOLDER
INFORMATION
Company profile .............................................. 4
Chairman’s letter ............................................. 16
Mineral resourse base .................................... 52
Strategic approach ......................................... 106
Chairman’s letter ............................................. 166
Share capital ..................................................... 238
Our History ........................................................ 6
President’s Letter ............................................ 18
Operational performance ............................. 63
HR management ............................................. 112
Corporate governance structure .............. 167
Dividend policy ................................................ 242
Performance highlights................................. 8
Commodity markets ...................................... 22
Logistics operations and product sales ... 70
Health and safety ............................................ 130
General Meeting of Shareholders ............. 176
Bonds and debt management ................. 245
Investment highlights ................................... 10
Our Strategy ...................................................... 42
Energy assets .................................................... 75
Business model ................................................ 12
Innovation and digital technology ........... 77
Financial performance (MD&A) ................. 90
Environmental protection
and climate change ....................................... 140
Board of Directors
and Board committees ................................. 178
Social strategy .................................................. 156
Executive bodies ............................................. 199
Shareholder relations .................................... 248
Control system ................................................. 208
Remuneration .................................................. 216
Risk management system .......................... 219
ADDITIONAL
INFORMATION
IFRS Financial statements ............................ 252
Glossary ............................................................... 332
Contacts .............................................................. 336
Interactive
version
of the Annual
Report
Sustainability
Report
ABOUT THE REPORT
We are pleased to present to you the Annual
Report of MMC Norilsk Nickel and entities
comprising the same group of companies
(the “Group”, “Nornickel”, the “Company”)
for the year ended 31 December 2022. The main
controlled entities and PJSC MMC NORILSK
NICKEL’s interest in their capital are listed
in the 2022 consolidated financial statements
in accordance with International Financial
Reporting Standards (IFRS).
The Report discloses all aspects of Nornickel’s
operations in the context of sustainability.
Nornickel has a unique resource base
underpinning its strategy of production
growth and operational excellence as well as its
unprecedented environmental programme. This
clean growth strategy not only lays out long-
term ore production and capital investment
targets but also sets out concrete action plans
to reduce the Company’s environmental
footprint in its regions of operation.
•
•
•
•
This Annual Report was prepared by the Investor
Relations Department, taking into account
the requirements and recommendations of:
•
the Bank of Russia’s Regulations No. 714-p
On Information Disclosure by Issuers
of Issue-Grade Securities, dated 27 March
2020
the Bank of Russia’s Letter No. 06–52/2463
On the Corporate Governance Code, dated
10 April 2014
the Bank of Russia’s Information Letter
No. IN-06–28/49 On Recommendations
for Public Joint Stock Companies to Disclose
Non-financial Information Related to Their
Activities, dated 12 July 2021
the Bank of Russia’s Information Letter
No. IN-06–28/96 On Recommendations
for the Board of Directors of a Public Joint
Stock Company to Consider ESG Factors
and Sustainable Development Issues, dated
16 December 2021
the Listing Rules of PJSC Moscow Exchange.
The Report discloses financial metrics
based on the Group’s IFRS consolidated
financial statements for 2022 audited by Kept
in accordance with International Standards
on Auditing.
Human Rights
Report
PRE-APPROVED by the Board of Directors
(Minutes No. GMK/18 -pr-sd dated 28 April 2023)
ACCURACY OF INFORMATION IS CONFIRMED
by the Audit Commission
(Opinion dated 26 April 2023)
THIS ANNUAL REPORT WAS APPROVED by the
Annual General Meeting of Shareholders
(Minutes No. 1 dated 6 June 2023)
VLADIMIR POTANIN
SERGEY MALYSHEV
President, Chairman
of the Management Board
Senior Vice President –
Chief Financial Officer
2
3
ABOUT NORNICKEL
Nornickel is the leader in Russia’s metals
and mining industry and one of the world’s
largest metal producer.
The Company produces metals essential
for the development of a low-carbon economy
and green transport.
Annual reportNornickelAbout Nornickel1/72022 4
5
COMPANY PROFILE
Nornickel is the leader in Russia’s metals and mining industry
and the largest palladium and high-grade nickel producer globally
as well as a leading producer of platinum and copper. The Company
also produces cobalt, rhodium, silver, gold, iridium, ruthenium,
selenium, and tellurium.
The Group has more than 85 companies located in Russia and other
countries. Major production assets include the Norilsk Division, Kola
Division (including Kola MMC and Norilsk Nickel Harjavalta Oy nickel
refinery in Finland) and also Trans-Baikal Division (including GRK
Bystrinskoye, 50.01% owned by the Company).
The Company also operates a captive sales network and owns
a wide range of R&D facilities, energy assets, river fleet, river and sea
port terminals, a unique Arctic cargo sea fleet as well as a number
of other auxiliary units.
10.8%
the Company’s share
in Russia’s metals production
>78,000
employees
RUB 180,000
average monthly salary
at the Company
>30 countries
consume the Company’s
products
Operating assets
Energy
Transport
R&D
Sales
Metal Trade
Overseas SA
(Switzerland)
Gipronickel
Institute
Kola Division,
including
Norilsk Nickel
Harjavalta Oy
Murmansk
Transport Division
MMC Norilsk Nickel
(Head office)
NORMETIMPEX
Arkhangelsk
Transport Division
Energy Division
Krasnoyarsk
Transport
Division
Polar Transport
Division
Norilsk
Division
Trans-Baikal
Division
Bystrinsky Transport
Division (part
of the Trans-Baikal
Division)
Norilsk Nickel Metals
Trading (Shanghai)
Co., Ltd (China)
Norilsk Nickel Asia
Ltd (Hong Kong)
Norilsk Nickel USA
Inc. (USA)
Annual reportNornickelAbout Nornickel1/72022 6
7
Annual report
2022
About Nornickel
1/
7
Nornickel
OUR HISTORY
In recent years, Nornickel has become the leader in Russia’s metals
and mining industry, a reliable social partner and one of the world’s largest
producers of palladium and high-grade nickel.
IMPLEMENTING
A NE
W STRATEGY
ENVIRONMENTALLY
GROWTH STRATEGY
Construction
of the Norilsk
Metallurgical Plant
was launched
in the Monchetundra.
The first batch of convert-
er matte was produced.
By late 1953, Norilsk Plant
produced
35% of nickel,
12% of copper,
30% of cobalt, and
90% of platinum group
metals (PGMs) of the So-
viet Union’s total output.
New deposits
developed and new
facilities put online
Company
transformation
In 1993, the Company
was transformed
into RJSC Norilsk Nickel
and privatised. In 2001,
the Company was restruc-
tured, with sharehold-
ers of RJSC Norilsk
Nickel exchanging 96.9%
of their stock to shares
in PJSC MMC NORILSK
NICKEL. The Company
shares started trading
on the RTS and MICEX
stock exchanges, and first
American Depositary
Receipts (ADRs)
were issued in June.
Major sulphide depos-
its of copper-nickel ores
of the Talnakh deposit
were discovered, giv-
ing a new lease on life
to Norilsk Plant. The con-
struction of mines
and the town of Talnakh
started on the Taimyr
Peninsula. The first
batch of carbonyl
nickel was produced
at Severonickel Plant
on the Kola Peninsula.
Komsomolsky,
Oktyabrsky
and Taimyrsky Mines
were launched;
Talnakh Concentrator
and Nadezhda
Metallurgical Plant
were commissioned.
Severonickel Plant cele-
brated first production
of electrolytic copper.
Vladimir Potanin and his new
management team took
the helm of the Company.
The Board of Directors
adopted a new long-
term development strat-
egy focused on world-class
assets of the Polar Division
and Kola MMC. Bystrinsky
GOK, the largest green-
field project in the Russian
metals industry, was con-
structed from scratch
in the Zabaykalsky Territory.
At that time, a programme
was launched to improve
the environmental situation
across the Company’s foot-
print, including the shutter-
ing of Nickel Plant in Norilsk,
the launch of the Sulphur
Project to drastically reduce
sulphur dioxide emissions
and the closure of obso-
lete metallurgical facilities
in the Murmansk Region.
The Company announced
a new investment cycle
aimed at the comprehen-
sive development of min-
ing assets and the expansion
of processing capacities
as well as the implementation
of its environmentally friendly
growth strategy that not only
lays out long-term ore produc-
tion and capital investment
targets but also sets out con-
crete action plans to reduce
the Company’s environmen-
tal footprint in its regions
of operation.
1935-1959
1960-1992
1993-2012
2013–2020
2021–2030
with CAPEX hitting a record USD 4.3 billion.
• Nornickel pioneered the free, prior and informed consent
(FPIC) procedure in Russia to discuss a relocation programme
with indigenous peoples, with FPIC obtained from Tukhard
residents.
2 • Nornickel fully delivered on its production programme,
2
0
2
N
and celebrated first production of limestone (23.5 thousand
tonnes) from the Mokulayevskoye field. The mine will become
the key producer of limestone for the Sulphur Project.
• The Company launched two icebreakers, including a nuclear-
powered one, enabling future expansion of transport capacity
to cover the needs of the Taimyr Peninsula.
• Nornickel received equipment for the Sulphur Project
• The Company launched an integrated control unit in Norilsk
to monitor the condition of buildings and structures, which
tracks the condition of permafrost soils.
•
In March, Nornickel sold NordStar Airlines.
• Nornickel reached a settlement agreement with the Federal
Agency for Fishery, stipulating that NTEC will ensure full
in-kind compensation for accident-related damage to aquatic
bioresources by releasing fry into the affected water bodies
between 2023 to 2050.
• Nornickel signed an agreement with RusHydro to purchase
electricity generated from renewable sources to Trans-Baikal
Division. Over the next three years, Bystrinsky GOK plans
to switch all its external energy consumption to carbon-
free sources leveraging similar contracts and thus unlock
significant GHG emission reductions.
I
L
E
K
C
N
R
O
N
I
8
9
PERFORMANCE HIGHLIGHTS
FINANCIAL
SUSTAINABILITY
Net income an
d r
evenue
(USD bn)
EBITDA an
d EBITD
A margin
(USD bn)
GHG emissions from production assets
(mln t)
Social expenses for employees
(USD mln)
2022
2021
2020
5.9
3.6
7.0
16.9
17.9
15.5
2022
52%
2021
59%
2020
49%
8.7
10.5
7.7
2022
2020
2021
8.1
8.5
0.5
0.5
8.0
0.5
8.6
9.0
8.5
2022
16
36
17
153
2021
14
28
14
123
2020
11
11
14
93
223
179
129
Scope 1
Scope 2
-5%
+7%
SO2 emissions
(mln t)
2022
2021
2020
+11%
1.8
1.6
1.9
Housing programmes
Health resort treatment
Pension plans
Other social expenses
(per million hours worked)
Injury rates
2022
0.03
0.57
0.38
2021
2020
0.1
0.08
0.21
FIFR
LTIFR
-66%
-66%
+45%
+50%
Net income
Revenue
EBITDA margin
EBITDA
-16%
-5%
-7 p.p
-17%
Capital investments
(USD bn)
3.2
1.0
0.1
2022
2021
2020
1.9
0.8 0.1
1.2
0.5 0.1
Stay-in-business
Commercial
Bystrinsky project
(USD bn)
Debt
2022
1.1х
2021
0.5х
2020
0.6х
4.3
2.8
1.8
9.8
4.9
4.7
+55%
Net debt/12M EBITDA
Net debt
+0.6%
+2x
OPERATIONAL
tion of nic
Produc
(from own feed, kt)
kel an
d c
opper
tion of p
Produc
(from own feed, kt)
alladium an
d platinum
2022
2021
2020
219
190
223
433
407
487
2022
2020
2021
651
641
693
2,790
2,616
2,820
Nickel
Copper
Platinum
Palladium
+15%
+6%
+2%
+7%
Annual reportNornickelAbout Nornickel1/72022 10
11
INVESTMENT HIGHLIGHTS
LEADING POSITION
IN GLOBAL MARKETS1
Nornickel is the global leader
in palladium and high-grade nickel
production.
№
43%Palladium
17%High-grade nickel
12%Platinum
№4
UNIQUE
RESOURCES
The unique mineral resource base of polymetallic ores secures
the most advantaged position in the global mining industry.
9 mines
75 years
over
Resources at the current
production rate
mln t
1,127
Proven and probable
reserves
mln t
1,826
Measured and indicated
resources
Ni
Cu
PGMs
8.3 mln t
14.9 mln t
165 Moz
Ni
Cu
PGMs
13.8 mln t
22.7 mln t
254 Moz
INDISPENSABLE METALS
FOR GREEN ENERGY
Nornickel is the world’s largest producer of green metals which underpin the global
economy’s decarbonization process and the transition to renewable energy
and electrified transport.
METAL PRODUCTS AND USES
Ni
High-grade nickel
Pd
Palladium
Batteries
Chemical industry
Medicine
Nickel electroplating
Alloys
Stainless steel
Chemical industry
Medicine
Investment
Glass fibre
and optical glass
Cu
Copper
Pt
Platinum
Electrical wires
Pipes
Architecture and design
Antiseptic
Copper rod
Catalysts
Jewellery
Electronics
Oil refining
THE MOST LIQUID SHARES
IN THE MARKET
Nornickel shares have been traded in the Russian stock market since
2001. Since 2014, the shares are included on the First Level quotation list
of the Moscow Exchange (ticker: GMKN).
Shareholding structur
ember 2022 (%)
e as of 31 Dec
8%Rhodium
№5
26
37
37
2%Copper
№12
152,863,397
shares
EN+ GROUP IPJSC
Interros
Other shareholders
e of the lo
d car
west cash
kel production
bon footprints
Som
costs an
of nic
among global producers. The carbon
footprint of nickel metal production
according to international standards
totalled
Analysts’ recommen
dations on the C
ompany shares
33%
67%
Hold
Buy
9.7 t of C
O2
equivalent per tonne of metal.
ee of v
ertical
High degr
integration: from ore
o finish
t
ed products
(100% self-suffi iency).
The Company’s reliance on own logistics,
energy, fuel, and water supply translates
to a significantly smaller share of these
expenditures in cash costs vs peers.
Nornickel shares ar
ge, with the f
Exchan
as of the end of Dec
c
ollowing w
ember 2022:
e in
luded in 16 in
es of the Mosc
dic
eights in the main in
ow
dices
7.39%
MOEX Russia
Index
10.44%
MOEX 10
Index
9.24%
Blue Chip Index
Best-in-class feedstock mix –
natural diversification and solid long-
term fundamentals.
15.27%
MOEX Metals
and Mining Index
7.32%
MOEX Broad Market
Index
4.51%
Sustainability Vector
Index
1 Data as of early March 2023. Based on refined metal (including tolling) output for palladium,
nickel, platinum, and rhodium; based on contained metal production for copper.
Annual reportNornickelAbout Nornickel1/72022 12
13
BUSINESS MODEL
RESOURCES
MINING
Mineral resource base
1,127mln t
Proven
and probable
reserves
1,826
mln t
Measured
and indicated
resources
>75 years
of resources
at the current
production rate
Norilsk Division:
Produced
.4 mln t of ore
18
Ni 1.27%
Cu 2.18%
PGMs 6.64 g/t
Workforce
Kola Division:
Produced
Pt 651 koz
CAPITAL EXPENDITURES IN 2022
USD 0.9 bn
Sulphur Project
USD 1.1 bn
Growth
and development
projects
USD 2.3 bn
Maintenance
and upgrades
of fixed assets
thousand
employees
mln t of ore
7.0
Ni 0.49%
Cu 0.21%
PGMs 0.10 g/t
~78.4
Mining an
d m
etallurgical assets
Trans-Baikal Division:
Produced
t
k
9
1
2
i
N
9mines
4concentrators
3metallurgical
plants
0 mln t of ore
15.
Cu 0.57%
AUXILIARY ASSETS
• Transport enterprises
• Energy enterprises
• Global sales network
• R&D: Gipronickel Institute
Energy Division:
Produced
2,816 Mcm
of natural gas
91 kt
of gas condensate
t
k
Cu 4 3 3
VALUE CREATED FOR STAKEHOLDERS
Shareholders
Employees
196 mln
USD 6,
Total dividend payout
in 2021
USD 2
11 mln
Spending on social
programmes
for employees
USD 2,662
Average monthly pay
USD 17 mln
Spending on pension
plans
Suppliers
95%Share of Russian companies
in supplies to Nornickel
Customers
The Company’s products
are supplied to
34 countries worldwide
Government
Tax and other
payments
to budgets:
USD 109.2
Federal
n
b
USD 116.9
b
Regional
n
P
d
,
2
7
9
0
k
o
z
FINANCIAL PERFORMANCE
USD 16.9
bn / revenue
USD 8.7bn
EBITDA
USD 5.9 bn
Net profit
52%EBITDA margin
1.1 хNet debt/EBITDA
Sales footprint
, %
Europe
Asia
North
and South America
Russia and the CIS
47
31
15
7
ENVIRONMENT
mln t
8.6
GHG emissions from
operations (Scope 1 + 2)
5.7 mln t
GHG emissions (Scope 3)
99%of the Company’s
industrial waste
is non-hazardous
51%of electricity generated from
renewable sources
82%Share of reused and recycled water
Annual reportNornickelAbout Nornickel1/72022
14
15
STRATEGIC
REPORT
Nornickel maintains its focus on growth and is
currently at the peak of its investment cycle.
In 2022, CAPEX totalled to
USD 4.3bn
In 2023, CAPEX is
expected to increase to
USD4.7bn
Annual ReportNornickelStartegic Report2/72022 16
17
CHAIRMAN’S
LETTER
DEAR
SHAREHOLDERS!
Having barely recovered from the
COVID-19 pandemic and industrial
incidents at the Taimyrsky and Oktyabrsky
Mines, we faced new, even more daunting
challenges in 2022. The unprecedented
sanctions regimes imposed by a number
of countries against Russia have had
a significant negative impact on our
business, challenging us to promptly
adapt our operations, procurement, sales,
and financial activities to the new normal.
Despite all these headwinds, Nornickel
fully met its production targets for the
year and ramped up its output of all
metals following unscheduled production
downtimes in 2021. I would particularly
note that, as we restored operations at the
two mines and Norilsk Concentrator, we
maintained our focus on improving our
health and safety management, making
tangible progress in this area. The number
of fatal accidents has decreased by almost
three times from 11 to 4, but we are far
from satisfied with this, and we will make
every effort to achieve zero fatalities at the
workplace.
We continue to make progress on the
Sulphur Project, our flagship sustainability
initiative to dramatically reduce sulphur
dioxide emissions in the Norilsk Industrial
District. Over 2022, we completed the
bulk of the project’s first phase, including
the construction of furnace gas recovery
facilities, a sulphuric acid neutralisation
line and related infrastructure at
Nadezhda Metallurgical Plant. We can
confirm that these facilities will come
online before 2023-end.
Amidst strong geopolitical turbulence and
economic uncertainty, it is vital for any
business to remain socially responsible.
As such, we decided to support our
employees and their families by indexing
salaries above inflation in Russia, as well
as paying extra bonuses last April. On
top of this, we also launched a long-term
programme in 2022 to renovate housing
and social infrastructure in Norilsk, for
which the Company plans to disburse
over RUB 81 billion by 2035.
Of course, the new operating environment
has forced the Company to completely
rethink the scope and timelines of many
investment projects. Although we remain
committed to all of our previously stated
strategic environmental, mining and
downstream priorities, many projects
in these areas are being redesigned as
we need to substitute imported process
equipment, source new suppliers and
build alternative supply chains.
In closing, I am proud to say that despite
all these challenges, Nornickel has
retained its leadership in non-ferrous
and precious metals, and our products
remain in demand and consistently
generate strong revenues and operating
profit. The Company has a robust balance
sheet, ready to fully meet its obligations
to employees, partners, society, and the
government, while retaining a compelling
investment case for shareholders.
ANDREY BOUGROV
Chairman of the Board of Directors
MMC Norilsk Nickel
Despite all these headwinds,
Nornickel fully met its
production targets for the
year and ramped up its
output of all metals following
unscheduled production
downtimes in 2021.
Annual ReportNornickelStartegic Report2/72022 18
19
PRESIDENT’S
LETTER
DEAR
SHAREHOLDERS!
The year 2022 has come to an end, and I
would like to take the opportunity to look
back on what we have achieved, as well
as share our short-term plans as we deal
with very high uncertainty going
into 2023.
OPERATIONAL
AND FINANCIAL
PERFORMANCE
Last year, Nornickel and the broader
Russian economy grappled with severe
sanctions, which, coupled with high
inflation and volatility rates across global
commodity and financial markets,
could not but affect the Company’s key
financials.
We have fully restored operations at the
Taimyrsky and Oktyabrsky Mines and
Norilsk Concentrator after incidents in
2021 and have ramped up our output of
all key metals. Despite the geopolitical
challenges and related disruptions to
international logistics, the Company
also successfully met all its obligations
to customers in 2022. Meanwhile, lower
prices for copper and palladium, as well
as higher metal inventories in transit due
to longer supply chains, have caused our
revenue to fall by 5% to USD 16.9 billion.
Our cost of goods sold has also
been affected. The direct impact of
inflation aside, it has been affected by
the additional incentives we paid to
employees and the wage indexation
above inflation in Russia, as well as
changing the calculation of the MET rates.
As a result, our EBITDA for the year was
USD 8.7 billion, while EBITDA margin
remained above 50%.
Our net debt has increased, but its ratio
to EBITDA remains at a comfortable 1.1x.
Amidst the ongoing turbulence, with
Russia cut off from traditional global
capital markets, leverage and liquidity
management have become another top
priority, and we have successfully risen to
this challenge by refinancing our dollar-
denominated debt through RUB- and
RMB-denominated instruments.
Over the year, we also continued to ramp
up our investments in growth projects
and programmes aimed at reducing our
environmental footprint and boosting
industrial safety. As a result, our capital
expenditure grew to USD 4.3 billion, an all-
time high for the Company.
EBITDA for the year was
USD 8.7 bn
The total number of retail
shareholders in the Company
topped 380 thousand,
evidencing the confidence
that Russian investors have
in our business in such
challenging times.
In 2022 our capital expenditure grew
to
USD4.3 bn
Annual ReportNornickelStartegic Report2/72022
number of work-related fatalities
across our operations. Tragically, four
of our colleagues lost their lives at
work during the last year. All accidents
were thoroughly investigated, with the
resulting reports submitted to the Board
of Directors and action plans developed
to eliminate their root causes. I would like
to reiterate the Company’s commitment
to achieving zero work-related fatalities,
which is our top strategic priority.
SOCIAL RESPONSIBILITY
In line with the key provisions of Norilsk’s
social and economic development
programme, we have launched efforts
to renovate housing and upgrade or
overhaul local utilities and engineering
infrastructure. We also continue to
develop the Corporate Healthcare project
to set up private healthcare facilities
complementing the public healthcare
system across our footprint so as to
drastically improve healthcare services for
local communities.
Finally, we were the first Russian company
to launch a process for obtaining the
free, prior and informed consent of
indigenous communities, which we have
used with the people of Tukhard on the
Taimyr Peninsula as part of the Tukhard
relocation and development programme.
This move has become an important
milestone in our relations with the
indigenous peoples of the North.
On a final note to our shareholders, I
would like to mention that last year,
the total number of retail shareholders
in the Company topped 380 thousand,
evidencing the confidence that Russian
investors have in our business in such
challenging times – I hope that we live up
to your expectations.
VLADIMIR POTANIN
President,
Chairman of the Management Board
MMC Norilsk Nickel
20
21
CAPEX PROGRAMME
ENVIRONMENT AND
OCCUPATIONAL HEALTH
As mentioned earlier, the Company is
currently at the peak of its investment
cycle, which implies further growth in total
capital expenditure in 2023 to about USD
4.7 billion. This money is earmarked for
financing production growth projects at
the Talnakh mines and the South Cluster,
expanding Talnakh Concentrator and the
environmental Sulphur Project, maintaining
and upgrading the energy infrastructure
of the Norilsk Industrial District, replacing
equipment, carrying out capitalised
repairs, and running social projects. Our
capital expenditure for asset upgrade and
replacement will remain at a consistently
high level above 50% of our total investment
budget.
Clearly, the extraordinary events that have
led to restrictions on exports of process
equipment into Russia have significantly
changed our long-term strategic plans.
We have redesigned a number of major
initiatives to reflect these changes and
are engaged in comprehensive efforts
to source alternative technical and
engineering solutions, equipment suppliers
and contractors. We are planning to finalise
this work before the year’s end and present
an updated investment programme for
2024–2030 in Q4 2023.
Our Environmental Strategy is centred
around the project to reduce sulphur
dioxide emissions in the Norilsk Industrial
District. Throughout 2022, we made
strong progress on the first phase of this
project at Nadezhda Metallurgical Plant.
At present, construction and installation
works are over two thirds of the way to
completion, with equipment and pipeline
pre-commissioning already underway,
which makes us confident that the project
will be launched before year-end.
Last year also saw the completion of our
CHPP-3 fuel spill response work, as well as
a large-scale biodiversity study across our
entire footprint and further efforts under
our sanitary clean-up and remediation
programme.
Nornickel continued its building and
structure monitoring programme as
part of its climate risk management: by
late 2022, we had connected 17 of our
enterprises to a special diagnostic system,
monitoring over 700 structures in real
time.
In 2022, we were able to demonstrate
significant progress on industrial
safety by considerably reducing the
The total number of retail
shareholders in the Company
topped
380,000
Annual ReportNornickelStartegic Report2/72022 22
23
COMMODITY
MARKETS
NORNICKEL METALS’
APPLICATIONS
EV batteries
Aerospace industry
Renewable energy
Automotive industry
Nickel is used as
a key element in
the production of
precursor cathode
active materials
for EV batteries.
The dominating
technologies include
nickel-intensive NCM
and NCA batteries,
owing to their
higher volumetric
and gravimetric
energy density,
which increases drive
range. Nickel-based
batteries are also
more recyclable and
reusable than other
types of batteries
Nickel alloys are
highly resistant to
heat and aggressive
environments and
are used in the
manufacturing of
aircraft engines and
rocket components
Nickel alloys are used
in wind, solar and
geothermal power
generation
Copper is intensively
used in the
construction of wind,
solar and other types
of renewable power
plants
The automotive
industry uses copper
in batteries, electric
motors, inverters,
wiring, and charging
infrastructure.
Transport
electrification is
expected to become
a key driver behind
copper demand in this
decade
Palladium, platinum
and rhodium are used
as the active material
in automotive exhaust
gas catalysts to
minimise the vehicles’
environmental impact
Construction,
air conditioning and
cooling systems
The construction
sector uses copper
in pipes and tubing,
heating and cooling
systems as well as
in wall cladding.
Electrical and
communication
cables are also mostly
made of copper
Electronics and
home appliances
Network
infrastructure
Hydrogen solutions
Jewellery
Healthcare
Copper is used in
electronics and home
appliances due to its
excellent electrical
and thermal
conductivity
Palladium has found
its way into the
electronics industry as
material for capacitors,
motherboards and
other components,
while platinum is
primarily used in
hard drives, and
rhodium in coatings
for connectors and
contacts
Copper is used in
power generation,
transmission and
distribution as well as
in all types of wiring.
A strong push
for transport
electrification
and transition to
renewable energy will
require significant
expansion of
distribution networks
Platinum, palladium,
iridium, and
ruthenium are widely
used in rapidly
developing hydrogen
technologies.
Platinum group
metals find
application
as catalysts in
low-carbon hydrogen
production as well
as for hydrogen
purification,
transportation and
use as an energy
source in fuel cells
Palladium and
platinum are widely
used in all kinds of
jewellery which is
renowned for its
beauty but also for
durability
PGMs are extensively
used as catalysts
in drug synthesis.
Additionally,
palladium has found
wide application
in dentistry, while
platinum is used
in medical devices
such as pacemakers.
Platinum is also an
active ingredient of
anti-cancer medicines
Glass fibre and
optical glass
manufacturing
In the glass industry,
platinum and
rhodium are used
to manufacture
bushings for making
glass fibre and optical
glass
Mechanical
engineering,
chemical and
petrochemical
industries,
construction
Nickel is used
in the stainless
steel production.
Adding nickel as an
alloying element
to stabilise the
austenite structure
enhances steel’s
corrosion resistance,
high-temperature
properties, weldability,
formability,
and resistance
to aggressive
environments.
Enhanced this way by
nickel, stainless steel
finds its applications
across many
industries, including
the mechanical
engineering, chemical
and petrochemical
industries, and
construction
Palladium, platinum
and rhodium are
used as catalysts
in chemical and
petrochemical
processes to boost
process performance
Annual ReportNornickelStartegic Report2/72022 24
25
STRATEGY
GLOBAL TRENDS
COVID-RELATED
RESTRICTIONS
STRICTER MONETARY
POLICY
GEOPOLITICAL
TENSIONS
In 2022, following the easing of pandemic-
induced restrictions, supply chains
affected by lockdowns started to recover.
China, the largest consumer of base
metals and a key producer and consumer
of base and precious metals, bucked the
trend, as the country, with its zero-COVID
policy, kept stringent restrictions in place
across major cities, slashing industrial
demand for metals across a wide range
of applications, from stainless steel to
the automotive and jewellery industries.
Meanwhile, despite the lockdowns that
were in place throughout the year, China
managed to boost both its production
and consumption of nickel and copper
products. The lifting of restrictions in late
2022 is expected to spur business activity
and demand for metals in China starting
from the second quarter of 2023.
The year 2022 saw a substantial rise in
global inflation caused by geopolitical
tensions, surging energy prices, ongoing
COVID-19 restrictions in China and
supply chain disruptions. In response
to accelerating inflation, major central
banks decided to tighten their monetary
policies, dampening global economic
growth and, consequently, negatively
impacting industrial consumption of
base and precious metals. The US dollar
appreciation against major currencies
caused by the Federal Reserve System’s
(the Fed) rate hikes resulted in a
retracement of commodity prices in the
second half of 2022.
The tensions in Ukraine in 2022 led to
unprecedented sanctions against Russia.
They were exacerbated by what became
known as “self-sanctioning” as some
international organisations shuttered their
Russian operations despite the absence
of any legal restrictions on working with
Russian companies, which affected both
inventory procurement and sales for
Russian producers.
The London Bullion Market Association
(LMBA) and the London Platinum and
Palladium Market (LPPM) have introduced
restrictions on Russian refineries and on
the processing of Russian-origin precious
metals in other countries. This move has
affected the liquidity of Russian metals
in the global market. The London Metal
Exchange also considered delisting
Russian base metal brands but decided
against the ban following consultations
with market players.
NICKEL (Ni)
Nornickel — No. 1 in high-grade nickel
production
(%)
Nornickel — No. 4 in primary nickel
production
(%)
Nornickel
Jinchuan
Glencore
Vale
Sumitomo MM
BHP Billiton
Sherritt
Sumitomo Corp. / KORES
Anglo American
Impala
Other MMCs
17
15
10
10
6
6
5
4
3
3
22
Tsingshan Group
Delong Group
Jinchuan
Nornickel
Vale
Glencore
Shandong Xinhai
Sumitomo MM
BHP Billiton
Anglo American
Other MMCs
20
8
6
6
5
5
3
2
2
2
39
Sources: producer reports, Company analysis as of 3 March 2023.
KEY TRENDS IN THE NICKEL MARKET
In 2022, the nickel market moved into
a surplus of 114 kt, or 4% of annual
consumption (compared to a deficit
of 172 kt in 2021). Historically, market
surpluses have been linked to the LME
deliverable / Class 1 nickel. However, in
2022, the surplus was mainly represented
by the low-grade nickel units, particularly
nickel pig iron (NPI) and FeNi. Meanwhile,
the high-grade nickel market remained
in deficit, particularly as nickel inventories
halved in 2022.
After a year of significant deficit in the
nickel market in 2021, which resulted in
a 38% increase in the annual nickel price,
the price started the year buoyantly
as robust speculative demand and
significant spot market tightness had
caused exchange stocks to dwindle
further. As a result, combined with
logistical bottlenecks and geopolitical
tensions in Eastern Europe, the price
has been pushed to an 11-year high of
USD 24,000/t in mid-January, although
this price spike was somewhat speculative
and was accompanied by massive short
covering.
In February, the nickel price dynamics
were dominated by escalating geopolitical
tensions between Russia and Ukraine,
which was further exacerbated by the
low exchange stocks. As a result, the LME
nickel price increased to a new 11-year
high of USD 30,000/t during the trading
session of 4 March.
On 8 March, the LME was forced to
suspend trading in all nickel contracts
after prices jumped to a record USD
100,000/t, allegedly due to a massive
short squeeze. Given the extreme price
movements and low trading volumes, the
LME decided to cancel all trades executed
on 8 March and rewound the market
to the moment when prices closed on
7 March.
Primary nickel consumption
by region
(%)
5
3.0mln t
60
25
10
China
Europe, Africa and the Middle East
Rest of Asia
Americas
Source: Company data
Annual ReportNornickelStartegic Report2/72022 26
27
The LME introduced new daily price
fluctuation limits on nickel contracts
based on the previous day’s closing price,
allowed nickel position transfers, restricted
the opening of new short positions, and
resumed trading on 16 March. For several
straight sessions, the price fell by the
newly established daily limits, and the
first settlement price of USD 30,800/t
was recorded on 22 March only, but
later on, prices steadied at around
USD 33,000–34,000/t, albeit at low trading
volumes.
The LME nickel price was in a downtrend
in April–July, retreating after its enormous
volatility and wild price swings. This
downturn was further exacerbated by a
broader trend of a demand slowdown
across all base metals with the underlying
weakness in the Chinese economy, strong
US dollar and aggressive monetary policy
tightening in conjunction with soaring
inflation and attendant recessionary
fears. On top of that, high energy prices
and ongoing supply chain bottlenecks
widely reduced investor activity across
all markets and dented the industrial
demand.
In July–September, nickel prices
were rising, hitting a 3-month high
of USD 25,000/t in late September,
supported by increased sales in the EV
market and low LME inventories, but
lost all of the gains soon and plunged
to USD 21,000/t in less than a week as
the US dollar index hit a 20-year high,
deteriorating the commodity prices.
In October, the price remained stable
at around USD 21,000–22,000/t before
surging to above USD 30,000/t in
November. This has been caused by
several factors, including speculation
regarding the ban on the Russian metals
by the London Metal Exchange and
slower growth in the US CPI data, driving
expectations that the Fed would ease the
pace of its interest-rate increases with
a correspondent drop of the US dollar
index and a jump in prices of all major
Average annual nickel prices
(USD/t)
2022
2021
2020
Source: London Metal Exchange (cash settlement)
LME nickel price in 2022
(USD/t)
100,000
3
25,605
18,488
13,789
1 2
4
5
6
7
8
9
10
11
12 14 15
13
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: London Metal Exchange
1. Geopolitical tensions in Ukraine
2. Massive short squeeze
3. The LME suspends trading in nickel
contracts and cancels all trades
after prices doubled to a record USD
100,000/t
9. Strike at Glencore’s Raglan mine ended
10. DXY hits a 20-year high of 115
11. The London Metal Exchange
announces public consultation on
banning Russian metal
12. US inflation slows down to 7.7%
4. Resumption of LME trading amid
following the DXY decline
illiquid market
13. The London Metal Exchange decides
5. Strike at Glencore’s Raglan nickel mine
6. LG Energy Solution launches
against banning Russian metal
14. Failed squeeze on low volumes,
construction of extensive nickel
sulphate, PCAM1 and CAM2 capacities in
Indonesia
unconfirmed blast at CNGR’s plant,
Goro’s leaks, and rumours about
Indonesia’s export taxes
7. US inflation at a 40-year high
8. US President Joe Biden signs Inflation
15. The EU considers imposing sanctions
against the Russian mining sector
Reduction Act 2022
1 PCAM – Precursor cathode material.
2 CAM – Cathode material.
commodities. These price gains were
also supported by the rumours about
a possible Indonesian nickel export tax,
an unconfirmed report about a blast at
CNGR’s NPI-to-matte conversion plant in
Indonesia, as well as disruptions at several
nickel producing sites in Ukraine and
New Caledonia. Later, however, the price
retreated to USD 25,000–26,000/t.
In the first half of December, the nickel
price rebounded to USD 30,000/t amid
increased speculative trading, which
could augur a new short squeeze attempt,
but the price then retraced to USD
28,000/t. In late December, LME nickel
prices stayed at USD 28,000–30,000/t in a
sluggish market ahead of Christmas and
New Year holidays.
Due to substantial volatility, the LME
nickel price averaged USD 25,605/t in
2022, up 38% from the 2021 average.
.
MARKET BALANCE
Primary nickel consumption grew by
5% y-o-y to 3.03 mln t in 2022. However,
sluggish stainless steel production due to
lower end use demand in China (on the
back of the zero-COVID policy and a weak
real estate sector) and in Europe (due to a
wild surge in energy prices and inflation
rates) was offset by a substantial increase
in demand from the battery sector (up
32% y-o-y).
Primary nickel production totalled
3.14 mln t in 2022 (up 16% y-o-y). This
increase was driven by the massive
growth in the Indonesian NPI capacities
(to 1.15 Mt Ni, or up 33% y-o-y) and the
continued underlying growth of nickel
compounds for the EV batteries sector,
mainly fuelled by the launches of new
HPAL capacities and NPI-to-matte
conversion lines.
As a result, in 2022, the nickel market
moved into a surplus of 114 kt, mostly
in low-grade nickel. This was primarily
due to lower-than-expected stainless
steel output and a surge in NPI output
in Indonesia, resulting in significant
discounts for low-grade nickel and
accumulation of NPI and FeNi stocks.
Meanwhile, the high-grade nickel market
saw a moderate deficit as evidenced by
a decline in total nickel inventories of the
LME and SHFE, which dropped by 49 kt in
2022 to 58 kt at the end of the year, or less
than 10 days of global consumption.
Nickel production and
consumption balance
(kt)
Primary nickel consumption
in 2022
Primary nickel production
in 2022
3.1 mln t
16 % y-o-y
+
+5 % y-o-y3.0 mln t
126
89
-172
-12
2020
2021
2022
High-grade nickel
Low-grade nickel
Source: Company data
Annual ReportNornickelStartegic Report2/72022 28
29
CONSUMPTION
Stainless steel remained the key sector
of nickel use (about 65% of primary
demand) in 2022. Adding nickel as an
alloying element to stabilise the austenite
structure enhances steel’s corrosion
resistance, high-temperature properties,
weldability, formability, and resistance to
aggressive environments.
Stainless steel production uses almost
all types of nickel feed (except for some
special products, such as nickel powder
and compounds). However, since the
quality of nickel used has almost no effect
on stainless steel quality, steelmakers
primarily use cheaper low-grade nickel
such as NPI, ferronickel and nickel oxide.
As a result, the share of high-grade nickel
used in stainless steel has decreased in
recent years.
In 2022, global stainless steel output
declined by 5% to 56 mln t as industrial
demand in China was dampened by the
government’s zero-COVID policy and
stringent lockdowns amid continuing
stagnation in the construction sector,
which led to a drop in production in
both China and Indonesia (by 2% and
4%, respectively). This was accompanied
by a substantial decline in production in
Europe and the US due to sluggish end
use demand and rising energy prices,
which translated to a jump in production
costs. Consequently, output dropped by
16% in Europe and by 13% in the United
States. Production was also stagnant in
other countries around the world (Japan,
South Korea, Taiwan). India was the
world’s only country that ramped up its
stainless steel output by launching new
production capacities, with its output
up 1%.
At the same time, primary nickel demand
in the stainless steel sector stayed flat
at about 2 mln t in 2022. The overall
decline in output was offset by the
growing demand for Indonesian NPI, the
preferred nickel feedstock for integrated
stainless steel producers in China, the
world’s largest producer accounting
for nearly 60% of global steel output.
This led to a lower share of demand for
scrap, i.e. secondary raw materials, and a
corresponding increase in use for primary
nickel.
The battery industry uses nickel as a key
element in the production of cathode
precursors for batteries. In 2022, nickel
demand continued to rise and grew 32% to
468 kt, driven by global EV support policies,
rapid expansion of charging infrastructure
and battery cost optimisation.
Lithium-ion batteries are the key type of
batteries because of their high energy
density, specific energy and long life cycle.
Growth in lithium-ion battery production is
primarily driven by transport electrification.
In 2022, EV sales (battery electric vehicles
and plug-in hybrids) rose more than 60% to
11 million units, growing at a CAGR of over
50% between 2015 and 2022. The impetus
for transport electrification comes from
government incentives, more stringent
environmental regulations, improved
battery performance, and lower production
costs of battery cells.
China was the epicentre of this growth,
with its sales almost doubling due to
higher availability of EVs across price
segments and more robust consumer
demand. At the same time, sales in
Europe rose only by 11% y-o-y and even
declined for some months, reflecting the
increasing cost of living and the pressure
on consumer savings as well as the rising
expenditure on energy and soaring
inflation.
The growing popularity of electric and
hybrid cars, along with the evolution
of cathode technology towards nickel-
intensive types, add to the tailwinds
for significant growth in primary nickel
demand in batteries in the long run.
Despite the mounting competition across
technologies, high-nickel formulations
will remain the preferred option for
automakers owing to their higher
energy density, longer range and better
recyclability. In our base case scenario,
we estimate the nickel use in batteries
Nickel consumption by industry
in 2022
(%)
15
8
6
5
1
3.0mln t
65
Stainless steel
Batteries
Alloys and superalloys
Electroplating
Special steels
Other industries
Source: Company data
Stainless steel production
(mln t)
52
59
56
3
8
14
3
6
14
34
33
3
7
11
31
2020
2021
2022
China
Rest of Asia
EMEA (Europe, Middle East, Africa)
Americas
Sources: Eurofer, ISSF, USGS, SMR, METI, TSIIA,
Company data
Global sales of electric vehicles
(thousand units)
Sales of electric vehicles by
region in 2022
(%)
24
9
6
61
China
Europe
USA
Rest of World
1,500
1,200
900
600
300
+62 %
+109 %
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2022
2021
2020
Source: Company analysis
to reach approximately 1.5 mln t of nickel
by 2030, or 30% of total primary nickel
demand (compared to 15% in 2022).
Meanwhile, this figure may require
further revisions given the continuous
introduction of more ambitious carbon
neutrality goals, subsidies-driven transport
electrification and cost optimisation of
battery cell production.
In 2022, nickel consumption in other
industries (alloys and superalloys, plating,
special steel) increased by 8%, or 43 kt,
amid the gradual post-COVID recovery of
industrial demand and robust economic
performance in the aerospace, oil and gas,
and military industries.
Regional sales of electric vehicles
(thousand units)
800
700
600
500
400
300
200
100
+97 %
+11 %
+48 %
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
China 2022
China 2021
Europe 2022
Europe 2021
USA 2022
USA 2021
Annual ReportNornickelStartegic Report2/72022 30
31
PRODUCTION
Primary nickel production by
product in 2022
(%)
26
12
50
3.1mln t
11
1
Nickel pig iron
Nickel metal
Nickel compounds
Ferronickel
Nickel oxide and utility nickel
Source: Company data
Primary nickel production can be
divided into the high-grade and low-
grade nickel segments.
High-grade nickel is produced in the
form of nickel cathodes, briquettes,
pellets and powder, rondelles, and
other small shapes, as well as chemical
compounds, both from sulphide and
from more common and available
lateritic raw materials. 2022’s leading
producers of high-grade nickel
were Nornickel, Jinchuan, Glencore,
Vale, BHP, and Sumitomo Metal
Mining (SMM).
Low-grade nickel includes nickel pig iron,
ferronickel, nickel oxide, and utility nickel,
which are produced from lateritic raw
materials only. In 2022, the key producers
of low-grade nickel were Indonesian and
Chinese NPI smelters, such as Tsingshan
Group and Delong Group, as well as the
largest ferronickel producers: POSCO,
South32, Eramet, Anglo American, etc.
The nickel market, which had been
fundamentally divided into the low-
grade and high-grade segments, became
interconnected once the practical
implementation of the NPI-to-matte
conversion started in early 2021 along with
the massive launches of HPAL capacities.
In 2022, producers around the world were
faced by both geopolitical upheavals,
energy crisis, operational disruptions,
and pandemic-induced challenges.
Nonetheless, primary nickel production
in 2022 grew by 443 kt, or 16% y-o-y, to
3.14 mln t, driven by the huge growth
in the Indonesian NPI capacities and
the continued underlying growth of
nickel compounds for the EV batteries
sector, mainly fuelled by the launches of
new HPAL capacities and NPI-to-matte
conversion lines.
Production of high grade nickel grew 14%,
or 135 kt, to 1.1 mln t in 2022.
Production of nickel metal rose 5% y-o-y
to 817 kt. Nickel metal production in
2022 was slowly recovering, although
several major producers reported some
downturns in their output because of
strikes, operational issues and rising costs
on the back of the energy crisis.
For instance, Vale’s Copper Cliff pellets
and powder production in Canada grew
year-on-year, while Long Harbour’s
rondelle output declined. In turn, the
Primary nickel production
(mln t)
2022
2021
2020
2
1.7
1.5
1.1
1
1
3.1
2.7
2.5
Low-grade nickel
+14%
High-grade nickel
+18%
Source: Company data
Primary nickel production
in 2022 totalled
3.1 mln t
16 % y-o-y
+
output of pellets and powder at the UK
Clydach plant declined year-on-year
due to the lower availability of PT Vale
Indonesia’s matte.
Glencore reported a lower production of
cathodes and rondelles in 2022 because
of the strikes at its Nikkelverk refinery
in Norway and at Canada’s Raglan
mine (both conflicts are now resolved).
The company, however, increased its
production of briquettes and electrolytic
powder at its Australian Murrin-Murrin
plant after numerous operational
disruptions in 2021.
In 2022, Australian BHP’s briquette and
electrolytic powder production decreased
due to equipment maintenance on
the back of the switch from briquettes
to nickel sulphate crystals production,
gradually rising following its launch in late
2021.
Japan’s SMM demonstrated weak results
in 2022 due to feed shortages and some
operational issues in the Philippines,
which adversely affected HPAL operations
(Taganito and Coral Bay) that feed the
Japanese refineries of SMM.
Meanwhile, Ambatovy continued ramping
up briquette production in 2022 in order
to achieve stable operation levels of 40
ktpa of nickel.
In 2022, Nornickel increased its nickel
output as a result of postponing the
repair of the flash smelting furnace at
Nadezhda Metallurgical Plant to 2023 and
the low base of 2021, when Oktyabrsky
and Taimyrsky Mines as well as the
Norilsk Concentrator were temporarily
suspended.
1,567
1,288
1,102
Production of nickel compounds,
including nickel sulphate from primary
sources (excluding sulphate produced
by Class 1 nickel dissolution), increased
by 81% y-o-y to 378 kt in 2022 on the
back of the massive launches of new
NPI-to-matte conversion capacities and
announced launches and ramp-ups of
new and existing HPAL capacities in
Indonesia, Australia and New Caledonia.
This was caused by robust EV sales and
solid nickel demand from the battery
sector.
Nickel sulphate can be produced
from a variety of raw materials by
different processes: directly from nickel
intermediates such as mixed hydroxide
precipitate (MHP), mixed sulphide
precipitate (MSP), nickel matte, and
crude nickel sulphate (product of copper
processing), or by dissolving Class 1 nickel
(as nickel briquettes or powder) or from
recycled materials.
In 2022, the expansion of HPAL capacities
launched by Lygend and PT Huayue
Nickel and Cobalt in 2021 as well as the
launch of a new PT QMB New Energy
Materials asset drastically increased total
MHP output in Indonesia compared
to 2021, approaching 100 kt. Huayou’s
fourth project, PT Huafei, is expected to
be brought online in 2023, accompanied
with the expansion of existing capacities,
which will further boost MHP output.
Meanwhile, the waste generated by HPAL
projects is becoming a severe limiting
factor in terms of potential environmental
effects as well as costs required to ensure
their safe storage. According to CRU, if
all Indonesian HPAL tailings were dry-
stacked, the total electricity consumption
to achieve that would exceed 300 GWh,
primarily through coal combustion.
For comparison, it is about 10% of the
Greater London’s current total electricity
consumption. Moreover, this waste
will require haulage resulting in nearly
40 million litres of diesel consumption,
too.
In general, laterite mining is associated
with substantial damage to ecosystems,
including deforestation, lower biodiversity,
groundwater contamination as well as soil
and coastal erosion.
NPI production
(kt)
2022
2021
2020
421
426
512
China
Indonesia
1,146
862
590
Low-grade nickel output grew by 18%, or
308 kt, to 2.0 mln t..
Indonesian NPI production continued
to grow year-on-year, becoming the key
driver behind the low-grade nickel supply
growth in 2022. However, its growth rates
slowed down slightly year-on-year due
to both conversion of some furnaces to
high-grade matte production and softer
demand for stainless steel as well as
skilled labour shortages in Indonesia. In
addition, strict COVID regulations and
more expensive airline tickets made
travelling to these projects less attractive
for Chinese workforce. Overall, we
estimate the total 2022 NPI production in
Indonesia at 1.1 mln t (up 33% y-o-y).
In 2022, China’s NPI output was down 1%
y-o-y to 421 kt suppressed by stronger
imports of Indonesian NPI and stagnant
stainless steel production. Nickel ore
imports from the Philippines were down
due to bad weather conditions, which
kept ore prices high, putting additional
pressure on the NPI production.
During the year, FeNi production declined
substantially to 341 kt (down 10% y-o-y).
This was due to production shutdowns
across several sites, including facilities
in Serbia, North Macedonia, Greece,
and Ukraine, as well as technical and
operational disruptions at projects in
Myanmar, Guatemala, Japan, and New
Caledonia. On the other hand, a number
of producers in New Caledonia, Brazil, the
Dominican Republic, and Colombia were
able to ramp up their output and deliver
consistent performance. The surplus in
the low-grade nickel market resulted
in significant discounts for FeNi and
accumulation of its stocks.
Annual ReportNornickelStartegic Report2/72022 32
33
COPPER (Cu)
Nornickel — No
opper mine production
. 12 in c
(%)
Codelco
Freeport
BHP Billiton
Glencore
Southern Copper
First Quantum Minerals
Zijin Mining
KGHM
Rio Tinto
Anglo American
Antofagasta
Nornickel
Other MMCs
LME copper price in 2022
(USD/t)
In 2022, the LME copper price
averaged at
8,797 USD/t
7
6
6
4
4
3
3
3
2
2
2
2
56
12,000
11,000
10,000
9,000
8,000
7,000
6,000
1
2
34
5
6
7
8
9
10
11
13
12
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
MARKET BALANCE
In 2022, copper mine output increased
by 4% to 21.9 mln t and refined copper
production by 1% to 24.6 mln t. Global
refined copper consumption totalled 24.8
mln t, up 1%. Overall, the copper market
was balanced in 2022 with an immaterial
deficit amounting to 231 kt, or less than 1%
of global consumption.
Copper market balance
(kt)
2022
2021
2020
-231
-77
-165
Source: London Metal Exchange
Source: Company data
1. Geopolitical tensions in Ukraine
2. Copper price hitting an all-time high of
USD 10,730/t
3. First LME statements regarding
9. Aurubis and Codelco raise their copper
premium offer by 85%, reports of
shipment cuts to China by Codelco in
2023
potential banning of Russian metal
10. The London Metal Exchange decides
4. COVID-19 outbreak in China
5. A cycle of rate hikes started by the Fed
and the European Central Bank
6. A tax reform bill introduced for copper
against banning Russian metal
11. The EU considers imposing sanctions
against the Russian mining sector
12. China lifts all strict lockdown measures
producers in Chile
7. Lowest copper price in 2022
8. DXY hits a 20-year high of 115, price
rebounds on expectations of a softer-
than-anticipated Fed medium-term
policy
across the country
13. Protests start in Peru
In 2022, copper mine output
4 % y-o-y21.9 mln t
+
Sources: producer reports, Company analysis as of 3 March 2023
KEY TRENDS IN THE COPPER MARKET
Macroeconomic and geopolitical factors
were the main driving forces of the copper
market in 2022. Volatile demand in China,
tough policies by the Fed and other
central banks, strikes and social unrest
in Latin America, Russian metal supply
risks, low exchange and warehouse stocks,
the push for transport electrification, and
new renewable capacity additions all
combined to slow the copper market in
2022.
The metal was traded within a wide range
of USD 7,000–10,700/t during the year.
It peaked in March amid geopolitical
concerns and mine disruptions in South
America, then corrected to USD 7,000/t
by the middle of summer on the back of
the interest rates hikes, stronger US dollar
and subdued economic activity in China.
Subsequently, the copper price bounced
back to the range of USD 8,000–8,900/t
against the backdrop of a more dovish
Fed rhetoric, the threat of strikes in Latin
America, low metal inventories, and a
more optimistic outlook for the Chinese
economy after the Communist Party
congress and the lifting of COVID-related
restrictions.
Refi ed copper consumption by
(%)
region in 2022
21
In December 2022, the total exchange
stocks (LME, SHFE and CME) were at an
extremely low level of 190 kt, roughly flat
year-on-year, while China’s bonded stocks
decreased dramatically by 71% since the
beginning of the year to 55 kt, which is the
lowest level for more than 10 years.
24.8mln t
In 2022, the LME copper price averaged at
USD 8,797/t vs USD 9,317/t in 2021 (down
6%).
13
10
1
55
China
Rest of Asia
Europe
Americas
Rest of World
Average annual copper prices
(USD/t)
2022
2021
2020
Source: London Metal Exchange
8,797
9,317
2022
2021
2020
6,181
Annual ReportNornickelStartegic Report2/72022 34
35
Refi ed copper consumption
by industry
CONSUMPTION
PRODUCTION
Thanks to its high electrical and thermal
conductivity, ductility and corrosion
resistance, copper is widely used in
various industries. Up to 75% of refined
copper produced globally is used to
make electrical conductors, including
various types of cable and wire. Key
copper-consuming industries include
construction, electrical and electronic
equipment, power industry, transport,
machine building, and the production of
various equipment and consumer goods.
Copper is also a key material for renewable
energy development (solar panels, wind
farms) and transport electrification
(batteries, wiring, electric motors, and
charging infrastructure).
In 2022, global refined copper
consumption totalled 24.8 mln t,
up 1% y-o-y.
With its 55% share of global consumption,
China remains the largest copper
consumer globally. Despite strict COVID-
related restrictions throughout the year
followed by lockdown lifting, China
ramped up its domestic consumption to
13.6 mln t, or up 2% y-o-y. In 2022, China
increased its imports of copper products,
including refined copper to 3.7 mln t, or
up 7% y-o-y, scrap to 1.8 mln t, or up 5%
y-o-y, and concentrates to 25.3 mln t,
or up 8% y-o-y.
Demand in Europe and North America
remained flat year-on-year at 3 mln t
and 2.2 mln t, respectively, while Asia
(excluding China) showed a 2% growth to
5.1 mln t. In Russia, copper consumption
stayed flat year-on-year at about 300 kt.
Global copper mine production rose by
4% to 21.9 mln t in 2022 as a result of the
commissioning of new projects and the
expansion of brownfields.
Production in North America was down by
2% y-o-y to 2.45 mln t, with US production
up by 1%, a decline of 10% in Canada and a
drop of 1% in Mexico.
In 2022, copper mine production in Chile,
the world’s leading producer of the metal,
declined 5% y-o-y to 5.3 mln t. Peru,
the world’s second-largest producer of
copper, managed to increase its copper
mine output by 4% to 2.4 mln t.
Refined copper output also rose by 1%
to 24.6 mln t. In 2022, South and Central
Americas produced 2.6 mln t of refined
copper (down 2% y-o-y), Africa grew its
output by about 12% y-o-y to 1.8 mln t,
and Asia increased its refined copper
production by 2% y-o-y to 14.8 mln t,
including China up 2% y-o-y to 10.6 mln t
and Japan up 3% y-o-y to 1.5 mln t. Europe
produced 3.5 mln t, roughly 4% down y-o-
y, while North America produced 1.6 mln t
(down 1% y-oy).
An 18% increase in Africa’s mining
production to 3.4 mln t was mainly due
to a higher output from mines in the
Democratic Republic of the Congo.
China ramped up its production by 7% to
1.88 mln t, while copper mine production
in Indonesia grew 26% to 0.95 mln t.
Production of refi ed copper
(mln t)
+1 %
2022
2021
2020
Source: Company data
24.6
24.3
23.5
First use
(%)
12
12
3
24.8mln t
73
Wire rod
Pipe
Rolled products
Other
End use by industry
(%)
29
10
16
30.6mln t
15
10
7
13
Construction
Power grids
Heavy engineering
Transport
Consumer goods
Air conditioning and cooling systems
Other
Source: Company data
In Russia, copper consumption
stayed flat y-o-y at
about 300 kt
Annual ReportNornickelStartegic Report2/72022 36
37
PGMs
Nornickel — No
alladium production
. 1 in p
Nornickel
Anglo American
Platinum
Impala Platinum
Sibanye-Stillwater
Northam Platinum
Other MMCs
Nornickel — No
. 4 in platinum pr
oduction
(%)1
Anglo American
Platinum
Impala Platinum
Sibanye-Stillwater
Nornickel
Northam Platinum
Other MMCs
Nornickel — No
hodium production
. 5 in r
(%)1
Anglo American
Platinum
Sibanye-Stillwater
Impala Platinum
Northam Platinum
Nornickel
Other MMCs
Sources: producer reports, Company analysis as of 9 March 2023
1 Refined metal output including production from third-party feedstock
and production from own feedstock by third parties under tolling
agreements.
(%)1
KEY TRENDS IN THE PGM MARKET
PGM consumption by region
(%)
Average annual PGM prices
(USD/oz)
43
18
16
13
4
6
31
23
20
12
9
5
35
23
22
11
8
1
313 t
221 t
33 t
13
9
20
29
16
12
22
16
16
11
24
18
29
34
31
Palladium
Platinum
Rhodium
China
North America
Europe
Japan
Rest of World
Palladium price started the year at around
USD 1,900/oz; however, in the second
half of January, it increased sharply to
USD 2,432/oz, as the fear of geopolitical
crisis was building up. The price shot
further up to USD 2,650/oz on 24 February
and skyrocketed to an all-time high of
USD 3,177/oz on 7 March.
From the end of April, once the market
squeeze was over, palladium was trading
in the range of USD 1,800/oz to USD
2,300/oz up until late July, when it found
strong support at USD 2,000/oz on the
back of 2022’s first year-on-year growth in
monthly global auto sales, mainly caused
by the easing of China’s COVID-related
restrictions. Since then, the price was
repeatedly hitting both the upper and
lower boundaries of this range without
breaking through them.
A notable attempt to break the USD 2,300/
oz resistance level occurred on 4 October.
Although palladium closed above the USD
2,300/oz level, the relatively light trade
volume did not signal the significance
of the resistance level breakout. Further
into the autumn, the price fall continued
20,046
2,398
1,090
2021
15,482
2,112
961
2022
11,231
2,197
884
2020
Rhodium
Platinum
Palladium
Source: LBMA, Johnson Matthey
on the back of the new negative demand
expectations related to the potential
short- and mid-term production cuts by
the European automotive sector.
beginning of September. The ETF outflow
in 2022 was 0.6 Moz as elevated interest
rates reduced investors’ appetite for
commodities.
In the middle of December, the price fell
below USD 1,800/oz on the back of weak
car market performance in China, the
USA and Western Europe, the possible
sale of consumer stocks before the end
of the financial period and speculative
actions (closing long and/or opening short
positions) after the Fed’s announcement
of higher than expected peak interest rate
target. The price bounced back to USD
1,800/oz level by the end of the year.
Rhodium prices also followed the
palladium pricing trends as the two
metals have similar consumption
breakdowns by industry. After peaking at
USD 22,000/oz on 8 March, prices dipped
to USD 13,500–14,000/oz in the first half
of the summer, and then, despite local
support from the Chinese automotive
industry recovery, rhodium prices followed
a downward trend, hitting a year-low of
USD 12,300/oz in late December.
The platinum price experienced the
same shocks as palladium, of which the
geopolitical crisis was the most notable. It
reached its local high on 8 March at USD
1,150/oz. With supply concerns subsiding,
the platinum price corrected down to its
year-lows of USD 838/oz at the beginning
of September. Operational disruptions
at South African mining assets, mostly
but not exclusively caused by unstable
electricity supply, have set the price of
platinum on an upward trend since the
Annual ReportNornickelStartegic Report2/72022 38
39
Palladium and platinum prices in 2022, LPPM
MARKET BALANCE
CONSUMPTION
1
2
34
5
6
7
8
9
10
11
13
12
12,000
11,000
10,000
9,000
8,000
7,000
6,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1. The geopolitical crisis starts
2. The LPPM suspends Russian refineries
6. Daily blackouts start in South Africa
7. The Fed slows interest rate increases
with a 50 bps hike but signals a
potentially higher-than-expected peak
interest rate target
8. Speculative sales of palladium as the
fiscal year draws to a close
from the Good Delivery List
3. Automobile manufacturing starts to
recover in China
4. The world’s leading platinum producer
announces lower production in 2022
5. OPEC+ commits to cut production,
driving up inflation expectations. A
positive trend starts in precious metals
markets on expectations of a softer-
than-anticipated Fed policy in the
medium term
In 2022, the palladium market remained
in a moderate deficit estimated at 16 t
(net of investment demand), while the
surplus in the platinum market shifted to
a balanced market, and deficit in rhodium
remained at 4 t. Demand for platinum
group metals was primarily driven by
slower-than-expected recovery rates in
auto production after the slump caused
by COVID-19 as well as by the substitution
effect between platinum, palladium and
to a lesser extent rhodium in automotive
catalysts. In 2022, PGM supply fell due
to lower recycling, the flooding of the
Stillwater Mine in the USA, and the lack
of smelting capacities and widespread
power outages in South Africa.
In 2022, the palladium market
deficit estimated at
16 t
In 2022, industrial consumption of
palladium and platinum fell by 14 t (down
4%) y-o-y and 3 t (down 1%) y-o-y to 295 t
and 221 t, respectively. In 2022, industrial
consumption of rhodium stayed flat at
33 t.
Automotive industry. Exhaust treatment
systems account for the bulk of total PGM
consumption. In this sector, palladium,
platinum and rhodium are used in
catalytic converters, which are mandatory
for road transport and legally regulated
in most countries. These solutions
drastically reduce emissions of hazardous
substances.
Due to their unique catalytic properties
ensuring effective chemical reactions
throughout the entire vehicle life cycle,
there are almost no alternatives to PGMs
in this sector.
Due to their catalytic properties,
palladium and rhodium are the key
choice for exhaust treatment systems in
petrol vehicles, while platinum is used
mostly in diesel vehicles. In recent years,
manufacturers of catalytic systems have
been developing catalysts based on the
three platinum group metals, which could
be used in engines of different types, but
such formulations are not widespread
yet. Meanwhile, there has been a partial
substitution of platinum for palladium in
petrol vehicle catalysts in recent years due
to the price spread between the metals.
In 2022, palladium consumption in the
automotive industry decreased by 9 t as
the overall automotive industry recovery
was taking place in parallel with the
increase in the proportion of electric
vehicles in the market, which, combined
with limited price-driven substitution of
platinum for palladium in petrol vehicles,
reduced the overall consumption of the
metal by the industry.
Palladium: consumption by industry
by application
in 2022
(t)
295
Auto catalytic converters
2022
Jewellery
Electronics
Chemical industry
Healthcare
Other
308
2021
(%)
and
9
0
3
1
2
1
82%
2%
2%
6%
6%
2%
-4%y-o-y
Platinum: consumption by industry
by application
in 2022
(t)
221
Auto catalytic converters
Jewellery
Electronics
Glass industry
Chemical industry
Other
224
2022
2021
(%)
and
10
40%
2
1
9
0
1
25%
2%
4%
9%
20%
-1%y-o-y
Rhodium: consumption by industry
by application
in 2022
(t)
Auto catalytic converters
Chemical industry
Electronics
Glass industry
Other
33
33
2022
2021
(%)
and
0
0
0
0
0
88%
6%
1%
3%
2%
+1%y-o-y
Annual ReportNornickelStartegic Report2/72022 Investments. Palladium and platinum are
widely used as an investment instrument.
Physical investments may vary from
coins and smaller bars to investments in
ETFs, which accumulate large amounts
of the metals in standard bars. In 2022,
palladium and platinum stocks in ETFs
slipped by 2.8 t and 17.7 t to 16.0 t and
95.4 t, respectively.
PRODUCTION
Primary PGM production
(t)
In 2022, primary refined palladium,
platinum and rhodium production
decreased by 9%, 14% and 23% y-o-y to
198 t, 172 t and 20 t, respectively.
2021 when previously built-up work-in-
progress inventories were drawn down
in South Africa, power supply issues and
smelting capacity shortages.
Production in the Russian Federation,
the key producer of palladium, grew by
5 t driven by a recovery in production
after a temporary shutdown of the
Oktyabrsky and Taimyrsky Mines flooded
by groundwater and suspension of
operations at the Norilsk Concentrator in
2021.Platinum production stayed flat
at 20 t.
In 2022, South Africa, the key producer of
platinum and rhodium, saw a significant
drop in PGM production (down 27 t for
palladium, 31 t for platinum and 6 t for
rhodium) due to the high base effect of
Primary platinum production in
Zimbabwe rose by 1 t, while palladium and
rhodium output remained flat year-on-
year. Palladium and platinum production
in the USA was down by 1 t due to the
floods in Montana in July 2022.
The main sources of recycled PGM supply
are scrapped auto catalytic converters. In
2022, secondary production of palladium,
platinum and rhodium declined by 9 t, 5 t
and 1.5 t to 81 t, 48 t and 8 t, respectively,
due to supply chain disruptions and weak
new vehicle sales, which in turn impacted
the supply of older vehicles for recycling.
26
20
201
172
17
152
194
216
198
2020
2021
2022
Rhodium
Platinum
Palladium
-23% +14% -9%
Source: Company data
40
41
At the same time, palladium consumption
in the automotive industry is supported by
the declining proportion of diesel vehicles
in the fleet mix as they are replaced with
petrol cars and hybrids, which make
greater use of palladium-based catalytic
converters for exhaust fumes. The market
share of diesel vehicles in Europe (27 EU
countries + the UK + European Free Trade
Association countries) dropped from 20%
to 16% over the year. Despite the declining
share of diesel vehicles, global demand for
platinum from the automotive industry
has grown by 10 t in 2022 driven by
the partial substitution of platinum for
palladium in petrol vehicles, as discussed
above.
Rhodium consumption in this industry
stayed flat year-on-year amid a moderate
recovery in auto production offset by
a partial palladium substitution for
rhodium.
Electronics. Palladium has found
its way into the electronics industry
primarily as a material for capacitors and
motherboards, while platinum is used
in hard drives. In 2022, palladium and
platinum consumption in the electronics
industry fell by 3 t and 1 t to 17 t and 5 t,
respectively, subdued by a marked decline
in personal computer and smartphone
shipments due to strong inventory
accumulation and stocking up during the
pandemic in 2019–2020.
Chemical industry.In 2022, the use of
PGMs in chemical process catalysts stayed
flat year-on-year.
Healthcare. Demand for palladium in
healthcare dipped by 1.5 t in 2022 due
to a drop in demand for the metal in
dental prosthetics amid the price-driven
substitution with cheaper materials. The
use of platinum in healthcare grew by
0.3 t driven by an increase in scheduled
high-tech healthcare services after the
peak of the COVID-19 response.
Jewellery. In 2022, global demand for
platinum from the jewellery industry
remained flat year-on-year. Jewellery
sales fell in China, which accounts for over
half of global platinum demand in this
sector, caused by strict COVID-related
restrictions; however, this drop was offset
by demand recovery in other regions.
The use of palladium in jewellery did not
change year-on-year.
Glass industry. Platinum is needed to
produce glass fibre and optical glass.
Demand for the metal in this industry fell
by 9 t in 2022 as China slowed down its
glass capacity expansion after a ramp-up
in previous years. The use of rhodium in
this industry has also declined, partially
due to manufacturers of bushings for the
glass industry seeking to minimise the
metal’s use because of its high cost.
Palladium stocks in ETFs
decreased to
17.7 mln t
8 % y-o-y
+2,
Platinum stocks in ETFs
decreased to
95.4 mln t
16 % y-o-y
+
Annual ReportNornickelStartegic Report2/72022 42
43
OUR STRATEGY‹
STRUCTURE OF THE COMPANY’S
INVESTMENT PROGRAMME
FOR 2022–2023 (USD BILLION)
THE COMPANY’S KEY
PRODUCTION PROJECTS
4.7
4.3
Environment: Sulphur Project
Production growth and development
Energy infrastructure upgrades
Fixed asset reliability programme
TOF-3
Boosting the capacity of Talnakh
Concentrator to 18 Mtpa, improving
nickel recovery rate
Sulphur Project
at Nadezhda
Metallurgical Plant
Construction of furnace gas recovery
facilities, a sulphuric acid neutralisation
line and associated infrastructure
Copper refining
at Kola MMC
New copper refining line using the
advanced and efficient roast–leach–elec-
trowin technology
NOF-2
Construction of a 9/12 Mtpa concentrator
to replace the retired capacity
Sulphur Project
at Copper Plant
Construction of a continuous converting
complex and a sulphuric acid
neutralisation line
Nickel refining
at Kola MMC
Development of long-term solutions to
improve performance and optimise the
product portfolio
Redesign
Progress
2022
2023E
Source: Company data
Annual ReportNornickelStartegic Report2/72022 44
45
SULPHUR PROJECT 2.0
ENVIRONMENTAL ROADMAP
KOLA DIVISION
Smelting shop
Nikel (shut down
in December 2020)
Copper refining line
Monchegorsk (shut down
in March 2021)
NORILSK DIVISION
Nadezhda
Metallurgical Plant
Copper Plant
Nickel Plant
(shut down in 2016)
71 %
reduction in SO₂ emissions
in the border area in 2020
90 %
reduction in SO₂ emissions
at Kola MMC and complete elimination
of cross-border emissions in 2020
2020
2021
Progress in 2023
Redesign in 2023
Streamlining of smelting operations
to reduce SO₂ emissions in the
Russia–Norway border area
Shutdown of an obsolete copper refining
line on the Kola Peninsula
Launch of the Sulphur Project 2.0 at
Nadezhda Metallurgical Plant to recover
furnace gases
Launch of the Sulphur Project 2.0 at
Copper Plant to recover furnace and
converter gases1
In December 2020, the obsolete smelting
shop in Nikel was shut down
Metallurgical shop shut down
on 20 March 2021
Reduction in SO2 emissions in Nikel
and Zapolyarny
Reduction in total SO2 emissions at
the Kola Division facilities
Reduction in SO2 emissions at the
Norilsk Division facilities by 2024
-50 %2
2•
-85 %2
7•
-45 %2
~2•
1
2
The implementation timeline for the project at Copper Plant is indicated in accordance with the Polar Division’s Environmental Performance Improvement Programme (2020)
taking into account Clause 6 of Appendix No. 8 to Resolution of the Russian Government No. 353 dated 12 March 2022.
From a 2015 baseline.
Reduction in total SO2 emissions at the
Norilsk Division facilities after the design
capacity is reached
up to 90 %2
10•
NORILSK DIVISION
Nadezhda
Metallurgical Plant
(Phase 1)
Copper Plant
(Phase 2)
The Sulphur Project at Copper Plant
comprises three key initiatives: upgrades
of existing and construction of new facili-
ties to recover SO₂ and the construction
of a continuous converting complex. The
technology to recover SO₂ from off-gases
of Copper Plant’s main smelting units
comprises converting such gases into
sulphuric acid and then neutralising it
with limestone to produce gypsum.
Amid external restrictions, the
Company is taking comprehensive
efforts to refine the design solutions
to incorporate technology and
equipment import substitution
options.
The review of design documenta-
tion to refine design solutions is
expected to be completed in 2023.
The Sulphur Project at Nadezhda
Metallurgical Plant includes construction
of facilities to recover SO₂ from off-gases
of the main smelting units by converting
them into sulphuric acid and then neu-
tralising it with limestone to produce
gypsum.
To date, the excavation and con-
crete works have been finished,
with foundations for the building’s
frame and equipment built, the
building’s metal frame 99% com-
plete, and the process equipment
partially installed.
The primary dam and roads have
been built, and the impervious shell
of the dam has been constructed.
Installation of the core process
equipment, pipelines and electric
power networks is in progress.
The core equipment and pipelines
undergo individual testing .
Plans for 2023 include completing
the construction and installation
works, pre-commissioning, launch
of pilot operation, and early results
from the emission-reduction
project.
Nadezhda
Metallurgical
Plant
Stage 1
Stage 2
Copper Plant
Redesign
09.2023
12.2023
2030+
Annual ReportNornickelStartegic Report2/72022 46
47
SOUTH
CLUSTER:
GROWING PRODUCTION
VOLUMES
BYSTRINSKY
GOK
UPGRADE OF TALNAKH
CONCENTRATOR
(TOF): STAGE 3
Project summary
Major capacity expansion based on proven technology to
process growing Talnakh ore volume and to unlock strategic
optionality of the South Cluster development project.
Projected implementation
timeline1
Commissioning before the end of 2024 and ramp-up to
design capacity in 2025.
Project status
Ore dressing and ore feeders: the metal frame is 75% com-
plete, installation of fences and preparations to install the
process equipment are in progress
Installation of reinforced concrete and metal structures is in
progress
Deliveries of core process equipment are underway
Power supply facilities are under construction
The water recycling system is under construction
The bulk of works to install the process equipment is
planned for completion in 2023
+8 Mtpa
capacity additions
+4 - 7 %
expected increase in
metal recovery
A large existing deposit with a long reserve life in the bot-
tom quartile of the PGM cost curve
Feasibility study, design documentation and contractor
selection have been completed
In 2022, construction permits were obtained for all the mine
facilities
Construction of the underground mine and related infra-
structure is in progress
Follow-up exploration is planned on the flanks of the Bystrinskoye
deposit
In 2022, the iron ore concentrate production section and the
chemical analysis laboratory were upgraded
Plans for 2023 include further upgrades to the concentrator’s
milling section
143 mln t1
disseminated ore
25 years
reserve life
274 mln t
ore reserves, grading
28 years
life of mine
Ramp-up to design capacity in
2022–2027
(mln t)
~2
3-4
6-7
8-9
Cu
~0.73 %ƒ
USD 934 mln
2022 EBITDA
Open pit mine
Underground mine
Fe
~14.60 %ƒ
50.01 %
Nornickel’s interest in the
mining industry’s major
greenfield project»
2022
2023
2025E
2026E
2027E
2027–2028 mining targets
Production volumes
Ore
Ni
Cu
PGMs
9
13+
20+
750-850
mln t
kt
kt
koz
2022
2023E
Ore2
10.6
10.8
mln t
Cu in concentrate
67.2
66.6
kt
Iron ore concentrate
2.5
2.8
mln t
1
Calculated to the JORC Code as at 1 January 2023.
1
2
Calculated to the JORC Code as at 1 January 2023.
Processed ore volumes.
1
Subject to import substitution of flotation equipment and the target delivery
schedule being met.
Annual ReportNornickelStartegic Report2/72022 48
49
ENERGY INFRASTRUCTURE
UPGRADE PROGRAMME
LOGISTICS INFRASTRUCTURE
DEVELOPMENT PROGRAMME
PROGRAMME RATIONALE
MAJOR PROJECTS
Growing eastbound shipments of construction equipment and
raw materials as the investment programme is entering its active
phase, and growing westbound shipments of intermediate prod-
ucts as projects move to the post-investment phase
Accelerated pace of production equipment upgrades
Expansion of Northern Sea Route operations and increased
freight volumes for major investment projects of other players
using the route in the Russian Arctic
40˛50 %
throughput increase at
Dudinka port (the Gateway to Taimyr)
Replacement of harbour cranes at
Dudinka port by 2027–2029
THE PROGRAMME’S
GOAL:
CONTRIBUTION
TO ENERGY EFFICIENCY:
Accelerated replacement of obsolete equipment,
mitigating physical risks and improving long-term
reliability.
Reinforced emphasis on higher output of the new
generating units at СHPPs1 and TPPs and comprehen-
sive energy loss reduction throughout the electricity
value chain
Gas and gas condensate exploration,
production and transportation
Construction of a new 70+ km gas and gas
condensate pipeline (Pelyatkinskoye–Messoyakhskoye)
Upgrade of 150+ km of gas and gas condensate pipelines
Ramp-up of gas well drilling at the Pelyatkinskoye
field beyond 2028
Combined heat and power plants
Replacement of two power generating units at CHPP-2 and
installation of two new generating units at CHPP-3
The new equipment is significantly more powerful and fuel
efficient, ensuring minimal energy losses
Heat and water supply networks
Hydropower plants
Accelerated replacement of 110-kV and 220-kV power lines
(over 1,000 km)
Upgrades of heat and water supply networks
Upgrade of all seven hydraulic turbines at Ust-Khantayskaya HPP2
is completed.
Upgrade of the Kureyskaya HPP
The HPP upgrade is aimed at expanding the installed capacity
and improving efficiency to boost low-carbon hydropower
capacity
CHPP-2
Norilsk
Dudinka
CHPP-3
CHPP-1
Pipeline
Gas and
gas condensate fields
Gas and gas condensate exploration,
production and transportation
Combined heat and power plants
Power network
Heat and water supply networks
Ust-Khantayskaya HPP
Energy
infrastructure
Kureyskaya HPP
Hydropower plants
Gas transportation
1
2
СHPP – combined heat and power plant.
HPP – hydropower plant.
Annual ReportNornickelStartegic Report2/72022 50
51
BUSINESS
OVERVIEW
In 2022, the Russian economy in general
and Nornickel in particular faced intense
pressure, which had a material impact on
the Company’s business, challenging us to
promptly adapt our operations, procurement,
sales, and financial activities to the new
normal.
Despite all these headwinds, Nornickel fully
met its production targets for the year and
ramped up its output of all metals.
Annual reportNornickelBusiness overview3/72022 52
53
MINERAL RESOURCE BASE
UPSTREAM PROJECTS
Existing ore deposits
Existing non-metallic
deposits
Promising areas
and prospects
Growth projects
Norilsk
Deposit
Kotselvaara, Semiletka, Zhdanovskoye,
Zapolyarnoye, Bystrinskoye, Tundrovoye,
Sputnik, Verkhneye
Area
Yuzhno-Norilskaya
Area
Mikchangdinskaya
Area
Arylakhskaya
Deposit
Talnakhskoye and Oktyabrskoye
Deposit
Norilsk-1
Deposit
Ozero Lesnoye
Deposit
Gorozubovskoye
Deposit
Kayerkanskoye
Deposit
Maslovskoye
Deposit
Western flank of
the Oktyabrskoye deposit
Deposit
Mokulayevskoye
Deposit
Gribanovskoye
Area
Mostovskaya
Area
Dogyinskaya
Deposit
flanks of the Bystrinskoye deposit
Deposit
Bystrinsko-Shirinskoye
Deposit
Bystrinskoye
Deposit
Bugdainskoye
Area
Alenuyskaya
Area
Shamyanskaya
Annual reportNornickelBusiness overview3/72022 54
55
THE GROUP’S MINERAL RESOURCES AND ORE RESERVES
AS AT 1 JANUARY 2023
Norilsk1 an
d K
ola divisions
Total proven an
d pr
Total measured an
obable reserves
d in
dicated resources2
Total inferred resources
Norilsk division3
d pr
Proven an
Proven reserves
obable reserves
Talnakh ore field, including
•
rich
• cuprous
• disseminated
Norilsk-1 deposit (disseminated ore)
Measured and indicated resources
Talnakh ore field, including
•
rich
• cuprous
• disseminated
Norilsk-1 deposit (disseminated ore)
Inferred resources
Talnakh ore field
•
rich
• cuprous
• disseminated
Norilsk-1 deposit (disseminated ore)
Inferred resources
Talnakh ore field
•
rich
• cuprous
• disseminated
Norilsk-1 deposit
Kola division (disseminated ore)
Proven and probable reserves
Proven ore reserves
Probable reserves
Measured and indicated resources
Inferred resources
Ore
mln t
1,127
1,826
876
1,058
658
617
77
76
464
41
400
297
62
57
179
103
1,521
1,378
124
131
1,123
143
737
725
44
55
626
12
69
35
35
305
139
Ni
%
0.74
0.76
0.67
0.75
0.73
0.76
2.76
0.74
0.43
0.26
0.78
0.97
2.78
0.60
0.46
0.23
0.77
0.82
3.46
0.86
0.52
0.29
0.68
0.68
3.31
0.60
0.50
0.30
0.63
0.59
0.67
0.69
0.63
Cu
%
1.32
1.24
1.11
1.38
1.38
1.44
3.15
2.51
0.99
0.35
1.40
1.79
3.96
2.24
0.89
0.26
1.42
1.53
4.39
2.91
1.06
0.36
1.26
1.28
5.43
2.04
0.92
0.39
0.32
0.25
0.38
0.34
0.31
Pd
g/t
3.44
3.26
2.77
3.66
3.57
3.59
6.06
6.15
2.77
3.21
3.81
4.22
7.64
5.11
2.76
2.61
3.90
3.95
8.68
7.31
3.04
3.46
3.28
3.27
10.35
5.22
2.61
3.94
0.03
0.03
0.03
0.05
0.04
Pt
g/t
0.95
0.91
0.74
1.01
0.98
0.96
1.27
1.59
0.80
1.24
1.06
1.07
1.56
1.35
0.81
1.01
1.09
1.06
1.83
1.94
0.87
1.34
0.87
0.86
2.15
1.39
0.73
1.54
0.02
0.02
0.02
0.03
0.02
Metal grade
6 PGM4
g/t
4.55
4.33
3.62
4.84
4.70
4.70
7.87
7.84
3.66
4.71
5.07
5.49
9.75
6.54
3.69
3.84
5.18
5.19
11.21
9.37
4.04
5.09
4.29
4.27
13.02
6.73
3.44
5.82
0.05
0.05
0.05
0.08
0.06
Au
g/t
0.19
0.19
0.16
0.20
0.20
0.20
0.17
0.38
0.18
0.13
0.20
0.23
0.33
0.33
0.17
0.11
0.22
0.23
0.33
0.44
0.19
0.14
0.19
0.19
0.47
0.33
0.16
0,150
0.01
0.01
0.01
0.02
0.01
Ni
kt
8,347
13,834
5,854
7,909
4,789
4,684
2,126
559
1,999
105
3,120
2,888
1,713
345
830
232
11,732
11,312
4,300
1,128
5,884
419
4,975
4,939
1,452
328
3,159
36
437
203
234
2,102
880
Cu
kt
14,870
22,681
9,749
14,651
9,058
8,918
2,427
1,906
4,585
140
5,593
5,322
2,442
1,282
1,598
271
21,656
21,144
5,451
3,807
11,886
512
9,316
9,269
2,383
1,115
5,771
47
219
87
132
1,025
433
Pd
koz
124,593
191,391
77,976
124,529
75,543
71,358
15,037
15,019
41,302
4,186
48,986
40,381
15,144
9,406
15,831
8,605
190,919
175,016
34,682
30,690
109,644
15,902
77,810
76,295
14,602
9,161
52,532
1,515
64
32
32
472
166
Pt
koz
34,259
53,505
20,819
34,217
20,645
19,028
3,144
3,879
12,004
1,618
13,572
10,238
3,099
2,484
4,655
3,333
53,203
47,057
7,332
8,159
31,566
6,146
20,710
20,116
3,032
2,429
14,654
594
42
23
19
302
109
Contained metal
Au
koz
6,752
10,927
4,528
6,732
4,182
4,009
411
934
2,665
173
2,550
2,197
647
599
951
353
210,755
10,099
1,303
1,865
6,931
657
4,473
4,415
669
576
3,170
58
20
10
10
172
55
6 PGM4
koz
164,823
254,156
101,958
164,716
99,520
93,366
19,523
19,137
54,707
6,154
65,196
52,523
19,312
12,026
21,185
12,673
253,324
229,919
44,787
39,374
145,758
23,405
101,669
99,429
18,372
11,803
69,254
2,240
107
56
51
832
290
1 In 2021, SRK Consulting (Russia) completed an estimate of mineral resources and ore reserves using its own methodology.
2 Proven and probable ore reserves are included in measured and indicated resources.
3 The decline in ore reserves and inferred resources across the Norilsk Industrial District’s deposits was mainly driven by shifting economic parameters
and changes in MET assessments, with some disseminated ores at the Taimyr ore cluster becoming less economically viable to mine beyond 2035.
4 The six platinum group metals (PGMs) are platinum, palladium, rhodium, ruthenium, osmium, and iridium.
Annual reportNornickelBusiness overview3/72022 56
57
Zabaykalsky division1
Ore
mln t
Metal grade
Contained metal
Reserves an
d r
esourc
es of the T
alnakhskoye an
d Okt
yabrskoye deposits
Cu
%
Au
g/t
Ag
g/t
Fe
%
Cu
kt
Au
koz.
Ag
koz
Fe
kt
Proven and probable reserves
Measured and indicated resources
Inferred resources
Total proven an
reserves2
d pr
obable
274
0.61
0.59
2.95
14.62
1,680
5,180
26,027
40,059
Total measured an
resources
d in
dicated
261
0.69
0.63
3.55
17.34
1,808
5,274
29,809
45,258
Total inferred resources
59
0.4
0.47
2.06
9.08
237
881
3,895
5,346
The Company conducts exploration
in three regions of Russia –
on the Taimyr and Kola Peninsulas
and in the Zabaykalsky Territory. Through
exploration at new and existing mine sites,
Nornickel ensures increases in its high-
grade and cuprous ore reserves to support
future production from existing sites,
viewing it as a key driver of its long-term
growth.
Over 75 years
of resources at the current
production rate
EXISTING ORE DEPOSITS
DEPOSITS: TALNAKHSKOYE
AND OKTYABRSKOYE
Minerals:
copper-nickel sulphide ores.
Krasnoyarsk Territory,
Location:
Norilsk. Geologically, the deposit is part
of the Talnakh Ore Cluster.
The Company has been developing
the Talnakhskoye and Oktyabrskoye
deposits since the early 1960s, when
multiple deposits of high-grade, cuprous
and disseminated ores were discovered
within the area. Nornickel is still well
supplied with base and noble metals from
the uniquely rich and vast resource base
of the Talnakh Ore Cluster deposits.
Mokulayevskoye
deposit
Western flank
of the Oktyabrskoye
deposit
Oktyabrskoye
deposits
Talnakhskoye
deposits
Talnakh
623
1,075
915
1,564
1,368
1,387
433
842
725
8
15
7.6
14.2
11.2
21.4
10.9
20.4
11.3
21.1
155
146
232
221
230
5.9
11.2
110
4.9
9.1
4.9
9.3
100
99
3.6
7.5
76
2020
2021
2022
2020
2021
2022
2020
2021
2022
6 PGMs, Moz
6 PGMs, Moz
Copper, mln t
Nickel, mln t
Copper, mln t
Total, mln t of ore
6 PGMs, Moz
Nickel, mln t
Copper, mln t
Nickel, mln t
Total, mln t of ore
Total, mln t of ore
DEPOSIT: NORILSK-1
Norilsk
Norilsk-1 deposit
Minerals:
copper-nickel sulphide ores.
Krasnoyarsk Territory,
Location:
Norilsk. Geologically, the deposit is part
of the Norilsk Ore Cluster.
Southern part
Chernogorskoye deposit
(copper-nickel ores)
Maslovskoye
deposit
6 PGMs, Moz
Copper, mln t
Nickel, mln t
Total, mln t of ore
The Company has been developing
Norilsk-1 since the 1930s, currently mining
disseminated ores from the deposit’s
northern portion. In 2020, the resource
estimate for the deposit was updated
against new permanent exploratory
standards for open-pit and underground
mining.
Reserves an
esourc
d r
es of the Nor
ilsk-1 deposit
Proven and probable reserves
Measured and indicated resources
Inferred resources
40
144
143
157
147
143
12
12
0.3
0.4
0.3
0.4
19
19
0.1
0.2
8
0.4
0.6
0.4
0.5
0.4
0.5
0.03
0.04
0.04
0.05
26
23
23
2
2
2020
2021
2022
2020
2021
2022
2021
2022
1 In 2021, CSA Global completed an estimate of mineral resources of the Bystrinskoye deposit in line with the JORC Code based on an updated resource
model, which reflects both complexity and diversity of the deposit’s ore types.
2 Proven and probable ore reserves are included in mineral resources. The reserves include 13.0 mln t of mined and concentrated ore stockpiles from
earlier production.
6 МПГ, млн тр. ун.
6 PGMs, Moz
Медь, млн т
Никель, млн т
Copper, mln t
Итого руды, млн т
6 МПГ, млн тр. ун.
Nickel, mln t
Медь, млн т
Никель, млн т
Total, mln t of ore
Итого руды, млн т
6 МПГ, млн тр. ун.
Никель, млн т
Медь, млн т
Итого руды, млн т
Annual reportNornickelBusiness overview3/72022 58
59
DEPOSITS: KOTSELVAARA, SEMILETKA,
ZHDANOVSKOYE, ZAPOLYARNOYE, BYSTRINSKOYE,
TUNDROVOYE, SPUTNIK, AND VERKHNEYE
Minerals:
copper-nickel sulphide ores.
Murmansk Region, Pechengsky
Location:
District.
Semiletka
deposit
Sputnik
deposit
Kotselvaara
deposit
Verkhneye
deposit
Zapolyarny
Zhdanovskoye
deposit
Western
deposit
Tundrovoye
deposit
Bystrinskoye
deposit
Reserves an
esourc
d r
es of the K
ola Division
Reserves an
esourc
d r
es of the By
strinskoye deposit1
The deposits are located within a 25 km
stretch between Nikel and Zapolyarny
and grouped into two ore clusters:
Western (Kotselvaara and Semiletka
deposits) and Eastern (Zhdanovskoye,
Zapolyarnoye, Bystrinskoye, Tundrovoye,
Sputnik, and Verkhneye deposits).
The deposits in the Western and Eastern
clusters have been developed since
the 1930s and 1960s, respectively.
Proven and probable reserves
Measured and indicated resources
Inferred resources
281
274
274
261
61
59
42
40
28
27
6
2
2021
5
2
2022
49
32
46
31
7
2
2021
5
2
2022
8
5
5
4
1
0.2
2021
1
0.2
2022
Медь, млн тонн
Copper, mln t
Золото, млн тр. ун
Серебро, млн тр. ун
Железо, млн тонн
Gold, Moz
Итого руды,
млн тонн
Медь, млн тонн
Silver, Moz
Золото, млн тр. ун
Серебро, млн тр. ун
Железо, млн тонн
Iron, mln t
Итого руды,
млн тонн
Медь, млн тонн
Железо, млн тонн
Total, mln t of ore
Золото, млн тр. ун
Серебро, млн тр. ун
Итого руды,
млн тонн
Proven and probable reserves
Measured and indicated resources
Inferred resources
80
74
69
316
310
305
142
141
139
0.5
0.5
0.2
0.1
0.2
0.1
0.4
0.2
0.1
2.2
2.1
2.1
0.9
0.9
1.1
0.8
1
1
0.8
0.8
0.4
0.3
0.4
0.3
0.9
0.4
0.3
2020
2021
2022
2020
2021
2022
2020
2021
2022
6 МПГ, млн тр. ун.
6 PGMs, Moz
Медь, млн т
Никель, млн т
Copper, mln t
Итого руды, млн т
6 МПГ, млн тр. ун.
Nickel, mln t
Медь, млн т
Никель, млн т
Total, mln t of ore
Итого руды, млн т
6 МПГ, млн тр. ун.
Никель, млн т
Медь, млн т
Итого руды, млн т
DEPOSIT: BYSTRINSKOYE
Gazlmursky Zavod
Bystrinskoye deposit
Minerals:
gold-iron-copper ores.
Zabaykalsky Territory,
Location:
Gazimuro-Zavodsky Municipal District.
Developed since 2017, the Bystrinskoye
deposit currently comprises two
open-pit mines, Verkhne-Ildikansky
and Bystrinsky-2, with two more – Medny
Chainik and Yuzhno-Rodstvenny –
scheduled to come online in 2030.
1 In 2021, CSA Global completed an estimate of the Trans-Baikal Division’s mineral resources in line with the JORC Code based on an updated resource
model, which reflects both the complexity and diversity of the deposit’s ore types.
Annual reportNornickelBusiness overview3/72022 60
61
EXISTING NON-METALLIC DEPOSITS
GROWTH PROJECTS
Deposit:
MOKULAYEVSKOYE
Deposit:
OZERO LESNOYE
Deposit:
GOROZUBOVSKOYE
Deposit:
BYSTRINSKO-SHIRINSKOYE
Minerals:
limestone.
Minerals:
magmatic rock (basalts).
Minerals: anhydrite.
Minerals:
gold ore.
Krasnoyarsk Territory, Taimyrsky
Location:
Dolgano-Nenetsky Municipal District.
Location:
Krasnoyarsk Territory, Norilsk.
Location: Krasnoyarsk Territory, Norilsk.
The deposit lies 10 km north-west
of the production sites of the Oktyabrsky
and Taimyrsky Mines. The exploration
and mining licence for this limestone
deposit was obtained upon its discovery
in 2017. In 2018, the State Commission
for Mineral Reserves reviewed
the feasibility study of permanent
exploratory standards and the reserve
statement for the deposit. It included
the deposit’s limestone reserves
into the State Register of Mineral
Reserves for potential use in cement
and lime production and in sulphuric
acid neutralisation. The deposit can
be developed through open-pit mining.
Its B + C1 + C2 balance reserves
of limestone are 135,661 kt.
In 2022, an exploration campaign
was completed to look into dolomite
overburden within the Mokulayevskoye
limestone deposit. In 2021 was confirmed
1.2 Mcm of reserves at the Verkhne-
Mokulayevskoye dolomite deposit,
which will be used to construct roads
for a project to develop the limestone
deposit.
Located 22 km to the north of Norilsk,
the deposit consists of two adjacent
licence areas (No. 1 and No. 2) which
share a common boundary. The deposit
is developed within licence area No. 1.
In 2017, Nornickel obtained a survey,
exploration and mining licence
for the magmatic basalt reserves
at licence area No. 2.
In 2022, Nornickel updated its reserve
estimate for the deposit’s two licence
areas to 189.2 Mcm and developed a case
for the best option to further develop
the deposit, enabling mining the two
licence areas as one open-pit mine
to ensure continuous production.
Deposit:
GRIBANOVSKOYE
Minerals:
sand.
In 2020, following further examination
of the deposit’s flanks carried out
as part of follow-up exploration
of the Gorozubovskoye anhydrite deposit,
the reserves were reclassified from C2
to C1. As a result, the deposit’s reserves
were recalculated. A certificate issued
by the State Commission for Mineral
Reserves confirmed the parameters
of updated standards; anhydrite reserves
were confirmed as follows: C1 balance
reserves at 81,830 kt, C2 balance reserves
at 12,484 kt and A + B + C1 + C2 off-
balance reserves at 1,640 kt. In 2022,
a detailed geological study of the deposit
was continued.
Deposit:
KAYERKANSKOYE
quartzose sandstone, coal,
Minerals:
tuffaceous argillite.
Krasnoyarsk Territory, Taimyrsky
Location:
Dolgano-Nenetsky Municipal District.
Location:
Krasnoyarsk Territory, Norilsk.
In 2020, Nornickel obtained an exploration
and mining licence upon the discovery
of the Gribanovskoye deposit, located
on the Yenisei River, 22.5 km south
of Dudinka. Exploration phase activities
were completed, and a pilot operation
was started at the deposit in 2020. A state
expert review of the feasibility study
of permanent conditions and the reserve
statement was conducted in 2021. 87,798
kt of sand reserves used for operational
needs were confirmed as C1 + C2 reserves.
Sand production was launched in 2022.
Since 1967, the Kayerkanskoye deposit
has been supplying the needs
of the Company’s Polar Division plants
in materials used to produce fluxes
for concentration and metallurgical
processes at the metallurgical plants,
as well as to manufacture building
materials.
In 2022, exploration within
the Kayerkanskoye multi-mineral deposit
confirmed C1 overburden (basalt) reserves
at 7.87 Mcm.
Zabaykalsky Territory,
Location:
Gazimuro-Zavodsky Municipal District.
In 2022, a feasibility study of permanent
exploratory standards and the reserve
statement were completed for the
deposit, with the results submitted in
December 2022 for a state expert review.
Deposit:
BUGDAINSKOYE
molybdenum and associated
Minerals:
elements.
Zabaykalsky Territory,
Location:
Alexandrovo-Zavodsky Municipal District.
The deposit’s mineral reserves
were included into the State Register
of Mineral Reserves in 2007. In 2014,
Nornickel halted the development
of the Bugdainskoye deposit for three
years amid a low-price environment
across the global molybdenum market
and in 2017 extended the suspension
of operations for another five years, until
31 December 2022.
B + C1 + C2 mineral reserves
Reserves
813 mln t
600 kt
360 koz
6,221 koz
41 kt
Total ore
Mo
Au
Ag
Pb
flanks have a potential for reserve
additions of 368 kt in copper and 32
tonnes in gold.
Deposit: MASLOVSKOYE
Minerals:
copper-nickel sulphide ores.
Krasnoyarsk Territory,
Location:
Norilsk. Geologically, the deposit is part
of the Norilsk Ore Cluster.
The Company obtained the licence
to explore and mine the Maslovskoye
deposit upon its discovery in 2015.
A feasibility study of permanent
exploratory standards and a reserve
statement for the Maslovskoye deposit
were approved by the State Commission
for Mineral Reserves, and its copper-nickel
ore reserves were included into the State
Register of Mineral Reserves.
B + C1 + C2 mineral reserves
Reserves
Metal grade
Total ore
Pd
Pt
Au
Ni
Cu
Co
206.8 mln t
33,087 koz
13,040 koz
1,268 koz
711 kt
1,098 kt
26 kt
5.0 g/t
2.0 g/t
0.2 g/t
0.3%
0.5%
0.01%
Deposit:
WESTERN FLANK
OF THE OKTYABRSKOYE
DEPOSIT
Minerals:
copper-nickel sulphide ores.
Krasnoyarsk Territory,
Location:
Norilsk. Geologically, the deposit is part
of the Talnakh Ore Cluster.
Licensed for prospecting in 2017, the area
shares a boundary with the earlier
licensed mining area at the Oktyabrskoye
deposit. In 2022, appraisal was started
at the Zapadny section, where
prospecting had earlier confirmed
the presence of copper-nickel ores,
suggesting potential for reserve
additions of 500 kt in high-grade ores,
2,140 kt in cuprous ores and 546 kt
in disseminated ores. Plans for 2023
include securing a state expert review
and a reserve statement approval.
Deposit:
FLANKS
OF THE BYSTRINSKOYE
DEPOSIT
Minerals:
lode gold, iron ore, copper ore.
Zabaykalsky Territory, Gazimuro-
Location:
Zavodsky Municipal District.
Licensed for prospecting in 2021, the area
shares a boundary with the earlier
licensed exploration and mining area
at the Bystrinskoye deposit. In 2022,
to grow the gold-iron-copper ore and gold
ore reserves in its the mineral resource
base, the Company launched exploration
phase activities and conducted surface
geophysical and geochemical prospecting
over the area. Further plans include
drilling the identified targets, followed
by a resource estimate against provisional
exploratory standards. According
to a preliminary estimate, the deposit
Annual reportNornickelBusiness overview3/72022 62
63
PROMISING AREAS AND PROSPECTS
Area: YUZHNO-NORILSKAYA
Minerals:
copper-nickel sulphide ores.
Krasnoyarsk Territory, Taimyrsky
Location:
Dolgano-Nenetsky Municipal District.
In 2019, the Company obtained
exploration licences for the Morongovsky
and Yuzhno-Yergalakhsky copper-
nickel sulphide ore prospects within
the Yuzhno-Norilskaya area. In 2021–2022,
prospecting of the areas was completed,
including prospecting drilling.
A preliminary estimate of the resource
potential is currently being prepared.
After laboratory tests are completed
in 2023, a report on the area’s potential
and an opinion on further prospecting will
be prepared.
Area: MIKCHANGDINSKAYA
Minerals:
copper-nickel sulphide ores.
Krasnoyarsk Territory, Taimyrsky
Location:
Dolgano-Nenetsky Municipal District.
In 2019–2020, the Company obtained
exploration licences for the Neralakhsky,
Yuzhno-Neralakhsky, Snezhny, Yuzhno-
lkensky, and Medvezhy prospects within
the Mikchangdinskaya area. Prospecting
drilling conducted in 2021 confirmed that
the area has a potential for containing
copper-nickel sulphide ores. In 2022,
the Company decided to continue
prospecting drilling, to be completed
in 2023–2024.
Area: ARYLAKHSKAYA
Minerals:
copper-nickel sulphide ores.
Krasnoyarsk Territory, Taimyrsky
Location:
Dolgano-Nenetsky Municipal District.
In 2020, the Company obtained
exploration licences for the Yttakhsky,
Samoyedsky and Mastakh-Salinsky
prospects within the Arylakhskaya
area. In 2021–2022, prospecting drilling
was completed at prospects identified
by geophysical and geochemical
prospecting across areal zones. In 2023,
after the ongoing laboratory tests
are completed, a report on the area’s
potential and an opinion on further
prospecting will be prepared.
Area: ALENUYSKAYA
Minerals:
gold-copper porphyry ores.
Zabaykalsky Territory,
Location:
Alexandrovo-Zavodsky District.
In 2020, the Company obtained
exploration licences for the Severo-
Alenuysky and Yuzhno-Alenuysky
prospects within the Alenuyskaya
area. In 2022, prospecting drilling
was completed at prospects identified
by geophysical and geochemical
prospecting across areal zones,
confirming signs of copper porphyry
mineralisation that extends beyond
the licence area. The Company applied
for a subsoil licence for the adjacent
Tsentralno-Alenuyskaya area, with plans
to continue prospecting in 2023.
Area: MOSTOVSKAYA
gold-silver ores, copper ore,
Minerals:
molybdenum ore.
Zabaykalsky Territory,
Location:
Mogochinsky District.
In 2020, the Company obtained
exploration licences for the Zapadno-
Mostovsky and Vostochno-Mostovsky
prospects within the Mostovskaya
area. In 2022, prospecting drilling
was completed at prospects identified
by geophysical and geochemical
prospecting across areal zones. In 2023,
after the ongoing laboratory tests
are completed, a report on the area’s
potential and an opinion on further
prospecting will be prepared.
AREA: DOGYINSKAYA
gold-copper and gold-silver
Minerals:
ores.
Zabaykalsky Territory,
Location:
Gazimuro-Zavodsky District.
In 2021, the Company obtained
exploration licences for the Severo-
Dogyinsky and Yuzhno-Dogyinsky
prospects within the Dogyinskaya
area. In 2022, the Company conducted
geophysical and geochemical prospecting
across areal zones and identified drilling
targets to confirm the geology. Started
in 2022, the drilling campaign will
continue in 2023. A report on the area’s
potential will be prepared based on drill
results from the drilling campaign.
Area: SHAMYANSKAYA
gold ore, copper-molybdenum
Minerals:
ore.
Zabaykalsky Territory,
Location:
Zabaykalsky District.
In 2021 and 2022, the Company obtained
exploration licences for the Zapadno-
Shamyansky, Tsentralno-Shamyansky
and Vostochno-Shamyansky prospects
within the Shamyanskaya area. In 2022,
the Company conducted geophysical
and geochemical prospecting across
areal zones and identified drilling targets
to confirm the geology in 2023.
OPERATIONAL
PERFORMANCE
The Company does not mine or manufacture its products
in areas of conflict and/or to finance conflicts. Nornickel’s
mining and production comply with human rights policies.
The Company owns three production assets: the Norilsk and Kola Divisions
mining copper-nickel sulphide ores and the Trans-Baikal Division producing
gold-iron-copper ores.
Kola
Division
Norilsk Division
Trans-Baikal
Division
e Nor
is the Group’s
ilsk Division
Th
flagship asset includes the Company’s
two major production assets – the Polar
Division and Medvezhy Ruchey (100%
stake), as well as a number of support
assets. The Norilsk Division’s assets
are located on the Russian Taimyr
Peninsula – in the Norilsk Industrial
District (northern part of the Krasnoyarsk
Region, within the Arctic Circle) –
and linked to other Russian regions
by the Yenisei River, the Northern Sea
Route and by air.
Located on the Kola Peninsula
in the Murmansk Region,
e K
th
ola
includes two Nornickel’s
Division
wholly owned subsidiaries: Kola MMC,
a production company; and Norilsk Nickel
Harjavalta. Norilsk Nickel Harjavalta
is located in Harjavalta, Finland. Founded
in 1959, Harjavalta is now the only nickel
refinery in Finland and one of the largest
in Europe with a total throughput
capacity of 65 ktpa of nickel products.
e T
rans-Baikal Division
is located
Th
in the Zabaykalsky Territory of Russia,
350 km away from Chita. The Division
includes Bystrinsky GOK (via 50.01% held
in GRK Bystrinskoye), the construction
of which was started by Nornickel in 2013
(put into commercial operation in 2019).
This asset includes open-pit ore mining
operations and a mining and processing
plant with full infrastructure, including
a power line, a 227 km Borzya–
Gazimursky Zavod railway line (25% held
by Nornickel and 75% by the government),
as well as a rotation camp.
e Nor
ilsk Division
Th
The Polar Division
Medvezhy Ruchey
the Russian Taimyr Peninsula
e K
ola Division
Th
Kola MMC
Kola Peninsula,
Murmansk Region
Norilsk Nickel Harjavalta
Finland, Harjavalta
e T
rans-Baikal Division
Th
Bystrinsky GOK
The Zabaykalsky Territory of Russia,
350 km away from Chita
Annual reportNornickelBusiness overview3/72022 64
65
PRODUCTION FLOW
Mining
Concentration
Smelting
Refining
PGM refining
Sales
Mines
(nickel sulphide ore)
Cuprous
and disseminated
ores
Norilsk
Concentrator
Copper
concentrates
Copper Plant
Copper cake from
NN Harjavalta
n
o
i
s
i
v
i
D
k
s
l
i
r
o
N
n
o
i
s
i
v
i
D
a
o
K
l
n
o
i
s
i
v
i
D
l
i
a
k
a
B
-
s
n
a
r
T
C
M
M
a
o
K
l
a
t
l
a
v
a
j
r
a
H
N
N
Taimyrsky
Oktyabrsky
Komsomolsky
Skalisty
Zapolyarny
Mayak
Rich, cuprous
and disseminated
ores
Talnakh
Concentrator
Disseminated
ore
Severny Mine
(nickel sulphide ore)
Zapolyarny
Concentrator
Nickel-polonium
concentrate
Metal-bearing
product
from Talnakh
Concentrator
Nickel concentrate
Sulphide
concentrate
Open pits
(copper-iron-gold ore)
Verkhne-Ildikansky
Bystrinsky-2
Copper-iron-gold
ore
Bystrinsky GOK
(gold)
gravity concentrates
Nadezhda
Metallurgical Plant
Converter matte
Copper Plant
Precious metal
concentrate
Copper
matte
Metal-bearing reverts
from the metallurgical shop
Chemical
and metallurgical
shop
Precious metal
concentrate
Chlorine leaching residuals,
nickel sludge
Nickel tankhouse
Krasnoyarsk
Non-Ferrous
Metals Plant,
Urals’ Innovative
Technologies,
Prioksky Plant
of Non-ferrous
Metals
Refining shop
Copper matte, nickel matte
Sulphide concentrate
Nickel refinery
in Finland
Copper cake
to the Norilsk Division
Crushed
converter
matte, nickel
concentrate
Third-party
feedstock
Own sales
network
Products
Nickel
Palladium
Copper
Platinum
Cobalt
Rhodium
Iridium
Ruthenium
Silver
Gold
Selenium
Tellurium
Sulphur
Sodium sulphate
Sodium chloride
Saleable
concentrates
Products
Iron and copper
concentrates
Annual reportNornickelBusiness overview3/72022
66
67
MINING
The Norilsk and Kola Divisions mine
copper-nickel sulphide ores of three
grades: high-grade ores with a higher
content of base and precious metals;
cuprous ores with a higher copper
content as compared to nickel;
and disseminated ores with a lower
content of all metals. The Trans-Baikal
Division mines gold-iron-copper ores
of the Bystrinskoye deposit.
Group ore output
(mln t)
2022
2021
2020
7
7.2
7.7
18.4
17.5
18.8
25.4
24.6
26.5
15
16.6
16
CONCENTRATION
CONCENTRATORS
• Talnakh Concentrator,
Norilsk Industrial District
• Norilsk Concentrator,
Norilsk Industrial District
• Concentrator, Zapolyarny
• Bystrinsky GOK, Zabaykalsky Territory
Concentrators’ throughput
(mln t)
2022
2021
2020
10.8
10.1
10.9
7.7
7
10.6
6.4
7.1
10.5
7.6
8
9.8
e Nor
develops
ilsk Division
Th
the Talnakhskoye and Oktyabrskoye
deposits through underground
mining at the Taimyrsky, Oktyabrsky,
Komsomolsky, Skalisty, and Mayak Mines.
The mines deploy slicing and room-
and-pillar methods with the cut-and-fill
system, with stopes refilled with backfill
mixtures.
The Norilsk-1 deposit is developed
by the Zapolyarny Mine of the Norilsk
Division through open-pit
and underground mining. Underground
mining is carried out through sublevel
caving using front ore passes and self-
propelled vehicles.
In 2022, total ore production by the Norilsk
Division was 18.4 mln t, up 1.0 mln t
y-o-y (+6%). High-grade ore production
increased by 22% (+1.3 mln t), while
production of cuprous ores decreased
by 4% (–0.2 mln t). Changes in ore
production were planed in the mining
option for 2022. Disseminated ore
production decreased by 1.8% (–0.1%
mln t). The year-on-year decrease
in the production of disseminated ores
was due to the repair of the backfilling
facility at the Mayak Mine
and the rescheduling of ore mining
at the Zapolyarny Mine (with mining
operations suspended) to process higher-
grade feedstock from the Talnakhskoye
and Oktyabrskoye deposits.
Kola Division
(copper-nickel sulphide ores)
Norilsk Division
(copper-nickel sulphide ores)
Trans-Baikal Division
(gold-iron-copper ores)
Talnakh
Concentrator
Norilsk
Concentrator
Concentrator
in Zapolyarny
Bystrinsky GOK
e K
mines disseminated
ola Division
Th
ores at four deposits: Zhdanovskoye,
Zapolyarnoye, Kotselvaara,
and Semiletka. Kola MMC uses various
ore mining methods. The Zhdanovskoye
and Zapolyarnoye deposits use three
mining methods: gravity caving with front
ore passes, sublevel caving with room-
and-pillar ore removal and room-
and-pillar mining. The Kotselvaara
and Semiletka deposits primarily use
stoping from sublevel drifts and sublevel
caving. Room-and-pillar short-hole
and long-hole stoping is also used
on a limited scale.
In 2022, Kola MMC produced 7.0 mln t
of ore (down 2% y-o-y). The decline in ore
production was caused by the decrease
in the regulatory requirements
for reserves prepared for development
and ready for extraction at the Severny
Mine (shortage of self-propelled-
diesel machinery, lack of spare parts
and termination of aftersale support
for mining equipment in Russia
by Western companies due to sanctions).
Average metal content
in min
ed ore
Nickel (%)
2022
2021
2020
1.27
0.49
1.2
1.3
0,57
0.53
Norilsk Division
Copper (%)
Kola Division
2022
2021
2020
2.18
0,21
0,57
2.09
0.25
0.5
2.27
0.24
0.6
Norilsk Division
PGMs1 (g/t)
Kola Division
e T
mines gold-
rans-Baikal Division
Th
iron-copper ores of the Bystrinskoye
deposit through open-pit mining
at the Verkhne-Ildikansky and Bystrinsky-2
mines.
2022
2021
2020
Trans-Baikal Division
6.64
0.1
0,29
0.1
6.69
6.89
processes high-
Talnakh Concentrator
grade, cuprous and disseminated ores
from the Oktyabrskoye and Talnakhskoye
deposits to produce nickel-pyrrhotite
and copper concentrates, as well as metal-
bearing products. Its key processing
stages include crushing, milling,
flotation, and thickening. In 2022, Talnakh
Concentrator increased its ore processing
by 7% to 10.8 mln t.
processes all
Norilsk Concentrator
disseminated ores from the Norilsk-1
deposit, cuprous and disseminated ores
from the Oktyabrskoye and Talnakhskoye
deposits, and some metal-bearing
products from Talnakh Concentrator
to produce nickel and copper
concentrates. Its key processing stages
include crushing, milling, flotation,
gravity concentration, and thickening.
In 2022, Norilsk Concentrator increased
its ore processing to 7.7 mln t, up 1.3 mln
t year-on-year. The resulting thickened
concentrates from Talnakh Concentrator
and Norilsk Concentrator are transported
via slurry pipelines to the metals
operations of the Norilsk Division
for further processing.
or in Z
apolyarny
Concentrat
processes disseminated ores from
Kola MMC deposits. The concentrator
produces nickel sulphide concentrate,
which is then sold via third parties
or partially shipped to the Norilsk
Division for further processing. In 2022,
the concentrator processed 7.0 mln t
of ore, down 0.1 mln t year-on-year due
to a decrease in ore production.
processes ores
Bystrinsky GOK
of the Bystrinskoye deposit into copper,
iron ore and gold concentrates.
Its key processing stages include
crushing, milling, flotation, thickening,
filtration, and end product packaging.
The concentrator has two processing
lines. Copper and iron ore concentrates
are sold via third parties, while gold
concentrates are further processed
at the Norilsk Division. In 2022,
Bystrinsky GOK processed 10.6 mln
t of ore, up 0.13 mln t year-on-year.
Metallurgy and refining.
Metals recover
across th
e Gr
oup
y in c
oncentration
Nickel (%)
2022
2021
2020
85.3
67.4
84.3
67.7
84.8
62.9
Norilsk Division
Copper (%)
Kola Division
2022
2021
2020
96.3
73.7
88.1
95.5
76.8
86.9
95.1
71.8
87.4
Norilsk Division1
PGMs (g/t)
Kola Division (Кольская ГМК)
Trans-Baikal Division
85.8
2022
2021
2020
85.6
86.4
In 2022, total ore production by the Trans-
Baikal Division was 15.0 mln t, down
1.6 mln t y-o-y. The decline in ore
production was scheduled in the mining
option for 2022.
Norilsk Division
Kola Division
Norilsk Division
Kola Division
Trans-Baikal Division
Kola Division1
Norilsk Division1
Kola Division
Trans-Baikal Division
1 The PGMs include palladium, platinum, rhodium, ruthenium, and iridium.
1 Metals recovery into bulk concentrate.
Annual reportNornickelBusiness overview3/72022
68
69
SMELTING AND REFINING
DOWNSTREAM FACILITIES
• Nadezhda Metallurgical Plant, Norilsk
Industrial District
• Copper Plant, Norilsk Industrial District
• Metallurgical shop of Copper Plant,
Norilsk Industrial District
• Chemical and metallurgical shop,
Monchegorsk
• Refining shop, Monchegorsk
• Nickel tankhouse, Monchegorsk
• Nickel refinery, Harjavalta
PRODUCTION CHAIN
Norilsk Division
The produced nickel concentrates, including
steam-cured sulphide concentrate1,
secondary materials and metal-bearing feed
from Kola MMC, are fed into flash smelting
furnaces at Nadezhda Metallurgical Plant.
The matte produced in flash smelting
furnaces is then converted into high-grade
converter matte.
Copper Plant processes all of the copper
concentrate from the Company’s
concentrators, metal-bearing products
from Kola MMC and copper cake from
Norilsk Nickel Harjavalta to obtain copper
cathodes, elemental sulphur and sulphuric
acid for the operational needs of the Norilsk
Division. Copper Plant’s metallurgical shop
recycles sludge from the copper tankhouses
of Copper Plant to produce precious
metal concentrates, commercial selenium
and tellurium.
Kola Division (Kola MMC)
Kola MMC’s refining facilities
in Monchegorsk refine converter matte
from the Norilsk Division2. Converter matte
is crushed, milled and separated into copper
and nickel concentrates by flotation, while
part of the converter matte after crushing
is immediately sent for processing to Norilsk
Nickel Harjavalta. The resulting copper
concentrate is sent to the Norilsk Division’s
Copper Plant. The nickel concentrate
flow is then separated, with some of it
after magnetic separation and recovery
of precious metals sent to Norilsk
Nickel Harjavalta for further processing.
The remaining nickel concentrate
is processed at the roasting and electric
furnace sections to produce tube furnace
nickel powder, anodes and granulated
nickel alloy. Anodes are processed using
the conventional electrorefining technology
at Tankhouse 1 to produce cathodes.
Tube furnace nickel powder is processed
at Tankhouse 2 using a new technology
involving leaching plus electrowinning
to produce cathodes. The granulated nickel
alloy is processed at the nickel carbonyl
section to produce pellets and powder.
The production of nickel cathodes
at Tankhouse 1 and Tankhouse 2 results
in semi-finished products with a high
content of precious metals. These semi-
products are processed at the chemical
and metallurgical shop to produce precious
metal concentrates. The production
of nickel cathodes at Tankhouse 1
and Tankhouse 2 also generates primary
cobalt cake, which is used by the cobalt
section to produce saleable cobalt
concentrate and cobalt cathodes.
Norilsk Nickel Harjavalta
Norilsk Nickel Harjavalta uses sulphuric acid
leaching with high metal recovery rates –
above 98%. The refinery processes nickel
feedstock (matte and crushed converter
matte) supplied by Kola MMC and small
amounts of feedstocks purchased from
third parties (nickel salts). Once leached,
copper cake is sent to the Norilsk Division
or sold to third parties, while purified nickel
1 Hydrometallurgical product.
2 The production and processing of own converter matte has been discontinued following
the shutdown of the smelting shop in December 2020.
3 Feedstock to finished products.
4 In refining, converter matte to finished products.
solutions are sent for further processing
to produce nickel cathodes, nickel briquettes,
powder, salts, as well as salts and solutions
of cobalt.
Precious metals produced by Nornickel
are refined under tolling agreements
at Krastsvetmet, Urals’ Innovative
Technologies and Prioksky Plant of Non-
ferrous Metals.
Metals recover
y in sm
elting
(%)
Nickel
2022
2021
2020
95.1
98.4
97.8
94.4
98.3
98.1
94.1
96.3
98.2
Norilsk Division1
Kola Division (Кольская ГМК)2
Copper
Kola Division (НН Harjavalta)132
2022
2021
2020
95.4
99.6
99.8
95.1
99.5
99.8
94.6
95.4
99.8
Norilsk Division1
Kola Division (Kola MMC)2
PGMs
Kola Division (NN Harjavalta)132
2022
2021
2020
96.6
97.8
99.9
96.5
92.9
99.9
96.4
92.9
99.9
Norilsk Division1
Kola Division (Kola MMC)2
Kola Division (NN Harjavalta)2
Norilsk Division3
Kola Division (Kola MMC)4
Kola Division (NN Harjavalta)4
PRODUCTS
Finished products manufactur
22
(percentage of the Group’s total output, %)
ed in 20
Ni
Cu
25
16
1
3
75
82
PGMs
1
61
38
Trans-Baikal Division
Harjavalta
Kola MMC
Norilsk Division
Production volumes
b
strinsky GOK
y By
Finished product output
b
y the Gr
oup
22.97
22.87
64.68
63.72
10.6
67,240
2,545
10.47
67,798
2,582
9.76
62,663
24.65
2,047
64.22
.
433.0
.
433.0
406.8
406.8
235.7
487.2
232.5
486.8
Ore processing (mln t)
Copper
(in copper concentrate) (t)
Сopper content
in the concentrate (%)
Iron ore concentrate (kt)
Iron content in the concentrate (%)
Nickel (kt)
Copper (kt)
Palladium (koz)
Platinum (koz)
from own feed
from own feed
from own feed
from own feed
The Group’s saleable products
Norilsk Division:
• Copper cathodes
• Commercial sulphur
• Selenium
• Tellurium ingots
• Precious metals
Kola Division:
• Nickel cathodes and carbonyl
• Nickel sulphide concentrate
• Nickel matte
• Copper matte
• Cobalt cathodes, cobalt concentrate
• Precious metals
• Sulphuric acid
Harjavalta:
• Nickel salts, briquettes, cathodes,
powders, and solutions
• Copper cake
• Cobalt sulphate, cobalt solutions
Trans-Baikal Division:
Iron ore concentrate
•
• Copper concentrate
Annual reportNornickelBusiness overview3/72022 70
71
LOGISTICS OPERATIONS
AND PRODUCT SALES
NORNICKEL’S LOGISTICS
MAP
Murmansk
Transport Division
Murmansk
Arctic fleet
Kola MMC
HARJAVALTA
(NN Harjavalta)
Arkhangelsk
Arkhangelsk
Transport Division
Asset summary:
Sea fleet
six heavy ice-class vessels
a sea-class diesel port icebreaker
River fleet
633 vessels (200 self-propelled and 433 towed vessels),
including the active core fleet of 415 vessels (131 self-propelled
and 284 towed vessels), and a river-class diesel port icebreaker
Rail car and locomotive fleet
117 container flatcars
two shunting vehicles
one shunting tractor
Aircraft fleet
23 helicopters
one plane
Norilsk Airport
Production flows (internal)
Finished products for export
and domestic market
Flows from suppliers
Dudinka
Polar Transport Division
Norilsk Airport
Norilsk Avia
Norilsk
Lesosibirsk
Krasnoyarsk
Transportation Hub
Lesosibirsk Port
Krasnoyarsk
Nornickel-YRSC
Krasnoyarsk River Port
Bystrinsky
Transport Division
Annual reportNornickelBusiness overview3/72022 Dry cargo transportation
b
y fleet (mln t)1
2022
2021
2020
1.9
1.6
1.2
Liquid cargo shipments
(kt)1
2022
57
129
2021
2020
101
99
165
90
186
266
189
Gas condensate
Other liquid cargo
Cargo tr
(mln t)
affic at Dudink
a port
2022
2021
2020
2.0
2.5
1.6
1.4
1.6
2.2
4.5
3.2
3.6
Via the Northern
Sea Route
Via the Yenisei River
Cargo tr
terminal
affic at the Mur
(mln t)
mansk
2022
2021
2020
1.7
1.4
1.4
reasonable alternative. In addition,
Dudinka is the world’s only port that gets
flooded every year during the spring
thaw. From November to May, its water
area and the Yenisei River freeze over.
At this period, Dudinka port handles only
sea vessels using icebreakers to de-ice
the berths and provide support during
manoeuvring and mooring operations.
In May and June, during the flooding,
the service is suspended to be resumed
for sea and river vessels when ice flows
pass and the water level goes down.
The port transships cargoes for the Norilsk
Division and for residents of the Taimyr
Peninsula. In summer, river vessels
deliver equipment and materials (sand,
round timber, clinker, process materials,
etc.) for process needs from Krasnoyarsk
and Lesosibirsk. Sulphur is shipped from
Dudinka partly by river and partly by sea.
Converter matte and metal products
are shipped by sea from Dudinka
throughout the year.
To support major investment projects,
the port’s cargo traffic is projected
to increase up to 1.5 times compared
to the current average of 3.5 million
tonnes, which will require expanding
the port facilities. In 2022, we increased
the volumes of cargo handled by the port
by up to 30% versus the average rate,
having invested more than RUB 6 billion
over the past four years in upgrading
and expanding the port facilities.
mansk
minal in Mur
Nornickel’s own
ter
ensures year-round transshipment
of the Company’s finished metal products
(primarily those produced by the Norilsk
Division) for export, acceptance
of converter matte from Dudinka and its
shipment by rail to the Kola Division,
shipment of semi-products to Dudinka
for further processing at the Norilsk
Division facilities as well as of procured
equipment, materials and cargoes
to meet the needs of the Norilsk Region.
72
73
TRANSPORT
AND LOGISTICS
ASSETS
Nornickel has a unique Arctic fleet
capable of breaking through Arctic ice up
to 1.5 m thick without icebreaker support,
which enables the Company to provide
year-round dry and liquid cargo shipping
services between Dudinka, Murmansk
and Arkhangelsk sea ports while also
serving other destinations.
In addition to sea transportation with its
own fleet of Arc7 heavy ice-class vessels,
the Company engages a fleet of lower
ice-class Arc4/Arc5 vessels to transport
additional cargo for major investment
projects in Taimyr. These sea vessels
require icebreaker escort in the Yenisei
River, the Yenisei Bay and the Kara Sea
between November and May, with three
icebreakers providing this support.
Arc7 ice class vessels require just one
icebreaker to make and maintain
ice channels in the Yenisei River
and the Yenisei Bay on a regular basis
to ensure commercial speed of piloting.
In 2022, Nornickel signed a long-term
contract with ROSATOM (valid until 2041
and renewable until 2051) to engage
a nuclear-powered Project 22,220
icebreaker with a shaft power of about 60
MW to make sure the Company’s strategic
needs for icebreaker support are fully
covered. After these two icebreakers
are retired upon reaching the end of their
service life (in 2027 and 2029), the Project
22220 vessel chartered by Nornickel
will ensure stable icebreaker support
for the Company’s vessels and cargo
transportation services.
e C
ompany owns Dudinka port
Th
on the Taimyr Peninsula, which
is Taimyr’s main cargo gateway with no
1 Includes a third-party fleet.
The Company also own aviation assets,
including Norilsk Avia and Norilsk Airport,
offering air transportation services to local
communities across the Taimyr Peninsula.
The air carrier has its own fleet of 23
helicopters and one plane and provides
air services related to the operations
of the Norilsk Nickel Group, emergency
medical flights, search and rescue
operations, and local passenger services.
Norilsk Airport is the only transport
infrastructure facility that provides year-
round connections between the Norilsk
Industrial District and other Russian
regions.
In March 2022, as part of its response
to the current situation, Nornickel
sold 100% of NordStar Airlines shares
to the airline’s managers to focus on its
core business, the production and sale
of non-ferrous and precious metals. That
said, NordStar Airlines remains the main
air carrier based in Norilsk Airport,
providing uninterrupted air services
between Norilsk and major Russian cities.
PRODUCT SALES
Nornickel’s products are listed
on the London Metal Exchange
and the Shanghai Futures Exchange
In 2022, the Company supplied its
products to 34 countries around
the world, with Europe remaining
the major consumer. The Company
operates its own global network
of representative and sales offices
in Russia, China, USA and Switzerland,
prioritising direct sales to consumers. .
SALES STRATEGY
Sales, along with production, have
traditionally been a key focus
area of Nornickel’s business. One
of the Company’s key sales objectives
is to promote and ensure a favourable
environment for sustainable demand
for its products now and in the future.
Sales b
egion
y r
(%)
2022
7
15
2021
5
15
27
2020
4
16
31
35
53
47
45
Russia and the CIS
North and South America
Asia
Europe
Hundreds of companies (more than 95%
of them – industrial consumers) purchase
Nornickel’s nickel products.
When it comes to
nickel products,
focuses on achieving
e sales str
ategy
th
a healthy balance between supplies
to stainless steel producers and shipments
to other industries to secure a stable
position in the market.
e C
ompany’s nickel product
matches the global nickel
Th
sales mix
consumption mix, with stainless steel,
plating and alloying as its main segments.
At the same time, the battery sector
is increasingly gaining importance.
To capture the expected mid- and long-
term growth in nickel demand from
the battery sector, Nornickel continues
implementing a number of initiatives
to enhance and expand its existing
product range supporting the battery
supply chain to secure nickel for its future
investments.
Electric vehicles and batteries
are a priority segment in the nickel
consumption mix, as its growth
rates suggest that in the long
term, it can become the key source
of demand for high-grade nickel. Given
the Company’s wide range of low-
carbon nickel products, high reliability
of supply, own global sales platform,
and long-term experience of partnering
with automakers and chemical
companies, Nornickel sees its role
as a key element in the development
of the electric vehicle market
and related value chains. The Company
is strongly focused on building long-
term relationships with key market
participants and considers various
forms of cooperation with the battery
sector players. Nornickel also conducts
research in battery recycling and works
on developing integrated solutions
for the future battery supply chain.
In the alloys, special steels
and electroplating sectors, the Company
seeks to maximise the use of its product
portfolio advantages and improve product
quality to boost its share in high-quality,
premium segments.
The automotive industry
and the production of other process
catalysts, as well as the jewellery
and medical products industries remain
the key market segments for
PGM
products.
Annual reportNornickelBusiness overview3/72022
74
75
At the same time, Nornickel engages
in various initiatives to further promote
the use of palladium in future industrial
applications.
Nornickel’s PGM products are purchased
by dozens of companies, 80% of them
being industrial consumers.
As the world’s largest producer
of palladium, the Company continues
to follow its strategy of entering into direct
contracts with end consumers in the
PGM
to sustain strong demand.
market
Speaking about the future PGM uses,
we should name several of those related
to the hydrogen economy. Palladium can
find important application in hydrogen
storage. Moreover, palladium may
be a good component in the systems
of hydrogen transportation based
on liquefied organic hydrogen carriers
(LOHC). In the longer run, palladium may
find new applications in electrolysers
and fuel cells.
Moreover, palladium may play
an important role in hydrogen safety.
Among other promising areas where
palladium can find its future use, we can
name water treatment systems, electronic
sensors (including those for autonomous
vehicles), palladium coatings and alloys
in aerospace and electronic applications,
energy density enhancing dopings
for Li-ion batteries as well as biofuel
catalysis, carbon dioxide capturing
devices, cancer drugs and pharmaceutical
catalysts, and others.
Nornickel together with its partners
is working on accelerated adoption
of hydrogen technologies and other
applications mentioned above to bring
closer a cleaner and more sustainable
future and ensure the effective energy
transition essential to achieve net-
zero goals set by the Paris agreement
on climate change.
PRODUCT SALES
In 2022, Nornickel once again confirmed
its reputation as a reliable supplier
of high-quality products. Every year,
the Company conducts customer
satisfaction analysis in line with ISO 9001
to get feedback from its customers.
Customer feedback is reviewed
and incorporated into initiatives
to improve product and service quality.
Nornickel is committed to continuous
improvement. The integrated
index of customer satisfaction
with the Company’s products and services
was fully in line with our target for 2022.
Despite the geopolitical challenges
and related logistical issues, the Company
successfully met all its obligations
to customers in 2022, having never failed
to deliver on its commitments. In 2022,
we developed and set up backup routes
to ensure uninterrupted product supplies
to consumers.
Nornickel has successfully retained all
of its major customers in 2022, none
of whom defaulted on contractual
obligations, enabling the Company
to meet its sales targets. This solid
performance was to a large extent driven
by the Company’s longstanding policy
of independent positioning in the market
and building direct relationships
with consumers.
ENERGY ASSETS
Natural gas production
2,816 Mcm
Gas condensate
production
91 kt
Share of renewables across
the Group
51%
Production volume1
Natural gas (Mcm3)
2022
2021
2020
,
,
,
Nornickel operates its own energy assets,
which are managed by the Energy
Division and comprise four natural gas
fields, three combined heat and power
(CHP) plants, two hydropower plants (Ust-
Khantayskaya HPP and Kureyskaya HPP),
as well as gas pipelines and power lines.
Electricity is generated from renewable
(hydropower) and non-renewable (natural
gas) sources.
produces gas and gas
Norilskgazprom
condensate from the Pelyatkinskoye,
Yuzhno-Soleninskoye and Severo-
Soleninskoye gas condensate fields,
as well as the Messoyakhskoye gas field.
Start of production
1969
Gas reserves
250.4 bcm
Gas condensate reserves
4,606 kt
Gas condensate (kt)
2022
2021
2020
91
102
98
transports natural
Norilsktransgaz
gas and gas condensate from fields
to consumers. The string length of its gas
and condensate pipelines totals 1,639 km.
The pipelines were commissioned in 1969.
is a strategic
Taimyr Fuel Company
supplier of light and heavy oil products
to the Far North, performing important
commercial and social functions,
as well as exporting gas condensate
to consumers. The company’s operations
span vast areas of Russia, including
the Norilsk Industrial District, the cities
of Krasnoyarsk and Dudinka, Murmansk
Region, and Zabaykalsky Territory. Taimyr
Fuel Company supplies petroleum
products to mining, exploration
and transport companies and municipal
enterprises. Its key consumers
are the Norilsk Nickel Group enterprises.
is an electricity and heat generation,
NTEC
transmission and distribution company.
Energy is generated from both renewable
(hydropower) and non-renewable
(natural gas) sources. NTEC supplies
electricity, heat and water to Norilsk
households, as well as to all industrial
and commercial consumers in the Norilsk
Industrial District. The local electricity
grid is operationally and geographically
isolated from the national grid
(the Unified Energy System of Russia),
which means stricter reliability
requirements. NTEC operates five
generating facilities: three thermal power
plants with a total installed capacity
of 1,115 MW and two hydropower plants
with a total installed capacity of 1,111 MW.
The total installed capacity of all plants
is 2,226 MW.
1 Gas condensate production figures include production losses (carryover with separation gas).
Annual reportNornickelBusiness overview3/72022 76
77
Power generation mix
in the Nor
(%)
in 20
ilsk Industrial District
22
Ust-Khantayskaya and Kureyskaya HPPs
are NTEC’s two renewable electricity
generation facilities. In 2022, the share
of renewables in total electricity
generation stood at 51% for the Group
and 56% for the Norilsk Industrial District.
The Company’s investment programme
includes a number of projects
to boost the share of renewables such
as hydropower, capture fuel and energy
savings and improve the reliability
of energy and gas supplies.
INNOVATION AND DIGITAL
TECHNOLOGY
44
The Kola and Trans-Baikal Divisions
purchase electricity on the wholesale
electricity and capacity market (WECM).
Harjavalta sources electricity from
the Finnish electricity market.
CONTRIBUTION
TO THE UN SDGs
platform and research centres, shaping
internal policies and fostering a culture
of high-tech developments.
The Company’s coordination centre
responsible for managing its intellectual
property registers exclusive patent rights
and copyrights both in Russia and abroad.
56
Renewables (hydropower)
Natural gas
The Company’s key projects to improve equipment reliability and energy efficiency
and to boost output include:
• construction of a new water
intake on the Norilskaya River
• construction of stormwater
and industrial wastewater
treatment facilities
• upgrade of emergency diesel
fuel tanks at Norilsk CHPP-1,
CHPP-2, CHPP-3, Dudinka boiler
house, Ust-Khantayskaya HPP,
and Kureyskaya HPP
• upgrade of electric power
networks
• upgrade of heat and water
pipelines
• upgrade of the Norilsk utility
tunnels
• upgrade of trunk
and distribution gas pipeline
systems
• construction of five new gas
wells at the Pelyatkinskoye
gas condensate field
• upgrade and development
of utility infrastructure in Tukhard
• comprehensive upgrade
of the Norilsk, Dudinka
and Kayerkan tank farms
•
replacement of generating units
at CHPP-2 and CHPP-3 in Norilsk
Nornickel is also progressing initiatives
to manufacture production-critical
components for its core operations as part
of embedding computer modelling
and 3D printing into its processes.
For this purpose, the Company has set up
a platform featuring available scanning,
design, modelling, and prototyping
technologies which already enable
Nornickel to efficiently jump-start
component manufacturing. The Company
has used 3D printing to reproduce the full
cycle of manufacturing pilot components.
These solutions enable the Company
to significantly expand its capacity
to manufacture in-house more items
required by its enterprises.
Nornickel extensively relies on innovative
solutions such as artificial intelligence
and machine learning at all stages of its
production process, from exploration
to smelting, while fostering an overall
culture of innovative transformation
and digital literacy among its employees.
The use of technology streamlines
operating processes while also making
production safer both for employees
and the environment.
However, technological innovation
at Nornickel is not only about research,
development and rollout of promising
technologies and solutions but also about
building the Company’s proprietary R&D
Nornickel’s uniform approach
to managing its intellectual property
greatly contributes to driving its
innovative growth and building
a competitive portfolio of R&D assets.
TECHNOLOGY BREAKTHROUGH 2.0
As at 1 January 2023, the Company
owned the intellectual property rights
in the following items registered in Russia:
•
• Four utility models
• Four software applications
•
18 trademarks
18 inventions
Moreover, the invention patent
for the method for continuously
converting nickel-containing copper
sulphide materials, which underlay
the continuous conversion project
at Copper Plant, has been registered
in the USA, Kazakhstan, China, Canada,
Finland, Sweden, and Chile.
Since 2015, Nornickel has been running its
Technology Breakthrough programme,
focused on building an automated
operational control system and improving
labour productivity and safety, including
by integrating advanced information
support and automation tools into its
production processes.
In 2019, all previous results from
the Technology Breakthrough
programme were analysed to transform
it into the Technology Breakthrough
2.0 project portfolio, with its initiatives
more focused on ensuring operational
continuity, securing technological
independence and achieving operational
safety and environmental goals.
By December 2022,
9 IT projects
had been successfully delivered as part
of the Technology Breakthrough 2.0
project portfolio.
Annual reportNornickelBusiness overview3/72022 78
79
AUTOMATION OF THE GLUBOKAYA MINE
(SKALISTY MINE)
INDUSTRIAL SAFETY
TECHNOLOGY
Human presence in the mine needs to be minimised given its challeng-
ing mining conditions (mining depth over 2 km, temperature of +46 °C,
high pressure).
Offsetting the projected decline
in the automation level, which
was maintained
of a drop from 80% to 20%
expected by now.
instead
at 50%
Confirmed
automation
of five core processes:
Crushing
Skip hoisting
Rock conveyor delivery
Drainage
Ventilation
Further development of a domestic
geological and mining information system
is ongoing. Once adopted by the Company,
the product has proved highly effective,
enabling Nornickel to update its mineral
resource base and streamline its mining
plans.
Further improvements are continuously
made to simulation modelling,
dispatch and mining management
systems, with an emphasis on verifying
and tracking production targets, boosting
the equipment utilisation rate, and so on.
The Company has made further progress
on its ambitious project to minimise
human presence in deep mines. Currently,
Nornickel is exploring the concept
of autonomous and automated mining
processes at the Glubokaya mine (part
of the Skalisty Mine) leveraging forward-
looking technical solutions that can
minimise human presence in underground
workings.
During 2022, the Company improved
the quality of its finished products by:
• changing the topology of the circuit
for zinc recovery from leaching
solutions
VIDEO ANALYTICS
To improve safety culture at its operations,
Nornickel is actively adopting solutions
that use AI-enabled video analytics.
The Company’s proprietary solution
to monitor the use of personal
protective equipment by operational
staff was further improved in 2022. New
safety incident detection models were,
detecting open fire, etc.). The solution
was integrated with personnel tracking
and face recognition modules to monitor
compliance with safety rules.
In particular, the Company is planning
to leverage video analytics to detect
four out of the six safety violations
with the highest risk of injury listed
in Nornickel’s golden rules:
• Working at height without a safety
harness
• Moving loads with people under
a suspended load or dangerously close
to the load
• Employees staying near unfenced
rotating (moving) machinery or
equipment components
• Transferring people in vehicles not
designed for these purposes
In 2022, the Norilsk Division launched
pilot tests of a video analytics system at its
industrial facilities. As part of this project,
server infrastructure was deployed
and mock violations of industrial safety
rules were staged for a quality test
of machine learning algorithms.
Plans for 2023 include looking
into the potential use of computer
vision at construction sites to monitor
compliance with industrial safety
rules by contractors. Nornickel
also plans to continue pilot testing
and implementation of other solutions
based on video analytics (assessment
of discharge turbidity, identification
of cathode grades on the cutting line,
monitoring for oversized ore pieces, etc.)
at the production facilities of the Norilsk
Division, following which the accuracy
of the algorithms and their impacts will
be assessed.
In 2022, Nornickel teamed up
with the Federal Environmental,
Industrial and Nuclear Supervision
Service of Russia (Rostechnadzor) to set
up an experiment to deploy a remote
industrial safety compliance monitoring
system. The system was piloted
at Kola MMC and provided continuous
risk-based supervision, monitored
compliance with the requirements
for operating conditions and the actual
status of industrial safety at hazardous
production facilities, analysed the current
situation at hazardous production
facilities predicted potential adverse
events, and transmitted information
to automated information system
of Rostechnadzor.
EMERGENCY
MONITORING
The Company has stood up
an information and diagnostic
system in its Norilsk Division
to detect and prevent negative
trends and emergencies. A large-
scale building and structure
monitoring system has been created
to consolidate data on the condition
of soil, bearing elements of buildings,
satellite monitoring data, and data
from predictive models. The resulting
insights inform the Company’s proactive
initiatives to prevent climate change
impact. In 2022, the project won gold
at the ComNews Awards and silver
at the MineDigital competition held
as part of the 18th MINEX Russia Mining &
Exploration Forum.
Backfilling can be automated
this requires manual
by 70%:
installation of backfill bulkheads
and adjustments to shutoff gates
and switches at branched workings.
Five areas do not currently lend
themselves to autonomous
or remote control and require
human presence:
Drilling and blasting
Supporting
Rock haul by self-propelled
diesel equipment
Rock pressure control
Mine surveying
• changing the topology of cobalt
and lead recovery circuits
• adopting abrasive material
•
•
•
with a reduced content of impurities
improving the performance
of the extraction cascade within
the zinc recovery process (from 43 m³/h
to 53–55 m³/h)
improving raffinate precipitation after
zinc recovery
improving the performance
of the circuit for raffinate neutralisation
after zinc recovery.
These improvements have reduced
the content of copper, iron and lead
impurities in Nornikel’s nickel cathodes
by 9% year-on-year for copper, 12% year-on-
year for iron and by over 30% year-on-year
for lead.
Annual reportNornickelBusiness overview3/72022 80
81
GREEN TECHNOLOGY AND ESG
ENVIRONMENTAL MONITORING
Environmental monitoring of water bodies is part of StikhiyaEco, the
corporate environmental protection and monitoring system.
Tools for environmental monitoring of water bodies enable online
tracking of changes in metrics over time to prepare mitigation
measures
Environmental monitoring
Data records
• Monitor the environment by aspect:
air, climate, water, soils, tailings
• and waste, biodiversity, emergency
preparedness
Related projects:
• Project to install an automated
control system covering emission
sources at Nadezhda Metallurgical
Plant
• Digital Plant (Nadezhda
Metallurgical Plant): digital mock up.
Environmental monitoring. Prototype
• Development of a predictive
•
emission monitoring system (PEMS)
Implementation of an environmental
tracking system (ETS)
• Smart City: piloting an air quality
monitoring system in Norilsk
• Air quality monitoring in
Monchegorsk, Nikel and Zapolyarny
• Registers and records of facilities with
negative environmental impacts
• Registers and archives of permits and
licences
• Registers of waste storage facilities
• Data sheets of metering and other
equipment
Environmental planning and
management
• Predict above limit levels of
environmental impacts
• Submit data to supervisory bodies
Report generation
• Operational and statistical reports on
environmental performance
• Paid use of natural resources (calculate
environmental fees, environmental tax,
water use fees)
Data visualisation panels (dashboards)
Tracking environmental indicators
• Operational data by aspect: air,
climate, water, soils, tailings and waste,
biodiversity, incidents
• Environmental performance by aspect
• Sulphur emissions
• Carbon footprint
• Oil spills
• Remediation of legacy pollution
• Clean-ups and other activities
The Company is implementing
automation projects in ecology /
environmental protection.
For example, an environmental water
drone has been successfully piloted
to speed up the tracking of performance
against targets over time.
Completed activities
• Tested an environmental water
drone
• Analysed the correctness of
collected data
• Exploring potential data
transmission to a digital plant to
build a prototype
Tools for environmental monitoring of
water bodies enable online tracking of
changes in metrics over time to prepare
mitigation measures
Environmental monitoring of water
bodies is part of StikhiyaEco, the
corporate environmental protection and
monitoring system.
Another tech-enabled initiative within
our ESG agenda was the development
of a prototype of an environmental
monitoring system at Nadezhda
Metallurgical Plant based on a digital
twin. The pilot will be the first step
towards creating an integrated
information and analytics platform
relying on a uniform methodology
for calculating environmental (air,
water and soil) impacts. The system will
be capable of interpreting and verifying
the data obtained, generating forecasts
and reports as well as performing
mathematical and simulation modelling
of environmental processes.
An automated pollutant emissions
monitoring system has been piloted
at Copper Plant. The pilot solution will
allow Nornickel to evaluate the potential
for using Russian equipment, taking
into account the Company’s process
and production profiles.
In 2023, Nornickel will also start developing
a mathematical model of industrial
emissions, with the relevant software
suite expected to become an alternative
to expensive and complicated
instrumentation to monitor emissions.
The development of this information
system has been supported
by an industrial competence centre. Going
forward, this product is also planned
to be offered to third-party industrial
enterprises. As part of the engagement
with industrial competence centres,
amendments are also being made
to the existing regulatory framework.
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MINE WATER
TREATMENT
A pilot test project was launched in 2022
to treat mine waters at the Komsomolsky
Mine. The pilot also included parallel
operation of several mine water
treatment plants using reverse osmosis
and electrodialysis to bring water quality
to the standards required by Russian laws.
Conducting tests in this format helps us
understand which technology performs
better given the biochemical profile
of mine waters at the Komsomolsky Mine.
A pilot test plan has been approved,
with the pilot slated for completion
in 2023. The pilot’s results will inform
the preparations for the Komsomolsky
Mine development project and help
make the optimal decision when
selecting the best mine water treatment
technology.
HIGH-TECH MATERIALS
Metals produced by Nornickel
are currently central to high-tech
manufacturing. In 2022, the Company
produced its first physical samples
of innovative high-tech materials
(powders, alloys, catalysts) which can
potentially boost its product margins
several times over. New palladium-
containing catalytic products (hydrogen
separation and purification membranes)
offers the potential to expand palladium
sales and build value chains from
palladium production to vehicle fuel
batteries. Pilot tests are ongoing as part
of an experimental battery unit.
have been produced to confirm that
the asphalt concrete mixtures meet
the requirements for operation in the Far
North, with the production of a pilot batch
of sulphur-extended asphalt and sulphur
concrete being set up at the asphalt
concrete plant in Norilsk. The project’s
potential throughput capacity is 30 ktpa
of sulphur. Up to 20 ktpa of modified
sulphur are planned to be additionally
used in the production of reinforced
concrete products to beautify the city.
The Kola Division continues exploring
technical and design solutions
for the manufacturing of new types
of saleable products: premium quality
nickel cathodes for electroplating
and superalloys, as well as rondelles.
MODIFIED SULPHUR
The Company has tested an innovative
technology for producing modified
sulphur, which could become a promising
feedstock for the construction industry.
Work is underway to produce pilot
samples of asphalt featuring modified
sulphur instead of BND 100/130 grade
bitumen. Asphalt pilot samples
GANGUE
MINERALISATION
The Company is exploring the ability
of waste from concentration
of polymetallic ores to absorb CO2 from
the atmosphere. Gangue mineralisation
is a natural process, but no prior research
has been conducted into using gangue
from ore concentration to reduce carbon
footprint. Solutions involving artificial
waste mineralisation are being developed
in parallel. Accelerated mineralisation
is being tested as part of the pilot project.
The new technology may also find
application at Nornickel’s assets.
TECH-ENABLED CONSTRUCTION
CONSTRUCTION
MANAGEMENT
PLATFORM
Nornickel is testing a platform that
provides a common data environment
based on a Building Information Model
(BIM) to connect all construction process
stakeholders and drive end-to-end
digitalisation of capital construction
projects throughout their life cycles.
The platform ensures comprehensive
monitoring of construction project
timelines and budgets. Competitive pilot
tests were conducted in 2022 on capital
construction projects of various types
(social infrastructure and residential
facilities) at all stages of their life cycles.
The Company tested the functionalities
of products offered by different vendors.
In 2023, the Company is planning
to digitise construction monitoring
and test additional features of vendor
products via pilot projects.
The platform’s value
proposition
1
Process acceleration through:
• end-to-end digitisation of the
construction process
• access for all stakeholders to a single
source of truth for data
Addressing potential errors by
preventing conflicts and using BIM
models
Timely identification of ariances in the
specialist
construction process through
services embedded into the process
2
3
LASER SCANNING
BASED ANALYTICS
The tool increases the speed and accuracy
of detecting deviations in construction
and installation.
The customer collects data using
STEP 1.
LIDAR and transmits the information
to the vendor’s cloud-based platform.
An analytical report is prepared
STEP 3.
regarding the quality (compliance
with geometric parameters) and work
progress.
The solution helps improve work quality
and accelerate timelines while tracking
and visualising construction progress
as well as improving communication
between project stakeholders.
in Norilsk, with the pilot construction
of a residential building launched as part
of the Norilsk renovation programme.
In 2023, Nornickel is planning to roll out
the technology in residential construction
as well as at the Company’s industrial
facilities to confirm its economic and non-
financial impacts across different types
of projects and different construction
stages.
Information is processed
STEP 2.
and compared by machine vision
and AI-based tools against the BIM
project parameters and work schedule.
In 2022, the first pilot phase
was completed under a project
to construct a church complex
of the Russian Orthodox Church
UAV-ENABLED
MONITORING
UAV-enabled analytics is used
to build a regularly updated 3D model
of the construction project, enabling better
monitoring of progress on groundworks
and improving communication between
project stakeholders.
In 2022, a pilot was launched to validate
the value proposition of the software
for UAV data analysis conducted as part
of groundworks for the surface backfilling
preparation complex at the Mayak Mine.
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TECHNOLOGY IN OPERATIONS
CONCENTRATION
OPTIMISATION
A pre-feasibility study was conducted,
and the potential technical
impact was calculated in 2022
for the introduction of an intelligent
automated process control system
for disseminated ore flotation to improve
operational performance of Norilsk
Concentrator. In 2023, the Company
is planning to create a prototype of this
assistant system, first in an automated
version and then in an automatic version,
with the system to be eventually rolled
out if the study results are validated.
A prototype assistant using statistical
data was developed in 2022
for the copper flotation circuit of Norilsk
Concentrator. The system currently runs
in an automated mode across normal
operating modes of the production
process. The assistant’s algorithms
for emergency operation are also being
described and prepared for testing
for the subsequent automatic operation
and rollout of the system. In parallel
with the prototyping of these assistants
on the copper and disseminated ore
circuits, Norilsk Concentrator, in particular
its flotation line, is being retrofitted
with sensors and process data collection
equipment to boost the assistants’
performance and step up the overall
performance and process effectiveness.
Industrial tests of a pilot pneumatic
flotation cell were also carried
out at Norilsk Concentrator. Data
were obtained to support the case
for retrofitting of scavenging facilities
at Norilsk Concentrator using impellerless
pneumatic flotation cells.
Among other things, Nornickel is planning
to draft an operating procedure in 2023
for the processing of disseminated
and cuprous ores at Norilsk Concentrator’s
upgrade project (NOF-2) based
on a relevant ore dressability study.
The resulting operating procedure will
be used to design NOF-2.
Since 2019, a number of projects
have been ongoing across Talnakh
Concentrator’s value chain to digitise
production processes for increased
productivity and improved recovery
of precious metals. These projects
include process cruise control systems
for process engineers as well as machine
vision sensors used across the process
stages. A digital granulometer has
already come online, and a nickel
flotation optimisation system and a low-
nickel pyrrhotite flotation optimisation
system were successfully piloted. Going
forward, Nornickel plans to scale up
these optimisation systems to the entire
flotation capacity and test the flotation
froth control systems in real time.
CONVERTING
OPTIMISATION
A converting monitoring system
is planned to be developed in order
to boost the recovery of non-ferrous
metals from converter matte.
The experiment will involve determining
the correlation between iron content
of converter matte and the colour
of the converter’s off-gas flame using
optical analysis tools. This will help
increase the average iron content
in converter matte and boost the recovery
of non-ferrous metals such as nickel,
cobalt and copper leveraging iron’s
shielding properties during matte
converting. The system will operate
remotely in real time. Material balance
calculations carried out by Gipronickel
Institute corroborate the potential
impact from its adoption. Initially,
the system will learn how to determine
iron content by analysing the off-gas
flame spectrum. When the target state
is reached, the system will be able
to prompt the operator about the optimal
time to complete the converting
based on the composition of off-gases
as determined by an analysis of their
flame spectrum.
In 1H 2023, Nornickel is planning
to create a prototype for one converter
of Nadezhda Metallurgical Plant. If proven
effective, the solution will be rolled out
to the plant’s other converters, and its
use in the converter operations of Copper
Plant will also be considered.
HYDROCYCLONE
CONTROL OPTIMISATION
The development of an assistant system
to optimise hydrocyclone control
at the Trans-Baikal Division’s concentrator
was launched in 2022. Hydrocyclone
control is essentially about stabilising
a set pressure by controlling the pump
operation rate, about keeping density
within a set range by controlling the water
flow rate in the sump subject to relevant
restrictions, and about adjusting the feed
density by opening/closing cyclones
when the sump level limits are reached.
Optimising hydrocyclone operating
modes will stabilise the proportion
of the material meeting target parameters
and, consequently, boost copper recovery
into copper concentrate.
The Company has developed a pump
hydrocyclone control concept, evaluated
the potential impact from the solution’s
implementation using historical
data and drafted a prototyping plan.
By mid-2023, Nornickel is planning to test
the model, make preliminary impact
estimates and prototype the solution
in real-life industrial settings.
MILLING OPTIMISATION
In 2021, a diagnostic was run on Bystrinsky
GOK, resulting in a decision to apply
optimisation algorithms to boost
the milling circuit’s performance.
The key hypothesis behind the project
was that a digital assistant would boost
the autogenous mill’s throughput.
As part of Step 1, Company specialists
analysed historical data and developed
a control algorithm for the autogenous
mill to confirm this hypothesis. Once
the hypothesis was verified using
the site’s historical data, it was decided
to prototype with real data. The test
results have confirmed the key hypothesis,
with the solution boosting the mill’s
throughput. Preparations are underway
for a review by the investment committee,
which will decide on whether to allocate
funds for the project. The Company’s
objective for 1H 2023 is to start moving
the solution to the commercial launch
stage.
In order to improve the semi-autogenous
mill’s throughput, an AI-based assistant
was developed, adjusted and tested
at Talnakh Concentrator in 2022.
The tests have confirmed that the system
is applicable and delivers a performance
impact. Plans for 2023 include testing
a feeder control system for the semi-
autogenous mill in automatic mode
and moving the finished assistant
prototype to fully automatic operation.
The mill is also expected to be retrofitted
with sound sensors to ensure more
accurate modelling and build the mill’s
DEM model. These improvements will
enable more data feeds from in-mill
processes while unlocking control
of the milling process and extending
the mill liner lifetime.
MONITORING TAILINGS
STORAGE FACILITIES
AND FLUE-GAS STACKS
LOWERING
MAGNESIUM CONTENT
IN CONCENTRATE
Starting from 2022, Talnakh Concentrator
and Nadezhda Metallurgical Plant have
been testing a platform to analyse UAV
data. As part of this initiative, pilots
were conducted to monitor the operation
of Talnakh Concentrator’s tailings storage
facility and flue-gas stacks of Nadezhda
Metallurgical Plant.
The tests at the tailings storage facility
included:
• monitoring changes in the condition
of dams and hydraulic structures
over time
visualising the liquid tailings inflow
distribution
•
• estimating the area covered by solid
tailings.
The tests at flue-gas stacks included:
• detecting cracks in the protective layer
of concrete
• evaluating the condition of service
platforms, ladders, stack tips,
and signal lights
• evaluating the condition of stack’s
metal structures and portals.
The tests have confirmed the product’s
functionality and provided preliminary
estimates of its economic and non-
financial impacts. Going forward,
the Company is planning to launch
a second testing phase to confirm
the product’s value proposition in harsher
winter conditions. Moreover, the second
phase will involve testing the technology
on new types of the Company’s
assets (power lines and pipelines)
and completing the calculations
of economic and non-financial impacts
from the technology rollout across all
facilities.
The initiative to lower magnesium content
in concentrate run at the Kola Division
is important to the Company since
higher magnesium content translates
to a potentially lower price of finished
products. The project bets on automated
on-stream analysis of gangue sample
mineral composition to improve
separation of magnesium-bearing
minerals from ore and enable predictive
adjustments to the concentration process.
A comprehensive characterisation
of minerals and their phases in all ores
mined by the Kola Division was conducted
in 2022 using advanced 3D microscopy
and digital core analysis methods.
Recommendations were drafted
for a range of laboratory studies
to streamline existing concentration
processes, planned to be completed in 1H
2023. The laboratory studies will support
subsequent pilot tests to trial the highest-
potential solution for improving
the sulphide concentrate production
process.
PRODUCING
HIGH-GRADE NICKEL
CATHODES
An initiative was launched to produce
higher grade nickel cathodes
by reducing the impact of zinc-emitting
sources. The initiative will identify key
zinc emission sources and provide
recommendations on reducing
and stabilising their impact on the quality
of nickel cathodes.
1 Discrete element method.
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LIDAR SCANNER
The Company has adopted mobile LIDAR
scanners to survey mining operations
across all of its mines.
LIDAR scanning is the most
effective method of sourcing digital
models for underground workings
and the ground surface. It performs
high-precision surveys of mine workings
in motion in minutes, with 3D visualisation
taking place in real time. An accurate
high-res digital model of the scanned
location is obtained through instant
processing of laser beam reflections.
A scanning range of up to 200 m can
be achieved underground, at a rate
of 300 thousand measurements per
second.
LIDAR scanning systems allow Nornickel
to conduct more than 1.5 thousand
surveys per year, covering over 40 km
of mine workings. Most importantly, these
scanners ensure more accurate geometric
measurement of underground workings,
including stopes. This level of accuracy
helps mine managers to make faster
and better decisions on how to proceed
with their mining operations.
A rate
оf 300 thousand
measurements per second
A scanning range of up to
tо 200 m
RESEARCH AND DEVELOPMENT
R&D is a major driver behind
the implementation of the Company’s
strategic priorities. The Company’s
key strategic priorities include
driving fundamental improvements
in environmental protection, developing
and implementing projects to upgrade
existing and construct new production
facilities so as to increase output
and supply of key metals to the global
market as well as maintaining
the Company’s financial stability as its
major investment projects are brought
online. Gipronickel Institute, which
is part of the Group, is Nornickel’s core
R&D platform. It is one of Russia’s largest
research and design centres for mining,
concentration and metallurgy.
DIGITAL PROJECTS
Technological advancements are the most
essential tool used to improve Nornickel’s
business processes and workplace safety.
Despite the geopolitical risks and external
challenges of 2022, the Company
continued its digital projects while taking
steps to maintain business continuity.
The strategy previously adopted
by Nornickel and its proactive
management decisions helped
the Company achieve strong IT stability
amid unprecedented uncertainty
and external pressure.
RUB 12.3 billion
was allocated to digital, innovative
and IT projects in 2022, including
initiatives to gain technological
independence.
TECHNOLOGICAL
INDEPENDENCE
Gaining technological independence
has become a new priority focus area
in the Company’s IT strategy. Nornickel’s
information systems have been isolated
in advance, with additional equipment
and spare parts purchased. An evaluation
of the Company’s IT landscape
for technological independence has
demonstrated that 18% of its systems
(barring the process control system,
PCS) use imported software, while
one third of these systems require
additional measures, including renewal.
The remaining systems can be operated
without running any material risks
for several years. The Company has
developed criteria for ranking IT projects
by impact of relevant restrictions. Key
considerations include availability
of Russian alternatives, in-house
development capabilities, available
purchased licenses, availability of updates,
and technical support.
In 2022, the Company put a huge effort
into securing technological independence
in industrial automation. Imported
process control systems make up 92%
at the Company while 21% requires
renewal in the nearest future. To reduce
exposure to imported equipment,
the Company has run a detailed analysis
of alternative Russian-made equipment
items and data collection and operational
control systems, approving four primary
Russian manufacturers of controllers
and preparing scheduled PCS upgrade
programmes for each of its divisions.
A targeted programme has been
developed and put in place to train
Nornickel specialists in the new
equipment. Dedicated testing laboratories
and an expert centre are being set up
to test solutions.
ICC Metallurgy will develop proprietary
alternatives for critical mining tools,
including a geological and mining
information system, a mining planning
system and an underground dispatch
system ICC Ecology will create a digital
twin to simulate industrial emissions
leveraging PCS data.
Pursuing projects announced
by Nornickel is a task of industry-
wide significance that requires
appropriate corporate procedures
and implementation approaches;
therefore, a separate legal entity, Norsoft,
was established to ensure product
development. The establishment
of a dedicated legal entity focused on ICC
projects was prompted by the need
to apply a flexible product-based
approach, streamline efforts to develop
industry-specific solutions, ensure
transparent management of project
implementation and financing, register
and exercise intellectual property rights,
and conduct follow-up monitoring.
Major companies in the Russian mining,
metallurgical and chemical industries
have shown interest in the products under
development.
In 2022, Nornickel launched a new
strategy to promote the uniformity
of measurements, which includes
an initiative aimed at import substitution
and stronger technological independence.
When searching for Russian
alternatives, we selected over 360
manufacturers across 119 principal groups
In 2022, Nornickel’s in-house
experts trained
>12 thousand employees
Were involved in digital literacy initiatives
~20 thousand employees
of measurement instruments. Their
production capacities and the quality
of their products meet the Company’s
requirements. In particular, an alternative
Russian-made nuclear density gauge,
PR-1K, produced by ROSATOM
was selected and tested in a real-life
operational environment at the Medvezhy
Ruchey site. The successful testing
prompted the decision to run in-depth
durability tests to build experience
and test operational performance.
In addition, a Russian-made automated
system for streamlining the work
of metrological services (NERPA software)
was piloted in 2022 with a view to building
a single information environment
to combine measurement standards,
measurement instruments, testing
equipment, and reference standards.
In order to improve digital literacy among
employees who operate existing software
and to reduce the risks associated
with the adoption of new information
systems and tools, the Company has
successfully launched an educational
ecosystem to meet current needs
and promptly deliver training. In 2022,
Nornickel’s in-house experts trained
over 12 thousand employees in various
software applications while almost
20 thousand employees were involved
in digital literacy initiatives.
DIGITAL FINANCIAL
ASSETS
In 2022, Nornickel placed a pilot
issue of digital financial assets (DFAs)
on Atomyze, an open asset and process
digitisation platform. The DFAs issued
by the Company were dubbed New
Money Market (NMM) and are set
to become a promising financial product
in short-term trade finance and highly
liquid and reliable investments. These
assets serve as Nornickel’s unconditional
financial obligation to repay the funds
to the investor (DFA holder) in such
amount and on such date as determined
by the offering documents. The NMM
digital financial assets combine
the advantages of traditional paper-
based financial products such as factoring
instruments and short-term bonds.
As such, the DFAs represent Nornickel’s
pure credit risk and rank among the best
debt assets in Russia in terms of quality
and reliability.
With this pilot project, Nornickel seeks
to test the platform functionality
and operating specifics when issuing
and transacting in DFAs. If successful,
the pilot project opens up broad
prospects for scaling up the circulation
of NMM DFAs and expanding the range
of digital financial assets through new
platform solutions and products for other
needs of issuers and investors.
IT INFRASTRUCTURE
CONTINUITY
In 2022, Nornickel teamed up
with Russian infrastructure solutions
market participants to carry out
an ambitious testing programme
for import-independent IT equipment
for compliance with existing corporate
standards and information security
requirements as well as for compatibility
with the current IT landscape.
Nornickel has launched a large-
scale initiative to pilot and phase
in a multifunctional Linux-based
infrastructure solution into its corporate
environment. The transition to Linux
infrastructure will imply a particular
emphasis on corporate business
processes and users.
A programme to build backup
computing capacity in key corporate
data centres has been completed. This
move will reduce the potential negative
impact on the continuity of IT services
caused by the shortages of equipment
and components following the withdrawal
of foreign manufacturers from the Russian
market.
The Company continues to implement
data centre development projects.
The construction of a new data centre
in Moscow in cooperation with IXcellerate
was completed in 2022, and functional
systems to support IT equipment
were put into operation. Land plots
for the construction of new data centres
in Monchegorsk and Norilsk have been
found and selected.
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The Company has launched a new
wave of the programme to upgrade
service facilities that are critical for its
production systems. Based on lessons
learned, the relevant corporate standard
has been updated with requirements
for the creation and operation
of the relevant class of physical
infrastructure.
THE DATA LAKE
PLATFORM
Technology-wise, mining production
of base metals is one of the most
challenging industries. The journey
from ore mining to selling the finished
product involves collecting terabytes
of data that must be processed to boost
plant productivity and make work more
comfortable. To collect and process big
data across production sites and embed
best practices, the Company has put
in place a project to create a Data
Lake digital platform. The Data Lake
is essentially a technologically advanced
platform that leverages big data, artificial
intelligence and machine learning
to address business tasks.
In 2022, infrastructures to launch several
business initiatives leveraging artificial
intelligence and machine learning
(including a containerisation platform)
were developed based on the Data Lake.
For example, a prototype was launched
for a prediction algorithm to control
the dissolution and filtration processes
in the nickel tankhouse at Kola MMC
(on one of the four dissolution units).
The system is comprised of machine-
learning models that receive input data
using several dozens of data tags in near
real time and display resulting insights
on dashboards across dedicated screens
in the control room. The prototype’s early
results were evaluated in the first quarter
of 2023. Going forward, we plan to roll out
a series of solutions leveraging machine
learning to the other three dissolution
units.
At the same time, as part
of the programme to gain technological
independence, we initiated migration
of the data platform from foreign
to Russian-made software. To date, three
of the four project phases have been
completed. We expect that new Russian-
made software will be used to support
the platform development strategy,
in particular, to design the Data Lake’s
geo-distributed infrastructure.
In addition, a dedicated platform is being
set up to develop solutions leveraging
machine learning. The platform helps
address tasks such as data discovery,
model development and launch
of applications leveraging machine
learning and runs on a high-performance
cluster.
DEVELOPING
COMMUNICATIONS
NETWORKS
The Company continues its programme
to develop service data networks. In 2022,
the construction of a high-performance
service network at the production sites
of the Polar Division was completed;
similar projects were initiated at Kola
MMC and NTEC. To implement
unmanned mine and remote equipment
control technologies, communications
networks must meet tough bandwidth
and data speed requirements. With this
in mind, the Company partnered
with a number of Russian manufacturers
of telecommunications equipment
to initiate in 2022 the development
of a switch with enhanced performance
to be subsequently used in mines.
By mid-2023, we expect to complete
testing of selected developments.
Delivering both enhanced performance
and stronger security is a challenging task
for developer teams; once implemented,
this solution will not only cover
the existing needs but also accommodate
future growth in data traffic from
production automation.
HIGH-SPEED INTERNET
IN THE NORILSK
INDUSTRIAL DISTRICT
Given that mobile and fixed-line
connectivity remains a key prerequisite
for high quality of life in the modern
world while driving the growth
of digital services, Nornickel launched
the construction of a 956-km Novy
Urengoy–Norilsk fibre-optic line back
in 2017.
The project seeks to cover the Company’s
production-driven demand for high-
speed connectivity and improve
the quality of life in the Norilsk Industrial
District by offering broadband internet
access, enhancing the quality of services,
including public ones, and expanding
the range of communications services.
High-speed data services are available
in the Norilsk Industrial District
as well as in communities along the fibre-
optic line route since 2017. An in-house
maintenance service has been set up
to service the communications line,
comprising a call centre, a single network
management centre and highly skilled
field teams experienced in working
in a similar environment and set up
with specialist equipment and a fleet
of custom-built all-terrain vehicles.
For more reliable operation, the capacity
of the existing backup communications
line across the Yenisei River was expanded
from 1 to 40 Gbps and stabilised. The new
line will both expand the total radio
bandwidth and reduce the impact
of weather conditions on data speed.
Work is ongoing on backing up
the existing communications
line between Novy Urengoy
and Norilsk. The project is carried
out by an approximately 200-strong
construction and installation team
set up specifically for this purpose,
with a dedicated fleet of construction
equipment. These efforts, including
measures to enhance the line’s reliability,
have ensured an SLA1 of at least 97%,
with emergency recovery within 72 hours.
services are GO.Media, Playbill, Broadcasts
(available only in the web version), Map,
and Transport.
increase the maturity of related business
processes and improve their operational
efficiency.
To improve connectivity given the growing
demand for data services from the Norilsk
Industrial District’s residents, the Company
has expanded the backhaul network’s
bandwidth from 40 to 200 Gbps, enabling
an increase of up to 85 Gbps for data traffic
passing through client communications
channels, while the Company’s own traffic
requires less than 1% of this capacity.
CITY ONLINE
City Online is a project aimed to improve
the quality of life of people living in small
and medium-sized towns in the Far
North and the Far East by providing
infrastructure and digital services
in various areas of life and making habitual
services more accessible in remote areas.
In line with advanced trends, the City
Online business model offers integrated
solutions and promotes digital social
services combined into ecosystems/
platforms.
Its key solution comprises an integration
platform and a range of integrated
B2C, B2B and B2G services selected
from existing market products based
on a needs analysis of cities. The platform
is an entry-level product and a key element
in the Company’s positioning in the Smart
City market.
The platform is available both online
and as a mobile app in five cities: Norilsk,
Dudinka, Monchegorsk, Murmansk,
and Krasnoyarsk. The number of registered
users exceeds 180 thousand, with almost
1.5 million unique visitors. The mobile app
has been installed about 55 thousand
times. The platform enjoys positive user
feedback as shown by surveys and regular
Net Promoter Score assessments.
The web and mobile versions
of the platform currently offer 28 and 16
services, respectively. The most popular
Services that support seamless
interaction of municipal employees
with each other and with local residents
within a shared information space will
be further enhanced. More effective city
management decisions will be enabled
by leveraging real data, including through
infrastructure products represented
by hardware and software solutions
for the automation of municipal
infrastructure.
Examples of infrastructure services
implemented as part of City Online
include an air quality monitoring
programme and a predictive
environmental assessment model
covering Norilsk, Monchegorsk, Nikel,
and Zapolyarny and seeking to improve
the urban environment and the quality
of life as well as a mobile-based
school education system introduced
in the Murmansk Region in 2022, offering
improved and socially inclusive education
and minimising the impact of weather-
related school cancellations.
ENHANCING
CORPORATE BUSINESS
PROCESSES
Key focus areas of Nornickel’s
digitalisation efforts include the continued
automation and development of core
processes within the corporate ERP2
template.
Currently, all key financially significant
Group enterprises are already included
into the unified business template
and relevant automation systems such
as the supplier relationship management
(SRM) system and warehouse
logistics management system,
with the groundwork laid to further
The corporate template covers over 50%
of the Company’s core business
processes, with the centralised platform
encompassing 37 enterprises engaged
in different areas (core and auxiliary
operations, sales, supply and logistics,
construction, energy, services, and project
management). The system supports
business functions and interaction
for more than 15 thousand users while
ensuring integration with 40 related
automation systems that make part
of the corporate architecture.
To ensure independence from imported
ERP solutions, the Company works
on migrating to a composite ERP
architecture.
Warehouse operations are improved
via projects that automate warehouse
logistics management. As part of these
efforts, Nornickel has launched a specialist
system at the warehouses of Kola
MMC and the Polar Division, which can
be rolled out to other corporate assets,
while its functionality related to cargo
management at ports and logistics within
divisions can also be expanded.
Novy Urengoy–Norilsk fibre-optic line
956 km
For data traffic passing through client
communications channels
85 Gbps
1 Service Level Agreement.
2 Enterprise Resource Planning. It is a business process management software solution that is used to integrate and manage finance, supply chains,
operations, trading, reporting, production, and human resources.
Annual reportNornickelBusiness overview3/72022 90
91
FINANCIAL PERFORMANCE (MD&A)
Key Segmental Highlights1
(USD million)
FY2022 HIGHLIGHTS
• Consolidated revenue decreased 5% y-o-y
amounting to USD 16.9 billion. Higher
nickel and cobalt prices and recovery
of production volumes following
the liquidation of damages caused
by incidents at Oktyabrsky and Taimyrsky
mines and Norilsk concentrator
were negatively offset by lower copper
and PGM prices as well as decline
in metal sales volume driven by logistics
disruptions and reorientation of sales
to new markets that requires additional
time;
• EBITDA decreased 17% y-o-y
to USD 8.7 billion owing to lower revenue,
higher operating cash costs driven
mainly by increase in labour expenses
and repairs. EBITDA margin amounted
to 52%;
• Net income was down 16% y-o-y
to USD 5.9 billion mostly driven by lower
EBITDA;
• CAPEX increased 55% y-o-y to a record
•
USD 4.3 billion driven by growth
of investments into flagship
environmental, mining and metallurgical
projects as well as capital repairs
aimed at improvement of industrial
safety and mitigation of physical risks
of production assets;
• Net working capital amounted
to USD 4 billion driven mostly
by increase in metal inventories
as well as amortization of advance
payments form customers
and termination of factoring services;
• Free cash flow decreased from
USD 4.4 billion to USD 0.4 billion driven
mostly by lower EBITDA, increase of net
working capital and higher CAPEX;
• Net debt doubled y-o-y to USD 9.8 billion
following the decrease of free cash flow
and payment of dividends. Net debt/
EBITDA ratio as of December 31, 2022
was at 1.1x. The Company continues
to duly service all its debt liabilities;
In September 2022, the Company
received the consent of holders of 5
issues of eurobonds for the total amount
of USD 3.75 billion to amend transaction
documents in order to split payments
to Russian and foreign investors, simplify
cancellation of notes and appoint new
Trustee. This was the largest deal of that
kind in Russia both in terms of total
amount and number of issues;
In October and December 2022,
Nornickel placed 9.75% RUB 25 billion
exchange-traded bonds on the Moscow
Exchange and two issues of CNY bonds
in the total amount of CNY 9 billion,
respectively;
•
• Economic restrictions imposed
on Russia by a group of countries
pose risks for operating, commercial
and investment activities of the Company.
To mitigate these risks Nornickel
is developing relationship with alternative
clients and suppliers, setting up new
logistic routes and exploring new capital
markets.
Indicators
Revenue
GMK Group
South cluster
KGMK Group
NN Harjavalta
GRK Bystrinskoye
Other mining
Other non-metallurgical
Eliminations
EBITDA
GMK Group
South cluster
KGMK Group
NN Harjavalta
GRK Bystrinskoye
Other mining
Other non-metallurgical
Eliminations
Unallocated
17,852
EBITDA margin
16,876
GMK Group
South cluster
KGMK Group
NN Harjavalta
GRK Bystrinskoye
2022
2021
Other mining
10,512
8,697
59%
2021
2022
2021
2022
16,876
12,242
972
10,451
2,363
1,325
1
1,558
–12,036
8,697
4,316
450
3,915
157
934
–11
9
–9
–1,064
52%
52%
35%
46%
37%
7%
70%
2022
н.п.
1%
2021
17,852
11,836
767
9,893
1,493
1,346
28
1,533
–9,044
10,512
5,456
397
3,758
59
1,076
–16
11
716
–945
5,854
59%
46%
52%
38%
4%
80%
2022
–57%
6,974
2021
Change
–5%
3%
27%
6%
58%
–2%
–96%
2%
33%
–17%
–21%
13%
4%
3x
–13%
–31%
–18%
n.a.
13%
4,298
–7 p.p.
–11 p.p.
–6 p.p.
–1 p.p.
3 p.p.
–10 p.p.
2,764
2021
2022
n.a.
Net profit
1%
0 p.p.
Capital expenditures
Other non-metallurgical
Revenue
EBITDA1
EBITDA margin
Key Corporate Highlights
(USD million, unless stated otherwise)
17,852
16,876
10,512
8,697
59%
52%
6,974
5,854
4,298
4,404
4,003
2,764
1,269
437
9,835
4,914
1.1X
40.5
0.5X
13.9
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
˜5%
˜17%
˜7 P.P.
˜16%
55%
Revenue
˜5%
EBITDA1
˜17%
EBITDA margin
˜7 P.P.
Net profit
˜16%
Capital expenditures
55%
Free cash flow2
Net working capital2
Net debt2
Net debt/12M EBITDA
-90%
3x
2x
0.6X
Dividends paid
per share (USD)³
3x
1 Segments are defined in the consolidated financial statements.
2 A non-IFRS measure, for the calculation see an analytical review document ("Data book") available in conjunction with Consolidated IFRS Financial
1 A non-IFRS measure, for the calculation see the notes below.
4,404
4,003
9,835
4,914
1,269
437
2022
2021
2021
2022
2021
2022
2021
2022
2021
2022
Free cash flow2
Net working capital2
Net debt2
Net debt/12M EBITDA
-90%
3x
2x
0.6X
Dividends paid
per share (USD)³
3x
1.1X
40.5
Results on the Company’s web site.
3 Paid during the current period.
0.5X
13.9
Annual reportNornickelBusiness overview3/72022 92
93
In 2022, revenue of GMK Group segment
increased 3% to USD 12,242 million
primarily due to the increase of sales
following the recovery of operations at
Oktyabrsky and Taimyrsky mines and
Norilsk Concentrator after incidents in
2021, which was partly negatively offset by
lower metal prices.
Revenue of South cluster segment
increased 27% to USD 972 million primarily
driven by higher volume of tolling services
realized to GMK group due to the recovery
of operations at Oktyabrsky and Taimyrsky
mines and Norilsk Concentrator after
incidents in 2021, and higher realized
prices of semi-products.
Revenue of KGMK Group segment
increased 6% to USD 10,451 million
primarily owing to higher sales of semi-
products delivered to GMK group and NN
Harjavalta.
Revenue of NN Harjavalta increased 58%
to USD 2,363 million driven by higher
realized nickel prices and higher semi-
products revenue.
Revenue of GRK Bystrinskoye decreased
2% and amounted to USD 1,325 million.
Revenue of Other mining segment
decreased 96% owing to the termination
of Nkomati’s operations in 1H2021.
Revenue of Other non-metallurgical
segment increased 2% to USD 1,558
million primarily due to higher revenue
from other sales that was partly negatively
offset by lower revenue from metal resale.
In 2022, EBITDA of GMK Group segment
decreased 21% to USD 4,316 million owing
to higher cash operating costs primarily
driven by increased mineral extraction tax,
higher labour, repair and maintenance
costs, which were partly positively offset
by higher revenue, decrease in social
expenses, as well as cancellation of Nickel
and Copper export custom duties in 2022.
EBITDA of South cluster segment
increased 13% to USD 450 million primarily
owing to higher revenue that was partly
negatively offset by increase in cash
operating costs due to higher labour,
repair and maintenance costs.
EBITDA of KGMK Group segment
increased 4% to USD 3,915 million
primarily owing to higher revenue.
EBITDA of NN Harjavalta increased
3-fold to USD 157 million owing to higher
revenue, which was partly offset by
increase in cash operating costs mainly
due to higher reagents and energy costs.
EBITDA of GRK Bystrinskoye segment
decreased 13% to USD 934 million
primarily due to increase in cash
operating costs driven by higher labour,
repair and maintenance costs.
EBITDA of Other mining segment
remained almost unchanged at negative
USD 11 million.
EBITDA of Other non-metallurgical
segment remained almost unchanged
y-o-y and amounted to USD 9 million.
EBITDA of Unallocated segment
decreased by USD 119 million and
amounted to a negative USD 1,064 million
mainly due to higher administrative
expenses.
in 2021. Lower palladium, copper, rhodium
and iron prices were partly compensated
by higher nickel and cobalt realized prices.
METAL SALES
In 2022, revenue from metal sales
was down 6% (or -USD 1,030 million)
y-o-y to USD 16,073 million primarily
driven by lower sales volume (-USD
704 million) as well as lower realized
metal prices (-USD 153 million) as well
as the decrease of revenue from the
resale of metals purchased from third
parties (-USD 173 million). Lower metal
sales volumes driven by the extension
of logistics and reorientation of sales to
new markets (-USD 2,040 million) were
partly compensated by the production
recovery (+USD 1,336 million) following the
temporary suspension of Oktyabrsky and
Taimyrsky mines and Norilsk Concentrator
OTHER SALES
In 2022, other sales increased 7% (or
+USD 54 million) to USD 803 million
primarily due to an increase in oil
product sales, resale of icebreaking and
sea transportation services, increase
of waste-product prices and Russian
rouble appreciation, which was partially
negatively offset by the sale of "NordStar"
airline.
In 2022, the cost of metal sales increased
21% (or +USD 1,051 million) to USD 6,108
million, driven by the following factors:
•
increase in cash operating costs by 34%
(or +USD 1,667 million);
increase in depreciation and
amortization by 20% (or +USD 172
million);
•
• comparative effect of change in metal
inventories y-o-y leading to the cost
of metal sales reduction of USD 788
million.
Cost of metal sales
(USD million)
Indicators
Labour
Mineral extraction tax and other levies
Materials and supplies
Third party services
Purchases of refined metals for resale
Transportation expenses
Fuel
Electricity and heat energy
Purchases of raw materials and
semi-products
Export custom duties
Other costs
Total cash operating costs
Depreciation and amortisation
Increase in metal inventories
Total
COST OF SALES
COST OF METAL
SALES
CASH OPERATING
COSTS
Inflationary growth of cash operating
costs amounted to +USD 352 million
while Russian rouble appreciation against
USD amounted to cash operating costs
increase of +USD 273 million.
In 2022, total cash operating costs
increased 34% (or +USD 1,667 million) to
USD 6,541 million mainly due to increase
in labour costs (+ USD 717 million),
increase in mineral extraction tax and
other levies (+USD 565 million), increase
in third party services (+ USD 374 million),
and increase in materials and supplies
(+ USD 354 million), partly offset by the
cancellation of nickel and copper export
custom duties in 2022 (- USD 442 million).
2022
2,123
1,192
1,069
784
437
275
166
136
33
-
326
6,541
1,015
–1,448
6,108
2021
1,406
627
715
410
581
130
122
118
95
442
228
4,874
843
–660
5,057
Change
51%
90%
50%
91%
–25%
2x
36%
15%
–65%
–100%
43%
34%
20%
2x
21%
Annual reportNornickelBusiness overview3/72022 94
95
Labour
In 2022, labour costs increased 51% (or
+USD 717 million) to USD 2,123 million
amounting to 32% of the Group’s total
cash operating costs driven by the
following factors:
• +USD 232 million – indexation of
salaries and wages above the CPI
in line with the terms of collective
bargaining agreement;
• +USD 127 million – increase in
headcount in Norilsk industrial region;
• +USD 77 million – one-off incentive
bonus to personnel;
• +USD 177 million – other increase in
labour costs mainly due to increase in
provisions, primarily unused vacation
provision, driven by the increase in
labour costs;
• +USD 104 million – effect of the Russian
rouble appreciation against US dollar.
Mineral extraction tax
and other levies
In 2022, mineral extraction tax and other
levies increased 90% (or +USD 565 million)
to USD 1,192 million, which was partly
offset by the cancellation of nickel and
copper export custom duties in 2022 (-
USD 442 million). The main factors of the
change were:
• +USD 527 million – increase of costs
primarily due to the change in mineral
extraction tax legislation in 2022;
• +USD 38 million – effect of the Russian
rouble appreciation against US dollar.
Materials and supplies
In 2022, expenses for materials and
supplies increased 50% (or +USD 354
million) to USD 1,069 million driven by the
following factors:
• +USD 223 million – higher consumption
of materials primarily due to increased
repairs as part of the programme for
improvement of fixed assets;
• +USD 78 million – inflationary growth of
materials and supplies;
• +USD 53 million – effect of the Russian
rouble appreciation against US dollar.
Third-party services
In 2022, cost of third-party services
increased 91% (or +USD 374 million) to
USD 784 million mainly driven by:
• +USD 306 million – primarily due
to increase in repairs as part of the
programme for improvement of fixed
assets;
• +USD 38 million – inflationary growth of
third-party services;
• +USD 30 million – effect of the Russian
rouble appreciation against US dollar.
Purchases of refined
metals for resale
In 2022, purchases of refined metals
for resale decreased 25% (or -USD 144
million) to USD 437 million owing to lower
purchases of palladium.
Transportation expenses
In 2022, transportation expenses
increased 2 times (or +USD 145 million) to
USD 275 million driven by the following
factors:
• +USD 129 million – primarily due to
transportation expenses growth in
Norilsk industrial region driven by
increase in sea transportation volume
and icebreaking services;
• +USD 8 million – inflationary growth of
expenses;
• +USD 8 million – effect of the Russian
rouble appreciation against US dollar.
Fuel
In 2022, fuel expenses increased 36% (or
+USD 44 million) to USD 166 million driven
by the following factors:
• +USD 23 million – increase of fuel
expenses due to growth of production
volume after recovery of operations at
Oktyabrskiy and Taymirskiy mines;
• +USD 12 million – inflationary growth of
Electricity and heat
energy
the Russian rouble appreciation against
US dollar and growth of industrial security
and health and safety expenses.
In 2022, electricity and heat energy
expenses increased 15% (or +USD 18
million) to USD 136 million driven by the
following factors:
• +USD 10 million – inflationary growth of
expenses;
• +USD 9 million – effect of the Russian
rouble appreciation against US dollar.
Purchases of raw
materials and
semi-products
In 2022, purchases of raw materials and
semi-products decreased 65% (or -USD 62
million) to USD 33 million due to decrease
of raw materials consumption at NN
Harjavalta and termination of Nkomati’s
operations.
Other costs
Depreciation and
amortisation
In 2022, depreciation and amortisation
expenses increased 20% (or +USD 172
million) and amounted to USD 1,015
million mainly due to transfers from
construction in progress as well as effect
of the Russian rouble appreciation against
US dollar.
Increase in metal
inventories
Сomparative effect of change in metal
inventory amounted to -USD 788 million
resulting in a respective decrease of cost
of metal sales mainly due to increase
in metal inventories in 2022 driven by
the extension of logistics chains and
reorientation of sales on new markets.
fuel price;
• +USD 9 million - effect of the Russian
rouble appreciation against US dollar.
In 2022, other costs increased 43% (or
+USD 98 million) to USD 326 million
primarily due to price inflation, effect of
Annual reportNornickelBusiness overview3/72022 96
97
COST OF OTHER SALES
In 2022, cost of other sales increased
by USD 70 million to USD 816 million
due to higher oil products sales, resale
of icebreaking and sea transportation
services, Russian rouble appreciation, as
well as higher labour and repairs costs,
which was partially compensated by the
sale of NordStar airline.
Other sales increased
USD 816 million
SELLING AND DISTRIBUTION EXPENSES
Selling and distribution expenses
(USD million)
2022
2021
100
52
33
65
81
48
23
39
Transportation expenses
+23%
Marketing expenses
+8%
Staff costs
+43%
Other
+67%
In 2021, selling and distribution expenses
increased 10% (or +USD 17 million) to USD
184 million primarily due to increase in
transportation expenses (+USD 9 million).
Selling and distribution expenses
USD 250 million
250
191
Total
31%
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses
(USD million)
2022
2021
833
577
Staff costs
+44%
Third party services
+20%
Depreciation and amortisation
230
107
94
9 80
191
83
76 18 44
Taxes other than mineral extraction tax and income tax
+24%
Transportation expense
-50%
+29%
Other
+82%
1,353
989
Total
37%
In 2021, selling and distribution expenses
increased 10% (or +USD 17 million) to USD
184 million primarily due to increase in
transportation expenses (+USD 9 million).
In 2022, general and administrative
expenses increased 37% (or +USD 364
million) to USD 1,353 million. Negative
effect of the Russian rouble appreciation
amounted to +USD 70 million. Changes of
the general and administrative expenses
in real terms were primarily driven by the
following factors:
• +USD 209 million – increase in staff
costs, including salary indexation and
one-off payments to personnel;
• +USD 26 million – increase of third-
party services primarily driven by repair
and maintenance, security, fire safety
and consulting services;
• +USD 59 million – increase of other
administrative expenses primarily
driven by property tax, depreciation
and business travel expenses.
Administrative expenses
USD 1,353 million
OTHER OPERATING EXPENSES
Other operating expenses,
NET (USD million)
Indicators
Social expenses
Environmental provisions
Loss on disposal of property, plant and
equipment
Change in other provisions and liabilities
Expenses on industrial incidents response
Change in provision on production
facilities shut down
Change in decommissioning obligations
Other, net
Total
2022
407
93
70
43
35
14
12
4
678
2021
1,048
176
35
–3
69
–3
–5
–32
1,285
Change
–61%
–47%
2x
n.a.
–49%
n.a.
n.a.
n.a.
–47%
In 2022, other operating expenses, net
decreased by USD 607 million to USD 678
million driven by the following factors:
•
-USD 641 million – decrease in social
expenses liabilities;
•
-USD 83 million – primarily due to
lower environmental provision related
to compensation for environmental
damages;
• +USD 46 million – change in other
• +USD 35 million – increase in loss
on disposal of property, plant and
equipment following the liquidation
of damages caused by incidents at
Oktyabrsky and Taimyrsky mines.
provisions and liabilities primarily due
to increased allowance for expected
credit losses;
Annual reportNornickelBusiness overview3/72022 98
99
FINANCE COSTS
Finance costs,
NET (USD million)
Indicators
Interest expense, net of amounts
capitalised
Unwinding of discount on provisions and
payables
Loss/(gain) from currency conversion
operations
Fair value loss/(gain) on the cross-currency
interest rate swap contracts
Interest expense on lease liabilities
Changes in fair value of other non-current
and other current liabilities
Income received as a result of early debt
repayment
Other, net
Total
2022
330
185
111
18
16
–
–172
5
493
2021
225
59
–24
–68
15
66
–
6
279
Change
(%)
47%
3x
n.a.
n.a.
7%
–100%
–100%
–17%
77%
In 2022, finance costs, net increased by
77% to USD 493 million primarily driven by
the following factors:
• +USD 105 million – an increase in
interest expenses as the Company
drew on RUB-denominated revolving
loan facilities with high nominal
interest rates in order to refinance
Company’s debt amidst deteriorating
external environment and also as a
result of significant increase in LIBOR
and Term SOFR rates during the course
of 2022;
•
-USD 66 million – the Company ceased
revaluating the put option related
to transactions with owners of non-
controlling interest in Bystrinsky GOK
following its expiration on 31.12.2021;
• +USD 135 million – to a larger extent,
the accounting effect related to the
results of foreign currency conversion
transactions that were exercised
during the periods of extreme intraday
volatility when the Company had
to comply with the regime of the
mandatory sale of foreign currency
revenues;
• +USD 126 million – an increase in
unwinding of discount on provisions
and payables primarily due to accrual
of social provisions at the end of 2021 as
well as significant volatility of discount
rates during 2022;
-USD 172 million – one-off income
derived from an early repayment of the
loan at a discount.
•
INCOME TAX EXPENSE
In 2022, income tax expense decreased
by USD 786 million driven mostly by lower
profit before tax as well as the provision for
income tax related to the compensation
of damages to water resources and soil in
2021.
In 2022, the effective income tax rate of
20.7% was above the Russian statutory tax
rate of 20%.
The breakdown of the income tax expense
(USD million)
2022
2021
1,306
219
1,695
616
Current income tax expense
Deferred tax expense/(benefit)
-23%
-65%
The breakdown of the current income tax expense by tax jurisdictions
(USD million)
Indicators
Russian Federation
Finland
Rest of the world
Total
EBITDA
EBITDA
(USD million)
Indicators
Operating profit
Depreciation and amortisation
Loss on disposal of property, plant and
equipment
EBITDA
EBITDA margin
In 2022, EBITDА decreased 17% (or -USD
1,815 million) to a USD 8,697 million
driven by lower revenue and higher cash
operating costs.
2022
1,288
20
–2
1,306
2022
7,581
1,026
90
8,697
52%
2021
1,668
5
22
1,695
2021
9,536
928
48
10,512
59%
1,525
2,311
Total
-34%
Change (%)
–23%
4x
n.a.
–23%
Change
–21%
11%
88%
–17%
–7 p.p.
Annual reportNornickelBusiness overview3/72022 100
101
STATEMENT OF CASH FLOWS
Statement of cash fl ws
(USD million)
Indicators
Cash generated from operations before
changes in working capital and income
tax
Movements in working capital
Income tax paid
Net cash generated from operating
activities
Capital expenditure
Other investing activities
Net cash used in investing activities
Free cash flow
Interest paid
Other financing activities
Net cash used in financing activities
Effects of foreign exchange differences on
balances of cash and cash equivalents
Net change in cash and cash equivalents
2022
8,897
–3,184
–1,127
4,586
–4,298
149
–4,149
437
–599
–4,465
–5,064
962
–3,665
2021
11,479
–2,226
–2,211
7,042
–2,764
126
–2,638
4,404
–315
–3,732
–4,047
–1
356
Change
–22%
43%
–49%
–35%
55%
18%
57%
–90%
90%
20%
25%
n.a.
n.a.
In 2022, free cash flow decreased 90% to
USD 0.4 billion following the decrease in
cash generated from operating activities
and increase of cash used in investing
activities.
In 2022, net cash generated from
operating activities decreased 35% to
USD 4.6 billion. Increase in cash operating
costs and more explicit working capital
increase in 2022 were partly compensated
by decrease in income tax payments
and comparative effect of repayment of
environmental damages in 2021.
In 2022, net cash used in investing
activities increased 57% to USD 4.1 billion
primarily driven by the increase in capital
expenditures.
Reconciliation of the net working capital changes between the balance sheet and cash fl w
statement is presented
(USD million)
Indicators
Change of the net working capital in the balance sheet
Foreign exchange differences
Change in income tax payable
Change of long term components of working capital included in CFS
Provisions
Other changes
Change of working capital per cash flow
Capital investments breakdown by project is presented
(USD million)
Indicators
Polar Division, including:
• Skalisty mine
• Taymirsky mine
• Komsomolsky mine
• Oktyabrsky mine
• Talnakh Concentrator
• Capitalised repairs
• Purchase of equipment
• Other Polar Division projects
Kola MMC
Sulfur project
South cluster
Energy and gas infrastructure modernization
Chita (Bystrinsky) project
Other production projects
Other non-production assets
2022
1,543
90
83
40
14
356
222
322
416
350
893
298
465
72
607
70
2022
–2,734
–218
–165
–51
–160
144
–3,184
2021
843
95
38
32
10
167
139
272
90
205
526
304
316
62
490
18
Total
4,298
2,764
2021
–557
15
524
–56
–2,145
–7
–2,226
Change (%)
83%
–5%
2x
25%
40%
2x
60%
18%
5x
71%
70%
–2%
47%
16%
24%
4x
55%
In 2022, CAPEX increased 55% (or +USD
1,534 million) to USD 4,298 million driven
by investments in key projects. Sulfur
Programme investments increased by
70% to USD 893 million, while investments
in Kola GMK and Talnakh Concentrator
expansion increased by 71% and
2-fold respectively. Another significant
CAPEX growth factor was an increase in
capital repairs, improvement of industrial
safety and modernization of core assets.
Annual reportNornickelBusiness overview3/72022 102
103
DEBT AND LIQUIDITY MANAGEMENT
REPORT ON PAYMENTS
Debt and liquidity
(USD million)
Indicators
As of 31 December
2022
As of 31 December
2021
USD million
Change %
Non-current loans and
borrowings
Current loans and
borrowings
Lease liabilities
Total debt
Cash and cash equivalents
Net debt
Net debt /12M EBITDA
7,189
4,295
233
11,717
1,882
9,835
1.1x
8,616
1,610
235
10,461
5,547
4,914
0.5x
–1,427
2,685
–2
1,256
–3,665
4,921
0.6x
–17%
3x
–1%
12%
–66%
2x
As of December 31, 2022, the Company's
total debt increased by 12% compared to
December 31, 2021 and amounted to USD
11,717 million. The increase in total debt
was primarily driven by utilization of RUB-
denominated revolving loan facilities in
order to refinance Company's debt amidst
deteriorating external environment.
As of December 31, 2022, the Company's
net debt increased by USD 4,921 million
due to a decrease in cash as a result
of increased capital expenditures and
dividend payments during 2022.
The Company fully honors its financial
obligations in line with transactional
documentation and in full compliance
with existing regulations.
In November 2022, Russian rating agency
“Expert RA” confirmed the Company's
credit rating at the highest investment
level “ruААА”. International rating
agencies withdrew and currently do not
publish Russian companies’ credit ratings
due to sanctions imposed on Russia.
Nornickel publishes a report on payments
in the countries where it operates.
The report confirms the Company’s
compliance with the highest standards
of corporate governance and business
transparency.
Income tax payments are recorded in
accordance with the taxpayer’s belonging
to a particular reporting segment. The
amounts of income tax payments for
a consolidated taxpayers group are
therefore reflected in the GMK Group
reporting segment since the designated
member of the consolidated taxpayers
group belongs to this segment.
Tax and other payments in 2022 by asset
(USD million)
Asset
Income tax
GMK Group
South Cluster
KGMK Group
NN Harjavalta
GRK Bystrinskoye
Other mining
Other non-metallurgical
1,035
64
0
2
1
8
17
MET
969
87
33
0
6
0
0
Total
1,127
1,095
Tax and other payments in 2022 by country
(USD million)
Licences and similar
payments
Total payments
0
0
0
0
0
0
0
0
2,004
151
33
2
7
8
17
2,222
Asset
Russia
Finland
Switzerland
Other
Total
Income tax
1,108
2
15
2
1,127
MET
1,095
0
0
0
1,095
Licences and similar
payments
Total payments
0
0
0
0
0
2,203
2
15
2
2,222
Annual reportNornickelBusiness overview3/72022 104
105
SUSTAINABLE
DEVELOPMENT
Nornickel is committed to promoting
sustainability practices.
Nornickel maintains its focus on ESG principles
as a fundamental factor that will shape the
global agenda in the coming years.
Annual ReportNornickelSustainable development4/72022 106
107
STRATEGIC APPROACH
Despite global uncertainties and
emerging economic and political
challenges, Nornickel maintains its
focus on sustainability principles as a
fundamental factor that will shape the
global agenda in the coming years.
Promoting sustainability practices, the
Company, on the one hand, adapts to
the strategic landscape and market
changes and contributes to more
effective risk management, and on the
other hand, fosters a motivating and
innovative corporate culture, builds
beneficial relationships with stakeholders
and supports principles that are key
to maintaining a healthy and rich
environment.
Contribution to
the UN SDGs
To effectively integrate sustainability
principles across all activities, Nornickel
has adopted over 20 internal documents1.
At the strategic level, the Company has
in place the Environmental and Climate
Change Strategy and is developing
the Social Development Strategy to be
approved in 2023.
To effectively integrate sustainability
principles across all activities, Nornickel
has adopted over
20internal documents
1 https://nornickel.ru/investors/disclosure/corporate-documents/#accordion-corporate-codes-and-policies
Environmental and climate
Social responsibility
Governance
• Reduction of SO₂ emissions on the Kola
Peninsula following shutdown of the
Company's smelting operations (down
90% from 2015)
• The lowest CO₂ emission level (Scope
1, 2 and 3) among global metals and
mining peers
• Reputation of a socially responsible
• Sustainable corporate governance
business
• Comprehensive support of local
•
communities and national projects
and risk management
Including ESG targets in short-term
and long-term KPIs
• Long track record of supporting
• Balanced and effective Board of
indigenous peoples; pioneering the
process to obtain their free, prior
and informed consent to projects
Directors
S
T
N
E
M
E
V
E
H
C
A
Y
E
K
I
• Zero work-related fatalities
• Reducing the impact of operations
• Fostering a new sustainability
culture across the Company
on indigenous peoples in the
regions of operation
• Refurbishment of housing and
social infrastructure in Norilsk
• Compliance with key international
sustainability initiatives
• Meeting the key SO, reduction targets
for the Norilsk Industrial District
• Clean-up of accumulated waste and
remediation following environmental
incidents in Norilsk
• Assessing biodiversity impact and
preparing a scientific rationale for a
biodiversity conservation programme
• Further developing the physical risk
management system across the
Company's footprint
• Supporting environmental initiatives
across the Company's geography
I
S
E
I
T
I
R
O
R
P
C
G
E
T
A
R
T
S
I
Annual ReportNornickelSustainable development4/72022
108
109
The principles of sustainable development are being actively introduced into the
corporate culture of the Company. In 2022, Nornickel:
held 17 dedicated
workshops and trainings,
up almost 2.5 times from 2021
provided training in ESG for
conducted
>1,300 emplo
yees
6 ESG audits
Actively used stakeholder engagement mechanisms through dialogues, surveys, public
discussions of internal documents, and public consultations on projects.
In 2023, the Company plans to continue implementing measures to align its activities
with the guidelines and standards, such as ICMM and IRMA, TCFD recommendations,
and other. The plans include:
• deeper integration of ESG principles
into strategic planning and risk
management procedures
• analysis of Global Industry Standard
on Tailings Management (GISTM)
requirements in relation to Company
facilities
• cascading adopted policies to
subsidiaries for implementation
•
setting additional ESG-related KPIs and
evaluating performance
• establishing a human rights due
•
diligence system (until the end of 2024)
implementing the supply chain to all
supplier categories
• holding stakeholder dialogues and
publishing new reports on climate
change and human rights.
Nornickel’s sustainability management fl wchart in 2022
Sustainable Development and
Climate Change Committee
chaired by an independent director
Board of Directors
approves the Company's internal
documents and strategic goals
Audit Committee
chaired by an independent director
monitors the progress on the strategy
Implementation and evaluates its
effectiveness;
oversees the progress on sustainability goals
and programmes;
provides the Board of Directors with an
opinion on the effectiveness and quality
of key developed and implemented
sustainability projects
President
Risk Management Committee
of the Management Board
chaired by the Company President
Senior Vice President
Operational Director
Vice President
Energy Division
Vice President
Investor Relations and
Sustainable
Development
Vice President
Internal Control and
Risk Management
Vice President for Ecology
and Industrial Safety
Technical
Supervision
Department
Ecological
Monitoring
Centre
Renewable
Energy Project
Management Office
H&S Department
Ecology
Department
Environmental risk
management
and Independent
internal control over
environmental
protection matters
Environmental units
participates
in developing
sustainability
strategies;
monitors and
coordinates the
implementation
of the Company's
sustainability
polices and
internal
procedures
Inspection
Department
for Monitoring
Technical,
Production and
Environmental Risks
Sustainable Development
Department
provides a systematic approach to
building an effective model of sustainable
development management and its
compliance by the Company;
develops and implements systems for
evaluating the Company's performance
for compliance with the requirements of
international standards
Annual ReportNornickelSustainable development4/72022 110
111
Sustainability KPIs for management
Global ESG initiatives at the end оf 2022
Sustainability
KPIs
50%
in team KPIs
Long-term
KPIs
30% KPI
Meeting the H&S targets (20%
reduction in FIFR from 2021)
20% KPI
Annual reduction of absolute
greenhouse gas emissions from
production operations
30% KPI
Meeting the environmental strategy
goals, including SO2 emission
reduction
Initiative
Status
Together for Sustainability (TfS) initiative
The Company’s compliance with the requirements of the initiative was confirmed
by the 2021 audit
International Platinum Group Metals
Association (IPA)
Member since 1999
Nickel Institute
Member since 2005
UN Global Compact
Member since 2016
Responsible Sourcing Blockchain
Network (RSBN)
Responsible Minerals Initiative (RMI)
Member from December 2020 to July 2022
In 2022, RMI suspended cooperation with the Company's Russian assets.
Norilsk Nickel Harjavalta (the Company’s asset in Finland) was included in the RMI
Conformant/Active Smelters lists based on RMI RMAP audit results
Initiative for Responsible Mining
Assurance (IRMA)
In 2022, IRMA suspended cooperation with the Company's Russian assets. In the
same year, Nornickel independently assessed its mining assets for compliance and
readiness for the certification
International sustainability standards at the end оf 2022
Global Battery Alliance (GBA)
Member since 2021
Standard
Certified assets
Status
ISO 14001–2015
ISO 9001:2015
ISO 45001:2018
ISO/IEC 27001:2013
MMC Norilsk Nickel (Head Office, Polar
Division,
Polar Transport Division, and
Murmansk Transport Division)
Kola MMC
Norilsk Nickel Harjavalta
Bureau Veritas Certification
Surveillance audits – annually
Recertification audits – every three
years
Kola MMC,
Murmansk Transport Division,
Nadezhda Metallurgical Plant,
Copper Plant,
Talnakh Concentrator
TUV Austria
Surveillance audits – annually
Recertification audits – every three
years
ESG ratings at the end оf 2022
Rating
EcoVadis
MSCI
Status
ESG score – 62
ESG rating – B, score – 3.0 out of 10
Sustainalytics
ESG risk score – 43.9 out of 100, on a scale from 1 (low risk) to 100 (high risk)
Annual ReportNornickelSustainable development4/72022 112
113
HR MANAGEMENT
Contribution to the
UN SDGs
HUMAN RESOURCES
HR policy: investing in human capital
Nornickel retains leadership in key Russian and international
rankings of the best employers
(Thousand people)
2022
2021
2020
2017
74
72
78
79
THE COMPANY’S STANCE
ON HUMAN RIGHTS
The Company respects the rights and
freedoms of its employees as well as
those of its stakeholders – partners,
investors, contractors, local communities,
customers, and consumers.
Nornickel upholds the principles of
international standards such as the UN
Global Compact, the Universal Declaration
of Human Rights and the International
Labour Organisation’s Declaration on
Fundamental Principles and Rights at
Work. Nornickel complies with the laws of
the countries in which it operates.
The Company implements programmes
for the development and social support
of its employees, upholding their rights
in respect of social security, education,
family welfare, shelter, freedom of artistic
expression, and participation in cultural
life.
The Company has created workplaces
tailored for people with disabilities.
According to the employment quotas,
the share of such employees starts from
2% of the average headcount, excluding
employees involved in hazardous or
dangerous work. We provide necessary
working conditions for this category of
people with regard to the work and rest
schedule, duration of the annual paid
leave, extra days off, additional financial
assistance, and other parameters.
The Company strictly adheres to the
following principles with respect to its
employees:
• Zero tolerance for the use of child
labour, forced or slave labour
• Zero tolerance for the employment of
persons aged under 18 for hazardous
and/or dangerous work
• Zero tolerance for violence or
discrimination
• The Company does not engage female
employees in extreme or dangerous
working conditions
• The Company ensures its employees’
right to safe working conditions
• The Company makes sure all
employees enjoy equal rights and
opportunities regardless of gender,
age, race, nationality, and origin
• The Company provides all employees
with equal opportunities for unlocking
their potential. Employee performance
is evaluated on a fair and impartial
basis, and recruitment and promotion
decisions are tied exclusively to
professional abilities, knowledge and
skills
• The Company respects the right
to form trade unions and does not
prevent employees from joining them.
The Company has adopted internal
labour regulations, which are approved
in consultation with the trade union
organisation and which establish
employees’ working hours. The Company
has a standard working week of 40 hours
as determined by the applicable Russian
laws and regulations. Employees involved
in hazardous or dangerous work enjoy a
reduced working week of not more than
36 hours. Women employed in the Far
North and equivalent areas work 36 hours
per week unless a shorter working
week is stipulated by Russian laws and
regulations. The Company arranges
for accurate work time control for each
employee.
2%
employment quotas for people with
disabilities
RUB182.5 th
average monthly salary of the Norilsk
Nickel Group employees
ousand1
6%
proportion of the benefits package in
the compensation package1
25.8%
average wage growth2 across the
Norilsk Nickel Group in 2022
NORNICKEL’S MAIN
VALUE IS ITS PEOPLE.
The Company is committed to
providing safe and high-quality working
conditions, decent wages and a benefits
package. Nornickel views its employees
as its key asset and invests in their
professional and personal development
while creating an environment
promoting employee performance and
engagement.
1 Data for 2022.
2 Including one-off payments.
Annual ReportNornickelSustainable development4/72022 114
115
AWARDS AND INDUSTRY RECOGNITION
In 2022, Nornickel entered a number of best employer lists:
Best employer in the metals industry
for students of leading universities
according
to Changellenge’s Best
Company Award ranking;
Gold in
Forbes’ ranking
Russia’s best employers;
of
Best employer in the metals industry
as well as 8th best employer for its
target audience in
Future Today’s
based on a survey of Russian
ranking
university students;
STAFF COMPOSITION
78.4thousand employees
The average headcount of Nornickel
employees in 2022
83 %
of Nornickel employees
work in Russia's single-industry towns
Best employer in the metals
industry as well as 12th place (out
of more than 600 companies)
among the largest companies in
the national employer ranking by
HeadHunter and RBC.
Women in Mining Russia
Since 2020, Nornickel has been a
co-founder of
, a
project to support women’s development
in the mining industry. In 2022, 134
female employees of Nornickel submitted
applications to participate in the all-Russian
contest
Talented Woman in the Extractive
with 34 of them short-listed and
Industry,
12 winning the contest.
70 %
30 %
Male
Female
67
15
18
In 2022, the Group’s average headcount
was 78.4 thousand employees, of which
99% were employed by its Russian
companies. In 2022, the Company’s
turnover rate stood at 10.5%. Nornickel is
among the main employers in the Norilsk
Industrial District and Kola Peninsula,
employing 67% and 15% of the regional
workforce, respectively. Local population
accounts for 99.7% of the headcount.
The average headcount increase in 2022
was driven by the Company’s investment
strategy as well as organisational and
technical changes. Since Nornickel is a
production company, the proportion of
men in its workforce is significantly higher
than that of women.
99.7 %
local population accounts
Norilsk Industrial District
Murmansk Region
Other regions
Average headcount
Location
Russia
Africa
Europe
Asia
USA
Australia
Total
2020
71,447
519
323
15
10
5
2021
73,061
151
317
15
10
3
2022
77,980
38
331
15
10
0
72,319
73,557
78,374
Headcount by category and
gender
(%)1
Managers
12
4
White-collar
employees
10
11
Blue-collar
employees
Male
Female
50
13
16
21
63
Headcount by age and
gender
(%)
<30 years
11
4
30–50 years
46
20
>50 years
13
6
Male (70%)
Female (30%)
Employee turnover
(people)2
2022
2021
2020
20,726
11%
14,281
17,642
14,803
12%
10,481
10,247
10%
Employed
Dismissed
Employee turnover, %
2 Russian enterprises.
3 The ratio of resignations, dismissals for breach of labour discipline and negotiated terminations, to the average headcount as of the year-end.
Annual ReportNornickelSustainable development4/72022 116
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RECRUITMENT
In 2022, the Company’s recruitment efforts included off-site events in cities
across the Krasnoyarsk Territory and the Republic of Khakassia. Nornickel’s
HR specialists met with more than 1 thousand applicants for positions
within the Company.
In 2022, Nornickel opened recruitment centres in Yekaterinburg, Orsk and
Ufa, where applicants could promptly receive advice on open vacancies
within the Company and on employment terms and conditions.
ENGAGING YOUNG
PEOPLE
To spark the interest of young people in
professions of mining and metallurgical
engineers and the industry on the whole,
the Company has launched programmes
for undergraduate and graduate
students of Russian industry-related
universities.
The Company focuses on training
and upskilling students majoring in
professions that are highly valued at
Nornickel. For example, our standard
format of the Conquerors of the North
educational programme moved online
and became available to a wider
audience of students from Russian
universities involved in the industry.
2,724 students
applied for participation
978 people
participated in the programme
236 participants
were recommended for further
employment and internships at
Nornickel
The Conquerors of the North online
educational course has served as a
tremendous library of knowledge for
students. The programme comprised
76 students
Company’s corporate scholarship
awarded
10 modules and 37 video lectures, and
its participants did a case study to
consolidate their knowledge. Nornickel
was the first Russian mining company to
engage undergraduates and graduates in
addressing real business challenges and
promptly move the programme online
in response to the pandemic spread in
Russia.
In 2022, an online apprenticeship
programme was run remotely for the
Moscow office. The best graduates of the
leading Moscow universities took part in
the programme.
The Company continues to support
talented students from industry-
related universities, with the Company’s
corporate scholarship awarded to
76 students in 2022.
EMPLOYEE DEVELOPMENT
Nornickel offers ample opportunities for retaining and developing human
capital as the Company’s key resource. One of Nornickel’s priority goals in
2022 was to build a proactive training ecosystem that enables employees
to achieve the Company’s business goals, which underlay our training
strategy for 2022–2025.
ON THE PATH TO
EFFICIENCY
In 2022, the Company continued
implementing its On the Path to
Efficiency programme online. The
programme traditionally includes
training and project activities. A particular
feature of the programme includes the
transformation of middle managers’
online behaviour: they develop the habit
of acquiring knowledge in a digital
environment and interacting with
each other. For many participants, this
transformation has meant a dramatic
change in their attitude – from passive
online listeners to active doers.
The programme participants completed
five modules aimed at improving the
management skills of middle managers.
In addition, the programme was
supplemented with workshops on topics
critical for the Company, such as ESG,
safety culture and risk management.
A total of 113 people from the Company’s
22 branches completed the training,
including 106 managers and seven young
specialists.
The transition to the ecosystem approach
helps solve the following tasks:
• Build a culture of continuous learning;
• Boost managers’ professional qualities;
•
Improve professional skills;
• Build critical competencies.
To address these challenges, the
Company’s training strategy highlights key
priorities of the new training system.
ENERGY OF CHANGE
(TOP 100)
In 2022, we launched Energy of Change,
a modular corporate development
programme for Top 100 managers. The
programme was delivered in a mixed
format and included the following
modules.
1. Energy of Change (change
management)
2. Energy of the Manager (the manager’s
awareness)
3. Energy of the Team (teamwork)
4. Energy of Performance (ownership of
the result)
5. Energy of Well-being
A total of 106 managers were trained. The
programme was built around three focus
areas:
• Way of thinking
• Mastering new skills
• Effective interaction
360-DEGREE
MANAGEMENT
In 2022, management training under
the updated 360-Degree Management
programme was continued, with
360-degree assessment of managers’
skills.
The programme focused on the
development of corporate and
management skills. Participants could
select training topics themselves
based on their assessment results and
development areas highlighted in their
individual development plans. In 2022, the
programme was substantially modified
to include basic courses in management
skills and enrichment courses in line with
current trends. Training was offered on
seven topics:
Basic courses:
• Management Decision Making
• Ambitious Management
• Leadership Driving Development
• Master of Management
Communication
Enrichment courses:
• Change Management
• Leveraging a Resourceful State
• Team Management
The programme stands out for its concise,
hands-on format that includes interactive
training sessions, business games,
real-life cases, and a review of real-life
management situations.
A total of 252 managers from the
Company’s 17 branches completed the
training.
106 managers
trained in the Energy of Change
programme
113 employees
from 22 Company branches completed
the On the Path to Efficiency training
252 managers
from 17 Company branches completed
the updated 360-Degree Management
online programme
106 managers
7 young
specialists
Annual ReportNornickelSustainable development4/72022 118
119
TRAINING IN NEW SKILLS
AND TECHNOLOGIES
Developing digital skills and improving
employees’ digital literacy remains a key
area of training. With this in mind, the
Company continues implementing its
Digital Nornickel educational programme
focusing on digitalisation and designed to
offer all employees an opportunity to learn
the technology and skills required to work in
a modern digital production environment
and live in a digital environment.
A total of 65.5 thousand people completed
the course by the end of 2022.
The educational project seeks to explain
in simple terms what digital solutions,
technologies and tools are available on the
market today, what Nornickel has in place,
and what everyone can leverage in their
work.
In addition to the training course for its
employees, the Company expanded the
target audience by launching the Digital
Nornickel.Junior project in September 2022
for employees’ children aged between
8 and 12.
Digital Nornickel.Junior is a fascinating quest
where a child can learn about Nornickel’s
advanced digital technologies in a gamified
format by taking tests and completing tasks.
Simple tasks show the course participants
how digitalisation is linked to daily work
and why it is critical to development and
progress.
BUILDING AN
ENVIRONMENT FOR
CONTINUOUS LEARNING
The Company places a strong emphasis on
building a modern learning environment
by creating technological learning spaces.
In 2022, with the commissioning of a new
campus in Monchegorsk, the Company
expanded its corporate university’s area by
almost 1 thousand sq m.
The Company continues to develop training
courses across its assets, offering professional
training and skills practice on simulators.
In 2022, industrial tourism gained wide
popularity. The Company’s underground
training base was among its production
facilities actively involved in promoting
industrial tourism.
Nornickel Academy is Nornickel’s core
educational digital resource featuring
training courses designed to develop
employees’ professional competencies
across all relevant areas, a reading room
with free books on personal growth, as well
as materials presenting the latest trends
in training and specific tools that can help
employees in their work.
In addition to the physical and digital
environment, the Company supports
its concept of continuous learning
through educational events (Biblionight,
Knowledge Every Day, New Life on Monday),
public lectures, masterclasses (Tribune,
workshops for schoolchildren), and regular
communications (L&D Digest, posts on
social networks, publications in mass media).
65.5 thousand people
trained in the Digital Nornickel course
by ~1,000 sq m
expansion of the corporate university
area
3,224 employees
participate in the Assistance programme
up to 40 %
of the pay – supplementary payments
to relocating employees
ASSISTANCE
PROGRAMME
Since the Company’s production sites are
located in remote areas, Nornickel actively
sources staff for its production facilities
from other regions of Russia. The Assistance
programme helps new hires adapt to their
new environment and settle into their new
communities on the Taimyr Peninsula. The
programme targets not only highly qualified
specialists and managers but also young
talent and workers with hard-to-find skills.
Today, it covers 3,224 of Nornickel employees,
including 1,659 new participants, who joined
in 2022. With this programme, the Company
seeks to provide the participants with
comfortable living conditions and reimburse
them for relocation and resettlement costs.
RELOCATION
PROGRAMME
Since the beginning of 2022, the Company
has been running the Employee Relocation
programme aimed at implementing a
range of measures to support employees
relocating to another region with their
current employer or through internal
transfers to other employers within the
Group following changes in job duties. Along
with the reimbursement of general travel,
baggage and subsistence costs, a relocation
allowance and an additional leave for settling
in, the programme’s distinctive feature is a
supplementary payment for relocation (up
to 40% of the salary) offered to employees.
The amount of this relocation payment is
capped depending on the new job’s location.
Relocation to a new place of work provides
employees with opportunities for growth
and development, both personal and
professional. The programme benefits the
Company by addressing its staffing needs
in a particular region where candidates with
the right skills are absent from the local
labour market or the local workforce.
CORPORATE CULTURE DEVELOPMENT
Nornickel nurtures its corporate culture to build corporate communities
bringing together activist employees of different professions and from
different enterprises as well as to enhance the engagement of production
site employees in achieving the Company’s strategic objectives and involve
them in the corporate and social activities of Nornickel’s facilities and regions
of operation.
FOCUS ON SAFETY
CULTURE
In 2022, the Company paid particular
attention to fostering a strong safety
culture, with a dedicated project
launched to set up the function of
corporate safety culture coaches. Within
the project, we selected and trained 43
coaches and seven supervisors, who will
provide training and mentoring under
the Dynamic Risk Assessment and
Behavioural Safety Audit programmes.
The financial incentive framework
was also updated to encourage risk
identification and elimination. By 2022-
end, corporate coaches had already
conducted more than 700 training
sessions for employees.
YOUTH PROGRAMME “IN
A GOOD COMPANY”
Nornickel’s youth programme, In a
Good Company, is designed to create a
community of young employees aged
under 35, encourage their professional
and creative growth and unlock their
potential in various areas and spheres.
The programme’s another focus area is to
identify gifted students and young talents
from outside the Company and bring them
to Nornickel, ensuring their onboarding in
the fastest and most effective way.
An analysis of expectations among young
people (aged between 18 and 35), who
account for a third of Nornickel employees,
showed that their needs are primarily
related to experience build-up, individual
development, recognition, and self-
fulfilment. They also need not just to be
part of a team, but work in an environment
of like-minded people. And this is what
the Company is ready and willing to offer
them. Over 4.4 thousand users registered
on the programme’s unified mobile
platform during а few months pilot.
production and can deal with any activities,
from waste recycling, more efficient use of
resources, and internal communications to
a culture of training, industrial safety, and
recruitment.
In 2022, the programme became the gold
winner of the Employer Brand Award
& Summit in the People Management
category.
THOSE WHO CARE
PROGRAMME
The Those Who Care programme targeting
activist employees of different professions
runs in the Kola and Norilsk Divisions. The
programme is designed to bring together a
business customer who has a task to solve
and proactive employees who, working as
a team, offer a solution and bring it to life.
The matters discussed are not limited to
Since the programme’s inception,
the following results have been
achieved:
out of the 56
33
business tasks
have been addressed as part of
relevant projects
726 employees
applied for participation in the
programme
35project teams
31 managers
have become business customers
33design solutions have been accepted for
implementation
10 %
of active programme participants have
made career moves within the Company
1.3 billion rubles
the economic effect of the proposed
solutions.
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121
CORPORATE
VOLUNTEERING
DIALOGUE BETWEEN SENIOR MANAGEMENT AND
EMPLOYEES
The Plant of Goodness project is the
main example of cooperation among
the business, local communities, the
Company, and its employees: it has
institutionalised and consolidated
Nornickel’s existing experience and
traditions of social and environmental
initiatives. Today, the programme is
implemented across all the regions
of Nornickel’s operation, including
Norilsk, Monchegorsk, Zapolyarny, Chita,
Krasnoyarsk, Saratov, and Moscow. Each
year, around 3.5 thousand employees
along with representatives of non-
profit organisations and action groups
volunteer as part of the Company’s Plant
of Goodness project. After being active
volunteers for some time, Nornickel
employees often come up with their
own initiatives. The skills and expertise
they obtained doing this kind of work
help them not only in everyday life but
also in their career pursuits as well as in
developing beyond their professional
competences.
Nornickel is strongly focused on engaging
with its employees and continues to
promote regular practices that expand the
dialogue between its senior management
and employees. To that end, the following
activities were held in 2022:
• Nornickel Live, a Q&A session;
• Spring corporate dialogues.
Employees’ sustained interest in the
programme is reflected in a large number
of questions from employees (more
than 5 thousand over the year) and
the audience’s active involvement. For
instance, over 15 thousand viewers joined
the direct line while about 3 thousand
people participated in corporate dialogues.
Nornickel places a particular emphasis on
building communications about the most
important topics: remuneration, bonuses,
social support, and safety. Specifically,
in 2022, the Company ran eight major
information campaigns on:
salary increase from 1 January;
•
• additional payments in April;
•
increase in the business performance
bonus;
• golden rules of safety;
• Nornickel with You programmes;
• pulse survey about engagement;
• VHI;
•
improvements to the Together We
Decide – Together We Do and Let
Everyone Be Heard programmes.
Effective engagement within such
programmes is supported by both the
multichannel format and a vast number of
in-house speakers. In 2022, the Company
trained over 1 thousand in-house speakers,
who maintained live contact and engaged
with employees.
The total audience of the information
campaigns exceeded 250 thousand
people (i.e. each employee was contacted
on average more than three times over
the year). Effective communication
channels between management and
employees and an open information
environment help build trust, reduce
stress and increase employee
engagement.
In addition, the Company conducts
regular targeted polls and surveys to
measure employee engagement and
assess social programmes.
ENGAGEMENT
Nornickel goes through the engagement
management cycle every year to maintain
an environment conducive to integration.
ADOPTION OF THE
BUSINESS ETHICS CODE
To ensure that employees understand
and embrace the principles and basics
of the Business Ethics Code, the
Company continued relevant training
in 2022 to explain its employees the
Code’s content. A training module on
the Code is integrated into the Our
Values programme, the Nornickel Live
– Direct Live Line with Vice Presidents
project, and corporate dialogues. By
2022-end, training in the Business Ethics
Code covered 80% of the Company’s
headcount.
This cycle includes three phases:
• The Let Everyone Be Heard. What Do
You Think? survey
• Analysing the survey findings
• Developing and implementing resulting
solutions.
According to the survey, the Company’s
engagement index grew by 8 p.p. to 63% in
2022. The following factors had progressed
the most over four years:
• Trust in, and accessibility of, senior
management: +22 p.p. (driven by an
open dialogue with management and
consistent delivery on promises);
• Career opportunities: +18 p.p.
(driven by increased availability of
information about vacancies, the
internal career moves programme,
active communication about internal
promotions, training and development
programmes);
• Remuneration and recognition: +18 p.p.
(driven by regular and anticipatory wage
increases, elimination of imbalances in
the remuneration system, and grading
of information campaigns on wages).
The survey includes polling and focus
groups. In 2022, 50.5 thousand employees
were covered by the survey, up 6% y-o-y.
All governance levels, from units of
individual entitles to the Group as a
whole, are involved in both survey data
analysis and the development and
implementation of improvements.
~3.5 thousand
employees
volunteer as part of the Company’s Plant
of Goodness project
>15 thousand viewers
tuned into the Nornickel Live broadcast
>1,000
in-house speakers
trained in 2022
63 %
increase in the engagement index in
2022
80 %
of employees covered by training in the
Business Ethics Code
~3 thousand people
participated in corporate dialogues
>250 thousand
people
total audience of information
campaigns
50.5 thousand employees
participated in the employee engagement survey
Annual ReportNornickelSustainable development4/72022 122
123
REMUNERATION
KEY PERFORMANCE
INDICATORS
Nornickel’s remuneration system is
linked to key performance indicators
(KPIs) for different job grades. KPIs
include social responsibility, occupational
safety, environmental safety, operational
efficiency, and capital management
metrics, with due consideration of cross-
functional interests. In 2022, more than
18 thousand employees of the Group were
assessed against their KPIs.
KPI setting is driven by the Company’s
well-established principles of balance,
regularity, KPI achievement validation,
decomposition, and ambition as well as
the SMART criteria. Cascading is one of
the tools used in KPI setting: a manager
breaks down their KPI into components
and cascades them to subordinates.
Therefore, when each employee meets
their KPI targets, their superiors’ KPIs are
also achieved.
The KPI framework is instrumental in
streamlining performance evaluation
criteria, identifying top priority targets
for managers and employees for the
current year (aligned with the Company’s
strategy) and link an employee’s pay to
their performance.
The Company has a procedure in place
for evaluating the performance of the
Head Office employees and, separately, of
Group company managers. In 2020, a new
incentive system was introduced for all
employees of project management offices
(PMOs): project bonuses and traditional
annual bonus were replaced with a
project completion bonus. Bonuses are
paid for the achievement of key project
parameters and are aimed at motivating
and retaining key project employees until
project completion. In 2022, the project
bonus system was used to evaluate the
performance of 1.5 thousand employees of
the Group’s PMOs.
The performance evaluation process
is supplemented with an automated
360-degree assessment procedure
run at 30 Group enterprises. In 2022,
the 360-degree assessment covered
almost 4 thousand managers at all
levels, including top management, and
3.8 thousand specialists. Following the
assessment, employees receive feedback
from their superiors, discuss further
development areas with them and build
their individual development plans for the
year.
In addition to remote learning opportunities
offered by the Nornickel Academy platform,
employees who develop individual
development plans based on the 360-degree
assessment results can benefit from access
to the corporate electronic library and take
training on the 360-Degree Management
programme.
SALARY AND BENEFITS
PACKAGE
Nornickel has in place a comprehensive
employee incentive system, which comprises
both financial and non-financial components.
The employee incentive system is aimed at
improving operational efficiency and boosting
labour productivity, delivering robust
performance as well as retaining highly skilled
employees.
The Company prohibits any discrimination
in terms of setting and changing wages
based on gender, age, race, nationality,
origin, or religion.
transition to target annual bonus rates
was completed. This approach ensures
higher transparency of the Company’s
remuneration system.
The use of financial rewards is governed
by the Company’s remuneration policy.
The Company’s compensation package
comprises salary and benefits. The salary
consists of fixed and variable components,
with the latter linked to the Company’s
operational performance and achievement
of relevant KPIs.
Nornickel has in place a grading
system, which is a key tool to develop
and implement various HR-related
programmes. Positions are graded using
the point rating method, which takes into
account the required knowledge and
skills, the complexity of tasks involved, and
the responsibility level in each job.
As far as annual bonuses are concerned,
back in 2021, the annual bonus rate
policy for employees covered by the
performance management system was
aligned with an approach according to
which the annual bonus rate depends
on the employee’s job grade. In 2022, the
In 2022, we also continued our efforts
to transform the bonus system for
employees of PMOs. The updated
incentive system, which is linked to the
achievement of key project indicators,
aims to motivate and retain key project
employees until project completion.
The Company makes regular reviews of
pay levels and trends as well as the cost
of living – both the nation-wide averages
and the average figures for each of its
operating regions, with wage indexation
done annually based on the review results.
From early 2022, Nornickel increased
employee remuneration by 20% in Norilsk
and in the Krasnoyarsk Territory and by
10% in the Murmansk Region and other
regions. In April 2022, the Company
also decided to provide additional
support to employees and pay a one-off
bonus for their Q1 performance, equal
to the monthly base salary but at least
RUB 50 thousand per employee.
The Company constantly evaluates its pay
levels to make sure they are not below
the established living wage. Monitoring
results suggest that all employees at the
Company are paid above the minimum
living wage.
Employee compensation package breakdown
Average monthly salaries of Nornickel employees1
Minimum living wage and employee remuneration by region
6%Benefits
31%
Bonuses
21%One-off bonuses
10%Regular bonuses
94%Salary
69%
Fixed
component
2022
2021
2020
2,662
183
1,970
145
1,827
132
USD
RUB thousand
+35% +26%
1 Based on the average annual RUB/USD exchange rate given at the end of
the Report.
Region
Established minimum living wage
Average monthly salaries of Nornickel
employees
Norilsk Industrial District
Murmansk Region
Moscow and other regions of Russia
Krasnoyarsk Territory (excluding NID)
Zabaykalsky Territory
RUB thousand
USD
RUB thousand
39.7
35.1
23.5
24.4
22.9
580
513
343
357
334
185.6
128.3
298.8
98.5
170.4
USD
2,708
1,872
4,359
1,437
2,486
Annual ReportNornickelSustainable development4/72022
Benefits ackage costs at Nornickel’s Russian entities
SOCIAL PARTNERSHIP
124
125
The benefits ackage includes
the following benefits a d
compensations:
• Voluntary health insurance (VHI) and
major accident insurance coverage
• Discounted tours for health resort
treatment and recreation of
employees and their families
• Reimbursements of holiday travel
expenses for a round trip and baggage
fees for employees and their families
living in the Far North and territories
equated thereto
• One-off financial assistance to
employees experiencing major life
events or in difficult life situations
• Complementary corporate pension
plan
• Other types of social benefits under
the existing collective bargaining
agreements and local regulations
Total
2022
2021
2020
USD mln
RUB bn
Per employee
2022
2021
2020
RUB thousand
USD thousand
10.5
153.3
10.5
142
7.1
99
134.8
2
143.3
1.9
99.7
1.4
ADDITIONAL EMPLOYEE
INCENTIVES
Nornickel’s Award Policy is closely linked
to its values and strategic priorities. The
Company rewards its employees for
outstanding professional achievements
and contribution, innovations that
drive growth and add value, efforts
going beyond formal agreements with
Nornickel, and contribution to overall
performance of the business.
There are several levels of awards
and incentives.
Employee awards in 2022
1. Governmental, agency and regional
awards. Nornickel welcomes
recognition of its employees and
nominates those who achieved
outstanding results in operations
and management and made a
significant contribution to production
development.
225 61
324
2,021
4,022
2. Corporate incentives. Company-wide
awards assigned by resolution of the
Company’s President.
1,391
3. Internal incentives at enterprises.
Initiated and awarded to employees
on behalf of the enterprise where they
work.
Internal awards
Awards from regional and
municipal authorities
Corporate awards
Ministerial and agency awards
Governmental and President
of Russia awards
Social partnership framework at Nornickel
Employer
Social partnership
7.4%
Trade union
organisations
77.0%
Social and
labour councils
89.7%
Interregional
cross-industry
agreement
94.4%
Collective
bargaining
agreements
We establish social partnerships
regulating labour relations as a key tool to
build dialogue with our people. Moreover,
the Company has in place offices for social
and labour relations, a response centre
and task forces at branches.
TRADE UNION
ORGANISATIONS
The Group has 58 primary trade union
organisations united into local trade union
organisations of the Norilsk Industrial
District and Murmansk Region, which are
part of the Trade Union of MMC Norilsk
Nickel Employees, an interregional public
organisation.
The trade unions of transport and logistics
divisions of the Krasnoyarsk region are
members of the Yenisey Basin Trade
Union of Russia’s Water Transport Workers,
headquartered in Krasnoyarsk.
In 2022, trade unions contributed to:
• collective bargaining on a three-year
extension of Collective agreements at 10
Group enterprises
inspecting the quality of public catering
and dietary meals
•
• conducting a special assessment of
employees’ working conditions.
In 2022, the trade union was also involved
in an information campaign run by the
employer to inform employees about the
change in the corporate approach to the
bonus system. The Company sees such
meetings as an opportunity to maintain
a constructive dialogue with employee
representatives and receive timely feedback
on changes introduced at the Company.
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127
SOCIAL AND LABOUR
COUNCILS
Social and labour councils have been
in place since 2006 to represent the
interests of all employees within the
framework of social partnership at the
local level. Social and labour councils
are authorised to raise matters relating
to health resort treatment, recreation
and leisure programmes for employees,
disease prevention, provision of personal
protective equipment, workplace and
catering arrangements, and much more.
In addition to the Corporate Trust Line
speak-up programme, the Group set up
offices for operational, social and labour
matters back in 2003. They are primarily
tasked with response to employee
queries, follow-up, and prompt resolution
of conflicts. On a regular basis, the offices
monitor social environment across
operations, enabling timely responses to
reported issues.
Queries submitted to offices are reviewed
by relevant specialists or forwarded
to functional or production units
depending on the issue raised in the
query. The offices control turnaround
time and quality of responses. When
handling complaints, the offices adhere
to the principle that precludes sending
complaints to the managers whose
actions are being challenged. In 2022,
Group enterprises in the Norilsk Industrial
District operated 27 offices, which
received over 52 thousand queries and
requests from employees (81%), former
employees (18%) and other individuals
(1%).
Offices for operational,
social and labour matters
Main topics of queries and
requests
(%)
2
12
86
Social welfare matters
Legal matters
Other
COLLECTIVE
BARGAINING
AGREEMENTS
Collective bargaining agreements at the
Group’s Russian enterprises comply with
the applicable laws and adequately reflect
employee expectations.
In 2022, the Group enterprises extended
for another three years 10 collective
bargaining agreements, which have
historically provided one of the industry’s
best benefits packages. Every year,
Nornickel reimburses holiday travel
expenses for employees and their families,
offers medical insurance, health and
recreation programmes as well as a
complementary corporate pension plan
and develops housing and professional
training programmes.
At present, all collective bargaining
agreements of the Group’s Russian
enterprises are based on unified
approaches to regulating social and
labour relations within the social
partnership framework.
No breaches of collective bargaining
agreements and no strikes or mass
layoffs were recorded across the Group
enterprises in 2022.
INTERREGIONAL CROSS-
INDUSTRY AGREEMENT
The interregional cross-industry
agreement, along with collective
bargaining agreements, regulates
social and labour relations at the Group
enterprises. Participants in the agreement
define uniform corporate approaches to
compensation, provision of guarantees,
allowances and benefits to employees,
work and rest hours, occupational
health, and other matters, enabling the
implementation of a uniform corporate
social policy across Group enterprises
operating in different industries.
In December 2021, the agreement was
extended for 2022–2025 with a number of
amendments. Currently, the Association
of Employers comprises 21 entities.
SOCIAL PROGRAMMES FOR EMPLOYEES
Social expenses for employees
(USA mln)
SPORTS PROGRAMMES
129
179
223
123
14
28
14
153
17
36
16
2021
2022
93
14
11
11
2020
Housing programmes
Health resort treatment
Pension plans
Other social expenses
HEALTH IMPROVEMENT
PROGRAMMES
The Company has been consistently
investing in health improvement
programmes for employees and their
families living in the harsh climate of
the Far North. Health resort treatment
programmes are among the most popular
programmes offered by Nornickel as part
of its social policy.
In 2022, 17.8 thousand employees and their
family members improved their health at
the corporate Zapolyarye Health Resort
in Sochi; 7.4 thousand employees spent
their holidays at other health resorts, with
1.5 thousand employees’ children visiting
children’s health resorts. The Company
compensates its employees an average of
about 86% of the trip voucher cost.
The Night Hockey League with teams
made up of Nornickel employees was
established to encourage involvement in
amateur hockey.
Other activities include annual
Spartakiads and mass sports events
involving both Nornickel employees and
local residents across the Company’s
footprint.
In 2022, the Company collaborated with
Hero Race to organise the Nornickel Run
Race at the Norilsk and Kola Divisions.
This format gave a new impetus to the
event and attracted a larger number of
participants.
A total of 24 thousand employees
participated in sports and recreational
activities in 2022. All corporate
competitions were broadcast live in
2022, with the total reach exceeding
60 thousand views.
Nornickel offers its employees, most of
whom work in the Arctic Circle, a wide
range of social support programmes.
Promotion of corporate sports and a
healthy lifestyle among employees is one
of the key priorities on Nornickel’s social
agenda.
The Company regularly holds corporate-
wide sporting events. The programme
aims to improve the quality of life, build a
more attractive employer brand and make
sports more accessible to employees and
local residents. The Company support
sports in its regions of operation by joining
efforts with various sports federations
that provide training support to coaches,
run masterclasses and promote a healthy
lifestyle.
Nornickel pays special attention to
corporate mass sports events, with
hockey, futsal, volleyball, basketball, alpine
skiing, snowboarding, swimming, and
family sports contests being particularly
popular with employees.
Sports expenses
2022
2021
2020
USD mln
RUB mln
4.9
337.3
4.0
296.6
2.8
199
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129
VOLUNTARY
HEALTH INSURANCE
PROGRAMME
Voluntary health insurance (VHI) covering
all Group employees is an important form
of social support for Nornickel employees.
In addition, the Company allows
employees to insure one close relative at
the attractive corporate rate.
The VHI policy entitles employees to
various healthcare services. Employees
living in the Far North can use their
VHI policy in the region of permanent
residence as well as outside this region.
The range of services is the same under all
insurance programmes. The programmes
for different employee categories differ
only in the level of clinics and the region
of coverage.
In addition, Company employees can do
specialised genome sequencing tests
and get advice from geneticists to help
identify and assess potential risks of
serious diseases.
HOUSING PROGRAMMES
In 2022, Nornickel continued its housing
programmes, Our Home / My Home and
Your Home, whose participants were able
to purchase ready-to-move-in apartments
on preferential terms across Russia. The
Our Home / My Home and Your Home
programmes cover employees of the
Norilsk and Kola Divisions.
Under the programmes, Nornickel
purchases ready-for-living apartments
at its own expense and provides them to
eligible employees under co-financing
agreements. Under the programmes,
the employer pays up to 50% of the
apartment cost (but in any case no more
than RUB 3 million (USD 44 thousand))
with the rest paid by the employee
within a certain period of employment
with Nornickel (from five to ten years).
The cost of housing remains unchanged
for the entire period of the employee’s
participation in the programme.
Under both programmes, the property
title is registered in the name of the
employee: under the Our Home / My
Home programme, at the end of the
employee’s participation (the participant,
however, may move in immediately after
the apartment is purchased); under the
Your Home programme, from the start of
participation (with the title encumbered
by a mortgage, and encumbrance
removed from the property once the
employee fully repays the debt to the
seller).
In 2014–2022, apartments were purchased
in the Moscow and Tver Regions,
Krasnodar Territory and Yaroslavl; the
Company purchased closely located
properties to create a more comfortable
living environment for employees by
developing additional infrastructure and
optimising maintenance of residential
premises for the property management
company.
A total of 5,842 apartments have been
provided to Nornickel employees since
the start of the programmes.
Nornickel also operates the Corporate
Social Subsidised Loan Programme
offering Nornickel employees an interest-
free loan to pay the initial instalment
and reimbursing a certain percentage of
interest paid to the bank on the mortgage
loan. Overall, more than 1.3 thousand
employees have already taken part in the
programme that covers the Norilsk and
Kola Divisions.
SUPPORT PROGRAMMES
FOR FORMER
EMPLOYEES AND THEIR
FAMILIES
The ongoing support of its former
employees is part of the Company’s
corporate social policy. The Company’s
Veterans programme has been designed
to support unemployed pensioners who
permanently reside in Norilsk. The main
eligibility criterion is the employee’s
length of service at the Company.
The Pensioner Financial Aid Fund grants
financial aid to former employees who
retired prior to 10 July 2001 provided they
had been employed by the Company
for more than 25 years and permanently
reside outside of the Norilsk Industrial
District. The Fund relies on voluntary
monthly contributions from employee
salaries and charitable contributions from
the Company’s budget.
The Company also provides targeted
assistance to its former employees
and their families to pay for health
improvement, medicines or funeral
services, and help in difficult life situations.
CORPORATE PENSION
PLANS
Nornickel offers its employees private
pension plans. Under the co-funded
pension plan, Nornickel and its employees
make equal contributions to the plan. The
complementary corporate pension plan
provides incentives for pre-retirement
employees with considerable job
achievements and a long service record at
Nornickel enterprises.
Contributions to, and participation in, corporate pension plans
Contribution,
USD mln
Number of participants,
thousand people
13.8
13.9
17.3
13.1
12.2
11.7
0.9
6.5
9.9
0.9
5.7
0.9
5.6
7.2
7.4
1.1
0.5
1.0
0.4
0.9
0.4
11.5
10.8
10.4
2020
2021
2022
2020
2021
2022
Co-funded pension plan
Complementary corporate pension plan
Other corporate pension plan
5,842 apartments
have been provided to Nornickel
employees since the start of the
programmes.
>1.3 thousand
employees
have taken part in the Corporate Social
Subsidised Loan Programme
Annual ReportNornickelSustainable development4/72022 130
131
HEALTH AND SAFETY
In 2022, the Company updated its key strategic
objectives in health and safety for 2023–2025. Efforts
in this area are primarily focused on achieving zero
fatalities and an industry average injury rate.
Contribution to the UN
SDGs
MANAGEMENT SYSTEM
Strategic goals
Zero work-related fatalities
The Company pursues a zero-
tolerance policy on work-
related fatalities
No major accidents at
production sites
Measures to prevent accidents
at the Company’s facilities
and the associated negative
impact on local communities in
operating regions or operational
performance
Work safety
Safe working conditions and
mitigation of ore mining and
processing risks
Company’s Management
(the Board of Directors Audit
Committee, Management Board,
President)
Senior Vice President –
Operational Director
The Company’s management team member responsible
for the implementation, maintenance and improvement
of the Corporate Integrated Quality and Environmental
Management System as regards quality, health, safety and
the environment
Vice President for ecology and
industrial safety
Health and Safety Department
Health, Safety and Environment
Committee
Key performance indicators
Heads of the Company’s branches
20%
in team KPIs of all
employees
Goal:
Deliver on the action plan in health and safety and
reduce FIFR by 20% or more year-on-year
Health and safety councils
(commissions)
Industrial safety functions
Industrial safety compliance
functions
12–28%
of production site managers
in individual KPIs
Goal:
Deliver on the injury prevention plan and achieve
zero work-related fatalities
employees include injury rate and FIFR1
reduction by 20% or more (20% of the team
KPIs).
The Audit Committee deals with industrial
safety matters. The Committee reviews
management reports on industrial
safety performance every quarter,
with management participating in the
Committee’s meetings, providing detailed
account of causes of accidents, measures
taken to prevent similar accidents in the
future and disciplinary actions taken
against the employees at fault.
The Company’s Health, Safety and
Environment Committee, led by the Senior
Vice President – Operational Director, is
focused on improving performance and
accountability in health and safety. The
Committee meets quarterly at various
production sites of the Group.
Remuneration payable to all heads of
production units is linked to work-related
injury rates. They are personally responsible
for the life and health of each of their
subordinates. Industrial safety metrics
weigh between 12% and 28% in individual
KPIs of production site managers. Failure
to prevent a fatality blocks performance
bonuses. In addition, team KPIs for all
1 Fatal Injury Frequency Rate is the number of fatalities per 1 million hours worked.
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133
Certifications and audits
As at the end of 2022, 47% of the Group companies had health and safety certification.
Certificate
ISO 45001
Certified assets
Auditor
MMC Norilsk Nickel
Kola MMC
Pechengastroy
Norilsk Nickel Harjavalta
Bureau Veritas Certification
In 2022, surveillance audits confirmed
compliance of the occupational health
and safety management systems of
MMC Norilsk Nickel facilities (Head Office,
Polar Division, Polar Transport Division,
and Murmansk Transport Division) with
ISO 45001:2018 international standard.
The auditor, Bureau Veritas, noted a
high level of maturity and development
of the occupational health and safety
management system and confirmed the
system’s compliance with the standard.
approved schedule, with production site
managers and their deputies also involved
in the audits.
The Group’s production units are
also regularly audited for compliance
with applicable health and safety
requirements. A total of 52 audits took
place in 2022 in accordance with the
WORK-RELATED INJURIES
In 2022, the number of fatalities fell
to 4 from 11 in 2021, as a result of
measures to improve the occupational
health management system and the
implementation of injury prevention
programmes. The decrease was driven
mostly by the Norilsk Division, delivering
a 4-fold reduction in fatalities, and the
Trans-Baikal Division and Energy Division,
achieving zero fatalities. Growth in the
number of lost-time incidents (66 vs 42 in
2021) was linked to higher transparency in
accident reporting.
Work-related injuries across the Group
2022
2021
2020
66
4
0.57
0.03
42
11
22
9
0.38
0.21
0.1
0.08
Lost-time injuries
Fatal injuries
LTIFR (per 1 million hours)
FIFR (per 1 million hours)
Causes of fatalities
Item
Fall from height
Falling objects
Moving objects/parts
Rock fall
Road traffic accident (RTA)
Electrocution
Exposure to extreme temperatures
Explosion
Other
Total
2020
2021
2022
0
2
1
2
0
3
0
0
1
9
1
0
3
2
0
1
0
0
4
11
1
0
0
2
0
0
0
0
1
4
Two fatalities were caused by rock falls,
one in the Kola Division and one in the
Norilsk Division. Investigations into
these mining accidents resulted in a
number of measures: the Company
developed and implemented technical
measures to support mechanised
mining, purchased a face drilling rig and
automated temporary supports and
conducted a series of audits to monitor
the implementation of mine surveyors’
instructions. Another fatality was due to a
fall from height when operating a crane.
To prevent similar accidents in the future,
a multidisciplinary team will regularly
inspect bridge cranes, evacuation routes
and emergency evacuation equipment.
Plans for 2023 include equipping bridge
cranes with remote control systems
and safe ways to access crane runways.
A mine accident that occurred when
operating an electric locomotive triggered
investigation, resulting in measures to set
up transport arrangements for employees
to safely access their work area, prevent
unauthorised use of electric locomotives
and review the mine rail infrastructure
repair programme.
All accidents were thoroughly
investigated, with the resulting reports
submitted to the Board of Directors and
action plans developed to eliminate their
root causes. Nornickel’s management
reinforces the Group’s commitment to
achieving zero work-related fatalities
and sees fatality-free operations as its
strategic priority. The Company continues
to implement dedicated programmes
to prevent and avoid accidents and
work-related injuries. A comprehensive
review of industrial safety standards and
requirements has been scheduled for
2023 to prioritise focus areas for reducing
safety breaches that may result in
fatalities or serious injuries.
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135
CONTRACTOR RISK MANAGEMENT
GOLDEN RULES
The Company’s industrial
safety standards also apply to
its contractors.
Contractors’ work-related injuries
In 2022, the Company revised and updated its Golden Rules of Safety, using an analysis of fatalities in 2017–2021. Employees who violate
these rules are now subject to termination.
2022
2021
2020
42
4
28
2
15
3
46
30
18
Lost-time injuries
Fatal injuries
The increase in work-related injuries
among contractors in 2022 was linked
to 50% higher staffing levels required to
implement major investment projects. In
the reporting year, the Company reviewed
the general terms and conditions related
to occupational health in its contracts
with contractors to emphasise the
achievement of zero fatalities and the
compliance with the golden rules of
safety in line with the Company's goals
and also to enable contractors to take
proactive action on occupational health.
In 2022, Nornickel regularly monitored
its contractors’ compliance with the H&S
requirements, including through joint
inspections of compliance with work
safety requirements and meetings of
health and safety councils (committees)
involving contractor representatives.
To improve control and safety of work
performed by contractors at its facilities,
in 2022, Nornickel updated the standard
that sets out relevant requirements for
H&S management at all stages. Prior
to the commencement of any work,
contractor employees are required to
receive induction and targeted briefings
on occupational health. The standard
provides for fines where a contractor’s
non-compliance has been identified.
Breaking golden rules of safety can be fatal
No working at height without a
safety harness
1
2
3
4
No loading, unloading or moving
loads near people
No energised electrical work on
electrical installations or electrical
equipment
5
6
No operations in workings with
unbolted and/or loose roof
No maintenance or repair of
equipment without completely
disconnecting it first and blocking
the power supply
No driving or transferring people
in vehicles not designed for these
purposes
Nornickel’s production enterprises have
process-, job- and operation-specific
regulations and guidelines in place
containing dedicated industrial safety
sections. For instance, workers with
on-site production experience of less
than three years wear special red helmets
with the word “Caution” on them and
protective clothing with “Caution” badges
that make them stand out.
RISK MANAGEMENT
PREVENTION AND CONTROL MEASURES
The Company has a zero-tolerance
approach to unsafe behaviours, as
prevention of safety breaches plays a
critical role in reducing injuries and
accidents.
In 2022, the Company revised its
incentives around occupational health
performance. Starting from 2023,
employees will be rewarded for identifying
risks in their workplace.
risk identification and assessment system.
To date, the project has identified 462
risks, of which 101 have been eliminated
and 222 were reported by workers. The
project will continue in 2023.
To keep employees well-informed about
safety measures, we regularly develop and
update H&S guides, videos, presentations,
and other visuals highlighting the most
important guidance to protect life and
health in various situations or when
performing certain types of work.
In 2022, Norilsk Concentrator launched
a safety culture transformation project
focused on a risk-based approach. The
project involved a diagnostic of safety
culture and certain processes, a strategy
session to identify key systemic measures,
training for pilot shops, and a review of the
Nornickel has developed and put in place
an H&S monitoring system featuring
multi-tier control with ad hoc, targeted
and comprehensive H&S inspections. The
first tier control involves the line manager
(aided by designated members of the
occupational health team) and focuses
primarily on workplace set-up. The second
and higher control tiers involve special
H&S commissions with representatives of
management and employees.
In 2022, the incident reporting procedure
was changed to accelerate responses,
and the incident classification system was
improved to enhance further analysis. The
investigation and root cause identification
process was significantly transformed
to further boost accident prevention
capabilities.
In addition to the above prevention and
control initiatives, the Company has set
up and conducts regular behavioural
safety audits. The prevention and control
team has identified and disciplined over
7 thousand non-compliant employees,
including by partially or completely
stripping them of their bonuses.
In 2022, Nornickel further improved and
integrated the Control, Management,
Safety Automated System (CMS AS) into
the corporate IT architecture, introducing
more than five new algorithms to notify
responsible persons via the corporate
email, as well as integrating it with related
SAP ERP, SAP BW (ACS) and the Nika
virtual assistant. In December 2022, the
corporate data warehouse was integrated
with the Unified System of Corporate
Reporting Indicators, enabling rapid
generation of annual reports online to
deep dive into injury rates across the
Group.
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INSTILLING A SAFETY CULTURE AMONG
EMPLOYEES
OCCUPATIONAL DISEASES AND THEIR
PREVENTION
The Company is committed to
ensuring its people have all the
necessary knowledge, skills and
capabilities to perform their duties in
a safe and responsible manner.
Training starts immediately after an
employee is hired, with a health and
safety induction and subsequent
on-the-job briefings. Briefings are then
repeated regularly in accordance with the
existing corporate programmes. There
are also interactive training courses for
employees in main occupations. In 2022,
over 51 thousand Group employees were
covered by these trainings and briefings.
All Group employees also regularly take
online industrial safety trainings and final
tests.
Employees trained in workplace safety
2022
2021
2020
51,520
38,253
34,040
In 2022, the Company launched a project
to establish a corporate safety coaching
institute. The project covers 18 enterprises
with 42 dedicated safety culture
coaches among them, currently offering
two training courses – Dynamic Risk
Assessment for blue-collar employees
and Behavioural Safety Audit for line
managers. A training course comprises
active classroom sessions, engaging all
participants, followed by practice sessions
in real workplace settings, such as a mine
or a production shop. By 2022-end,
750 trainings were delivered to a total
5,268 employees.
42 coaches
on safety culture joined the Company
in 2022
750 trainings
held by 2022-end
5,268 employees
trained under the safety culture project
Newly identified о cupational diseases
Contribution to
the UN SDGs
2022
2021
2020
174
213
235
The Сompany is implementing a large-
scale environmental program aimed
at reducing harmful emissions into the
atmosphere to minimise the risk of
occupational diseases. The Company
also promotes disease prevention and
healthy lifestyle among its workforce, with
management focused on communicating
to all employees the importance of
complying with occupational safety
requirements and protecting one’s own
health.
Nornickel also seeks to introduce
meaningful occupational health initiatives
taking into account both workplace
and individual risk factors. Production
enterprises have dedicated medical aid
posts to perform pre-shift health checks
and provide medical assistance on
request during working hours.
Employees working in contaminated
conditions are provided with free-of-
charge wash-off and decontaminating
agents.
The Company offers its staff regular
disease prevention screening in line
with recommendations from the
healthcare authorities. All employees
regularly undergo mandatory medical
examinations paid for by the Company,
and special examinations at occupational
pathology centres are provided to
employees exposed to hazardous
substances.
Employees working in harmful and
hazardous conditions receive free food,
milk and other nutritional products for
therapeutic and preventive purposes to
promote health and prevent occupational
diseases.
Employees are provided with safety
clothing, footwear and other personal
protective equipment to mitigate the
adverse impact of work-related harm.
The Russian Federal Service for
Surveillance on Consumer Rights
Protection and Human Wellbeing
(Rospotrebnadzor) constantly scrutinises
the impact of emissions on the health of
the local population in the Company’s
operating regions as the healthcare
system is almost entirely state-run.
Sulphur dioxide emissions in Norilsk have
decreased by 30%–35% over the period
since Nickel Plant shutdown in 2016.
According to Rospotrebnadzor, the total
number of newly diagnosed cases in
the Norilsk Industrial District decreased
by 19% in 2021 (from a 2016 baseline),
specifically for disorders of blood and
blood-forming organs, as well as other
disorders, including the immune system
(down 50%), tumours (down 64%) and
cardiovascular diseases (down 30%).
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139
Nornickel’s medical care framework
Digital Healthcare
Nornickel
VHI
Nornickel Corporate Health Centre the Group's single operator of healthcare services
Medical and posts
Shop-level
Healthcare service
Healthcare
centres
Health resort treatment
Partnerships
CHI
Public healthcare facilities
CORPORATE
HEALTHCARE
The Company has a Corporate Healthcare
programme in place to improve the
availability of medical care in the regions
of its operation for both employees
and members of their families. To this
end, the Company set up a dedicated
subsidiary, Nornickel Corporate Health
Centre, and started to roll out its own
network of corporate healthcare centres
across its footprint, equipped with latest
medical equipment and staffed by highly
qualified healthcare workers. Under this
programme, Company employees enjoy
a wide range of quality medical care and
timely medical aid services both at its
healthcare centres and enterprises.
In December 2021, Nornickel opened its
first corporate healthcare centre under the
Z-Clinic brand in Norilsk to primarily focus
on patients under the VHI programme.
The centre currently provides 246 types
of medical services across 12 primary
care specialties. Over its first year of
operation, the centre accommodated
about 70 thousand patient visits. The
average appointment wait time for many
doctors ranges from 7 days to 1 month,
which confirms the high local demand for
medical care.
In 2022, the Company continued to
develop its network and started work of
opening two more healthcare centres –
in the Talnakh District of Norilsk and in
Monchegorsk. Another focus area is a
programme to set up smaller healthcare
units in remote areas.
The Company is running to establish
healthcare centres across its footprint
to serve all local residents under the CHI
programme. In the reporting year, two
new healthcare facilities were repaired and
equipped: an MRI centre in Monchegorsk
and a healthcare centre in Dudinka. The
centres are expected to welcome their first
patients in the first half of 2023.
The Workshop Medical Service has started
its work, designed to bring quality medical
care closer to employees at work and
strengthen the prevention of disease
detection.
Single health data
repository
Electronic health check-up
system
Telemedicine
Radiology system
Biosensors
Contains health data of more than 70 thousand employees across
the Company’s entire workforce
Automates health check-ups and enables analyses of employees’
health data
Enables a doctor from anywhere in the country to consult with
experts from central clinics
AI-based system for analysing and processing medical images
Round-the-clock health data monitoring with wearable sensors
Disease risk assessment
Tracks changes in the body that can lead to a disease, enabling early
prevention
E
R
A
C
H
T
L
A
E
H
L
A
T
I
G
D
I
The Company also rolled out its
Digital
programme to implement
Healthcare
innovative IT solutions in medical technology.
Introduced in 2021 at Zapolyarye Health
Resort, the programme was launched in
Norilsk in 2022 and is expected to cover
healthcare facilities on the Kola Peninsula in
2023. Employees can now use a new mobile
app to quickly access their medical records,
make an appointment with a doctor and
get all the information they need about the
clinics’ services. Development plans include
fully digitising key medical documents (an
electronic health record project), setting
up a new automated system for advanced
diagnostics and rolling out a disease risk
assessment system.
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140
141
ENVIRONMENTAL PROTECTION AND
CLIMATE CHANGE
Contribution to the
UN SDGs
ENVIRONMENTAL STRATEGY
In 2020, Nornickel developed its Holistic
Environmental Strategy which sets
clear goals across key focus areas:
climate change, air, water, soil, waste,
and biodiversity. In 2021, the Strategy
was further detailed and approved by
the Board of Directors, with an update
scheduled for the second quarter of 2023.
For more details on the Environmental
Strategy, see the Company website.
ENVIRONMENTAL MANAGEMENT SYSTEM
Nornickel’s Environmental Management
System (EMS) is part of the Corporate
Integrated Quality and Environmental
Management System. This ensures
coordination between all environmental
matters and other areas, enhancing
the Company’s overall performance on
environmental safety.
System audit
At the end of 2022, 44% of Group companies (by average headcount) were certified to ISO
14001:2015, an international environmental standard.
Certificate
Certified assets
Auditor
ISO 14001:2015
MMC Norilsk Nickel (Head Office, Polar
Division, Polar Transport Division, and
Murmansk Transport Division)
Kola MMC
Norilsk Nickel Harjavalta
Bureau Veritas
In 2022, a surveillance audit was
conducted (annual)
In 2021, a recertification audit was
conducted (once every three years)
CLIMATE CHANGE
OUR APPROACH
The current approach and further
development of the climate risk
management system are based on the
TCFD (Task Force on Climate-related
Financial Disclosures) framework,
covering strategy, corporate governance,
risk management, metrics, and targets.
9.7 t CO₂ per tonne
of metal
the carbon footprint of nickel metal
production in 2021, in line with
international standards
The Company has in place the Sustainable
Development and Climate Change
Committee of the Board of Directors, the
Board-approved Climate Change Policy
and the management-approved TCFD
Compliance Roadmap.
We aim to be a sustainable and reliable
partner. One of our key priorities is to
retain a competitive carbon footprint
while boosting metals production to
enable the global transition to a green
economy.
In line with its TCFD Compliance Roadmap, the Company has developed
three scenarios of the global economy development and climate change
until 2050.
Rapid
Transition
Sustainable
Palladium
Global
Growth
Probability 25%
Probability 70%
Probability 5%
Human and
environmental
well-being
7 °
+1.
С1
Continuation of current
socio-economic and
technological trends
0 °
+2.
С1
Hydrocarbon-driven rapid
technological advancement
and economic growth
.5 °
С1
+2
The recertification audit conducted in 2021
confirmed the Company’s compliance
with ISO 14001:2015, with a certificate of
compliance issued for another (sixth)
certification period. Following the second
surveillance audit of the sixth certification
period in November 2022, the auditors
concluded that the Company successfully
demonstrated that it had deployed
and was maintaining and continuously
improving its Corporate Integrated Quality
and Environmental Management System,
as well as confirmed its compliance with
ISO 14001:2015.
The Company has chosen the
Sustainable Palladium as its baseline
scenario, according to which traditional
industries are expected to continue
playing a significant role amid a growing
green economy. In particular, internal
combustion engine vehicles are expected
to retain a large market share, resulting in
a steady long-term demand for palladium.
The other two scenarios will be used
by the Company to stress-test climate-
related risks.
1 Projected temperature increase above pre-industrial levels by 2050.
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PERMAFROST
MONITORING
The key risk entailed by global climate
change for the Northern climatic zone
covering the Norilsk Industrial District
includes permafrost thawing, which
can significantly reduce permafrost
bearing capacity. To minimise such
risks, improve the Company’s asset life
cycle management and forecast the
potential negative impact of higher soil
temperatures on buildings and structures,
the Company has taken proactive
mitigation measures, including:
• measures to identify climate risk
factors;
• developing and testing a model to
•
assess the impact of climate change
risk factors on the Company’s assets;
introducing the building and structure
monitoring system in the Norilsk
Industrial District.
The large-scale automated monitoring
programme aims to equip the Company’s
buildings and structures with an array of
sensors, which will feed real-time data
to the main control centre. In total, the
programme is planned to install sensors
across at least 1,500 facilities in the Norilsk
Industrial District.
Key activities implemented in 2021–2022:
• Creating and launching an IT platform
to process both automatically and
manually collected data from sensors
and the Company’s geotechnical
monitoring business process;
• Launching systems for automated
monitoring of foundation soil
temperature, foundation deformations
and the temperature and humidity
in ventilated crawl spaces across 165
buildings and structures;
• Satellite monitoring of the Company’s
assets, which provided a set of data on
land surface displacements to bring
dedicated management focus to
identified issues when conducting field
studies of buildings and structures;
• Completing the design of automated
monitoring systems for the
programme’s Phase 2 buildings and
structures (production facilities of NTEC
and tailings storage facilities of the
Company’s Norilsk Division). Phase 2
deployment of the monitoring system
will be completed by 2025.
In 2022, the Company focused on building
a research and practice framework
for its asset life cycle management
strategy. Efforts to this end included
drilling deep monitoring wells (200 m) in
populated areas of the Norilsk Industrial
District to study the permafrost soil
temperature range and assess the impact
of global climate change on permafrost
(including restoring a deep well in the
centre of Norilsk, where temperature
measurements have been taken since
as early as the 1960s). The Company has
partnered with leading expert and R&D
organisations studying permafrost as well
as construction and operation of buildings
and structures in northern climates. The
Company constantly collects, compiles
and analyses data on permafrost soil
composition and properties, including
historical data from engineering surveys
that were carried out in the Norilsk
Industrial District throughout its history
from the very beginning. Plans include
building and implementing predictive
models as well as shifting to advanced
smart manufacturing technologies,
big data processing systems, machine
learning, and AI to support decision
making around construction and
operation of buildings on permafrost.
GHG EMISSIONS
In 2022, direct and indirect greenhouse
gas emissions (Scope 1 + 2) from
operations were 8.6 mln t 1, down
6% y-o-y. The decrease was due to
streamlining CHPP operating modes
and HPP loads as well as the weather
factor – in 2022, the heating period was
shorter than in 2021 due to a warmer
winter.
ope 1 + 2 GHG emissions (mln t of СО2 eq)2
Sc
2022
2021
2020
1.3
1.3
1.2
8.1
8.5
8.0
0.5
0.5
0.5
9.9
10.3
9.7
Scope 1 emissions from households and infrastructure facilities
Scope 1 emissions from production assets
Scope 2 emissions from production assets
Indirect emissions (Scope 2) were
calculated using the location-based
method, including regional emission
factors. Notably, Bystrinsky GOK, the key
enterprise of Nornickel’s Trans-Baikal
Division, signed an unregulated bilateral
agreement to purchase 118.3 mln kWh
of electricity to reduce its impact on the
climate.
GHG emissions from operations by division in 2022,
Sc
ope 1 + 2 (mln t of СО2 eq)
2022
0.03
2021
0.05
2020 0.05
3.9
3.7
3.9
0.4
0.5
3.4
0.3
0.5
0.6
3.6
0.6
0.5
0.5
3.1
0.4
8.6
9.0
8.5
Harjavalta
Norilsk Division
Kola Division
(excluding Harjavalta)
Trans-Baikal Division
Energy Division
Other
Nornickel’s key production facilities are
located in the Norilsk Industrial District,
in the Arctic Circle, and operate in sub-
zero temperatures for about eight
months of the year. Since the Norilsk
Industrial District is isolated from the
federal energy infrastructure, Nornickel
generates electricity and heat locally
at its own generating facilities (100%
owned by the Group). As a result, the
bulk of GHG emissions comes from the
Company’s energy assets. At the same
time, as Nornickel is the only producer
of electricity and heat in the Norilsk
Industrial District, the Company also fully
meets the demand for energy and heat
from social infrastructure facilities and
the local population. The share of GHG
emissions generated by infrastructure
facilities and households in Nornickel’s
regions of operation is on average 12% of
total Scope 1 and 2 GHG emissions.
1 Including the emissions allowance for the Sulphur Project and excluding GHG emissions from heat and electricity supplies to household consumers.
2 GHG emissions were calculated as per the GHG Protocol Guidelines. Estimates of greenhouse gas emissions for the Group included the following
greenhouse gases: direct emissions of carbon dioxide (CO2) – 9.7 mln t, nitrogen oxide (N2O) – 53.31 kt and methane (CH4) – 2.5 kt, mostly from gas
transportation, including the Sulphur Project, and heat and electricity supplies to household consumers.
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145
Scope 3
In 2022, the Company published its
first Scope 3 upstream GHG emissions
estimate. Emissions were estimated across
all categories of the GHG Protocol. The bulk
of the emissions is related to the purchase
of goods and equipment from third-party
suppliers as well as the consumption of
energy and fuel not included in Scope 1
and 2. In 2022, the Company continued
to quantify its Scope 3 downstream GHG
emissions in line with GHG Protocol.
Scope 3 GHG emissions
(mln t)
2022
20211
20201
3.9
4.0
3.2
Downstream
Upstream
Downstream emissions include those
associated with transportation of sold
products from the Company to the
customer and first use of the product. Iron
ore concentrate accounted for the largest
share of the total emissions (86%) as its
processing is a highly carbon-intensive
process. Due to the mix and size of its
product portfolio, Nornickel’s Scope 3
downstream emissions are lower than
those of its global metals and mining
peers.
1.8
1.7
1.8
5.7
5.7
5.0
RENEWABLES AND ENERGY EFFICIENCY
The Company’s key renewable energy
source is hydropower generated by the
Group’s Ust-Khantayskaya and Kureyskaya
HPPs. In 2022, the share of renewables
in total electricity generation stood at
51% for the Group and 56% for the Norilsk
Industrial District.
Natural gas and renewables (hydropower)
are the core low-carbon sources for
energy generation. Diesel fuel, fuel oil,
petrol, and jet fuel are used by Nornickel’s
transport assets. Use of coal by energy
assets is minimised to only small amounts
in certain production processes.
Nornickel has its own energy assets
located in the Norilsk Industrial District,
in the Arctic Circle, operating in sub-zero
temperatures for about eight months
of the year. Since the Norilsk Industrial
District is a remote area isolated from the
federal energy infrastructure, Nornickel
has historically been fully self-sufficient
in building its operations, including in
terms of electricity/energy generation
and transmission. As the only producer
of electricity and heat in the Norilsk
Industrial District, the Company also
supplies energy to social infrastructure
facilities and the local population.
The use of other renewables, such as solar
and geothermal energy, is impracticable
as Nornickel’s core production assets
are located in the Arctic Circle in the
Norilsk Industrial District, in harsh
climatic conditions. As to wind farms, the
Company considered them as part of a
feasibility study in 2022. While there are
currently no viable options to construct a
wind farm in the Norilsk Industrial District,
the Company will continue exploring
available opportunities.
Due to harsh climates, not all renewables are available in the Arctic Circle
SOLAR POWER
GEOTHERMAL ENERGY
~ 8 m
onths a year —
air temperatures below freezing point
~ 100 da
ys —
duration of polar nights and twilights
Permafrost —
300 to 500 m deep
0 da
~ 7
sunny days
ys per year —
The Group’s own energy assets produce
about 54% of total energy and 83% of
electricity consumed by the Group. The
Group also supplies electricity and heat to
external consumers, primarily local social
infrastructure and local communities in
the Norilsk Industrial District.
Energy generation and consumption by the Group1
(TJ)
Item
Fuel consumption by the Company2
• Natural gas
• Diesel fuel and fuel oil
• Petrol and jet fuel
• Coal4
Electricity and heat from own renewable sources
(HPPs)
Electricity and heat purchased from third parties
Sales of electricity and heat to third parties
2020
141,237
122,216
13,9393
2,902
2,180
15,310
11,200
17,254
2021
151,235
130,867
15,097
3,715
1,557
14,586
10,891
19,974
2022
141,380
125,933
13,581
311
1,555
16,152
11,005
18,968
Total consumption of electricity and fuel5
150,128
156,383
149,274
1 In 2022, the calculation procedure was improved by updating a number of GHG emission factors for the production of metals and concentrates sold by
the Group. The 2020 and 2021 data were recalculated using the updated 2022 emission factors.
1 For a detailed breakdown of the Group’s energy consumption by enterprise, see Nornickel’s Sustainability Report 2022.
2 Including the fuel used to generate electricity for Norilsk.
3 Including the diesel fuel spill in May 2020.
4 Coal is only used in production processes, with the Kola Division accounting for 60% of total consumption, the Trans-Baikal Division 20% and
the Norilsk Division 20%.
5 Including losses.
Annual ReportNornickelSustainable development4/72022 146
147
Fuel consumption
(ТJ)
2020
2.1%
10%
2%
2021
2.5%
10%
1%
2022
0.2%
10%
1%
141,237
151,235
141,380
87%
87%
89%
Natural gas
Coal
Diesel fuel and fuel oil
Petrol and jet fuel
Electricity consumption
(TJ)
2022
2021
2020
15,397
16,136
17,750
15,946
14,351
15,111
Electricity from natural gas
Electricity from HPPs
Share of renewables
51%
47%
46%
The 7% y-o-y decrease in fuel
consumption was primarily driven by
reduced gas consumption (down 4%)
due to the growing share of renewable
electricity and by lower jet fuel
consumption (down 92%) due to the sale
of NordStar Airlines.
The Group attaches great importance
to improving the energy efficiency of
its existing and future production sites,
focusing on keeping GHG emissions
within the declared targets under
its comprehensive environmental
programme. In 2022, the Company
invested more than USD 450 million
in upgrading its energy infrastructure.
The investments cover a wide range
of projects related to equipment
replacement at thermal and
hydropower plants and upgrades of fuel
tank storage facilities, power grids and
gas pipelines.
Electricity savings totalled 111,759
thousand kWh in 2022, with 45 energy-
saving initiatives implemented.
> USD 450 mln
invested in upgrading the energy
infrastructure in 2022
111,759
thousand kWh
total energy savings in 2022
Annual ReportNornickelSustainable development4/72022 148
149
AIR
High sulphur dioxide emissions from the smelting of sulphide concen-
trates with high sulphur content are a key environmental issue for the
Company.
OUR TARGETS
Nornickel’s strategic plan is to transform the Company into an environmentally clean and
safe business by implementing Sulphur Project 2.0 across the Norilsk and Kola Divisions
and thus cutting its sulphur dioxide emissions.
SO2 emissions from Kola Division
, kt
SULPHUR PROGRAMME 2.0:
REDUCTION IN SO2 EMISSIONS
KOLA DIVISION
NORILSK DIVISION
2022
2021
2020
2015
SO2
2022
2021
2020
2015
13
16
From 2015 to 2021
decrease by
73
90%
155
emissions Norilsk Division
, kt
1,765
1,585
1,837
1,854
2020
2021
2023
Redisign
Optimization of smelting operations to cut
SO₂ emissions in Russia-Norway border
zone
Complete shut-down of the obsolete
Copper refining line and metallurgical
shop on the Kola Peninsula
Programme 2.0 project at Nadezhda
smelter to capture furnace gases
Launch of Sulphur Programme 2.0 at
Copper Plant to capture furnace and
converter gases2
Target: 50%1
reduction in SO₂ emissions in Nickel
town and city of Zapolyarny
Fact:
Outdated smelting shop was shut down in
Nickel town in December 2020
Target: 85%1
reduction in total SO₂ emissions at Kola
Division
Fact:
Metallurgical shop was shut down in
March 2021
Target: 45%1
reduction in SO₂ emissions at the
Norilsk Division facilities once the design
capacity is reached. The design capacity
is expected to be achieved in 2024
Target: up to 90%1
reduction in SO₂ emissions at the
Norilsk Division facilities after the design
capacity is reached
1
2
Compare to «base» 2015 year.
The mplementation timene for the project at Copper Plant is indicated in accordance with the Polar Division's
Enveonmental Performance invitere Progranime (2020) taking into account Clause 6 of Appendix No. 8 to
Resobtion of the Russian Government No. 353 dated 12 March 2022.
2‘
by 71%1
SO˘ emissions were reduced
in Nickel town and city of
Zapolyarny in 2020
by 90%1
SO˘ emissions were reduced in 2021
at Kola Division
7‘
~2‘
~10‘
In progress
Redesign (2023) and
in progress
Annual ReportNornickelSustainable development4/72022
150
151
Item
Across the Norilsk Nickel Group
Sulphur dioxide (SO₂)
Nitrogen oxide (NОx)
Particulate matter
Other pollutants
•
including the Norilsk Division
Sulphur dioxide (SO₂)
Nitrogen oxide (NОx)
Particulate matter
Other pollutants
•
including the Kola Division
Sulphur dioxide (SO₂)
Nitrogen oxide (NОx)
Particulate matter
Other pollutants
•
including the Trans-Baikal Division
Sulphur dioxide (SO₂)
Nitrogen oxide (NОx)
Particulate matter
Other pollutants
•
including other entities
Sulphur dioxide (SO₂)
Nitrogen oxide (NОx)
Particulate matter
Other pollutants
2020
1,968
1,911
10
15
31
1,858
1,837
1
4
16
83
73
2
6
2
5
1
0
3
2
22
0
7
2
12
2021
1,647
1,601
11
9
25
1,604
1,585
1
5
13
20
16
2
1
1
3
0
0
2
1
20
0
9
0
11
2022
1,819
1,778
10
11
21
1,782
1,765
1
7
8
16
13
1
1
1
4
0
0
3
1
18
0
7
0
11
In 2022, the Group’s pollutant emissions
totalled 1.8 mln t, up 10.5% y-o-y. The
increase was caused by production
recovery in the Norilsk Division after a
decline in 2021 that followed suspension
of operations at Norilsk Concentrator
and the temporary shutdown of two
mines due to flooding. The Kola Division
continued reducing its emissions with
the closure of certain obsolete production
facilities: total gross emissions were down
18% from 2021.
WATER
The Company’s assets are located in
regions with sufficient water resources.
In 2022, as in previous years, no shortage
of water was reported as enterprises and
households were supplied with sufficient
amounts of water.
Nornickel is extremely careful about its use
of fresh water and strictly complies with
restrictions applicable to industrial water
withdrawal.
Nornickel’s key production facilities
use closed water circuits to keep water
withdrawal on a relatively low level.
Furthermore, the Company never
withdraws water from protected natural
areas. The water we used was mostly
withdrawn from surface and underground
water bodies, in addition to third-party
wastewater and natural water inflow.
The total water withdrawal remained flat
y-o-y in 2022. Natural water inflow and
meltwater accounted for 17.6% of the total
water withdrawal in 2022. All facilities
using water have programmes in place to
monitor water bodies and water protection
areas.
Nornickel is committed to
responsible and sustainable use of
water resources and prevention of
water body pollution.
In 2022, 81.8% of all water used was
recycled or reused, in line with the
Company’s strategic goals.
Total fresh water withdrawn1
(Mcm)
2022
2021
2020
236
235
283
Water consumption and wastewater discharge in 2022
Water withdrawal
Consumption
Mcm
353
Surface sources
3 Mcm
- 23
Underground sources
4 Mcm
- 2
Wastewater
4 Mcm
- 2
Natural water inflow
- 62 Mcm
Other
- 9 Mcm
51 Mcm =
1,3
246 (fresh water)
+
+
1,105 (reused and recycled
water)
-
27 Mcm
water reused in other
production processes
(2%)
8 Mcm
1,07
recycled water (80%)
-
Wastewater
discharge
168 Mcm
Clean - 90 Mcm
Treated
4 Mcm
-
Insufficiently treated
- 34 Mcm
Contaminated
1 Mcm
- 4
1 With the exception of mine waters for production activities.
Annual ReportNornickelSustainable development4/72022
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153
Water consumption
(Mcm)
2022
2021
2020
511
541
110
100
471
141
716
627
765
15
13
82
1,351
1,281
1,458
Norilsk Division
Kola Division
NTEK1
Other
The slight increase in water
consumption in 2022 was due to
the commissioning of new facilities
at the Kola Division, the nickel
carbonyl section reaching high capacity
and the concentrate shipment unit at
the Concentrator ramping up to design
capacity.
Wastewater discharge
(Mcm)
2022
2021
2020
90
95
4
34
41
5
34
60
110
4
33
55
Clean
Treated
Insufficiently treated
Contaminated
168
194
202
Wastewater discharge into water bodies
also does not exceed the approved limits
or have any material impact on biodiversity
of water bodies and related habitats. In
2022, the Company decreased its total
wastewater discharge by 13.4% y-o-y and
also untreated wastewater discharge by
32.5% y-o-y.
attributed to a lower volume of water
inflow into underground workings due to
weather conditions.The Company makes
every effort to ensure that substance
concentrations in wastewater are kept
within regulatory limits, with all division-
level programmes at the Company
containing measures to this end.
by 13.4%
decrease in wastewater discharge in
2022
In 2022, the mass of pollutant discharges
decreased by 12% y-o-y. The decrease in
wastewater and pollutant discharges was
Water risk management
The Company’s ongoing procedures to
assess the risks of its impact on water
resources include:
• wastewater inventory
• monitoring of wastewater discharge
volume and quality at discharge sites
1 NTEС is part of the Energy Division.
• observation of surface water bodies
at control points upstream and
downstream of discharge sites
investments in improving the
performance of water treatment
systems and building new systems
•
• monitoring of wastewater treatment
processes at treatment facilities and
implementation of organisational
and technical measures to improve
treatment effectiveness.
Waste generation by hazard class
(kt)
2022
2021
2020
164,742
154,923
1,541
1,493
144,052
1,182
166,283
156,416
145,234
Class V
Class I-IV
Waste management
(kt)
2022
2021
2020
33,076
3
133,443
29,460
0.1
128,080
37,728
4
111,491
Utilisation
Treatment
Disposal
WASTE
The Company reuses most of its
industrial waste in its own operations
as approximately 99% of the waste
generated is non-hazardous (hazard
class V). Such waste includes rock and
overburden, tailings and metallurgical
slags. Ore extraction waste is placed
in tailings and used as backfill for
underground workings and open
pits, road fill or for tailings dam
reinforcement.
In 2022, the total weight of waste
generated increased due to higher
mining and concentration volumes as
well as the Company implementing
a programme to clean up the sites
of unused (dilapidated) facilities and
dismantle these facilities, which drove
the generation of construction waste.
TAILINGS
Nornickel currently operates six tailings
storage facilities: four in the Norilsk
Division, one at Kola MMC and one at
Trans-Baikal Division.
While all tailings storage facilities
operated by the Company are located at
a significant distance from production
facilities and local communities, Nornickel
recognises these facilities as higher-
risk assets with significant potential
environmental and social impacts. This
is why the Company regularly monitors
the condition of hydraulic structures
and inspects discharge sites as well as
adjacent areas.
Annual ReportNornickelSustainable development4/72022 154
155
BIODIVERSITY
Although Nornickel has for years
supported protected areas in its regions
of operation, it was not until 2022 that the
Company decided to establish a dedicated
biodiversity impact management
system, also laying the first foundation
for it by conducting baseline biodiversity
surveys.These studies became another
milestone in Nornickel’s history of
partnering with scientists for biodiversity
conservation.
The baseline survey project, known as
the Great Scientific Expedition, was a
comprehensive study of the ecosystems
near the Company’s operations, including
its exploration, mining, concentration,
metallurgical, transport, logistics, and
energy facilities. Geographically, the surveys
covered three regions: the Zabaykalsky
Territory, the Murmansk Region and the
Taimyr Peninsula, partially including even
the Northern Sea Route. This biodiversity
survey became the most extensive
ecosystem study since the Soviet era. The
obtained data were used to establish the
key parameters needed to build the system:
• Delineating the areas where ecosystem
biodiversity is exposed to negative
impacts
• Reference areas, adverse impacts and
threats to biodiversity
Indicator species for local ecosystems
•
• Biotic and abiotic indicators of
ecosystem health
• Key biodiversity values
• The current state of biodiversity within
selected affected areas
• Other
For more details on the survey findings, see
the Biodiversity section on the Company
website.
The expedition will span beyond 2022: it
will be continued with in-depth research in
2023, gradually evolving into an ecosystem
monitoring programme while also serving
as a source of data for assessing biodiversity
impacts.
The 2022 survey data were used to
establish estimated radii of impact on
biodiversity and changes in ecosystem
health vs reference areas. This principle was
incorporated into the technique developed
specifically for Nornickel to check
ecosystem health using key biodiversity
indicators, with differentiation by impact
radius. The technique served as the basis for
a methodology to establish the integrated
ecosystem indicator (IEI), which will
measure the Company’s progress towards
its goal of zero net biodiversity losses and
zero negative ecosystem changes caused
by its production and mining operations.
In other words, the IEI will become a tool to
track the performance of the biodiversity
impact management system.
Starting from 2022, divisions will conduct
annual biodiversity monitoring to track
changes, and the IEI will also be annually
calculated using the methodology and
the updated biodiversity monitoring data
submitted by each division. The zero net
biodiversity losses goal is planned to be
achieved through the Prevent – Mitigate –
Restore – Offset principle, implementing
biodiversity conservation plans.
Such plans will be drawn up to drive the
performance of the biodiversity impact
management system designed by the
Company in parallel with the baseline
surveys. To develop this system, a draft
corporate Standard for biodiversity
conservation was developed in 2022. Next
steps for further developing the Company’s
biodiversity impact management system
include the rollout of the corporate
Biodiversity Standard and the development
and implementation of division-level long-
term biodiversity conservation programmes
and annual activity plans based on the
standard. The divisions are expected to
develop and implement these documents
in the 2023 year.
Also in 2022, monitoring was continued for
the ecosystems cleaned up after the spill
– the efforts known as the “Great Norilsk
Expedition”. This was the first large-scale
study of biodiversity, which also highlighted
the need to study and conserve the
ecosystem biodiversity. The data collected
by the Great Norilsk Expedition were
included in the data analysis of the Great
Scientific Expedition.
In a separate programme, the basin of
the Pyasina River was studied to explore
opportunities for naturally improving the
productivity of its water bodies; the results
showed a good potential for piloting the
latest ecosystem restoration methods.
Another highlight of 2022 was an
agreement between Nornickel and the
Russian Ministry of Natural Resources and
Environment on polar bear conservation,
which resulted, inter alia, in two separate
operations to rescue polar bears, Dikson
and Slastena, with the Company’s
management matching any donations to
help treat Dikson.
COOPERATION WITH
NATURE RESERVES
There are no nature reserves in the
proximity of Nornickel’s operations. In the
Murmansk Region, the Pasvik and the
Lapland nature reserves are 10 to 15 km
away from the Kola Division production
facilities. In the Krasnoyarsk Territory, the
boundaries of the Putoransky Nature
Reserve buffer zone are at a distance of
80 to 100 km from the Norilsk Division
production sites.
The Company regularly organizes volunteer
actions, supports nature reserves and
finances research of red Book animals, in
line with its long-term strategy to maintain
biodiversity in its regions of operation and
to preserve the unique Arctic nature. In
the Zabaykalsky Territory, the Company
supports the development of research and
technical capabilities of the Uryumkansky
Nature Reserve.
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157
SOCIAL STRATEGY
Contribution to the UN
SDGs
Nornickel is playing an important role
in the Russian economy. Due to its
geography and financial strength, the
Company has a strong impact on the
social and economic life in the regions
in which it operates. With its enterprises
located mostly in single-industry towns,
Nornickel seeks to foster a favourable
social climate and comfortable urban
environment, providing its employees
and their family members with ample
opportunities for creative pursuits and
self-fulfilment.
The core principle behind this social
contribution is a partnership involving
all stakeholders in the development and
implementation of social programmes
based on the balance of interests,
cooperation and social consensus.
The harsh climate faced by Nornickel
employees in life and at work, the
remoteness of the Company’s key
industrial facilities and the increasing
competition for human capital across the
industry call for a highly effective, human-
centred social policy that would promote
Nornickel’s reputation as an employer of
choice.
Social expenses
(USD mln)1
2022
2021
2020
407
505
The Company not only consistently fulfils
its obligations to support and develop the
indigenous peoples of Taimyr as part of
its five-year support programme but also
provides additional assistance on matters
relevant for indigenous communities,
including:
•
strengthening the infrastructure of
indigenous communities and helping
them prepare for autumn and winter
(the hunting and fishing seasons)
transporting passengers and cargo
to Taimyr villages by helicopter;
supporting holidays that resonate with
the indigenous peoples of Taimyr – the
Reindeer Herder’s Day, the Fisherman’s
Day, etc.
1,048
•
2022 saw a decrease in social spending,
primarily due to the high base effect
of 2021, when significant reserves
were accumulated to finance the
Comprehensive Plan for the Social and
Economic Development of Norilsk.
In 2022, the Company continued the
Taimyr Students targeted programme
launched in 2020 to provide education
at the Fedorovsky Polar State University
for representatives of indigenous peoples
living in the Taimyrsky Dolgano-Nenetsky
language textbooks and supported
the establishment of an open-air Sámi
museum in Murmansk.
Municipal District. At the moment,
40 indigenous students are studying
at the university under the targeted
programme. The Company finances
tuition fees, accommodation in Norilsk
during the study period, round-trip
travel expenses, and a scholarship of
RUB 20 thousand (monthly for full-time
students and during exams requiring full-
time attendance in Norilsk for part-time
students).
In 2022, Nornickel completed projects
under a cooperation agreement with the
Kola Sámi Association which represents
the interests of the indigenous peoples of
the North of the Murmansk Region. The
Company supported the Sámi people in
developing their culture and preserving
their traditional lifestyle, leveraging
the best practices tried and tested in
Taimyr. In particular, Nornickel financed a
project to create a single Sámi alphabet
and the publication of pre-school Sámi
SUPPORT FOR INDIGENOUS PEOPLES
Indigenous peoples of the North, such as
Nenets, Dolgans, Nganasans, Evenks, and
Enets, currently residing on the Taimyr
Peninsula, count over 10 thousand people.
The Company also engages with the Kola
Sámi in the Lovozersky Municipal District
of the Murmansk Region.
Nornickel respects the rights and protects
the ancestral lands, traditional culture and
trades, historical heritage and interests of
indigenous peoples within the Company’s
footprint and delivers on its commitments
to enhance and foster good neighbourly
relations.
Nornickel adopted the Indigenous Rights
Policy, which defines Nornickel’s key
related commitments. Nornickel compiles
with all applicable international standards
and regulations regarding the support
for indigenous peoples of the North and
recognises the rights of local communities
to preserve their traditional lifestyle and
1 According to IFRS statements.
indigenous trades. The Company’s metals
and mining assets are located outside
indigenous territories in the Taimyrsky
Dolgano-Nenetsky Municipal District.
The Company’s voluntary commitments
and arrangements with the indigenous
peoples of Taimyr are formalised by
agreements and minutes of meetings
with representatives of indigenous family
communities.
To support the indigenous peoples
of Taimyr, Nornickel implements a
programme to promote the social and
economic development of the Taimyrsky
Dolgano-Nenetsky Municipal District
in 2020–2024, with a total funding of
RUB 2 billion. The programme comprises
over 40 activities across a number of areas
such as support for traditional trades
of indigenous peoples; infrastructure
development, e.g. construction of housing
and social facilities in Taimyr villages;
improved accessibility of medical care;
promotion of education, culture, sports,
and tourism.
In 2022, the annual World of Taimyr
project contest continued, aimed at
supporting social-impact projects and
fostering the sustainable development of
indigenous territories on the peninsula.
The contest features a grant financing
system and only accepts project from
representatives of indigenous peoples
of Taimyr and non-profit organisations
acting in the interests of the indigenous
peoples. The winners started
implementing their projects in June 2021
and completed them in November 2022.
A total of 28 social projects received the
grants. The success of the first contest,
with projects implemented in 2021–2022,
proved the popularity and relevance of
this initiative.
In 2022, the Company spent a total of
RUB 412 mln
on projects to support the
indigenous peoples of the North
For Nornickel, these projects are
much more than just spending
items. These are joint initiatives
that can only be delivered
efficiently through ongoing
collaboration and close contacts
with indigenous communities
and tribes, supported by mutual
understanding and regular
dialogues driven by a sense of
inclusion.
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159
YOUTH PROGRAMMES
Shine art festival
In 2022, Nornickel supported the
first Shine public art festival held in
Monchegorsk. The festival’s key message
was that we can and should improve the
environment we live in, and public art is
an excellent tool to do just that.
The city’s residents and guests had
the opportunity to express themselves
creatively in the urban environment.
During the festival, more than
2 thousand city residents attended
creative laboratories, masterclasses and
workshops. The programme covered
several arts: street art, singing, music,
and dance. In the run-up to the festival, a
campaign was held to collect scrap metal,
which the festival participants later turned
into unique art objects to decorate the
city. The festival was open for everyone,
and the most active participants received
prizes.
Add Colours to Your
Town project
For nine years, Nornickel has been holding
its annual Add Colours to Your Town art
contest for children and youth living in
Norilsk and Monchegorsk. The main idea
of the project is to engage the younger
generation in transforming cities through
art, foster their feeling of attachment to
the city and build a vision of their future
intertwined with the city’s.
Early career guidance for
children
On 1 September each year, the Company
provides all first-graders in its host cities
with A Book on How Metals Helped Build
Cities presenting metals and mining jobs
in a compelling and informative way.
Systematic career guidance efforts build
up children’s patriotism and instil a sense
of pride and ownership in the metals and
mining champion while introducing them
to cultural heritage, promoting science
and boosting its appeal to the younger
generation by telling them about the
Company’s production processes.
thousand employees took part in the
drive, completing over 200 environmental
projects. The environmental volunteering
programme focuses primarily on the
Arctic: Nornickel employees joint forces to
implement projects aimed at preserving
the harsh but beautiful and vulnerable
nature of the Far North.
Green Brush online
camp
Nornickel supported the Green Brush
online children’s camp aimed at fostering
green behaviours and a safety culture
among the younger generation and
offering early career guidance.
The project lays a foundation for training
future environmental engineers and H&S
professionals by teaching school students
to be environmentally responsible and
considerate and conscious of their own
safety and the safety of those around
them.
Over 500 schoolchildren aged between
8 and 14 participated in webinars,
creative workshops and online quizzes
hosted by practicing environmental
engineers, geologists, occupational
safety specialists, and education experts.
Guided by professional consultants,
students developed projects that helped
them practise the new knowledge and
hands-on skills.
LET’S ROLL
ENVIRONMENTAL DRIVE
Run since 2016, the annual Let’s
Roll environmental drive includes
environmental awareness initiatives in
addition to urban development activities.
The event is divided into four stages
focused on communication, projects,
nature reserves, and partnerships.
In 2022, 184 volunteer teams and 1.2
ARCTIC LESSONS
In 2022, to highlight the value of the Arctic
nature and draw public attention to the
problems of its conservation, the Seven
Wonders of the Arctic interactive lesson
was developed as part of the Let’s Roll
environmental drive.
The lesson was designed as a universal
educational tool to be used by the
Company employee volunteers at
educational institutions or online, easily
adapting it to different ages: the tasks and
lesson plans are different for elementary
and middle school students. The lesson
contributes to the UN Sustainable
Development Goals.
The Arctic is one of the few places on
Earth with almost pristine nature, but
also one of the most vulnerable regions
of the world. When the global average
temperature rise by 2 °C is mentioned, it
means a rise by 5 °C in the Arctic, or even
10 °C in some places. Such changes have
huge consequences: accelerated melting
of sea ice and permafrost, changing sea
currents and destroyed shores, animal
habitats and engineering infrastructure
facilities.
With its footprint extended as far as the
Arctic Circle, Nornickel contributes to
preserving this region by supporting
and organising monitoring and research,
promoting landscape and species
30,000
people
from across the Company’s regions of
operation took part in the World of New
Opportunities events.
conservation initiatives and engaging
its employees to provide volunteer
assistance.
CHARITY PROGRAMMES
To incorporate and promote the
sustainability agenda across its operating
regions, Nornickel runs the World of New
Opportunities charity programme focused
on supporting community initiatives and
fostering sustainable development in local
communities.
In 2022, the projects and initiatives
under the World of New Opportunities
programme were integrated into
an ecosystem of related elements:
education – expert community – support
for initiatives. A systematic approach to
engaging local communities ensures
sustainable results: stronger competence
of non-profit organisations, introduction
and adoption of new social technologies,
support for public initiatives as well as
rolling out successful practices across
national and regional expert community
platforms.
In 2022, about 30 thousand people
from across the Company’s regions of
operation took part in the World of New
Opportunities events.
The programme’s key areas in 2022:
Develop!
Invent!
• We Are the City! social technologies forum
• Socially Responsible Initiatives Competition
• World of Taimyr project contest
• Social Engineering Bureau
• Peremena: Change Starts with You education
project
•
•
IMAKE engineering marathon
IN’HUB International Forum of
Innovators
Act!
Create!
• An accelerator for regional entrepreneurs and
an investment session
Projects by regional development institutions:
• Norilsk Development Agency
• Second School centre for community initiatives in
the Pechengsky District
• Monchegorsk Development Agency
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SOCIALLY RESPONSIBLE
INITIATIVES COMPETITION
To support public initiatives that lay fertile
ground for sustainable development of
local communities, the Company holds
the annual Socially Responsible Initiatives
Competition for non-profit organisations.
In 2022, 114 socially beneficial initiatives
were implemented in Nornickel’s regions
of operation. In 2021–2022, the Company
tended to focus on mutually beneficial
regional and cross-regional partnerships
among the competition applicants.
Pandemic-driven constraints and the new
reality drove closer cooperation within the
non-profit sector. The non-profit sector
set an example of achieving positive social
impacts by joining efforts and pooling
resources.
The contest-winning projects span
various social activities: a new interactive
children’s climbing wall, a modern
environmental awareness and tourism
centre, a robotics olympiad for children,
career guidance clubs and assistance in
choosing a professional path, collection
and recycling of waste and litter in the
tundra.
The programme experts and staff note
the positive impacts of the established
ecosystem supporting non-profit and
municipal organisations. Travel grants
enabled applicants to improve their
professional skills during internships and
bring fresh ideas to the regions where
Nornickel operates. The social technology
forum enables experience sharing and
serves as a platform to present successful
practices. The Social Engineering
Bureau and other educational initiatives
provide an opportunity to educate new
contestants and pass on the values
and principles. All in all, the ecosystem
drives the project resilience and
teams’ professional competence, thus
contributing to meaningful results and
positive social impacts.
2022 saw a lot of career guidance projects
helping school students choose their
professional paths.
PEREMENA: CHANGE STARTS
WITH YOU EDUCATION
PROJECT
In 2022, the Company continued the
Peremena: Change Starts with You
education project aimed at facilitating
communication between children, their
parents, teachers and other stakeholders
in a joint effort to improve the education
process. In early 2022, the project experts
held a series of in-person trainings for
teachers and school students from remote
areas. The main topics were gamification
tools and managing motivation in
education. In the reporting year, the
education project covered more than
2 thousand people from 13 communities.
In 2022, the Peremena: Change Starts
with You project won the GRADUATE
AWARDS as the Best Schoolchildren
Engagement Programme. In 2021, it
received international recognition and,
along with Nornickel’s other education
programmes, was included in the
compendium of best practices following
the UN’s open call.
IMAKE LEAGUE PROJECT
This is a club for aspiring, seeking,
thoughtful young makers, future
engineers and scientists. Through this
project, Nornickel supports a system of
scientific and educational activities to
promote a culture of scientific creativity
among children and teenagers. The
project comprehensively involves children
in the R&D process, stimulating their
interest, motivation and development in
this area.
2022 saw such key initiatives under the
project as yet another IMAKE Camp shift
in Vladivostok, the IMAKE engineering
marathon (intensive courses and
workshops in different cities, consultations
for participants, online presentations
of inventions and prototypes), IMAKE.
May Day (maker family weekend), and
participation in inventor forums. In 2022,
more than 3.5 thousand school students
from the Company’s regions of operation
took part in the project events.
Members of the IMAKE League presented
their scientific and engineering inventions
at various online presentations and
meetings. Young League members
(children and teenagers aged between
8 and 17) as well as their parents, experts
and invited specialists are gradually
becoming ambassadors for the IMAKE
League project. In 2022, the LIGA IMAKE:
Producers of Ideas project was praised
by experts and won the first prize in the
GRADUATES & INTERNS category of the
HR IMPACT competition.
IN’HUB PROJECT
Nornickel co-organised the IN’HUB
international innovations salon aimed
primarily at supporting and promoting
inventors and innovators. As part of this
project, an innovative project competition
was held in 2022, with projects such
as Interval Train Traffic Control System,
Stereotech Hybrid 5D Printer, BIO
Industrial Air Cooling System, and others
named among the winners. As part of the
IN’HUB series of events, 1,300 applications
were submitted for the competition
in 2022, of which 490 were formally
reviewed and 204 were presented at the
Forum and posted on the marketplace.
Projects by 30 foreign inventors from
Switzerland, Austria, Israel, Egypt, Iran,
Indonesia, Kazakhstan, and Belarus were
presented at the IN’HUB International
Forum, along with Russian inventions and
developments from 42 regions.
The Company’s social investments are
aimed, first and foremost, at encouraging
the development of our children while
also developing the human capital in
regions and thus contributing to their
sustainable development.
For more details on the World of New
Opportunities programme, see Nornickel’s
2022 Sustainability Report.
RESPONSIBLE SUPPLY CHAIN
APPROACH TO
MANAGEMENT
Nornickel’s procurement system
focuses on timely and fully meeting the
Company’s needs for required materials
and services of specified quality and at an
acceptable price.
Nornickel takes a responsible approach to
sourcing, prioritising partners who comply
with applicable laws and regulations,
ensure safe working conditions and
care for the environment. The Company
expects its suppliers to comply with
international best practices and standards
in sustainability and environmental
stewardship.
The following key documents guide
supply chain management at Nornickel:
• Business Ethics Code;
• Human Rights Policy;
PROCUREMENT
Nornickel engages with suppliers via open tender procedures. In 2022, the
Company signed over 4.4 thousand contracts for centralised procurement of
materials and equipment worth around RUB 143 billion.
Procurement process
Nornickel’s procurement process is
certified to international standards ISO
9001 and ISO 14001.
The Company procures over 40
aggregated purchasing categories, from
heavy industrial equipment to food. In
doing so, the Company provides equal
competitive opportunities for large,
medium and small businesses alike,
guided by generally accepted standards of
fair business practices and the principles
of avoiding conflicts of interest. To
maximise procurement effectiveness and
transparency, the Company’s procurement
activities are mostly centralised at its Head
Office through automated systems and
electronic trading platforms.
Depending on the budgeted cost,
procurement can follow a tendering,
simple or simplified procedure. Based
on the materiality and parameters of
purchases, the qualification results and
the winning bidder in the procurement
process are approved by the collective
procurement body composed of
representatives from various functions of
Nornickel. The contract with the winning
bidder is signed in accordance with the
approved results of the procurement
procedure. All details of the Group's
centralised procurement transactions are
published on the website.
As the Company aims to work with reliable
suppliers who will meet their obligations
regarding delivery dates and the quantity
• Supplier Code of Conduct;
• Responsible Sourcing Policy;
•
Internal corporate procurement
standards
and quality of products supplied, during
the procurement procedure all suppliers
undergo mandatory qualification
screening against formalised criteria and
rules.
Nornickel gives preference to local
suppliers to provide social support to its
operating regions. Along with saving jobs,
this policy supports unique enterprises
whose continuous operation is essential to
both the well-being of their employees and
the social fabric of local communities.
Nornickel has in place a hotline that can be used by counterparties to report any
violations.
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Supplier engagement
Nornickel has in place a supplier
relationship management (SRM)
system to drive seamless and
effective engagements with
suppliers.
The Company’s supplier engagement
efforts are focused on establishing
effective feedback mechanisms. The
SAP SRM automated management
system gives suppliers anytime access
to information about the Company’s
procurement procedures.
Sign-up for the supplier relationship
management (SRM) system is free
of charge and does not impose any
obligations on users.
If a counterparty faces difficulties with signing in or
operating the system, they can seek help and advice via
e-mail at
As at 2022-end, over 10 thousand
potential suppliers had registered in the
system, of which over 9.5 thousand had
been accredited.
suppliers@nornik.ru
or by phone at
+7 (495) 783–00–45, ext. 6 (for calls within Moscow);
8 (800) 700–59–11, ext. 6 (toll-free federal number).
Goods to be shipped must meet the cargo
standards and requirements of GOST
26653-2015 Preparation of general cargoes
for transportation and GOST 15846-2002
Production for transportation to the areas
of the Far North and similar regions.
Packaging, labelling, transportation and
storage. Mandatory requirements are
established for the transport containers
and product packaging that should
ensure cargo integrity during multiple
transshipments and transportation to the
Far North.
Environmental impact is assessed
throughout the life cycle of procured
products: production, transportation,
storage, use, and disposal. Nornickel
requires its contractors to have a
functioning environmental management
system in place and to ensure that all
services and products delivered by them
comply with local environmental laws.
ESG FACTORS IN THE
SUPPLY CHAIN
Nornickel seeks to create a common
information space and set of values with
its suppliers. The Company employs a
proprietary multi-tier system to evaluate
its suppliers. The criteria for selection,
evaluation and re-evaluation of external
suppliers have been determined in line
with the requirements of ISO 9001:2015
Quality management systems. Nornickel
is particularly focused on building
relationships with suppliers whose
equipment is unique and critical for
the stable operation of the Company’s
production facilities.
In 2021, the Company approved its
Responsible Sourcing Policy covering
all of the Company’s activities related to
supplier selection in the supply chain
of raw materials, goods and services.
The purpose of the Policy is to define
the Company’s approach to responsible
sourcing and declare standards and
principles to be followed by the Company
and its suppliers.
Together with the Policy, the Company
approved its Supplier Code of Conduct,
which encourages the Company and its
business partners to introduce procedures
for responsible sourcing in accordance
with ESG requirements in all of Nornickel’s
supply chains.
In the reporting period, the Company also
developed and deployed a due diligence
management system (DDMS) for mineral
suppliers, focused on identifying potential
risks affecting the sustainability of
business processes in the mineral supply
chain while also minimising risks of
human rights violation, corruption and
misinformation about minerals, as well
as risks relating to illegal control of mines
and support for non-state armed groups.
The OECD Due Diligence Guidance for
Responsible Supply Chains of Minerals
from Conflict-Affected and High-Risk
Areas and a five-step model for risk-based
due diligence on supply chains provide a
methodological framework for developing
the DDMS.
The DDMS is driven by the following
requirements and recommendations:
• London Metal Exchange responsible
sourcing policy
• Standards and principles of leading
sustainable development initiatives
in the industry: ICMM, IRMA, RMI,
and JDDS, as well as the Chinese Due
Diligence Guidelines for Responsible
Mineral Supply Chains of the China
Chamber of Commerce of Metals,
Minerals & Chemicals Importers &
Exporters (CCCMC)
• Requirements of the Company’s
customers
In 2022, Nornickel conducted due
diligence of metallic mineral suppliers to
the Polar Division and Kola MMC, having
inspected 100% of relevant suppliers, with
zero risks confirmed.
Contracts with suppliers were
supplemented with an anti-corruption
clause and a clause on ESG compliance,
which, in particular, provides for access to
Nornickel’s Corporate Trust Line. In 2022,
the ESG compliance clause was included
in 1,313 contracts and master agreements
with suppliers.
The Company plans to roll out due
diligence to all categories of suppliers,
including those not involved in supplying
minerals. To this end, a new tool within
the DDMS will be launched in 2023 – a
supplier self-assessment questionnaire
covering environmental, social and
governance (ESG) aspects. Its objective
is to assess compliance of suppliers of
minerals, goods, works and services with
the requirements of the Supplier Code of
Conduct.
In 2022, the Norilsk and Kola Divisions as
well as Nornickel’s Head Office underwent
annual RSBN audits. The audits assessed
the maturity of the DDMS and its
compliance with the OECD guidance. As a
result, in 2022, the Company improved its
performance by 35% year-on-year.
Given the risk of potential negative
environmental impact of cargo in transit,
the Company’s master agreement sets
explicit requirements for cargo packaging.
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CORPORATE
GOVERNANCE
Continuous improvement of corporate
governance is Nornickel’s absolute priority.
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167
CHAIRMAN’S LETTER
CORPORATE GOVERNANCE
STRUCTURE
As one of the world’s largest metals
companies, Nornickel is strongly
committed to good corporate
governance.
Throughout 2022, despite a new wave of
shocks that hit the economy following the
sanctions introduced by several countries
against Russia and the challenging
geopolitical environment and economic
uncertainty, Nornickel’s Board of Directors
consistently provided strategic leadership
to the Company and monitored the
achievement of the goals set for the
management team.
In terms of improving the quality of
corporate governance, the reporting
year was marked by a number of
important decisions. Nornickel’s corporate
practices cover most of the principles
and recommendations of the Corporate
Governance Code recommended by the
Bank of Russia.
To further improve corporate governance
and incorporate the Bank of Russia’s
recommendations, the Company updated
its internal documents regulating
disclosure, prevention of unlawful use
of insider information and market
manipulation as well as the documents
dealing with internal audit, internal
control and prevention of corruption and
fraud.
For more details on the Company’s
approved and updated internal
documents, please see Corporate
Governance Results section of this
Annual Report.
The new developments that the
Company had to deal with in 2022 gave
its management a new perspective
on the Company’s priorities and its global
goal – building safe and green cutting-
edge production while driving sustainable
business growth. The Company’s business
processes were promptly adapted to the
new environment in 2023 to maintain its
leading position in the global market.
Dear shareholders, despite all the
challenges of the reporting year,
Nornickel achieved all its 2022 targets. The
Company’s robust balance sheet allows it
to fully meet its obligations to employees,
partners and the state while continuing
to be a compelling investment case for
shareholders and remain upbeat about
the outlook on progress towards its long-
term priorities.
Andrey Bougrov
Chairman of the Board of Directors
MMC Norilsk Nickel
Corporate governance structure as of
31 December 20
22
Audit Commission
Independent external
auditor
36.61 %
37 %
GENERAL MEETING
OF SHAREHPLDERS
President, Chairman
of the Management Board
26.39 %
Internal Control
and Risk Management
Internal Audit Department
Board of Directors
Corporate Governance,
Nomination and
Remuneration Committee
Audit Committee
Strategy Committee
Budget Committee
Sustainable Development
and Climate Change
Committee
Management Board
Budget Committee
Corporate Secretary
Reporting
Interros
Other shareholders (including free float)
Election / appointment
EN+ GROUP IPJSC
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169
KEY PRINCIPLES
In its corporate governance practice, Nornickel is governed by the applicable Russian
laws, the Listing Rules of PJSC Moscow Exchange, and the Corporate Governance
Code recommended by the Bank of Russia1. Nornickel’s corporate governance
system is designed to balance the interests of its shareholders, the Board of Directors,
management as well as employees and other stakeholders.
Key corporate governance principles
Equitable and fair treatment of every shareholder
1
2
Enabling shareholders to exercise their rights and legitimate
interests in the most reasonable and convenient manner
Strong business ethics
Zero tolerance for corrupt behavior
6
7
3
Professionalism and leadership of the Board of Directors, and
engaging independent directors in governing the Company
8
Full, transparent, reliable, and timely
disclosure by the Company
4
Strategic management by the Board of Directors, its efficient
control over executive bodies and oversight of the risk management
and internal control framework
9
Robust internal control and risk
management framework
5
Sound, diligent and efficient management of the Company’s day-
to-day operations by executive bodies accountable to the Board of
Directors and the General Meeting of Shareholders
10
Adherence to sustainability principles
1 The Bank of Russia’s Letter No. 06-52/2463 On the Corporate Governance Code, dated 10 April 2014.
CORPORATE GOVERNANCE PERFORMANCE
In addition, with a view to codifying the
existing practice and further improving
the regulatory framework to prevent
unlawful use of insider information and
market manipulation, the Company has
updated its Internal Control Rules for
Preventing, Detecting and Stopping the
Unlawful Use of Insider Information and/or
Market Manipulation, and the Regulations
on the Procedure for Keeping the List of
Insiders. The updated Regulations take
into account the amendments made
to the Bank of Russia’s regulations on
maintaining insider lists.
In 2023, Nornickel intends to continue
improving its corporate governance
practice.
Given the importance and significance of
anti-corruption procedures, the Company
plans to approve an internal document
to regulate the identification, assessment
and management of corruption risks in
2023.
In order to meet the Bank of Russia’s
recommendations to raise information
transparency of the securities market,
Nornickel has updated its internal
documents regulating disclosures and
identified events/facts with a potential
to materially influence the price of the
Company’s securities.
To further improve its corporate
governance and meet the Bank of
Russia’s recommendations on risk
management, internal control and
internal audit processes, in the reporting
year, Nornickel developed new versions
of the Regulations on the Internal Audit
Department and Internal Control Policy as
well as the Internal Audit Policy. The above
documents were amended as follows:
• According to the new version of the
Regulations on the Internal Audit
Department, the Department has
been tasked with the evaluation of the
Company’s corporate governance and
the performance audit of its corporate
sustainability risk management system;
• The Internal Control Policy was
updated in terms of the composition
of internal control entities and
the Company’s committees; its
provisions regulating the division of
responsibilities among the Company’s
departments were amended;
• The Internal Audit Policy has been
developed bearing in mind the
position of the Bank of Russia and the
International Professional Practices
Framework. The main purpose of the
document is to regulate the internal
audit procedures of the Company,
ensure their compliance with the
principles of setting up and executing
an internal audit, and define the scope
of duties and control procedure for
internal audit quality assurance and
improvement.
During the reporting year, the Company
approved a number of internal
documents dealing with the prevention
of corruption and fraud. In March 2022,
the Board of Directors approved the
Corporate Fraud Policy. The main purpose
of the document is to prevent, identify
and mitigate the risks of corporate
fraud as well as to build and implement
a corporate system of measures and
mechanisms to prevent corporate fraud.
In addition, the Company updated its
Procedure Rules for Anti-corruption Due
Diligence of Internal Documents by the
Head Office of MMC Norilsk Nickel as well
as the Regulations on the Prevention and
Management of Conflicts of Interest. The
new version of the Regulations on the
Prevention and Management of Conflicts
of Interest includes a requirement to
sign a conflict of interest declaration
when entering into a contract with a sole
proprietor or transactions with individuals,
including former government and
municipal employees. The amendments
also stipulate that a notice of a pre-
conflict situation and/or a conflict of
interest (arising as part of the contractual
procedure) should be filed with the
Corporate Trust Line, or a notification
should be sent to the employee who
initiated the contract.
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COMPLIANCE WITH THE CORPORATE
GOVERNANCE CODE
Nornickel’s corporate governance
standards are based on the principles
and recommendations of the Bank of
Russia’s Corporate Governance Code, and
the Company continues to consistently
incorporate and implement them.
The Company’s compliance with the
Corporate Governance Code’s principles
and recommendations in 2022 was
evaluated using a format recommended
by the Bank of Russia’s Letter
No. IN-06-28/102 dated 27 December 2021.
Nornickel’s corporate practices cover
most of the Corporate Governance Code’s
principles and recommendations. In case
of a partial non-compliance, the Company
provides an appropriate explanation and
description of the corporate governance
mechanisms and tools used by it instead
of those recommended by the Code. For
the full 2022 Corporate Governance Code
Compliance Report, including comments,
please see an Appendix to this Annual
Report.
Compliance with the Corporate Governance Code recommendations in 20221
Corporate governance principles
Full compliance
Partial compliance
Non-compliance
Rights and equal opportunities for
shareholders in exercising their rights
Board of Directors
Corporate Secretary
Remuneration system for members of the
Board of Directors and senior management
Risk management and internal control
framework
Company disclosures
Material corporate actions
2021
2022
2021
2022
2021
2022
9
28
2
6
5
4
3
10
25
2
7
5
4
3
4
8
-
4
1
3
2
3
11
-
3
1
3
2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
STAKEHOLDER RELATIONS
To achieve operational excellence and
further improve corporate governance,
Nornickel is strongly focused on engaging
its stakeholders in corporate governance,
taking their needs into account when
making important decisions.
At the end of the reporting year, Nornickel
presented its 2022 sustainability results.
The Company annually invites a wide
range of experts to a dialogue in order
to take into account the opinions of all
its stakeholders. Nornickel’s strategy is
underpinned by its sustainability agenda.
The Company regularly engages with
stakeholders to understand expectations
and take the pulse of public opinion
on corporate environmental and social
sustainability. This year’s results were
presented by the Company’s top
managers in an online format. More than
200 people attended the conference,
including Company employees,
government authorities, businesses, local
communities, environmental and other
non-profit organisations, and industry
bodies.
A well-built and clear corporate
governance framework which is
transparent for both Russian and foreign
shareholders and investors as well as
active stakeholder engagement directly
affect the investment decisions and the
price of the Company securities.
DIALOGUE WITH
INVESTORS
The Company is committed to making
mandatory disclosures in line with global
best practice. To make its disclosures
more meaningful and comprehensive,
Nornickel uses an array of disclosure tools,
including press releases, presentations,
annual and sustainability reports, issuer
reports, corporate action notices, and
interactive tools. Nornickel ensures parallel
disclosure of all material information both
in Russian and English, with the latter
being done via a regulatory information
service approved by the UK regulator.
Nornickel’s quarterly disclosures made via
its official website include its operating
results and RAS financial statements.
IFRS financial statements are released on
a semi-annual basis To maintain strong
investor relations, the Company makes
extensive use of various communication
tools, including conference presentations,
road shows, site visits for investors, etc.1
For more details on investor relations,
please see the Investor Relations section
of this Annual Report.
fund for employees in difficult life
situations. All in all, RUB 20 billion were
allocated to the above measures, with the
total amount of employee support in 2022,
including the indexation earlier this
year, reaching RUB 50 billion (including
deductions to budgetary funds).
DIALOGUE WITH
EMPLOYEES
The Company regularly runs open online
conferences between employees and
senior management to identify strengths
and weaknesses in communication
and improve corporate governance. A
challenging geopolitical environment,
production upgrades and ambitious
investment projects transform
the approaches to work, routines,
sustainability, safety, and environmental
protection. To retain its leadership
in the market, the Company needs
to address new challenges, which is
next to impossible without employee
involvement. During the Nornickel
Live annual broadcast, Nornickel’s vice
presidents answered employee questions
and discussed the Company’s news and
future plans. March 2022 saw another
Direct Line live broadcast, with top
management fielding questions from
Nornickel employees. The key topic was
social support for Company employees
in a challenging economic environment.
Over 5 thousand questions from Nornickel
employees were received during the
live event. The issues discussed during
the event included, among others,
wage indexation across the Company’s
footprint, payment of a one-time, first-
quarter extra bonus in the amount of a
monthly base salary and the Company’s
decision to increase its financial assistance
1 The data are given for 2021 and 2022, since the form of the Corporate Governance Code Compliance Report was changed in 2021 (the Bank of Russia’s
1 Information on upcoming events is posted in the IR Calendar on the Company website.
Letter No. IN-06-28/102 dated 27 December 2021).
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PARTNERSHIP AND
COOPERATION
Nornickel is building a multipurpose
sports complex in Moscow. It will include
a basketball centre, which will serve as
a home arena for the CSKA basketball
club (Professional Basketball Club CSKA
is part of the Norilsk Nickel Group). The
total area of the new sports complex
on Leningradsky Avenue will be
approximately 55 thousand sq m. The
complex is expected to be completed by
the end of 2023.
Nornickel is stepping up its cooperation
on environmental protection with the
Russian academic circles. During the
reporting year, Nornickel launched a
large-scale biodiversity study in the
three Russian regions hosting the
Company’s operations. The study seeks
to delineate the areas affected by the
Company’s operations and assess the
current ecosystem biodiversity status.
The findings by researchers will feed
into the design of the biodiversity
impact management system and help
develop the biodiversity conservation
and monitoring programmes. In
addition, these findings will enable the
identification and implementation of
priority measures necessary for biological
diversity conservation. The biodiversity-
focused Great Scientific Expedition builds
on the successful partnership between
Nornickel and the Siberian Branch of
the Russian Academy of Sciences, which
started in 2020 with the Great Norilsk
Expedition. By initiating voluntary large-
scale environmental studies across its
operating regions, the Company collects
up-to-date information about the
current condition of the environment
across its footprint while also unlocking
opportunities to further reduce its
environmental impact.
In April, Nornickel signed a cooperation
agreement with ROSATOM. The parties
agreed to pursue a number of strategic
projects in the Russian Arctic to enhance
the Northern Sea Route infrastructure
and Arctic shipping, including to
implement shipbuilding projects and
further develop the nuclear-powered
icebreaker fleet. The agreement also
contemplates a joint project to develop
the Kolmozerskoye lithium deposit
in the Murmansk Region and launch
further deep processing of lithium raw
materials. Kolmozerskoye is the largest
and most promising deposit of lithium
ores, accounting for 18.9% of domestic
reserves. Nornickel and ROSATOM have
established Polar Lithium, a 50-50 joint
venture with equal governance rights, to
implement the project by combining the
parties’ assets and capabilities. Lithium
mining will help set up the first domestic
production of lithium-containing
products as well as the production of
lithium-ion traction batteries.
Also in 2022, Nornickel entered into two
agreements to bolster its energy assets.
• Nornickel will hand over control and
dispatch functions in the Norilsk
energy system to the System Operator
of the United Power System (SO
UPS). The agreement contemplates
the transfer of control and dispatch
functions in the technologically
isolated territorial power supply
system in the Taimyrsky (Dolgano-
Nenetsky) Municipal District to the
Krasnoyarsk Regional Dispatch Office,
a branch of SO UPS. The transfer will
be phased and is expected to be
completed by the end of 2023, with
the parties working closely to expand
the areas of dispatch responsibilities
for SO UPS. In addition, the parties
will bring their information systems in
sync with each other to facilitate the
exchange of process data between
NTEC and SO UPS as part of the
dispatch and technological control.
This is necessary to streamline
interoperability and harmonise
technologies used by power supply
entities across Russia. Going forward,
these steps will make it possible to
integrate the operational parameters
of the isolated territorial power supply
system of the Taimyrsky (Dolgano-
Nenetsky) Municipal District into the
information model developed by the
Unified Energy System of Russia in line
with the national standards.
• The other energy-related agreement
was signed by Nornickel with
Rosseti North-West, a power grid
company. Nornickel plans to fully
abandon the use of fuel oil at the
Company’s Monchegorsk site. This
investment project will help reduce
pollutant emissions and facilitate
Nornickel’s transition to modern green
technologies.
In 2022, Nornickel entered into
an agreement with RusHydro for
the purchase of hydropower. The
agreement marked another step in
the implementation of the Company’s
environmental strategy, which, among
other things, provides for the gradual
transition to carbon-free energy in
the Company’s operations. The new
agreement will enable Bystrinsky GOK
to transition approximately 30% of its
energy needs to carbon-free sources.
This will lead to a reduction of GHG
emissions by 100 thousand tonnes of
CO2 equivalent in absolute terms in 2022
and also contribute to the Company’s
environmental KPIs, e.g. cut its Scope 2
emissions. In addition, the plant
continues to improve its energy efficiency
and is currently assessing the feasibility
of building new renewable energy
facilities in the Zabaykalsky Territory.
In December 2022, Nornickel and
Atomflot signed a long-term charter
contract for a new Project 22220
icebreaker. The signing ceremony took
place in Saint Petersburg as part of the
Arctic: Today and the Future forum. This
is a new long-term contract, unique in
its duration. According to the document,
the nuclear-powered icebreaker of the
22220 series will be used to escort vessels
navigating the Northern Sea Route in the
interest of Nornickel for a period through
2041, with an extension option until the
end of 2051. Currently, Nornickel is using
Sibir, a nuclear-powered icebreaker,
under a short-term charter contract.
Since early 2022, the icebreaker has
supported year-round navigation on the
Murmansk/Arkhangelsk – Dudinka route,
escorting ships at a service speed in the
Yenisei Bay. The new contract is part
of a far-reaching strategic partnership
between Nornickel and ROSATOM, which
aims to further develop the Northern Sea
Route. It meets the long-term interests
of both parties: as a major consumer
of icebreaker escort services, Nornickel
receives guaranteed icebreaker support
for the long term, while ROSATOM, as
the Northern Sea Route infrastructure
operator, secures orders for its current
icebreaking fleet and a source of funding
for the construction of new icebreakers.
RUB 2 bn
programme to support the
indigenous peoples of Taimyr
the Coordination Council includes
53 indigenous local
communities
is not part of the Russian law, Nornickel
proposed to solve the relocation problem
in line with international standards
codified in the UN Declaration on the
Rights of Indigenous Peoples.
Nornickel held initial consultations
with the indigenous communities
in the settlements of Lovozero and
Krasnoshchelye in the Murmansk
Region in view of the looming start
of the Kolmozerskoye lithium mining
project. Sámi, Nenets and Komi as well
as representatives of reindeer farms, and
independent experts on indigenous rights
attended the meeting, the main purpose
of which was to set up a two-way dialogue
between the Company and indigenous
peoples, to inform local communities
about the upcoming project, and to listen
to and record suggestions and comments
put forward by local indigenous
organisations. During the consultations,
Nornickel representatives told the
audience about the Company’s principles
of engagement with indigenous people
and about the Kolmozerskoye project.
Geological studies of the Kolmozerskoye
deposit were conducted back in the 1950s,
and much of the project data has yet to
be verified. The parties also discussed
basic approaches to ethnographic and
sociological research. The Company
confirmed its intention to collect and
verify all possible information on the
range, nature and scale of traditional
trades, sacred sites and burials, to identify
the range of people potentially affected
by the project, and to make detailed
maps of the project area in the near
future. The research will be carried out
with the involvement of leading scientific
institutions and in cooperation with
indigenous peoples.
DIALOGUE WITH
INDIGENOUS
MINORITIES
Nornickel’s engagement with the
indigenous peoples of the North
inhabiting Taimyr is based on respect for
the customs, traditions and culture of the
indigenous communities. It takes place on
a regular basis, covers all areas of mutual
interest and relies on a holistic approach.
In May 2021, the local indigenous
communities spearheaded the creation
of the Indigenous Communities
Coordination Council to engage with
the tribal communities involved in
traditional economic activities in Taimyr.
Currently, the Coordination Council
includes 53 indigenous local communities.
The Coordination Council facilitates
cooperation between indigenous
communities and Nornickel, including
under the Company’s RUB 2 billion
five-year programme to support the
indigenous peoples of Taimyr.
The programme was set up with the
direct and immediate participation
of representatives of indigenous
communities and covers all aspects of
indigenous life – social, economic, cultural,
and linguistic, taking into account the
needs and demands, values and views,
ethnic traditions, and culture of the
indigenous peoples inhabiting Taimyr.
A department responsible for liaising
with indigenous peoples of the North
was set up within the Polar Division to
promote a direct dialogue. The new
format of the Company’s direct dialogue
with indigenous communities has
significantly expanded the scope for
engagement and created conditions
to build their sustainability capacity by
further improving rural infrastructure,
advancing the economy by creating new
industries based on traditional uses of
natural resources that ensure processing
of agricultural products and higher added
value as well as by preserving historical
traditions and cultural heritage.
Within its efforts to further improve
its indigenous engagement formats,
the Company pioneered the use of the
free, prior and informed consent (FPIC)
procedure for indigenous peoples in the
Russian Arctic, offering relocation and
community development options to
indigenous people living in the Tukhard
settlement area. Tukhard was founded
in the 1970s as a rotation camp for the
Norilskgazprom construction project
workers. The new infrastructure and
improved transportation options attracted
nomadic indigenous people from
nearby, who settled in the construction
trailers abandoned on site. With a view
to improving the living conditions in
Tukhard, the Company proposed to
build a new settlement and relocate the
residents. Although the FPIC procedure
Annual ReportNornickelCorporate governance5/72022 174
175
In October 2022, Murmansk hosted
the Public-Private Partnership for the
Sustainable Development of Indigenous
Peoples, an international forum sponsored
by Nornickel. Organised by the Federal
Agency for Ethnic Affairs, the Ministry
for the Development of the Russian Far
East and Arctic, the Ministry of Foreign
Affairs of the Russian Federation, and
Nornickel, the event welcomed more
than 200 delegates from Russia and
other countries. The participants included
representatives of federal and regional
authorities, businesses, associations
of indigenous peoples, international
organisations as well as reindeer herders
and leaders of tribal communities of
Taimyr, Yamal, Chukotka, and many other
regions. The forum is included in the work
plan for the Russian chairmanship of the
Arctic Council. The forum participants
discussed best indigenous engagement
practices of industrial companies.
Generally accepted global approaches in
this area include due diligence policies
requiring targeted consultation by
businesses with indigenous peoples
when engaging in industrial operations in
indigenous territories.
GOVERNMENT
RELATIONS
The Company’s representatives also
take part in parliamentary hearings and
round table discussions organised by
the Federation Council and State Duma
of the Federal Assembly of the Russian
Federation, the Government of the
Russian Federation, the Russian Union of
Industrialists and Entrepreneurs (RSPP),
the Civic Chamber of the Russian
Federation, the Chamber of Commerce
and Industry of the Russian Federation, the
Association of Managers interregional non-
governmental organisation, etc.
applications for various inventions and
technologies developed by scientific
and operational teams, businesses and
organisations, or any creative individual in
general.
Nornickel’s experts are involved in
discussing draft regulations through anti-
corruption expert reviews and regulatory
impact assessments. This all helps to
maintain a constructive dialogue with the
government, cut red tape and improve
the country’s business climate. Nornickel’s
representatives also sit on various working
groups created by federal executive
authorities to help implement the
regulatory guillotine mechanism.
In 2022, Nornickel and the Federal
Supervisory Natural Resources
Management Service signed cooperation
agreements. The first agreement provides
for the exchange of information and
joint implementation of environmental
initiatives. The second one is a pilot project,
being the first agreement in the Russian
Federation that contemplates receiving
advice from the Federal Supervisory
Natural Resources Management Service
for Nornickel’s future investment projects.
Nornickel has supported the development
of IN’HUB, a platform that will enable
the creation of a global innovation
centre in Russia in cooperation with
international partners. The project initiated
by Nornickel has been endorsed by
more than 20 foreign associations and
inventors’ organisations. As a responsible
corporate citizen, Nornickel took the lead
in proposing an innovation accelerator
in Russia to help identify industrial
In June 2022, about 200 participants from
more than 100 largest tech companies
from Russia, Kazakhstan and Belarus as
well as representatives of federal, regional
and municipal authorities came to Norilsk
by the invitation of Nornickel. For two days,
participants of the forum discussed the
capability of the domestic manufacturing
sector to meet the needs of Nornickel
and other large Russian businesses in
all necessary supplies and equipment. A
lot of attention was paid to government-
sponsored business support measures
and incentives for entrepreneurs in the
Arctic region. The focus of the forum was
on import substitution – one of the most
important themes for the entire Russian
manufacturing sector.
Nornickel has a long and successful
history of cooperation with many Russian
companies. Over 30 letters of intent were
signed during the two days of the forum
to formalise joint import substitution
efforts between Nornickel and its potential
suppliers.
In October 2022, the Federation Council,
the upper chamber of Russia’s parliament,
hosted a photo exhibition of the Clean
Arctic project pursued in partnership with
Nornickel. The most active participants
in the Arctic Environmental Initiative,
including the Company, were awarded
letters of acknowledgment.
MANAGING CONFLICTS OF INTEREST
Nornickel has developed measures to
prevent potential conflicts of interest
involving shareholders, Board members
and senior managers.
Transactions that have the attributes
of interested-party transactions are
regulated by the law on joint stock
companies.
actions that may result in a conflict of
interest, and if such a conflict arises, they
should promptly inform the Corporate
Secretary in writing about such conflict.
The Company’s Articles of Association
set forth the procedure for approving
transactions by shareholders who hold
more than 5% of voting shares. Such
transactions are only made if approved
by a qualified majority of Board members
(at least 10 out of 13 votes).
The Company also has in place the Code
of Conduct and Business Ethics for
Members of the Board of Directors, which
aims to reinforce high standards of ethics
and business conduct among members
of the Board of Directors and serves as
guidance in the event of ethical risks and
conflict of interest situations.The Code
provides for the obligation of members
of the Board of Directors and the
Management Board are to refrain from
If a Board member has a direct or
indirect personal interest in a matter
reviewed by the Board of Directors, they
should inform other members of the
Board of Directors before the matter
is reviewed or a relevant resolution is
passed, and refrain from participating
in the review and from voting on the
matter. In 2022, no notifications of
conflicts of interest were received from
members of the Board of Directors.
Annual ReportNornickelCorporate governance5/72022 176
177
GENERAL MEETING
OF SHAREHOLDERS
The General Meeting of Shareholders
is the
of MMC Norilsk
highest governance body
Nickel responsible for making decisions
on matters most critical to the Company’s
performance. Matters within the remit
of the General Meeting of Shareholders
are listed in the Company’s Articles of
Association, and the procedures for
convening, preparing and holding general
meetings are detailed in the Regulations
on the General Meeting of Shareholders.
to its convocation date. Except for the
cumulative voting to elect members of
the Board of Directors, each voting share
represents one vote at the General Meeting
of Shareholders.
registrar (official website: Shareholder’s
Personal Account, rrost.ru). Each time,
more and more shareholders take
advantage of this service enabling them to
vote regardless of their location.
Three General Meetings of Shareholders
were held in 2022. All meetings were held
in absentia via an easy-to-use and reliable
e-voting service. The e-voting service
for general meetings of shareholders is
provided by IRC – R.O.S.T., the Company’s
The notice of a General Meeting of
Shareholders is published on Nornickel’s
website at least 30 calendar days prior
General Meetings of Shareholders held in 2022
Meeting date
Agenda
3 June 2022 – an Annual General
Meeting of Shareholders (held in
absentia)
11 August 2022 – an Extraordinary
General Meeting of Shareholders (held
in absentia)
24 November 2022 – an Extraordinary
General Meeting of Shareholders (held
in absentia)
The Meeting approved the Annual Report, annual accounting statements and
consolidated financial statements for 2021.
Profit for the period was distributed, and the resolution on FY 2021 dividend payout
was passed.
A new Board of Directors and Audit Commission were elected; resolutions on their
remuneration were passed.
The auditor was approved to audit Nornickel’s Russian accounting (financial)
statements for 2022, consolidated financial statements for 2022 and interim
consolidated financial statements for 1H 2022.
An interested party transaction (liability insurance of members of the Board of
Directors and the Management Board) and related interested party transactions
(indemnification of members of the Board of Directors and the Management Board)
were approved.
The Meeting resolved to reduce the Company’s authorised capital by cancelling the
shares repurchased by the Company.
The Meeting resolved to terminate early the powers of Board members and elect a
new Board of Directors.
Meetin
g quorum, %
80
77
78
79
78
13.05.2020
(AGM1)
10.12.2020
(EGM2)
19.05.2021
(AGM)
19.08.2021
(EGM)
27.12.2021
(EGM)
03.06.2022
(AGM)
11.08.2022
(EGM)
24.11.2022
(EGM)
70
72
70
Attendance at General Meetings of Shareholders
13.05.2020 (AGM)
10.12.2020 (EGM)
19.05.2021 (AGM)
19.08.2021 (EGM)
27.12.2021 (EGM)
03.06.2022 (AGM)
11.08.2022 (EGM)
24.11.2022 (EGM)
309
325
309
315
303
165
117
88
2,269
3,172
2,978
2,626
3,840
3,782
3,255
3,358
57
51
50
61
61
66
72
72
Legal entities that attended the Meeting
Individuals that attended the Meeting
Shareholders who used e-voting services, %
DIVIDENDS
Dividends in 2022
On 28 April 2023, the Company’s
Board of Directors recommended
that the Annual General Meeting of
Shareholders resolve not to pay a final
dividend for the financial year 2022. The
resolution will be passed at the Annual
General Meeting of Shareholders on 6
June 2023.
Dividend history
6М 2019 г.
9М 2019 г.
12М 2019 г.
9М 2020 г.
12М 2020 г.
9М 2021 г.
12М 2021 г.
2.2
139.9
1.6
95.4
1.3
88.2
1.3
98.3
2.2
161.6
3.1
178.1
3.1
232.8
Dividends paid, USD bn
Dividends paid, RUB bn
1 AGM – Annual General Meeting of Shareholders.
2 EGM – Extraordinary General Meeting of Shareholders.
Annual ReportNornickelCorporate governance5/72022 178
179
Annual Report
2022
Corporate governance
5/
7
Nornickel
BOARD OF DIRECTORS AND
BOARD COMMITTEES
COMPOSITION OF THE BOARD OF DIRECTORS
from the Board of Directors, and Denis
Alexandrov, Andrey Bougrov, Alexey
Germanovich, Alexey Ivanov, Vsevolod
Rozanov, and Egor Sheibak were elected
as new Board members.
Following the Extraordinary General
Meeting of Shareholders that took place
on 24 November 2022, Maxim Poletaev
and Vsevolod Rozanov stepped down
from the Board of Directors, with Elena
Bezdenezhnykh and Alexandra Zakharova
elected as new Board members.
As at 31 December 2022, the Board of
Directors had 13 members, including:
•
six independent directors:
Denis Alexandrov, Alexey Germanovich,
Sergey Volk, Alexey Ivanov, Stanislav
Luchitsky, and Evgeny Shvarts
six non-executive directors:
Andrey Bougrov, Sergey
Batekhin, Alexey Bashkirov, Elena
Bezdenezhnykh, Alexandra Zakharova,
and Egor Sheibak
•
• one executive director:
Marianna Zakharova
The Board of Directors plays a crucial
role in designing and developing the
corporate governance system, ensures
the protection and exercise of shareholder
rights and supervises executive bodies.
Guided by the principles of mutual
respect and humanism.
The Board’s authority and formation
process, as well as the procedure for
convening and holding Board meetings
are determined by the Company’s Articles
of Association and Regulations on the
Board of Directors.
According to Nornickel’s Articles of
Association, the Board of Directors has 13
members. The current size of the Board
of Directors ensures a balanced mix of
professionalism, expertise and experience
required for the Board to properly
perform its functions and best align its
activities with the Company’s goals and
objectives. All Board members enjoy an
impeccable business reputation and
recognition (including among investors)
and have no conflicts of interest with
Nornickel. The current Board of Directors
comprises six independent directors. An
objective judgement that independent
Status of Board members (%)
2022
2021
2020
46
46
46
directors bring to the table, along with
their constructive feedback, is a valuable
contribution to the Board’s leadership
and the Company’s operations on the
whole. The independent directors’
contribution to decision making helps
align the interests of various stakeholder
groups while improving the quality of
management decisions.
As at 1 January 2022, the Board of
Directors consisted of Sergey Barbashev,
Sergey Batekhin, Alexey Bashkirov,
Sergey Bratukhin, Sergey Volk,
Marianna Zakharova, Sergey Luchitsky,
Roger Munnings, Gareth Penny, Maxim
Poletaev, Vyacheslav Solomin, Evgeny
Shvarts, and Robert Edwards, who were
elected at the 2021 Annual General
Meeting of Shareholders.
In March 2022, foreign nationals
Gareth Penny, Roger Munnings and
Robert Edwards announced their
resignation from the Board of Directors.
Following the Annual General Meeting of
Shareholders that took place on 3 June
2022, Sergey Bratukhin, Sergey Barbashev
and Vyacheslav Solomin stepped down
46
46
8
8
39
15
Tenure on the Board of Directors (%)
2022
2021
2020
54
23
23
15
39
46
46
39
15
<3 years
3–8 years
>8 years
Board composition by age group (%)
2022
2021
2020
46
38
62
23
39
15
15
39
23
35–50 years
51–61 years
Over 61 years
Board composition by gender (%)
2022
2021
2020
73
27
92
92
8
8
Independent
directors
Non-executive directors
Executive directors
Male
Female
180
181
Chairman of the Board
of Directors
The Chairman of Nornickel’s Board of
Directors leads the Board of Directors,
convenes and chairs its meetings, ensures
constructive collaboration between
the Board members and corporate
management.
Since March 2013, the Board of Directors
was chaired by Gareth Penny, who in
line with global best practice was an
independent director. In March 2022,
due to the challenging geopolitical
situation, independent non-executive
directors Gareth Penny, Roger Munnings
and Robert Edwards decided to step
down from the Board of Directors. Since
Gareth Penny could not perform his
duties as the Board Chairman, the Board
of Directors decided to delegate the
functions of convening and holding the
Company’s Board meetings, organising
the keeping and signing of their minutes,
as well as presiding over its meetings to
Sergey Batekhin, Deputy Chairman of the
Company’s Board of Directors.
The increased pressure of sanctions
on the Company and the dramatically
wider scope of strategic challenges
called for a better coordination within
the entire management team. Non-
executive Director Andrey Bougrov was
elected as Chairman of the Company’s
Board of Directors in June 2022 for the
Board to effectively handle its tasks.
Andrey Bougrov’s long track record at the
Company offers a range of advantages
since he knows the ins and outs of the
Company’s operations and its internal
business processes, which helps better
understand them and facilitates fast but
high-quality decision making. In his role
as Senior Vice President for Sustainable
Development, Andrey Bougrov focused
on aligning the Company’s development
strategy with the sustainability agenda,
monitoring corporate internal procedures,
policies and organisational structure for
compliance with the requirements of
international sustainability associations
and certification procedures, as well as
on preparing and further improving the
Company’s sustainability reporting to
bring it closer in line with international
non-financial reporting standards. Andrey
also oversaw the Company’s investor
relations. Andrey Bougrov also boasts
a vast track record of serving on expert
councils on governance and sustainability,
and chairs the Share Issuers Committee of
Moscow Exchange.
For more details on Andrey Bougrov’s
biography, please see this Annual Report
and the Company website.
Independent directors
Independent directors assist the Board in
making decisions that take into account
the interests of various stakeholder
groups while improving the quality of
management decisions.
In 2022, in line with corporate governance
best practice, Nornickel’s Board of
Directors regularly evaluated Board
nominees and new members against
the independence criteria set out in the
Company’s Articles of Association and the
Listing Rules of PJSC Moscow Exchange.
If a sign/signs of relationship was/were
identified, the nature of such relationship
was comprehensively assessed.
Where the identified relationship was
established to be formal in nature,
the Company’s Board of Directors
determined whether the Board member
in question met the independence
criteria based on a recommendation by
the Corporate Governance, Nomination
and Remuneration Committee. Thus,
Board member Alexey Germanovich
was determined to be independent
despite his formal relationship with
the Company’s contractor since such
relationship did not affect his ability to
exercise independent, fair and unbiased
judgement. Alexey Germanovich has
signed a relevant statement, under which
the Director committed to represent
the interests of all shareholders and the
Company, despite the fact that he meets
a formal relationship criterion, and inform
the Board of Directors if he might start
to meet any other relationship criteria or
have a conflict of interest, or other ethical
issues.
Over the year, the Company was in
compliance with the requirements of the
Listing Rules of PJSC Moscow Exchange
as regards the number of independent
directors on the Board.
Thus, as of 31 December 2022, 6 out of the
13 Directors, or 46.2%, were independent
(Denis Alexandrov, Sergey Volk,
Alexey Germanovich, Alexey Ivanov,
Stanislav Luchitsky, and Evgeny Shvarts).
The Board’s experience and skill mix
Name
Tenure on the Board
of Directors
Key skills
e
c
n
a
n
r
e
v
o
g
e
t
a
r
o
p
r
o
c
d
n
a
w
a
L
d
n
a
e
c
n
a
n
F
i
t
i
d
u
a
d
n
a
s
l
a
t
e
M
y
g
e
t
a
r
t
S
Composition of the Board of Directors as at 2022-end
Andrey Bougrov
Non-executive Director,
Chairman of the Board of
Directors
Denis Alexandrov
Independent Director
Sergey Batekhin
Non-executive Director
Alexey Bashkirov
Non-executive Director
Elena Bezdenezhnykh
Non-executive Director
Sergey Volk
Independent Director
Alexey Germanovich
Independent Director
Marianna Zakharova
Executive Director
Alexandra Zakharova
Non-executive Director
Alexey Ivanov
Independent Director
Stanislav Luchitsky
Independent Director
Evgeny Shvarts
Independent Director
Egor Sheibak
Non-executive Director
2002–2020
2022 — to date
2022 — to date
2020 — to date
2013 — to date
2022 — to date
2019 — to date
2022 — to date
2010 — to date
2022 — to date
2022 — to date
2021 — to date
2019 — to date
2022 — to date
As at 31 December 2022, the average tenure on the
Board of Directors was 4.8 years
Board members who stepped down in 2022
Gareth Penny
Independent Director
Roger Munnings
Independent Director
Robert Edwards
Independent Director
Sergey Barbashev
Non-executive Director
Sergey Bratukhin
Independent Director
Vyacheslav Solomin
Non-executive Director
Maxim Poletaev
Non-executive Director
Vsevolod Rozanov
Independent Director
2013–2022
2018–2022
2013–2022
2011–2022
2013–2022
2019–2022
2019–2022
2022
+
+
+
+
+
+
6
+
+
+
+
+
+
+
+
+
+
7
+
+
+
+
+
+
+
+
+
+
+
+
+
9
+
+
+
+
+
+
+
+
+
+
+
+
8
+
+
+
+
+
+
/
g
n
n
m
i
i
g
n
i
r
e
e
n
g
n
e
i
+
+
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e
t
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c
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m
o
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o
c
e
s
n
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+
+
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+
+
+
6
+
+
+
+
Annual ReportNornickelCorporate governance5/72022
182
183
SELECTION CRITERIA AND SUCCESSION
BOARD OF DIRECTORS’ PERFORMANCE
The performance of the Company’s
Board of Directors is largely driven by a
mix of skills, qualifications, experience,
independent judgement, and degree of
independence on the Board. The number
of Board members and the composition
of the Company’s Board of Directors
enable fair and comprehensive review
of matters, most informed decision
making, timely detection and prevention
of conflicts of interest, as well as effective
performance of the Board’s other
functions. When electing members to the
Board of Directors, the Company is guided
by the principles recommended by the
Bank of Russia:
• Having a mix of skills on the Board of
Directors that enables it to work as a
close-knit team of professionals to drive
informed and professional collective
decision making by the Board;
• Balanced composition, whereby
the experience, expertise and skills
of the Company’s Board members
complement each other and help the
Board of Directors exercise fair and
impartial judgement, timely identify
strategic risks and assess their potential
impacts;
• diversification, whereby the Board of
Directors is able to review matters from
different perspectives, bring up new
ideas for discussion and make more
balanced decisions;
• Tailored approach, whereby the
Company itself decides on the optimal
composition of the Board of Directors
and its committees and maintains
succession plans for them considering
the Company’s objectives, business
profile and other factors;
TRAINING OF BOARD MEMBERS
In order to update the knowledge of the
Company’s Board members and better
involve them in the Company’s processes,
in July 2022, the Company’s management
prepared and held a webinar for Board
members on safety culture leadership,
with training courses on handling insider
information delivered on a regular basis
for directors.
managers and Board members visited
production sites at Norilsk. A number of
informal discussions and meetings took
place during the visit.
In September 2022, to keep up to date
with local developments and progress
on ESG adoption, the Company’s top
•
•
Independence, whereby the Board
of Directors strives to make the most
fair and independent decisions.
Independent directors on the
Company’s Board of Directors play
an important role in maintaining a
balance of interests between various
shareholder groups and working out
the best possible solutions;
Information transparency, whereby
shareholders are provided with timely
information about candidates, their
professional qualities, experience, and
skills.
In 2022, the Company’s Board of
Directors held
Number of Board meetings
38 meetings
9 meetings
in person
105 matters
reviewed
2022
2021
2020
9
10
10
In person
In absentia
Number of matters reviewed
29
27
33
102
105
106
During the year, the Board of
Directors continued to focus on
matters critical to the Company’s
sustainable growth, investor relations
strategy, and operational and
financial performance.
Matters reviewed in 2022 (%)
11
11
5
27
105matters
51
Corporate governance
Approval of transactions
Approval of internal documents
Strategy, operations and finance
Other
Annual ReportNornickelCorporate governance5/72022 184
185
Attendance of Board and committee meetings in 20221
In 2022, attendance at Board meetings was 100%.
Name
Status
Attendance at Board meetings
Attendance at committee meetings
Total
In
person
In
absentia
Strategy
Committee
Budget
Committee
Audit
Committee
Corporate Governance, Nomination
and Remuneration Committee
Sustainable Development
and Climate Change
Committee
Andrey Bougrov
Non-executive Director / Chairman of the Board of Directors
Denis Alexandrov
Independent Director
Alexey Bashkirov
Non-executive Director
Elena Bezdenezhnykh
Non-executive Director / Chairwoman of the Strategy
Committee
21/38
21/38
38/38
6/38
Sergey Batekhin
Non-executive Director / Chairman of the Budget Committee
38/38
Sergey Volk
Independent Director / Chairman of the Corporate
Governance, Nomination and Remuneration Committee
Alexey Germanovich
Independent Director / Deputy Chairman of the Corporate
Governance, Nomination and Remuneration Committee
Marianna Zakharova
Executive Director
Alexandra Zakharova
Non-executive Director
Alexey Ivanov
Independent Director / Chairman of the Audit Committee
Stanislav Luchitsky
Independent Director / Chairman of the Sustainable
Development and Climate Change Committee
Evgeny Shvarts
Independent Director
Egor Sheibak
Non-executive Director
Before the Extraordinary General Meeting of Shareholders on 24 November 2022
38/38
21/38
38/38
6/38
21/38
38/38
38/38
21/38
7/9
7/9
9/9
3/9
9/9
9/9
7/9
9/9
3/9
7/9
9/9
9/9
7/9
14/29
14/29
29/29
3/29
29/29
29/29
14/29
29/29
3/29
14/29
29/29
29/29
14/29
Vsevolod Rozanov (from 3
June 2022 to 24 November
2022)
Non-executive Director
13/38
3/9
10/29
Maxim Poletaev
Non-executive Director / Chairman of the Strategy Committee
30/38
6/9
24/29
Before the Annual General Meeting of Shareholders on 3 June 2022
Gareth Penny
Independent Director / Chairman of the Board of Directors
/ Chairman of the Sustainable Development and Climate
Change Committee
5/38
0/9
5/29
Sergey Barbashev
Non-executive Director
Sergey Bratukhin
Non-executive Director
Roger Munnings
Independent Director / Chairman of the Audit Committee
Vyacheslav Solomin
Non-executive Director
Robert Edwards
Independent Director / Chairman of the Corporate
Governance, Nomination and Remuneration Committee
17/38
17/38
5/38
17/38
5/38
3/9
3/9
0/9
3/9
0/9
14/29
14/29
5/29
14/29
5/29
1 The attendance by Board members is represented as X/Y, where X is the number of meetings attended by the director, and Y is the total number of
meetings held.
3/4
4/4
2/4
4/4
4/4
2/4
1/4
2/3
3/3
1/3
2/3
1/3
2/3
1/3
1/3
11/15
4/15
3/15
14/15
11/15
4/15
11/15
7/15
4/15
1/15
4/15
1/15
2/4
1/4
1/4
1/4
2/4
0/4
3/4
4/4
2/4
1/4
1/4
1/4
1/4
19/19
19/19
11/19
2/19
8/19
11/19
9/19
4/19
8/19
4/19
Annual ReportNornickelCorporate governance5/72022 186
187
PERFORMANCE EVALUATION OF THE BOARD OF DIRECTORS
The procedure for evaluating the
performance of the Company’s Board of
Directors is regulated by the Performance
Evaluation Policy for the Board of Directors
approved by resolution of the Company’s
Board of Directors. The Policy provides for
internal evaluation by surveying the Board
members as well as external evaluation
involving professional independent
consultants.
To reflect stakeholders’ views and interests
in the decision-making process, the
Corporate Governance, Nomination and
Remuneration Committee continued
interacting with the Company’s
management during 2022 when resolving
on changes in the composition of the
Company’s Management Board and
discussing approaches to developing
individual KPIs for top 10’s.
In line with the recommendations of the
Corporate Governance Code, corporate
governance best practice and the
Performance Evaluation Policy for the
Board of Directors, in 2022, the performance
evaluation of the Company’s Board of
Directors for 2021 was carried out by an
external organisation, IDA Academy.
Detailed questionnaires were sent out to
participants to evaluate the performance of
the Board and its committees, along with
the directors’ individual contributions. The
results were supplemented by comments
and feedback from certain chairmen given
during one-on-one interviews. Following
these activities, IDA Academy prepared a
preliminary evaluation report submitted to
the members of the Corporate Governance,
Nomination and Remuneration Committee
and the Corporate Secretary and reviewed
by the Company’s Board of Directors.
During the reporting year, the Board of
Directors’ efforts focused on the areas for
improvement identified by the external
evaluation as well as on consolidating the
progress made in priority areas.
Following the lifting of COVID restrictions,
the Board of Directors and top managers
resumed the practice of reviewing matters
related to the Company’s business and
strategic priorities at in-person meetings,
including informal ones. In September 2022,
to keep up to date with local developments
and progress on ESG adoption, the
Company’s top managers and Board
members visited production sites in Norilsk.
The visit involved, among other things, the
discussion of charity matters.
KPI improvement was an important
topic discussed in 2022 at meetings of
the Corporate Governance, Nomination
and Remuneration Committee, the
Audit Committee, and the Sustainable
Development and Climate Change
Committee. The Sustainable Development
and Climate Change Committee approved
the Company’s KPI system (including
environmental and health and safety
metrics). Members of the Audit Committee
also regularly reviewed health and safety
reports and made recommendations to
improve the effectiveness of relevant efforts.
In 2022, the Strategy Committee reviewed
matters related to the long-term
investment programme aimed at the
Company’s development, future production
programme and the implementation status
of several projects (development concept
for the Company’s design services, IT
Programme, and exploration strategy).
In line with global best standards, in early
2023, the Company summarised the
Board of Directors’ performance in 2022
through continued Board of Directors’ self-
evaluation, thus ensuring the continuous
development and improvement of
Nornickel’s corporate governance.
The internal performance evaluation of the
Board of Directors in 2022 was carried out
by the Corporate Governance, Nomination
and Remuneration Committee in line with
the resolution of the Board of Directors
dated 7 February 2023.
Evaluation of the Board of Directors’
performance in 2022 showed that:
•
•
•
the current composition of the Board
of Directors is well-balanced in terms
of directors’ qualifications, experience
and business skills. The qualitative and
quantitative composition of the Board of
Directors matches the scale and profile
of the Company’s business, its business
objectives and risk profile, and meets
the Company’s current and anticipated
needs and shareholder interests;
the composition of the Board
committees is aligned with the
Company’s goals and objectives; there
is no need to set up additional Board
committees;
the Chairman of the Board of Directors
organises the Board of Directors’
activities in the most efficient way,
ensures its communication with other
bodies of the Company and facilitates
the best performance of assigned duties.
At its meeting on 28 April 2023, the
Board of Directors reviewed the
Report on the Internal Performance
Evaluation of the Board of Directors
and the recommendations of the
Corporate Governance, Nomination
and Remuneration Committee, and
acknowledged that in 2022 the Board of
Directors, the Board Chairman and the
Board committees discharged their duties
effectively.
The Corporate Governance, Nomination
and Remuneration Committee used
the self-evaluation results to identify
areas for improvement and make
recommendations concerning the Board of
Directors’ respective functions that require
performance improvement measures.
The Board of Directors will continue
incorporating the recommendations of the
Corporate Governance, Nomination and
Remuneration Committee in its work in
2023.
BIOGRAPHICAL DETAILS OF BOARD MEMBERS AS OF 31
DECEMBER 20221
For more detailed biographies of the Board members, please see the Company’s website, and for biographies of the members who
stepped down after the Annual General Meeting of Shareholders, please see the 2021 Annual Report.
In the reporting year, Board members made no transactions with MMC Norilsk Nickel shares, with only Elena Bezdenezhnykh
(0.00115%) and Egor Sheibak (0.00003%) holding shares in the Company.
Education
Degree in International Economic Relations, Economist for Foreign Trade, PhD in
Economics, Moscow State Institute of International Relations (MGIMO University)
Experience in the last fi e years
since 2002: positions at Nornickel: member of the Board of Directors (2002–2020),
Chairman of the Board of Directors (2010–2013, 2022 to date), Deputy Chairman of the
Board of Directors (2013–2020), Senior Vice President (2016–2020), Senior Vice President
for Sustainable Development (2020–2022), member of the Management Board
(2013–2022);
since 2006: member of the management board of the RSPP;
since 2013: vice president of the RSPP;
since 2015: member of the National Council on Corporate Governance non-profit
partnership;
since 2016: chairman of the Share Issuers Committee of Moscow Exchange;
since 2018: chairman of the RSPP Council on Non-financial Reporting;
since 2020: member of the RSPP Climate Policy and Carbon Regulation Committee;
since 2021: member of the RSPP Coordination Council on Sustainable Development,
member of the International Advisory Panel of the Asian Infrastructure Investment
Bank (AIIB);
since 2022: member of the working group on ESG agenda and energy transition under
the Russian Government Expert Council;
since 2022: member of the Expert Council on Sustainability and Green Finance under
the Subcommittee on Sustainability and Green Finance of the State Duma Committee
on the Financial Market at the Federal Assembly of the Russian Federation
Andrey Bougrov
Non-executive Director, Chairman
of the Board of Directors since 2022
Born in: 1952
Nationality: Russian Federation
1 Positions are indicated as at 2022-end.
Annual ReportNornickelCorporate governance5/72022 188
189
Sergey Batekhin
Non-executive Director since 2020
Chairman of the Budget
Committee, member of the
Corporate Governance, Nomination
and Remuneration Committee,
member of the Strategy Committee
of the Board of Directors
Born in: 1965
Nationality: Russian Federation
Education
Degree in Military and Political Translation, Foreign Languages (German and French),
Assistant Translator/Interpreter, Red Banner Military Institute of the Ministry of Defence
of the USSR, 1987
Degree in Finance and Credit, Economist, Plekhanov Russian Academy of Economics,
1998
Master of Business Administration, Moscow International Higher School of Business
MIRBIS, 1998
Postdoctoral degree in Philosophy, International Information Technology Academy, 2002
Speaks French, German, English, and Italian
Experience in the last fi e years
since 2020: chairman of the supervisory board of the Digital Capital
2019–2022: member of the board of directors of Jokerit Hockey Club Oy
since 2019: chairman of the presidium of the Night Hockey League non-profit amateur
hockey foundation
Denis Alexandrov
Independent Director since 2022
Member of the Strategy Committee,
member of the Audit Committee,
member of the Sustainable
Development and Climate Change
Committee of the Board of Directors
Born in: 1974
since 2018: member of the board of directors of LLC Kontinental Hockey League
Nationality: Russian Federation
2013–2020: positions at Nornickel: member of the Management Board (2013–2020),
Vice President (2015–2016), Senior Vice President – Head of Sales, Commerce and
Logistics (2016–2018), Senior Vice President – Head of Sales, Procurement and Innovation
(2018–2020)
Education
Degree in International Economic Relations and Management, Far Eastern State
University, 1996
Bachelor of Science in Business and Management, University of Maryland, 1995
Experience in the last fi e years
2016–2020: CEO of Russdragmet (Highland Gold Mining Limited Group)
since 2020: CEO of the public gold mining company Petropavlovsk PLC (POG)
since 2020: general director, LLC Atlas Mining
since 2021: member of the board of directors of Pokrovskiy Mine, a Petropavlovsk Group
company
since 2021: member of the board of directors of PHM Engineering, a Petropavlovsk
Group company
since 2022: member of the board of directors of Petropavlovsk-Avia, a Petropavlovsk
Group company
since 2022: member of the Council of the Union of Gold Producers of Russia
Education
Degree in International Economic Relations, Moscow State Institute of International
Relations (MGIMO University)
Experience in the last fi e years
since 2015: managing director at Winter Capital Advisors
Alexey Bashkirov
Non-executive Director since 2013
Member of the Audit Committee,
member of the Strategy Committee of
the Board of Directors
Born in: 1977
Nationality: Russian Federation
Annual ReportNornickelCorporate governance5/72022 Education
Degree in Law, Lawyer, Krasnoyarsk State University, 1996
Experience in the last fi e years
2015–2018: Vice President, State Secretary and Head of Government Relations at MMC
Norilsk Nickel
2018–2019: vice president for regional policy and government relations at RUSAL Global
Management B.V.’s branch
since 2019: vice president for regional policy and government relations at RUSAL
Management
since 2022: member of the board of directors at Yenisei Siberia Development
Corporation
Education
Master of Business Administration (majoring in Finance), University of Texas at Austin
(USA), 1998
Experience in the last fi e years
2019-2022: member of the board of directors of Fortenova grupa d.d. (Zagreb, Croatia)
2018-2022: member of the supervisory board of Mercator d.d. (Ljubljana, Slovenia)
190
191
Elena Bezdenezhnykh
Non-executive Director since 2022
Chairwoman of the Strategy
Committee of the Board of Directors
Born in: 1973
Nationality: Russian Federation
Sergey Volk
Independent Director since 2019
Chairman of the Corporate
Governance, Nomination and
Remuneration Committee,
member of the Budget
Committee and member of the
Audit Committee of the Board of
Directors
Born in: 1969
Nationality: Ukraine
Education
Bachelor in Law, 1998; Master in Law (with distinction), 2000, Peoples’ Friendship
University of Russia
Experience in the last fi e years
since 2015: First Vice President – Head of Corporate Governance, Asset Management and
Legal Affairs at MMC Norilsk Nickel
Education
Degree in Non-ferrous Metallurgy, Metallurgical Engineer, Norilsk Industrial Institute,
1999
Experience in the last fi e years
since 2021: deputy CEO – head of geology, technology and engineering, member of the
management board of STANMIX HOLDING LIMITED
since 2021: deputy CEO – head of geology, technology and engineering, member of the
management board of Russdragmet
2020–2021: deputy CEO – project director at Ozernaya Mining Company
2018–2019: CEO of Arctic Palladium
2014–2018: Head of the Chita PMO at MMC Norilsk Nickel
Marianna Zakharova
Executive Director since 2010,
member of the Management Board
since 2016
Born in: 1976
Nationality: Russian Federation
Stanislav Luchitsky
Independent Director since 2021
Chairman of the Sustainable
Development and Climate Change
Committee, member of the
Strategy Committee, member
of the Corporate Governance,
Nomination and Remuneration
Committee of the Board of
Directors
Born in: 1976
Nationality: Russian Federation
Annual ReportNornickelCorporate governance5/72022 192
193
Alexey Germanovich
Independent Director since 2022
Deputy Chairman of the Corporate
Governance, Nomination and
Remuneration Committee, member of
the Audit Committee, member of the
Sustainable Development and Climate
Change Committee of the Board of
Directors
Born in: 1977
Nationality: Russian Federation
Alexandra Zakharova
Non-executive Director since 2022
Member of the Audit Committee,
member of the Budget Committee,
member of the Sustainable
Development and Climate Change
Committee of the Board of Directors
Born in: 1973
Nationality: Russian Federation
Education
Education
Degree in Economics, Manager, Lomonosov Moscow State University, 1998
Degree in Journalism, Lomonosov Moscow State University, 2002
Executive MBA, Cranfield University, UK, 2009
Experience in the last fi e years
since 2008: member of the management board of the St Petersburg University
Endowment Fund
2014–2019: member of the board of directors of E.ON Russia (Unipro since 23 June 2016)
2016–2018: member of the board of directors of Aeroflot
2016–2018: member of the board of directors of Ameriabank, Armenia
2018–2019: member of the board of directors of Komercijalna Banka a.d. Beograd, Serbia
Alexey Ivanov
Independent Director since 2022
Chairman of the Audit Committee of
the Board of Directors
Born in: 1969
Nationality: Russian Federation
Department of Economic Cybernetics, Faculty of Economics, 1991; postgraduate degree,
Department of International Economic Relations, Leningrad State University, 1993
Institute of Chartered Accountants in England and Wales (АСА qualification), 1997
Experience in the last fi e years
since 2021: CEO of Green Energy
since 2020: CEO of Axioma
2010–2020: key account management partner (2016–2020), head of audit services
(2013–2016), head of private company services (2010–2013) at PricewaterhouseCoopers,
Moscow
Education
Degree in Economics and Labour Sociology, Economist, Plekhanov Russian Academy of
Economics, 1996
Experience in the last fi e years
since 2020: function director at JSC Russian Aluminium Management
2013–January 2023: Head of project of the Financial Control Service of MMC Norilsk
Nickel
Evgeny Shvarts
Independent Director since 2019
Education
Degree in Zoology and Botany, Biologist, Lomonosov Moscow State University, 1982
Candidate of Geographical Sciences (Biogeography and Soil Geography), Institute of
Geography, Academy of Sciences of the Soviet Union, 1987
Doctor of Geographical Sciences (Geoecology), Institute of Geography, Russian Academy
of Sciences, 2003
Experience in the last fi e years
since 2021: professor at the Faculty of Geography and Geoinformation Technology,
National Research University – Higher School of Economics; head of the Centre for
Responsible Environmental Management at the Institute of Geography, Russian
Academy of Sciences
Member of the Sustainable
Development and Climate Change
Committee of the Board of Directors
since 2020: leading researcher at the Department of Physical Geography and
Environmental Management Problems of the Institute of Geography, Russian Academy
of Sciences
Born in: 1958
since 2020: member of the board of directors of UC RUSAL, IPJSC
Nationality: Russian Federation
2007–2019: director for conservation policy at WWF
since 1993: member of the board of the Biodiversity Conservation Centre charitable
foundation
Annual ReportNornickelCorporate governance5/72022 Education
Degree in Public Administration, Manager, Lomonosov Moscow State University, 2008
Experience in the last fi e years
since 2022: deputy chairman of the Committee on Competition Development of RSPP
2013–January 2023: Head of project of the Financial Control Service of MMC Norilsk
Nickel
194
195
Egor Sheibak
Non-executive Director since 2022
Member of the Corporate
Governance, Nomination and
Remuneration Committee, member
of the Budget Committee of the
Board of Directors
Born in: 1986
Nationality: Russian Federation
BOARD COMMITTEES
Committees established by Nornickel’s
Board of Directors are responsible for
conducting a preliminary review of critical
matters related to the Company’s activities
and making recommendations for decision
making on matters reserved for the Board.
To discharge their responsibilities in an
effective way, the committees may consult
Nornickel’s governance bodies and seek
opinions from independent external
advisors.
From the beginning of the reporting year,
the Board of Directors had five committees,
each consisting of five members:
• Strategy Committee;
• Budget Committee;
• Corporate Governance, Nomination and
Remuneration Committee;
• Audit Committee;
• Sustainable Development and Climate
Change Committee.
Members of all committees are appointed
by the Board of Directors.
Status of Board committee directors (%)
Number of Board committee meetings in 2022
Strategy Committee
40
60
4
0
Budget Committee
20
80
1
2
Corporate Governance,
Nomination and Remuneration
Committee
Audit Committee
Sustainable Development and
Climate Change Committee
60
60
40
40
15
4
11
4
80
20
2
2
4
3
19
15
4
Independent
directors
Non-executive
directors
In person
In absentia
STRATEGY COMMITTEE
Committee members at 2022-end
Elena Bezdenezhnykh
Chairwoman
Denis Alexandrov
Independent Director
Alexey Bashkirov
Sergey Batekhin
Stanislav Luchitsky
Independent Director
The Strategy Committee is made up
of five directors, two of whom are
independent (i.e. the Committee is 40%
independent). In 2022, the Committee
held four meetings in person.
• Supporting Nornickel’s Board of
Directors in developing, overseeing and
adjusting the corporate strategy
• Recommending updates to the
strategy.
The Strategy Committee assists the Board
of Directors by previewing matters related
to:
• building a sustainability strategy
•
investment planning and structural
changes
• engagement with capital markets.
The Strategy Committee’s key areas of
focus:
During the reporting year, the Strategy
Committee made recommendations
to the Board of Directors and reviewed
progress and status updates on
Nornickel’s major investment projects,
including Bystrinsky GOK and the
Sulphur Project, as well as the Company’s
contribution to the implementation of
the Comprehensive Plan for the Social
and Economic Development of Norilsk
to 2035 (including renovation of Norilsk’s
housing stock). The Committee also
discussed reports on the Company’s
operational performance, Progress Report
on the IT Programme and Progress
Report on Implementing the Company’s
Energy Sector Development Strategy.
The Committee also reviewed progress
updates on the Transport Logistics
Strategy, sales performance for 2022–2023
and the project to update the marketing
strategy, as well as assessed changes in
the competitive environment and the
Company’s repair service development
concept.
Annual ReportNornickelCorporate governance5/72022 196
197
BUDGET COMMITTEE
Committee members at 2022-end
Sergey Batekhin
Chairman
Alexey Bashkirov
Alexandra Zakharova
Sergey Volk
Independent Director
Egor Sheibak
AUDIT COMMITTEE
Committee members at 2022-end
Alexey Ivanov
Chairman,
Independent Director
Denis Alexandrov
Alexey Germanovich
Independent Director
Sergey Volk
Independent Director
Alexandra Zakharova
Nornickel’s current Budget Committee is
made up of five directors, one of whom is
independent (i.e. the Committee is 20%
independent).
In 2022, the Committee held three
meetings, including two in absentia.
In 2022, the Budget Committee focused
on making recommendations to the
Board of Directors to inform decision
making on the amount of the Company’s
2021 full-year dividend and the dividend
record date to be proposed by the Board
of Directors, as well as reviewed metal
price and FX forecast updates to support
the Company’s 2023 budgeting. The
Budget Committee also approved and
recommended that the Board of Directors
approve Nornickel’s 2023 budget.
The Audit Committee is made up of five
directors, three of whom are independent
directors, including the Committee
Chairman (i.e. the Committee is 60%
independent). On average, Committee
members have more than 10 years of
experience in finance.
The Audit Committee plays an
important role in enabling controls
and accountability, and has become an
effective interface between the Board of
Directors, Audit Commission, independent
auditor, Internal Audit Department, and
management of Nornickel.
discussed the 2021 Sustainability Report.
The Committee reviewed reports by
the Risk Management Service on the
Company’s key risks and reports by the
Inspection Department for Monitoring
Technical, Production and Environmental
Risks, as well as the Corporate Risk
Appetite Statement for 2022.
In 2022, the Committee held 15 meetings,
including 11 in person and 4 in absentia.
The Committee discharges its
responsibilities by overseeing:
• financial reporting
•
• external and internal audit
• prevention of wrongdoing by Nornickel
risk management and internal controls
employees and third parties
• health and safety matters.
During 2022, the Audit Committee
prepared for the Board of Directors
a number of recommendations for
decision making on matters related to the
accuracy, completeness and reliability of
Nornickel’s financial statements, as well
as health and safety, and the approval of
PJSC MMC NORILSK NICKEL’s Internal
Control Policy and PJSC MMC NORILSK
NICKEL’s Internal Audit Policy. The
Committee also reviewed the results of
audits by the Internal Audit Department
and Internal Control Department and
CORPORATE GOVERNANCE, NOMINATION AND
REMUNERATION COMMITTEE
Committee members at 2022-end
Sergey Volk
Chairman,
Independent Director
Alexey Germanovich
Deputy Chairman,
Independent Director
Sergey Batekhin
Stanislav Luchitsky
Independent Director
Egor Sheibak
The Committee is made up of five
directors, three of whom are independent,
including the Committee Chairman (i.e.
the Committee is 60% independent).
In 2022, the Committee held 19 meetings,
including 15 in absentia and 4 in person.
The Corporate Governance, Nomination
and Remuneration Committee supports
the Board of Directors by:
• evaluating, overseeing and improving
Nornickel’s corporate governance
framework
• ensuring succession planning for
Nornickel’s Board of Directors and
Management Board
• providing incentives, evaluating the
performance of Nornickel’s Board
of Directors, Management Board,
President, and Corporate Secretary, and
setting relevant remuneration policies
supervising the development and
implementation of Nornickel’s
information policy.
•
The Committee made recommendations
to the Board of Directors to inform decision
making on convening, preparing and
holding the Annual and Extraordinary
General Meetings of Shareholders, and on
matters reserved to the General Meeting
of Shareholders (remuneration and
reimbursement of expenses of members
of the Board of Directors and the Audit
Commission, and liability insurance and
indemnity for members of the Board of
Directors and the Management Board).
The Corporate Governance, Nomination
and Remuneration Committee advised
the Board of Directors on evaluation of the
Board of Directors’ performance in 2021, on
changes to the Company’s Management
Board and on the approval of a number
of the Company’s internal documents.
The Committee approved the Company’s
set of key performance indicators (KPIs)
for HSE performance and team KPIs of
the Norilsk Nickel Group for 2023. The
Committee reviewed the Report on the
Consistent Efforts to Improve Employee
Engagement at the Company. It also
reviewed performance against the 2021
KPI scorecards for the Company’s top 10’s
and top 100’s, as well as the Management
Board labour relations and motivation
system, updates on the Company’s
charitable policy, sponsorship efforts and
other social programmes, the Human
Capital Development Programme, and the
Company’s training system development
strategy for 2022–2025. The Committee
discussed approaches to developing
individual KPIs for 2022 for top 10’s. The
Committee also reviewed the annual
evaluation of the Board of Directors’
performance in 2021, which concluded that
the Board of Directors and the Corporate
Secretary of Nornickel were effective, and
assessed the independence of nominees
to the Company’s Board of Directors.
In 2022, the Audit Committee of the Board
of Directors:
•
reviewed the annual audit plan and
internal audit development plans
reviewed bonus-related performance
targets (KPI scorecards) of the Internal
Audit Department Director
•
• discussed the results of completed
audits, including gaps identified
and remedial actions designed by
management to improve internal
controls and minimise risks.
Annual ReportNornickelCorporate governance5/72022 198
199
SUSTAINABLE DEVELOPMENT AND
CLIMATE CHANGE COMMITTEE
EXECUTIVE BODIES
Committee members at 2022-end
Stanislav Luchitsky
Chairman,
Independent Director
Denis Alexandrov
Independent Director
Alexey Germanovich
Independent Director
Alexandra Zakharova
Evgeny Shvarts
Independent Director
The Committee is made up of five
directors, four of whom are independent,
including the Committee Chairman (i.e.
the Committee is 80% independent). In
accordance with its Terms of Reference,
the Committee has five members, with an
option to increase its membership should
the Board of Directors decide to do so.
In 2022, the Committee held four
meetings, including two in person and
two in absentia.
The Sustainable Development and
Climate Change Committee’s key
functions:
•
Integrating sustainability principles,
including climate change, into the
Company’s activities
• Developing and implementing the
Sustainable Development and Climate
Change Strategy
• Managing risks and internal controls
related to sustainable development
and climate change
• Preparing the Company’s internal
reports and disclosures on sustainable
development and climate change
• Overseeing the external audit of the
Company’s reports and activities
related to sustainable development
and climate change.
In the reporting year, the Committee
members discussed a report by
Nornickel’s management on the
Company’s sustainability performance,
including environmental protection and
climate change monitoring, international
certification of the Company’s activities,
compliance with international standards
on business conduct, as well as social
and corporate governance matters.
Particular attention was paid to
environmental remediation after the
diesel fuel spill, carbon-neutral nickel
production, as well as the integration of
the International Council of Mining and
Metals (ICMM) standards and the Initiative
for Responsible Mining Assurance
(IRMA) requirements into the Company’s
operations. The Committee meeting
also discussed in detail matters related
to supporting indigenous peoples of the
Far North and studying the impacts of
climate warming on permafrost.
Following the discussion, the
Committee deemed it appropriate to
publish information about Nornickel’s
sustainability/ESG performance and
future plans on the Company’s website
on a regular basis. Members of the Board
of Directors and Company management
recognised environmental and industrial
safety matters as their special focus areas
and highlighted the need for sustainable
results in transforming Nornickel’s
industrial safety culture.
The President and the Management Board are Nornickel’s executive bodies in charge of
day-to-day operations. They ensure:
•
implementation of resolutions passed by the Board of Directors and the General
Meeting of Shareholders
implementation of Nornickel’s key plans and programmes
•
• continuous operation of an effective risk management and internal control system
(RMICS).
PRESIDENT
The President is Nornickel’s sole executive
body in charge of day-to-day operations.
The President is elected by the General
Meeting of Shareholders for an indefinite
term and acts as Chairman of the
Management Board.
The President reports to the Board of
Directors and the General Meeting of
Shareholders. Since 2015, this position has
been held by Vladimir Potanin (Nornickel’s
CEO in 2012–2015).
MANAGEMENT BOARD
The Management Board is a collective
executive body in charge of Nornickel’s
day-to-day operations within its scope
of authority as set out in the Articles of
Association; it ensures the implementation
of resolutions passed by the General
Meeting of Shareholders and the Board of
Directors.
Members of the Management Board are
elected by the Board of Directors for an
indefinite term. The Board of Directors
may at any time terminate the office
and contract of any member of the
Management Board.
The Management Board had 10
members at the start of 2022, according
to the composition approved by the
Board of Directors on 28 October 2021.
The composition of the Company’s
Management Board changed twice during
the reporting year:
• On 14 April 2022, the Board of Directors
resolved to elect Anton Berlin to the
Company’s Management Board
effective 14 April 2022 and to establish
an 11-member Management Board as
from 14 April 2022
• On 1 June 2022, the Board of Directors
resolved to terminate the office of
Andrey Bougrov, member of the
Company’s Management Board, and to
establish a 10-member Management
Board as from 2 June 2022.
In 2022, the Management Board held 21
meetings (all in absentia).
During 2022, the Management Board
decided to change the composition of the
Energy and Trans-Baikal Divisions; passed
resolutions regarding the Company’s
branch directors and amendments to
their employment contracts; reviewed the
Company’s capital-raising, guarantee and
surety transactions; approved the scope of
internal control system self-evaluation for
2022; and reviewed matters related to the
progress of the Environmental and Climate
Change Strategy.
Number of Management Board
meetings
41
37
34
22
22
21
1
2020
1
2021
0
2022
In person
In absentia
Number of matters reviewed
Annual ReportNornickelCorporate governance5/72022 200
201
Attendance at meetings in 2022
Name
Vladimir Potanin
Andrey Bougrov1 (until 1 June 2022)
Anton Berlin2(from 14 April 2022)
Sergey Stepanov
Evgeny Fyodorov
Sergey Dubovitsky
Marianna Zakharova
Larisa Zelkova
Elena Savitskaya
Sergey Malyshev
Nina Plastinina
Tenure on the Management
Board (years)
Meetings attended / total number of
meetings
10
10
1
2
2
5
7
10
9
10
10
21/21
6/21
19/21
21/21
21/21
21/21
21/21
21/21
21/21
21/21
21/21
Tenure on the Management Board (%)
Management Board composition by gender (%)
2022
2021
2020
30
20
20
20
30
20
50
50
60
2022
2021
2020
60
60
60
40
40
40
0-2 years
3-7 years
>8 years
Male
Female
Vladimir Potanin
Chairman of the Management Board
since 2012
President of the Company since 2015
(CEO in 2012–2015)
Born in: 1961
Nationality: Russian Federation
1 Left the Management Board on 1 June 2022 as per the Board of Directors’ resolution.
2 Joined the Management Board on 14 April 2022 as per the Board of Directors’ resolution.
1 Positions are indicated as at 2022-end.
BIOGRAPHICAL DETAILS OF MEMBERS OF THE
MANAGEMENT BOARD 1
For more detailed biographies of members of the Management Board, please see the website. Biographical details of previous
members of the Management Board are available in the 2021 Annual Report.
In the reporting year, Sergey Stepanov and Anton Berlin held shares in MMC Norilsk Nickel (0.002% of the authorised capital each).
Education
Degree in International Economics, Moscow
State Institute of International Relations
(MGIMO University)
Experience in the last fi e years
since 2022: member of the management
board of the Russian Ice Hockey Federation
since 2021: member of the board of trustees
of the Football Union of Russia
2020–2022: chairman of the board of
trustees of the Vladimir Potanin Foundation
since 2020: member of the board of trustees
of the ROZA Club for Sport Development
and Support
since 2018: member of the board of trustees
of the Russian–American Council for
Business Cooperation trade association;
member of the board of trustees of
the Fund for the Conservation and
Development of the Solovetsky Archipelago
since 2017: chairman of the supervisory
board of the Norilsk Development Agency
autonomous non-profit organisation
since 2016: member of the board of the
Endowment Fund for Education and
Culture, chairman of the board of trustees
of the Night Hockey League non-profit
amateur hockey foundation
2014–2019: chairman of the board of trustees
of the ROZA Club for Sport Development
and Support
since 2011: member of the board of
trustees of the State Hermitage Museum
Endowment Fund non-profit organisation;
member of the board of trustees of the
Moscow Church Construction Foundation
since 2010: member of the board of trustees
of the Russian Geographical Society all-
Russian non-governmental organisation
since 2009: deputy chairman of the board
of trustees of the Russian International
Olympic University
since 2007: member of the board of trustees
of Saint Petersburg State University, deputy
chairman of the board of trustees of the
MGIMO University Endowment Fund
since 2006: deputy chairman of the board
of trustees of the MGIMO University
Endowment Fund, member of the
board of trustees and member of the
management board of the Graduate School
of Management at Saint Petersburg State
University, member of the bureau of the
board of the Russian Union of Industrialists
and Entrepreneurs (RSPP)
since 2005: member of the board of
trustees, member of the board of the
Russian Olympians Foundation non-profit
charitable organisation
since 2004: chairman, member of
the presidium of the National Council
on Corporate Governance non-profit
partnership
since 2003: chairman of the board of
trustees of the State Hermitage Museum
2001-2022: member of the board of trustees
of the Solomon R. Guggenheim Foundation
(New York)
since 2000: member of the bureau of the
board, member of the management board
of the RSPP
since 1995: member of the presidium of the
International Foundation for the Unity of
Orthodox Christian Nations
Annual ReportNornickelCorporate governance5/72022 202
203
Anton Berlin
Member of the Management Board
since 2022
Born in: 1973
Nationality: Russian Federation
Sergey Dubovitsky
Member of the Management Board
since 2018
Born in: 1978
Nationality: Russian Federation
Education
Education
Faculty of Radio Electronic Equipment, Systems Engineer – Administrator of Production,
1996; postgraduate degree, 1999, MATI – Russian State Technological University named
after K. E. Tsiolkovsky
Experience in the last fi e years
since 2008: positions at Nornickel: Director of the Marketing Department (2008-2019),
Vice President – Head of Sales and Commerce (since 2019)
Education
Public Relations Specialist with Foreign Language Skills, Moscow State Institute of
International Relations (MGIMO University)
Experience in the last fi e years
since 2021: member of the boards of directors of MPI Nickel Pty Ltd, Norilsk Nickel Africa
Pty Ltd and Norilsk Nickel Mauritius, member of the Executive Committee of Nkomati
since 2013: positions at Nornickel: Director of the Strategic Planning Department
(2013–2016), Vice President for Strategic Planning (2016–2019), member of the
Management Board (since 2018), Vice President – Head of Strategy and Strategic
Projects (2019–2020), Senior Vice President – Head of Strategy and Strategic Projects,
Logistics and Procurement (since 2020)
Larisa Zelkova
Member of the Management Board
since 2013
Senior Vice President – Head of HR,
Social Policy and Public Relations
since 2016
Born in: 1969
Nationality: Russian Federation
Journalist, Literature Editor at a Newspaper, Lomonosov Moscow State University, 1991
Experience in the last fi e years
since 2020: chairwoman of the management boards of the Second School centre for
community initiatives in the Pechenegsky District and the Monchegorsk Development
Agency
since 2019: member of the councils of the endowment funds for the replenishment of
the Tretyakov Gallery’s collection and development of its small museums at the State
Tretyakov Gallery Foundation
since 2017: chairwoman of the management board and member of the supervisory
board of the Norilsk Development Agency autonomous non-profit organisation
since 2016: chairwoman of the board of trustees of the Endowment Fund for Education
and Culture
2015-2020: member of the board of trustees of the Russian Academy of Education
2015-2022: member of the board of trustees of the Hermitage Foundation UK
since 2014: chairwoman of the board of the Vladimir Potanin Foundation
2011–2020: member of the board of directors of Rosa Khutor Ski Resort Development
Company
since 2011: chairwoman of the management board of the State Hermitage Museum
Endowment Fund
since 2013: positions at Nornickel: member of the Board of Directors (2011-2013), Deputy
CEO of Social Policy and Public Relations (2013-2015), Vice President – Head of HR, Social
Policy and Public Relations (2015-2016), Senior Vice President – Head of HR, Social Policy
and Public Relations (since 2016)
since 2009: member of the board of trustees of the Pavlovsk Gymnasium private
autonomous non-profit organisation
since 2007: member of the presidium of the MGIMO University Endowment Fund
Annual ReportNornickelCorporate governance5/72022 204
205
Marianna Zakharova
Member of the Management Board
since 2016
Member of the Board of Directors
since 2010
Born in: 1976
Nationality: Russian Federation
Sergey Malyshev
Member of the Management Board
since 2013
Born in: 1969
Nationality: Russian Federation
Education
Education
Bachelor in Law, 1998; Master in Law (with distinction), 2000, Peoples’ Friendship
University of Russia
Experience in the last fi e years
since 2015: First Vice President – Head of Corporate Governance, Asset Management and
Legal Affairs of Nornickel
Degree in Chemical Machine and Fixture Building, Mechanical Engineer, Moscow
Chemical Machine Building Institute; postgraduate degree in Economics and
Production Management, Bauman Moscow State Technical University
Experience in the last fi e years
since 2013: positions at Nornickel: Director of the Internal Control Department
(2013–2015), Vice President – Head of Internal Audit (2015—2016), Vice President – Head of
Internal Control and Risk Management (since 2016)
Nina Plastinina
Member of the Management Board
since 2013
Born in: 1961
Nationality: Russian Federation
Education
Education
Degree in Machines and Devices for the Textile and Light Industries, Mechanical
Engineer, Kosygin State University of Russia
Degree in Public and Municipal Administration, Economist, Institute of Advanced
Training at the Russian Presidential Academy of National Economy and Public
Administration
Finance Academy under the Government of the Russian Federation, Public and
Municipal Administration retraining programme, with the State Attestation Commission
certifying the right (compliance with qualification requirements) to carry out
professional activities related to public and municipal administration
Experience in the last fi e years
since 2013: positions at Nornickel:), Deputy CEO – Head of Economics and Finance
(2013–2015), Vice President – Head of Economics and Finance (2015–2016), Senior Vice
President – Chief Financial Officer (since 2016)
Elena Savitskaya
Member of the Management Board
since 2014
Born in: 1972
Nationality: Russian Federation
Degree in Psychology, Psychologist, Psychology Teacher, Moscow Pedagogical State
University
Experience in the last fi e years
since 2013: positions at Nornickel: Chief of Staff (2013-2015), Vice President – Chief of Staff
(since 2015)
Annual ReportNornickelCorporate governance5/72022 206
207
Sergey Stepanov
Member of the Management Board
since 2021
Born in: 1977
Nationality: Russian Federation
Evgeny Fyodorov
Member of the Management Board
since 2021
Born in: 1978
Nationality: Russian Federation
Education
Lomonosov Moscow State University: 1998: Bachelor in Economics (with distinction)
2000: Master in Economics (with distinction)
Experience in the last fi e years
since 2022: member of the board of directors of Polar Lithium
2020–2021: CEO of VSMPO-AVISMA Corporation
2014–2020: CEO of Raspadskaya
2012–2020: vice president, head of Evraz’s Coal Division
since 2021: Senior Vice President – Operational Director of Nornickel
Education
Degree in Economics and Enterprise Management, Economist/Manager, Bauman
Moscow State Technical University, 2001
PhD in Economics, Moscow Power Engineering Institute (Technical University), 2003
Experience in the last fi e years
2018–2020: member of the board of directors, Advisor to the CEO of TRUST SM
since 2018: member of the board of directors of Unitile Holding
since 2017: member of the board of directors, Advisor to the CEO of Rosvodokanal
Management Company
since 2021: Vice President for Energy of Nornickel
CORPORATE SECRETARY
The role of the Corporate Secretary is to
ensure compliance with the procedures
for the protection of shareholder rights
and legitimate interests, as prescribed
by applicable laws and Nornickel’s
internal documents, and to monitor such
compliance. According to the Company’s
Articles of Association, the Corporate
Secretary is appointed by the Board of
Directors for a three-year term. The Board
of Directors may terminate the office of
the Corporate Secretary before the end of
the term.
The Corporate Secretary’s key functions:
•
Involvement in preparing and holding
the General Meeting of Shareholders;
• Preparing and holding meetings of the
Board of Directors and its committees;
• Contributing to the improvement
of Nornickel’s corporate governance
framework and practice;
• Managing the activities of the
Secretariat;
• Other functions in accordance with
Nornickel’s internal documents.
The Corporate Secretary reports
administratively to the President and is
accountable to the Board of Directors.
At present, Pavel Platov is Nornickel’s
Corporate Secretary. In December 2021,
the Board of Directors extended Pavel
Platov’s term as Corporate Secretary by
another three years.
Education
Linguistics University of Nizhny Novgorod
Academy of National Economy under the Government of the Russian Federation
Experience in the last fi e years
since 2017: Corporate Secretary of MMC Norilsk Nickel (2011–2017: Company Secretary)
Pavel Platov
Corporate Secretary since 2011
Born in: 1975
Nationality: Russian Federation
In the reporting year, he held no shares
in MMC Norilsk Nickel and made no
transactions with them.
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209
CONTROL SYSTEM
The Company has in place an internal
control system covering key business
processes and all management levels
across the Group. The internal control
system integrated into the Company’s
corporate governance processes is
geared towards achieving the goals
related to accurate financial reporting
and operational efficiency as well as
compliance goals.
e s
ystem comprises th
Th
e f
ollowing control bodies:
Audit Commission
Audit Committee of the Board of Directors
Internal Audit Department
Internal Control and Risk Management, comprising the Internal Control
Department, Financial Control Service, Risk Management Service,
and the Centre for Monitoring Technical, Production and Environmental
Risks
Internal control structur
e as of 31 December 20
22
Audit Commission
General Meeting of
Shareholders
Independent auditor
Audit Committee of the
Board of Directors
Board
of Directors
President, Chairman
of the Management
Board
Internal Audit
Department Director
Vice President –
Head of Internal Control
and Risk Management
Election
Reporting
Administrative
reporting
Internal Audit
Department
Internal Control
and Risk Management
AUDIT COMMISSION
The Audit Commission is Nornickel’s
standing internal control body that
monitors its financial and business
operations. The five members of the Audit
Commission are elected annually at the
Annual General Meeting of Shareholders.
INTERNAL AUDIT
The Company has set up the Internal
Audit Department to assist the Board
of Directors and executive bodies in better
managing the Company and improving
its financial and business operations
through a systematic and consistent
approach to the analysis and evaluation
of risk management and internal controls
as tools providing reasonable assurance
that Nornickel will achieve its goals.
The Internal Audit Department
conducts objective and independent
audits to assess the effectiveness
of the internal control system
and risk management system. Based
on the audits, the Department prepares
reports and proposals for management
on improving internal controls,
and monitors the development
of remedial action plans.
In order to ensure independence
and objectivity, the Internal Audit
Department functionally reports
to the Board of Directors through
the Audit Committee and has
an administrative reporting line
to Nornickel’s President. MMC Norilsk
Nickel has in place an Internal Audit Policy
approved by the Company’s Board of
Directors in 2022.
Audit Commission’s
performance
business operations for 2022 will
be reported to the Annual General
Meeting of Shareholders in 2023.
In 2022, the Audit Commission audited
Nornickel’s business operations for 2021,
with the auditors’ report presented to the
shareholders as part of materials for the
Annual General Meeting of Shareholders.
Results of the audit of the Company’s
The Annual General Meeting of
Shareholders on 3 June 2022 elected
the Audit Commission as follows: Alexey
Dzybalov, Anna Masalova, Georgy
Svanidze, Eduard Gornin, Elena Yanevich.
In 2022, the Audit Committee:
•
reviewed the annual audit plan and
internal audit development plans
reviewed bonus-related performance
targets (KPI scorecards) of the Internal
Audit Department Director
•
• discussed the results of completed
audits, including gaps identified
and corrective actions designed by
management to improve internal
controls and minimise risks
reviewed the results of internal audit
self-assessment.
•
The Audit Committee commended
the work of the Internal Audit Department
in the reporting period.
In 2022, the Internal Audit Department
audited the following areas:
• H&S and environmental risk
management
• Progress on the Company’s major
investment projects
• Corporate governance processes
• Control over IT assets and IT projects
During some audits, the Department
made use of data analysis tools to process
significant data volumes and present
them graphically. For some business areas,
the Department uses the continuous
auditing method.
The Internal Audit Department performed
an annual performance evaluation
of Nornickel’s corporate risk management
system (CRMS) and internal control
system (ICS) for 2022 and concluded that
the Company’s CRMS and ICS as a whole
operate effectively, but there were
some comments. The evaluation results
were reviewed at an Audit Committee
meeting and a meeting of the Company’s
Board of Directors.
Based on the recommendations
issued during the audits, management
developed corrective actions
and implemented a total of 270 such
actions over 2022. The actions included
updating regulatory documents,
developing new or amending existing
control procedures, communicating
them to employees, training employees,
and identifying and assessing risks. The
Internal Audit Department uses SAP AM,
an automated internal audit solution, to
continuously monitor the implementation
of initiatives developed by management,
with the resulting insights on types
and number of initiatives regularly
reviewed by the Audit Committee.
Annual ReportNornickelCorporate governance5/72022 210
211
INTERNAL CONTROL
The Internal Control Department regularly
monitors the Company’s high-risk
business processes – procurement and
investment activities, capital construction
and corporate insurance transactions,
as well as the reliability of the existing
systems of accounting for metal-bearing
products. The Company also continuously
monitors compliance with regulatory
requirements to combat the unlawful
use of insider information and market
manipulation, as well as money
laundering, terrorist financing
and proliferation financing.
The performance and maturity of internal
control system elements are evaluated
annually as part of an external financial
statement audit and internal control
system self-evaluation. Reports containing
the internal control system evaluation
results are reviewed by Nornickel’s
management and the Audit Committee
of the Board of Directors.
In May 2022, Nornickel rolled out an
automated risk management and internal
control system based on an SAP GRC
solution. The system maintains data on
the Company’s internal control system,
runs procedures to assess its effectiveness
and generates reports.
The Financial Control Service audits
financial and business operations of
Nornickel and its subsidiaries to make
updates and recommendations for the
President and members of the Board
of Directors. The Head of the Financial
Control Service is appointed by resolution
of the Board of Directors.
CORPORATE TRUST LINE
Nornickel runs the Corporate Trust
Line speak-up programme established
to respond promptly to reports
of non-compliance, wrongdoing or
embezzlement, violation of employees’
rights, and breach of ethical standards or
rules of conduct by employees. Employees,
shareholders and other stakeholders can
report any actual or potential actions
that cause or may cause financial or
reputational damage to Nornickel.
All reports submitted via the line
are registered, assigned a unique number
and investigated. The key principles
underlying the operation of the Corporate
Trust Line include data privacy and
guaranteed anonymity for whistleblowers
who wish to remain anonymous, as well as
timely and unbiased review of all reports.
Nornickel will in no circumstances retaliate
against an employee who raises a concern
via the Corporate Trust Line, meaning
that no disciplinary action or sanction
will be taken (dismissal, demotion,
forfeiture of bonuses, etc.). If pressure on
a whistleblower is reported, the Company
conducts mandatory investigations of
such reports and thoroughly reviews their
findings. Whistleblower status is regularly
monitored at all levels to identify cases of
undue pressure.
Reporting channels (24/7):
Phone: 8 800 700 1941, 8 800 700 1945
Email: skd@nornik.ru
Reporting form on Nornickel’s website:
Corporate Trust Line – Nornickel
(nornickel.ru)
Report statistics
2022
2021
2020
589
422
451
Total number of reports
Total number of reports that triggered investigation
Over the past three years, the Corporate
Trust Line has not received any reports
classified as corrupt practices. For more
details on report statistics, please see the
Sustainability Report.
1,463
1,243
1,037
ANTI-CORRUPTION
The Company is annually included in the Anti-corruption Ranking of Russian
Business compiled by the Russian Union of Industrialists and Entrepreneurs.
Independent experts assess the anti-corruption management system against
the criteria of the international standard ISO 37001:2016 and the provisions
of the Anti-corruption Charter. Following a comprehensive independent
evaluation carried out for the Anti-corruption Ranking of Russian Business
2022, Nornickel received the top rating, A1, reflecting the particular attention
paid by the Company’s management to corruption prevention, as well as the
effective implementation of relevant measures.
Rating A1
Nornickel received the top rating
following a comprehensive
independent evaluation
Nornickel compiles with anti-corruption
laws of the Russian Federation and other
countries in which it operates, as well as
with any applicable international laws and
Nornickel’s internal documents. Nornickel
openly declares its zero tolerance for
corruption in any form or manifestation.
Members of Nornickel’s Board of Directors
/ Management Board and senior
management role model a zero-tolerance
approach to corruption in any form or
manifestation at all levels across the
organisation.
Facilitation payments
and political
contributions are
strictly prohibited by
Nornickel’s policy.
Nornickel will not tolerate any retaliation,
disciplinary or other action against an employee
who reports a concern about suspected bribery
or corruption, or refuses to offer a bribe, facilitate
bribery, including commercial bribery, or take part
in any other corrupt activities.
In line with legal requirements and
its voluntary commitments, Nornickel
actively implements and improves anti-
corruption measures. The Company
has established uniform requirements
for giving and receiving business gifts
applicable to all employees, which are
set forth in the Regulations on Business
Gifts, with record keeping and tracking in
place for entertainment expenses. Regular
anti-corruption due diligence of internal
documents ensures that they present no
potential for corruption.
We perform annual assessment and
quarterly monitoring of corruption risks.
Every two years, Nornickel submits to
the Russian Union of Industrialists and
Entrepreneurs a Declaration of Compliance
with the Anti-corruption Charter of the
Russian Business to confirm its compliance
with anti-corruption requirements.
Nornickel annually publishes statistics
on recorded corruption incidents in its
Sustainability Report, demonstrating
its commitment to openness and
transparency to stakeholders.
Department employees take a course on
compliance with anti-corruption laws. As of
the end of 2022, 100% of employees were
trained to be familiar with the Group’s
anti-corruption policies and methods.
Over the year, the training on statutory
requirements and provisions of corporate
anti-corruption regulations covered 31
people.
When recruited, all Company employees
familiarise themselves with anti-corruption
documents, sign an agreement setting out
their anti-corruption responsibilities and
take an anti-corruption induction briefing.
Nornickel regularly trains its employees
and involves them in implementing anti-
corruption programmes. All Company
employees take an annual online anti-
corruption training course, while all HR
Timely identification and prevention of
conflicts of interest are also key to our
anti-corruption efforts. The Company has
in place an approved standard reporting
form to be filled by candidates applying
for vacant positions at Nornickel and
individuals signing an independent
contractor agreement with the Company.
The Company set up standing conflict
of interest commissions across the
organisation to enhance the effectiveness
Annual ReportNornickelCorporate governance5/72022 procurement body comprised of
representatives from various functions of
Nornickel;
ANTITRUST
COMPLIANCE
INFORMATION SECURITY
212
213
of preventing, identifying and resolving
conflicts of interest, as well as to ensure
legal compliance and improve corporate
culture.
Nornickel maintains the dedicated
Anti-corruption section on its website,
providing information on its anti-corruption
regulations and measures taken to
combat and prevent corruption, offer legal
education, and promote lawful behaviours
among employees.
In order to mitigate potential risks
associated with contractor engagement,
Nornickel evaluates business standing,
integrity and solvency of its potential
counterparties. To prevent procurement
misconduct and maximise value capture
through unbiased selection of best
proposals, Nornickel’s procurement owner,
customer and secretary of a collective
procurement body adhere to the following
rules:
• Procurement relies on the principle of
division of roles;
• Commercial proposals submitted by
suppliers are compared using objective
and measurable criteria approved
prior to sending a relevant request for
proposal;
• The selection results and the winning
bidder in the material procurement
process are approved by the collective
• A Master Agreement containing an anti-
corruption clause is signed with each
supplier or updated on an annual basis.
The anti-corruption clause outlines the
course of action to be taken between
the supplier and Nornickel with respect
to risks of abuse. Moreover, by signing
the Master Agreement, suppliers
acknowledge that they have read the
Company’s Anti-Corruption Policy.
In 2022, to develop and improve its anti-
corruption compliance system, the
Company:
• approved a unified approach to
adopting anti-corruption regulations
and controls throughout the Group
• delivered training in the basics
of anti-corruption compliance to
Group employees responsible for
implementing anti-corruption measures
revised and updated its anti-corruption
procedural documents.
•
The Company is also reviewing its approach
to assessing corruption risks related to
contractor engagement.
An antitrust compliance system in place
at the Company since 2017 establishes
the processes for the timely prevention,
identification and elimination of causes
and conditions facilitating antitrust
violations and ensures compliance of the
Company and its corporate entities with
applicable laws.
Federal Law No. 135-FZ On Protection
of Competition dated 26 July 2006 was
amended in 2020 to set requirements for
internal antitrust compliance regulations
of organisations and establish the right of
organisations to submit these regulations
to the Federal Antimonopoly Service and
obtain its opinion upon confirmation
of compliance. The Company was the
first in Russia to use the new statutory
procedure to obtain a confirmation of
the Federal Antimonopoly Service that its
antitrust compliance system meets legal
requirements, issued on 25 March 2021.
In 2022, the Federal Antimonopoly
Service and/or its territorial bodies did
not find any antitrust violations by the
Company or by Group enterprises; and no
administrative action was taken against
Group enterprises for such violations.
CORPORATE SECURITY
Nornickel’s corporate security system
management is based on a set of
programmes to ensure economic, corporate
and information security.
In March 2022, the Board of Directors
approved the Corporate Fraud Policy.
It underlies the consistent measures
implemented to prevent, identify and
combat abuses and manifestations
of corporate fraud, as well as signs of
corruption. The policy requirements are
aligned with the principles of fair and
responsible business conduct, as well
as with the Company’s commitment
to improving its corporate culture and
ensuring compliance with corporate
governance best practice and high ethical
standards.
Measures to protect production, transport
and energy sector facilities against terrorism
and to prevent unlawful interference in
their operations are implemented on a
scheduled basis.
In 2022, Nornickel conducted a total of 706
trainings, 46 general and 12 tactical and
special drills.
The Company collaborates with external
contractors to ensure the safety of its
facilities, making sure that contractor
activities respect human rights, including
those of employees of private security
organisations. Respect for human rights
is incorporated in the regulations of the
Corporate Security Unit.
In 2022, the Company’s information
security strategy was adapted and
adjusted as many foreign IT and
information security companies withdrew
from Russia and new legal requirements
were introduced during the year.
In the reporting year, Nornickel established
a subsidiary, Nornickel Sfera, to ensure
information security across the Group.
The company has extensive technical
competencies across core information
and process security areas and offers a full
range of key services to Group enterprises.
Going forward, Nornickel Sfera will expand
the coverage and range of its services.
Nornickel has developed an import
substitution plan covering information
security solutions and took extra steps
to protect its enterprises’ technological
infrastructure and mitigate risks.
With some employees still working
remotely, the Company is taking extra
precautions to ensure the information
security of its corporate resources and
infrastructure. These include more
stringent security requirements for
remote computers and devices used in
audio and video conferencing; remote
work is monitored on a daily basis, with
users guides and instructions updated as
necessary. The Company has expanded the
scope of systems security inspections and
audits for compliance with information
security requirements to timely identify
and eliminate vulnerabilities that can be
exploited by attackers.
PROGRAMMES
The Company has in place relevant
information security processes, including:
identification and classification of data
•
assets;
raising awareness;
•
• managing access to data assets;
•
•
•
security analysis;
risk management;
information security incident
management;
review of projects’ information
technology and automated process
control systems (APCSs) for compliance
with information security requirements.
•
In 2022, as part of an ongoing process of
identifying and classifying data assets,
the Company identified key business
applications and is actively implementing
plans to align them with corporate
information security standards by
embedding the required solutions and
information security tools.
In view of new sanctions risks and the
growing number of cyber threats to the
technological IT infrastructure, Nornickel
has developed approaches to, and plans
for, implementing a suite of projects to
create systems protecting the Company’s
technological and operating processes. The
Company’s priorities have shifted towards
establishing a basic level of infrastructure
security across its key enterprises and
complying with the Russian President’s
core executive orders on import
substitution. The Company maintains
a strong focus on complying with
information protection requirements in
APCS development and upgrade projects.
Nornickel has taken measures to ensure
the provision of information protection
tools, reviewed the procedure for updating
system and application software, and
ensured control over the updates.
In line with the plan, the Company has
finished rolling out process protection
equipment across its key production sites
as well as at the gas facility transporting
energy resources to the Norilsk Industrial
District so as to improve process safety
compared to 2020 and 2021.
Industrial automation systems across all
production sites have been audited for
compliance with internal information
security standards, which enables the
Company to develop effective plans and
take measures to improve information
security over the next two years.
IMPORT SUBSTITUTION
Since many foreign suppliers of
information security solutions have left the
Russian market, as well as to comply with
new legal requirements, Nornickel has
joined the import substitution process as
regards information and communication
technologies, including industrial
automation systems. The Company selects,
tests and rolls out Russian technology
solutions in close contact with its industry
peers.
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215
CYBER INCIDENT
RESPONSE SYSTEM
The Company’s Information Security
Incident Response Centre uses advanced
technical solutions as well as Russian
and global best practices in managing
cyber defence. Seamless information
security processes and procedures have
been developed and documented to
ensure business continuity in the event
of incidents and emergencies. These
procedures are tested for relevance at least
once a quarter.
To prevent confidential information leaks,
the Company has introduced special
safeguards to detect unauthorised data
retrieval through primary channels,
including via email and file exchange
platforms. If unauthorised attempts to
retrieve confidential information are
identified, an internal inspection and
investigation procedure is initiated in
accordance with the Company’s current
regulations.
SUSPICIOUS ACTIVITY
REPORTING PROCESS
If users detect suspicious content or
activities, the Information Security Incident
Response Centre is notified accordingly via
a corporate communication channel. The
Centre assesses the potential disruptive
impact on the Company’s IT systems and
ensures the planning and implementation
of measures to prevent and respond to
incidents.
The Information Security Incident
Response Centre operates across the
Company’s key regions of operation. Over
the year, the Centre’s employees processed
over 1 thousand incidents, handling over
20 thousand information security events
in total.
In 2022, the number of cyber attacks on
Russian companies increased significantly.
Additional comprehensive efforts were
made to mitigate risks, including proactive
measures to protect the Company’s IT
infrastructure.
In addition, the Company uses regular
dedicated newsletters to improve
employee awareness about current
information security threats and digital
hygiene.
The Response Centre has always closely
cooperated with similar units of private
companies and regulators. The Company
has maintained its effective partnership
with the National Coordination Centre
for Computer Incidents, with a relevant
cooperation agreement already in its
second year.
TRAINING AND
COMMUNICATION
The Company is strongly focused on
improving employee awareness about
information security principles and digital
hygiene.
New hires are introduced to corporate
information security requirements and
have an additional induction briefing. A
total of almost 7 thousand new employees
were introduced to information security
requirements in 2022, and about 5
thousand had additional induction
briefings on information security. Annual
employee trainings also take account of
current trends and newly identified risks
and cyber threats. In 2022, 67 scheduled
and three unscheduled e-learning courses
were delivered, with almost 13.5 thousand
Group employees trained in total.
Furthermore, the Company runs regular
drills including simulations of phishing
attacks and other fraudulent practices
that affect users. Following the drills,
instructions for employees are updated.
An information security bulletin is
prepared for the Company's management
on a quarterly basis, detailing measures to
protect critical information infrastructure,
project activities, cyber risks, anti-phishing
efforts, as well as major information
security incidents and trends.
CERTIFICATION
In line with international best practices,
Nornickel enterprises have in place
information security management systems
(ISMSs) compliant with ISO/IEC 27001:2022
requirements. In 2022, four of Nornickel’s
enterprises had the high effectiveness of
their information security management
processes confirmed:
• Murmansk Transport Division
• Nadezhda Metallurgical Plant (Norilsk
Division)
• Copper Plant (Norilsk Division)
• Talnakh Concentrator (Norilsk Division)
Despite the fast-paced external changes,
Nornickel’s team has succeeded in
maintaining continuous compliance with
international standards. The certificates
obtained are an international information
security standard driving a consistent and
structured approach and helping identify
and mitigate relevant risks. The successful
completion of the certification process
testifies to the high level of maturity of
Nornickel’s information security systems
and approaches.
The preparedness of the Company’s
enterprises to respond to new threats
and challenges has been praised by an
external auditor, who has also confirmed
that previously identified issues have been
addressed. Employees involved in the
operation of the ISMS showed excellent
knowledge of information security, and
the Company as a whole demonstrated
that it can control risks and is prepared for
unexpected changes when achieving its
goals relating to the security of production
processes.
Nornickel’s efforts to develop and
implement advanced cyber security
solutions for industrial assets have
been repeatedly acknowledged by the
professional community and industry
associations.
MANAGEMENT
INVOLVEMENT IN
INFORMATION SECURITY
Nornickel’s Information Security Policy
applies to all employees and includes
the engagement boundaries and
responsibilities of the Board of Directors
and the Management Board in this regard.
Their responsibilities include, among other
things, reviewing information security risks
and budgets for relevant programmes and
projects. Risks are monitored on a regular
basis through dedicated committees and
corporate reporting.
PARTNERSHIPS AND
BEST PRACTICE SHARING
At the national level, the Information
Security in Industry Club, an industry
association founded by Nornickel in 2017,
has been successfully operating for five
years now. Information security managers
of major Russian industrial holding
companies are involved in its activities.
Over the years, the Information Security in
Industry Club has become a recognised
platform for discussing ongoing security
issues dealing with the use of information
and communication technologies, and for
sharing experience and best practices in
protecting industrial information systems.
In international information security,
Nornickel cooperates with the Security
Council of the Russian Federation and
the Ministry of Foreign Affairs of the
Russian Federation, contributing to the
development and discussion of position
papers in this area. The Company also
participates in the National Association
for International Information Security
and cooperates with the International
Information Security Research Consortium.
The development and international
promotion of precious metal supply
chain security is an important aspect
of the Company’s engagement with its
business partners: Nornickel participates
in dialogues on this issue on international
platforms, including the Security
Committee of the International Platinum
Group Metals Association. In September
2022, Nornickel also ran a session on
cybersecurity at a meeting of the above
committee in South Africa held in person
for the first time after a long break, where
the Company shared its experience of
creating a distributed information security
management system and highlighted key
approaches to maintaining the continuity
of IT-driven production processes.
For more details on the information
security risk, please see the Key Risks in
2022 section of this Annual Report.
PERSONAL DATA
PROTECTION
The Company has developed,
implemented and put in practice a set of
organisational and technical measures
to protect the personal data of different
types of owners (including the protection
of third parties’ personal data) and ensure
compliance with Russian laws. Technical
protection involves anti-virus protection,
leak prevention, monitoring of removable
devices, and analysis of security incidents.
INDEPENDENT AUDIT
An independent auditor for Nornickel’s
financial statements is selected through
competitive bidding in accordance with
the Company’s established procedure.
The Audit Committee of the Board of
Directors reviews the shortlist and makes
a recommendation to the Board of
Directors on the proposed auditor to be
approved by the Annual General Meeting
of Shareholders of MMC Norilsk Nickel.
In 2022, the General Meeting of
Shareholders approved Kept as the auditor
for RAS and IFRS financial statements for
2022 on the recommendation of the Board
of Directors.
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217
REMUNERATION
The Board of Directors directly supervises the remuneration framework at Nornickel. The Corporate Governance, Nomination and
Remuneration Committee of the Board of Directors is responsible for:
• developing the Remuneration Policy for Members of the Board of Directors, Members of the Management Board and the President
of Nornickel;
• overseeing the implementation and execution of the Policy;
•
reviewing the Policy on a regular basis.
Nornickel does not issue loans to members of the Board of Directors and the Management Board but encourages them to invest in
Nornickel shares.
Remuneration paid to members of Nornickel’s governance bodies in 2022 totalled RUB 4.8 billion (USD 69.7 million).1
DIRECTORS’
REMUNERATION
The Board of Directors’ annual
remuneration is set out in the
Remuneration Policy. By resolution of
the General Meeting of Shareholders,
members of the Board of Directors
are remunerated for their service
on the Board of Directors and
reimbursed for expenses incurred
by them in performing their duties
as Board members. Additional
benefits for all Board members
include liability insurance and
reimbursement of losses incurred
in connection with their service on
the Board of Directors. The Bank of
Russia’s Corporate Governance Code
recommends that companies pay
for their directors’ liability insurance
to be able to recover potential losses
through the insurer. Apart from
securing stronger commitment from
directors, this insurance coverage
encourages competent leaders to
join the Board.
Remuneration of the
Chairman of the Board
of Directors
Remuneration of the Chairman of the
Board of Directors differs from the
remuneration payable to other non-
executive directors, due to the Chairman’s
enhanced scope of expertise and
responsibilities. Subject to a resolution of
the General Meeting of Shareholders, the
Chairman of the Board of Directors may
be entitled to additional remuneration
and benefits other than those set out in
the Policy. Under the Policy, the annual
base remuneration of the Chairman of
the Board of Directors is USD 1 million. The
Chairman of the Board of Directors is not
entitled to any additional remuneration
for serving on Board committees.
Remuneration of non-
executive directors
All non-executive directors receive equal
remuneration. The Policy sets forth the
following annual remuneration for non-
executive directors:
• Base remuneration of USD 120
thousand for Board membership;
• Additional remuneration of USD 50
thousand for serving on a Board
committee;
• Additional remuneration of USD
150 thousand for chairing a Board
committee.
Non-executive directors are not eligible
for any forms of short-term or long-
term cash incentives, or non-cash
remuneration, including shares (or share-
based payments), share options (option
agreements) or other non-cash rewards or
benefits.
Remuneration of
executive directors
In line with the approved Policy, executive
directors do not receive any additional
remuneration for their service on the
Board of Directors to avoid any potential
conflict of interest.
1 The amount of remuneration paid does not include the remuneration accrued but not yet paid as of 31 December 2022, as well as insurance premiums
and voluntary health insurance (VHI) contributions. Adding the amounts above, remuneration of members of Nornickel’s governance bodies for 2022 as
per the 2022 IFRS statements totalled RUB 5.5 billion (USD 80 million).
Directors’ remuneration in 2022
RUB mln
USD mln
292.1
4.3
16 0.5
0.2 0.01
308.6
4.5
Remuneration for serving on the Board
of Directors and Board committees
Salary
Reimbursement
MANAGEMENT BOARD’S REMUNERATION
Management Board’s remuneration
Management Board’s remuneration
Fixed component
Bonuses
Financial metrics:
– EBITDA (15%)
Non-financial metrics:
• Performance against H&S targets (10%)
• Reduction of GHG emissions (5%)
• Work plan performance and other individual KPIs (70%)
Key performance indicators (KPIs) used to
assess senior management’s performance
are aligned with Nornickel’s strategic
goals. In line with Nornickel’s Articles
of Association, the remuneration and
reimbursement payable to the President
and members of the Management Board
are determined by the Board of Directors.
Remuneration payable to senior
management is comprised of basic
salary and bonuses. Bonuses are linked
to Nornickel’s performance, including
both financial (EBITDA) and non-financial
metrics (work-related injury rate, GHG
reduction and work plan). The variable
component of the remuneration payable
to members of the Management Board
reflects KPIs, which are annually updated
by the Corporate Governance, Nomination
and Remuneration Committee of the
Board of Directors. The Board of Directors
decides whether to pay the President a
performance bonus for the reporting year.
In 2022, the GHG Reduction metric was
included in senior management’s KPIs
with a 5% weight (among all KPIs) and a
quantitative target.
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219
Management Board’s remuneration in 2022
RUB mln
2.6
USD mln
0.04
2,684.3
39.2
1,645.6
135.8
24
2
4,468.3
65.2
Remuneration for serving on a governance body
Salary
Bonuses
Other
AUDIT COMMISSION’S REMUNERATION
The Annual General Meeting of
Shareholders held on 3 June 2022 set
total remuneration at RUB 1.8 million
per year (before taxes) for each member
of Nornickel’s Audit Commission who is
not an employee of the Company. The
above remuneration level is similar to the
remuneration rate set for members of
the Audit Commission in 2021. Members
who are Nornickel employees are not paid
remuneration for their work as part of the
Audit Commission.
In 2022, the members of the Audit
Commission received remuneration for
their work in the body in the amount of
RUB 7.2 million (USD 105 thousand). No
bonuses or other rewards were paid.
AUDITOR’S FEE
Auditor’s fee
RUB mln
USD mln
0
Audit
116.9
1.7
50
Auxiliary audit services
Other audit-related services
57.3
0.8
165.6
2.4
100
150
200
250
300
339.8
4.9
350
The fee paid to Kept for its audit, auxiliary
audit services, as well as other audit-related
services in 2022 totalled RUB 339.8 million
(USD 4.9 million), net of VAT, with the share
of other audit-related services accounting
for 49% of the total. To prevent conflict of
interest, Kept has in place a specific policy
covering different types of services they
provide to auditees, which complies with
the requirements of the International
Ethics Standards Board for Accountants
(IESBA), the Russian Independence Rules
for Auditors and Audit Firms, and other
applicable standards.
RISK MANAGEMENT
SYSTEM
RISK MANAGEMENT
The existing corporate risk management
system is integrated into the Company’s
business processes and enables
effective risk-based decisions at various
organisational levels to achieve strategic
and operational goals.
Nornickel has set the following key risk
management objectives:
•
Increase the likelihood of achieving the
Company’s goals;
Improve resource allocation;
•
• Boost Nornickel’s investment case and
shareholder value.
The risk management system is based
on the principles and requirements
set forth in Russian and international
laws, as well as professional standards,
including the Corporate Governance Code
recommended by the Bank of Russia,
GOST R ISO 31000-2019 Risk Management.
Principles and Guidelines, COSO
Enterprise Risk Management – Integrating
with Strategy and Performance, and
Recommendations for Public Joint Stock
Companies to Organise Risk Management,
Internal Controls, Internal Auditing, and
the Work of Auditing Committees under
Boards of Directors (Supervisory Boards)
(Appendix to the Bank of Russia’s Letter
No. IN-06-28/143 dated 1 October 2020).
To manage production and infrastructure
risks, Nornickel develops, approves,
updates, and tests business continuity
plans to maintain operations and take
recovery steps in case of emergency.
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Risk management system
Board
of Directors
Audit Committee of
the Board of Directors
Management Board
Risk Management
Committee of the
Management Board
Risk Management Service
Risk owners /
heads of business units
Internal audit
Internal control
KEY FUNCTIONS
KEY FUNCTIONS
KEY FUNCTIONS
KEY FUNCTIONS
KEY FUNCTIONS
KEY FUNCTIONS
• Approving the Corporate Risk
• Reviewing strategic risks and
• Developing and updating the risk
Management Policy
reports on key risks
• Supervising the development of
the risk management system
• Approving the Corporate Risk
Appetite Statement (annually)
• Managing strategic risks on an
ongoing basis
• Reviewing materialised risks and
lessons learned
• Reviewing risk appetite metrics
• Making decisions related to key
risk management
• Reviewing business continuity
• Reviewing and approving the
plans
risk management development
roadmap and assessing its
implementation status (annually)
• Reviewing reports on strategic and
key risks (annually/quarterly)
• Assessing risk management
performance at Nornickel
(annually)
• Reviewing the strategy and
development plans for the
Corporate Risk Management
System (CRMS) and Internal
Control System (ICS)
• Reviewing the performance of
dedicated risk management
committees within business
verticals
management methodology
• Preparing reports on Nornickel's
Top 20 risks (annually)
• Preparing reports on strategic risks
(annually)
• Enhancing quantitative risk
assessment with simulation
modelling tools
Improving the Company's business
continuity management system
•
• Ensuring employee training
in practical approaches to risk
management
• Day-to-day risk management
within the integrated risk
management model, including
risk identification, analysis,
assessment, and/or prioritisation,
as well as development and
execution of response plans and
mitigation measures
• Risk-based decision making
• Making independent assessments
• Methodological support and
of the effectiveness of risk
management, internal controls
and corporate governance
(annually)
participation in risk assessment of
business processes
analysis of the budget sensitivity to key
risks, with follow-up risk management
measures included in the budget;
• Ran a self-assessment of the risk
management system’s maturity to
identify areas for improvement;
In 2022, the Company completed the
following projects to develop, improve
and maintain the maturity of its risk
management system:
• Rolled out of a GRC-class system
across the Group to automate risk
management processes;
• Ran an external follow-up review of
• Broke down the Company’s risk appetite
into lower organisational levels, with
relevant metrics, including ESG metrics,
monitored via risk management
committees;
key asset risks, including updates and
verification;
• Further improved quantitative
assessment tools for operational risks;
• Maintained regular activities of
dedicated risk management
committees;
Improved integration between risk
management and budget planning
processes through GRC-based
automation tools;
•
• Ran a quantitative assessment of the
cumulative impact of key risks on the
Company’s 2023 budget, as well as an
• Organised comprehensive
employee training across divisions
in risk management and continuity
management;
• Developed a professional competence
model defining key roles within the risk
management system;
• Ran regular quantitative assessments of
investment project risks;
1 Task Force on Climate-related Financial Disclosures.
• Launched a project to assess long-term
climate-related risks in line with TCFD 1
requirements.
In line with risk management system
improvement plans for 2023 and beyond,
the following areas have been prioritised:
• Further automating risk management
processes and system functionality;
Introducing quantitative risk assessment
in strategic and operational planning;
• Enhancing the methodology to analyse,
assess and manage various categories
and types of risks;
•
• Continuing the assessment of long-term
climate-related risks in line with TCFD
requirements.
KEY STRATEGIC RISKS
INSURANCE
The Company’s strategic risks were
updated in 2022. Nornickel sees the
following groups of risks as its key risks:
lower demand for the Company’s products,
lower productivity and disruptions of
operations, as well as the mismatch
between Nornickel’s financial position and
its growing strategic development needs.
Insurance is an essential tool used to
manage risks while protecting the
property interests of Nornickel and its
shareholders against any unforeseen losses
related to operations, including due to
external effects.
Nornickel has centralised its insurance
function to ensure the consistent
implementation of its uniform insurance
policy and standards. The Company
annually approves a comprehensive
programme that defines key parameters
by insurance type, key business area and
project. Nornickel has implemented a
corporate insurance programme that
covers assets, equipment failures and
business interruptions across the Group as
well as enterprises in the core production
chain, all on the same terms. The directors’
and officers’ liability, freight, construction
and installation, vehicle, and other types
of liability insurance programmes of the
Company are also centralised and promote
continuity.
Nornickel underwrites insurance contracts
by major Russian insurers.
Nornickel applies industry best practice
and leverages insurance market trends to
negotiate the best insurance and insured
risk management terms.
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CLIMATE RISKS
The Company’s corporate risk
management system takes into account
climate risk factors. The Company reviews
relevant risks on a quarterly basis.
Nornickel considers both physical risks
associated with lasting climate changes
and extreme weather, and transition
risks arising from changes in the market,
regulatory, technology, and political
environment during the low-carbon
transition.
Implementing a TCFD compliance
roadmap helps embedding climate
risk management approaches in the
Company’s business processes.
The analysis of physical risks relies on
public scenarios of the Intergovernmental
Panel on Climate Change (SSP 1-2.6, SSP
2-4.5, SSP 5-8.5) localised for all regions
of the Company’s operation. To analyse
transition risks we rely on our own
scenarios for global economy and climate
change until 2050.
As part of permafrost thawing risk
management, the Company further
develops its building and structure
monitoring system for continuous
automated monitoring of permafrost
foundation soil temperature and
foundation deformations. The monitoring
system is developed by the Buildings
and Structures Monitoring Centre of the
Norilsk Division, which is responsible for
technical supervision and permafrost
monitoring and serves as a centre of
excellence in engineering geology.
Lack of water resources (physical climate change risk)
Water shortages in storage reservoirs of Nornickel’s hydropower facilities may result in failure to achieve required water pressures at
HPP turbines, leading to lower power output and to drinking water shortages in Norilsk.
Key risk factors
Extreme weather events (droughts) caused by climate change
Effect on Nornickel’s
development objective
and strategy
• Social responsibility: comfort and safety of people living in Nornickel’s regions of
operation
• Lower share of renewables in the Company’s energy mix
Permafrost thawing (physical climate change risk)
Loss of bearing capacity by pile foundation beds may lead to deformation and collapse of buildings and structures.
Risk assessment
Key risk factors
• Climate change, average annual temperature increases over the last 15 to 20 years
Key mitigants
•
Increased depth of seasonal permafrost thawing
Effect on Nornickel’s
development objective
and strategy
• Efficient delivery of finished products (metals) in line with the production programme
• Social responsibility: comfort and safety of people living in Nornickel’s regions of
operation
Risk assessment
Effect on objectives:
Source of risk:
Year-on-year change in risk:
external
medium
stable
Key mitigants
To manage this risk, Nornickel:
• performs regular monitoring of soil condition under the foundations of buildings and
structures
• performs geodetic monitoring of the movement of buildings
• uses satellite technology to monitor Nornickel’s assets and further analyse the data
•
•
regularly monitors the condition of Nornickel’s buildings and structures and
subsequently processes the results to check for potential risks of Earth surface
displacements
regularly monitors the condition of Nornickel’s buildings and structures by scaling
the information and diagnostics system (in particular, by deploying automated
observation points to monitor the key factors that affect the safe operation of
buildings and structures)
• monitors soil temperature in buildings’ foundations
•
takes corrective and adaptive actions to ensure that buildings and structures are
technically operational.
Effect on objectives:
Source of risk:
Year-on-year change in risk:
external
medium
stable
To manage this risk, Nornickel:
•
implements a closed water circuit to reduce water withdrawal from external sources
• carries out regular hydrological observations to forecast water levels in rivers and
other water bodies
• cooperates with the Federal Service for Hydrometeorology and Environmental
Monitoring (Rosgidromet) on setting up permanent hydrological and meteorological
monitoring stations in order to improve the accuracy of water level forecasts for major
rivers across Nornickel’s regions of operation
• dredges the Norilskaya River and prepares its production facilities for reducing their
energy consumption in case of risk occurrence
•
refurbished one of its two hydropower plants to increase power output through
improving the hydropower units’ performance.
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MAP OF NORNICKEL’S
MATERIAL RISKS
WITH YEAR-ON-YEAR
CHANGES IN 2022
Changes in risk status in 2022 reflect
changes in the external environment. Over
the year, the Company faced multiple
external factors, which triggered a
reassessment of impacts from external risk
factors.
Response measures included restoring
the cobalt metal production chain and
also preventing such incidents, including
upgrades (repairs) of fire protection
systems.
A high-level map of Nornickel’s material
risks leverages global best practices in risk
management. The risk map ranks material
risks by effect on the Group’s objectives
and by source.
In 2022, Kola MMC lost equipment (a risk
that had been identified earlier) after a
fire started at the extraction facility of the
nickel tankhouse’s cobalt section.
KEY RISKS
Nornickel’s risks are all inherent to its strategic and operational development and business continuity goals. Key risks have a varying
degree of effect on Nornickel’s objectives.
PRICE RISK
Potential decrease in sales revenues due to lower prices for Nornickel metals is subject to actual or potential changes in demand and
supply in certain metals markets, global macroeconomic trends and the financial community’s appetite for speculative/investment
transactions in the commodity markets.
Technical and production risk
Risk assessment
Effect on objectives:
Source of risk:
Year-on-year change in risk:
external
medium
stable
Key risk factors
• Lower demand for metals produced by Nornickel
• A slowdown in the global economy in general and in the economies consuming
Nornickel metals in particular
• Supply and demand imbalance in metals markets
Effect on Nornickel’s
development objective
and strategy
Enhancing Nornickel’s leadership in the nickel and palladium markets
Key mitigants
Nornickel is consciously accepting the existing price risk for now. To manage this
risk, Nornickel:
• continuously monitors and forecasts supply and demand dynamics for key metals;
•
secures feedstock supplies for key consumers through long-term contracts to supply
metals in fixed volumes;
• as a member of the Nickel Institute and the International Platinum Group Metals
Association, works with other nickel and PGM producers to maintain and expand the
demand for these metals.
Should the risk materialise, Nornickel will consider cutting capital expenditures (revising
the investment programme for projects that do not have a material effect on Nornickel’s
development strategy) as part of the budgeting process.
RISK MAP
RISK
'
S
E
V
I
T
C
E
J
B
O
S
L
E
K
C
N
R
O
N
N
O
T
C
E
F
F
E
I
H
G
H
I
W
O
L
4
3
5
2
6
10
9
8
13
12
1
7
11
1
2
3
4
5
6
7
8
9
10
11
12
13
SOURCE OF RISK
INTERNAL
EXTERNAL
Risk:
effect of uncertainty on objectives (ISO/GOST R 31000).
Risk source:
element which alone or in combination has the potential to give rise to risk
(ISO/GOST R 31000). The assessment takes into account the predominance of
external or internal factors.
The Effect on Nornickel's Objectives scale shows the relative impact
of risks on the Company's goals.
Price risk
Market risk
Financial risks
Investment risks
H&S risks
Permafrost thawing
Compliance risk
Information security risks
Environmental risks
Lack of water resources
Social risk
Supply chain risks
Comparing with the previous year:
Risk increased year-on-year
Risk has not changed year-on-year
Risk decreased year-on-year
Annual ReportNornickelCorporate governance5/72022
Effect on Nornickel’s
development objective
and strategy
Risk assessment
Key mitigants
226
227
Lower competitiveness of Nornickel products in the market may result in their lower liquidity, discounts to the market price and a
decrease in Nornickel’s income.
FINANCIAL RISKS
Key risk factors
• Foreign regulators imposing new foreign trade restrictions that impact the
Company’s activities
• Competition from producers of cheaper nickel
• More aggressive transport electrification programmes
• Replacement of metals produced by the Company with alternative materials
• Stricter market requirements on product quality and ESG compliance
Enhancing Nornickel’s leadership in the nickel and palladium markets
This group includes FX, interest rate and liquidity risks, as well as other risks related to the financial security of the Company’s
operations and investments.
Key risk factors
•
Increased debt financing costs
• Deteriorating market conditions
• Sharp rouble exchange rate fluctuations
•
Inability to raise debt financing due to deterioration in financial markets
• Lack of access to key segments of global financial markets (debt and derivatives),
limited access to the foreign currency debt market
• Unexpected major expenses
• Counterparty credit risk
• Restrictions imposed by foreign regulators that affect Nornickel’s operations, its key
business partners and infrastructure partners
Effect on objectives:
Source of risk:
Year-on-year change in risk:
mixed
high
increased
Effect on Nornickel’s
development objective
and strategy
• A debt portfolio with a well-balanced profile in terms of maturity, currency
composition and sources of financing
• Maintaining a strong investment case
To manage this risk, Nornickel:
• monitors and analyses changes in market demands for product quality and ESG
compliance
•
stimulates the demand for its key metals
• monitors evolution of vehicles by engine types
•
searches for new applications and uses for palladium
• diversifies its metal product sales across industries and geographies
•
improves and diversifies its product range
Risk assessment
Effect on objectives:
Source of risk:
Year-on-year change in risk:
mixed
high
increased
• cooperates with industry institutions to maintain access to relevant sales markets for
Key mitigants
its metals
To manage this risk, Nornickel:
• maintains a balanced debt portfolio
• cooperates with Russian ministries and agencies to prevent/mitigate negative
impacts of local or international regulation
•
•
implements an ESG roadmap
seeks partnership opportunities with key producers of cathodes for lithium-ion
batteries
• maintains strategic partnerships with car makers based on guarantees of long-term
palladium supplies.
•
raises additional rouble-denominated debt to prevent a liquidity shortfall
• holds liquidity reserves on the Group’s balance sheet to ensure payments on time
• monitors its account balances and existing cash gaps, as well as the availability of
liquidity reserves on its balance sheet
• uses various hedging instruments
•
regularly evaluates key potential risk events through scenario modelling and develops
prevention and response plans
• constantly seeks new potential partners among borrowing and financial institutions,
expanding and diversifying its financial infrastructure
• uses different financial models for various purposes, expands the array of financial risk
assessment tools (stress testing and reverse stress testing of all financial risks and risk
factors considering their combinations, interrelations and changes over time).
•
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TECHNICAL AND PRODUCTION RISKS
INVESTMENT RISKS
Technical, production or natural phenomena which, once materialised, could have a negative impact on the implementation of the
production programme and cause equipment breakdown or result in the need to compensate damage to third parties.
Risk related to time and budget overruns, and performance targets of Nornickel’s major investment projects.
Key risk factors
Effect on Nornickel’s
development objective
and strategy
Risk assessment
Key mitigants
• Harsh natural and climatic conditions, including low temperatures, storm winds and
snow load
• Unscheduled stoppages of core equipment caused by fixed assets’ wear and tear
• Release of explosive gases and flooding of mines
• Collapse of buildings or structures
•
Infrastructure breakdowns
Key risk factors
• Changes in forecasts of ore volumes, grades and properties resulting from follow-up
exploration
• Changes in investment project timelines
• Further changes to budgets of investment projects
• Amendments to project performance targets in the course of implementation
Effective delivery of finished products (metals) in line with the production programme
Effect on Nornickel’s
development objective
and strategy
• Strategic goal: growth driven by Tier 1 assets
• Developing the mining, concentration and metallurgical assets
• Developing the mineral resource base and upgrading core production processes at
Nornickel’s Tier 1 assets
Risk assessment
Key mitigants
Effect on objectives:
Source of risk:
Year-on-year change in risk:
mixed
high
increased
To manage this risk, Nornickel:
• ensures proper and safe operation of its assets in line with the requirements of technical
documentation, as well as technical rules and regulations as prescribed by local laws across
Nornickel’s geographic footprint
• develops ranking criteria and criticality assessment for the Norilsk Nickel Group’s key
•
industrial assets
implements an automated system for managing reliability, effectiveness and production
asset risks
• ensures timely replacement of fixed assets to consistently achieve production safety
targets
• continuously monitors the ongoing condition of Nornickel’s buildings and structures via an
information system for conducting geotechnical surveys
• uses satellite technology to monitor Nornickel’s assets and further analyse the data
•
implements automated systems to control equipment process flows, uses state-of-the-art
engineering controls
improves its maintenance and repair system
trains and educates its employees both locally on site and centrally through its corporate
training centres
•
•
• systematically identifies, assesses and monitors technical and production risks,
implements a programme of organisational and technical measures to mitigate relevant
risks
• continuously monitors the industrial asset management system
• ensures risk review by collective bodies at all management levels of the Company
• develops the technical and production risk management system, including by engaging
independent experts to assess the system’s performance and completeness of risk data
• develops and tests business continuity plans which set out a sequence of actions to
be taken by Nornickel’s personnel and internal contractors in case of technical and
production risks causing maximum damage. These plans ensure that Nornickel resumes
its production operations as soon as possible after any disruption
• engages, on an annual basis, independent surveyors to analyse Nornickel’s exposure to
disruptions in the production chain and make assessments of related risks.
Effect on objectives:
Source of risk:
Year-on-year change in risk:
mixed
high
increased
To manage this risk, Nornickel:
• carries out proactive exploration and updates project performance targets and the mining
plan (a long-term production plan) based on the progress of its major investment projects
developing the mineral resource base
• conducts resource, geomechanical and hydrogeological modelling
• holds external expert audits of geological data
• develops an in-house geological and mining information system
• models mining options in geological and mining information systems
• as part of the project assurance process, conducts internal (cross-functional) audits of
major investment projects at each stage in their life cycle
•
improves incentives to drive project delivery and build skills and capabilities (including staff
certification, identification of improvement areas and provision of tailored training)
•
improves project delivery standards, develops project management tools
• promotes the use of pilot units across all technically challenging and unique processing
stages
•
redesigns projects and substitutes supply routes to source materials/services from friendly
countries, taking into account sanctions
• supports the growth of NN Development as a dedicated corporate function with
integrated responsibility for major construction projects
•
implements a transformation programme for Gipronickel Institute to improve the quality
and reduce the timelines of R&D, survey and engineering activities
• enhances project management competencies of project teams and ensures best practice
sharing through its Project Forum held on a regular basis.
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HEALTH AND SAFETY RISKS
COMPLIANCE RISKS
Failure to comply with Nornickel’s health and safety (H&S) rules may result in threats to health and life or temporary suspension of
operations, or cause property damage.
The risk of legal liability and/or legal sanctions, significant financial losses, suspension of production, revocation/suspension of a licence,
loss of reputation, or other adverse effects arising from Nornickel’s non-compliance with the applicable laws, regulations, instructions,
rules, standards, or codes of conduct.
Key risk factors
Effect on Nornickel’s
development objective
and strategy
Risk assessment
Key mitigants
• Suboptimal methods of work organisation
• Disruptions in technological processes
• Exposure to hazards
Health and safety
Effect on objectives:
Source of risk:
Year-on-year change in risk:
internal
high
stable
Pursuant to the Occupational Health and Safety Policy approved by the Board of
Directors, Nornickel:
• continuously monitors compliance with H&S requirements
•
improves the working conditions for its employees and contractors deployed at Nornickel’s
production facilities, including by implementing new technologies and labour-saving
solutions, and enhancing industrial safety at production facilities
• provides employees with certified state-of-the-art personal protective equipment
•
improves the system of stationary gas analysers, provides employees with portable gas
analysers
• carries out preventive and therapeutic interventions and enforces hygiene protocols to
reduce the potential impact of work-related hazards
•
regularly trains, briefs employees on health and safety, assesses their health and safety
performance and conducts corporate workshops, including by deploying special simulator
units
• enhances methodological support for H&S functions, including through the development
and implementation of corporate standards
•
•
improves the risk assessment and management framework across Group enterprises as
part of the Risk Control project
reviews the competencies of line managers across Nornickel enterprises, develops H&S
training programmes and arranges relevant trainings
• holds H&S competitions
• communicates the circumstances and causes of accidents to all Nornickel employees,
conducts ad hoc safety briefings
•
introduces frameworks to manage technical, technological, organisational, and HR
changes.
Key risk factors
• Discrepancies in rules and regulations
• Considerable powers and a high degree of discretion exercised by supervision
agencies
Effect on Nornickel’s
development objective
and strategy
Risk assessment
Key mitigants
Compliance by Nornickel and Russian entities of the Norilsk Nickel Group with the
applicable laws, regulatory requirements, corporate standards, and business codes
Effect on objectives:
Source of risk:
Year-on-year change in risk:
mixed
medium
stable
To manage this risk, Nornickel:
• ensures the development and update of procedural documents on anti-corruption
and on combatting the unlawful use of insider information and market manipulation
• ensures its compliance with the applicable laws
• protects its interests during regulatory inspections and administrative proceedings
• uses trial and post-trial remedies to protect its interests
• ensures that agreements signed by Nornickel contain clauses safeguarding its
interests
•
•
implements conflict of interest management, anti-corruption, anti-money
laundering, counter terrorist financing, and counter proliferation financing initiatives
takes actions to prevent unlawful use of insider information and market manipulation
• ensures timely and reliable information disclosures as required by the applicable
Russian and international laws
• has its employees take insider information management and anti-corruption training
courses
• ensures that all employees receive anti-corruption induction briefing
• ensures that the Corporate Trust Line receives and handles reports of corruption,
fraud, embezzlement, or other wrongdoing, either planned or committed
• ensures evaluation of anti-corruption controls at the Norilsk Nickel Group.
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233
INFORMATION SECURITY RISKS
ENVIRONMENTAL RISKS
This group includes risks such as potential cybercrimes, an unauthorised transfer, modification or destruction of data assets, disruption
or reduced efficiency of Nornickel’s IT services, business, technological, and production processes.
This risk group includes events that result in environmental pollution, are not provided for in approved technological processes and
Russian laws, and affect the achievement of the Company’s environmental goals.
Key risk factors
• Growing external threats
• Unfair competition
Key risk factors
Effect on Nornickel’s
development objective
and strategy
Risk assessment
Key mitigants
Effect on Nornickel’s
development objective
and strategy
Risk assessment
Key mitigants
• Rapid development of Nornickel’s IT infrastructure and automation of technological
and business processes
• Unlawful acts by employees and/or third parties
• Shift to work from home and hiring remote employees outside Nornickel’s regions of
operation
Mitigation of the information security risk and risk of cyberattacks on Nornickel’s
information systems and automated process control systems
Effect on objectives:
Source of risk:
Year-on-year change in risk:
mixed
medium
increased
To manage this risk, Nornickel:
• ensures compliance with applicable Russian laws and regulations with respect to the
protection of personal data, insider information, trade secrets, and critical information
infrastructure
•
implements MMC Norilsk Nickel’s Information Security Policy
• categorises data assets and makes information security risk assessments
• embeds and monitors compliance with corporate information security standards
within information systems and automated process control systems
•
•
raises information security awareness among employees
substitutes imported data protection tools whose functionality was restricted due to
sanctions
• uses technical means to ensure information security of assets and manage access to
data assets
• ensures information security of automated process control systems
• monitors threats to information security and the use of technical protection means,
including vulnerability analysis, penetration testing, cryptographic protection of
communication channels, controlled access to removable media, protection from
confidential data leaks, and mobile device management
• develops information security regulations
•
•
sets up and certifies the Company’s information security management system
implements measures to ensure safe remote access.
• Failure to comply with the requirements of environmental laws when operating the
Company’s facilities
• Poor internal management and control
• Delay in implementing environmental programmes and measures
• Natural and climate phenomena
Compliance of business with the applicable laws, regulations, corporate standards, and
business codes
Effect on objectives:
Source of risk:
Year-on-year change in risk:
mixed
medium
stable
To manage these risks, Nornickel:
• develops, implements and improves environmentally sustainable business processes
and introduces advanced practices and approaches
• has in place an incentive system and promotes environmental competences of its
employees
•
•
implements its corporate Environmental and Climate Change Strategy
implements environmental initiatives at the Company and Russian entities of the
Norilsk Nickel Group
• oversees environmental compliance and the implementation of environmental
programmes and measures.
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235
SOCIAL RISK
SUPPLY CHAIN RISKS
Tensions may escalate among the workforce due to the deterioration of social and economic conditions in Nornickel’s regions of
operation.
Supply chain interruption/disruption within the existing transport and logistics system.
Key risk factors
• Headcount / staff composition optimisation projects
• Rejection of Nornickel’s values by individual employees and/or third parties
• Limited ability to perform annual wage indexation
• Dissemination of false and inaccurate information about Nornickel’s plans and
operations among the Group’s employees
• Reallocation of funds originally intended for social programmes and charity
Key risk factors
• Challenging natural and climatic conditions in the regions of operation
• Limitations of the transport and logistics system
Effect on Nornickel’s
development objective
and strategy
Social responsibility:
• Partnering with regional and local authorities to develop a social infrastructure that
supports a safe and comfortable living environment for local communities
• Facilitating the employees’ professional and cultural development and building up
talent pools across Nornickel’s regions of operation
•
Implementing long-term charity programmes and projects
Effect on Nornickel’s
development objective
and strategy
Risk assessment
• Growing inflation, FX rates, pricing pressure from suppliers, poor planning, and other
factors
• Breach of contracts by contractors
Effective delivery of finished products in line with the production programme
Timely supply of products to consumers
Effect on objectives:
Source of risk:
Year-on-year change in risk:
mixed
medium
stable
Key mitigants
To manage this risk, Nornickel:
• actively engages Russian manufacturers to expand competition
• uses long-term agreements / contracts / price lists with fixed optimal prices for
materials, equipment and spare parts on terms that are most beneficial for the
Company
• drafts lists of critical manufacturers of equipment and materials, works to prevent
supply disruptions and monitors suppliers’ performance
•
implements its Logistics Infrastructure Development Programme.
Risk assessment
Key mitigants
Effect on objectives:
Source of risk:
Year-on-year change in risk:
mixed
medium
stable
To manage this risk, Nornickel:
•
strictly adheres to the terms and conditions of collective bargaining agreements
between the Group companies and their employees (the Group has signed a total of
23 collective bargaining agreements)
•
•
•
•
•
•
•
interacts with regional authorities, municipalities and civil society institutions
fulfils its social obligations under public-private partnership agreements
implements corporate social responsibility programmes and the World of New
Opportunities charity programme aimed at supporting and promoting regional civil
initiatives, including by indigenous peoples of Taimyr and the Plant of Goodness
employee volunteering programme
implements infrastructure projects to support the accelerated development of
the service economy and improved living standards across Nornickel’s regions of
operation through the Norilsk Development Agency, the Second School centre for
community initiatives in the Pechengsky District and the Monchegorsk Development
Agency
implements regular sociological monitoring across its operations
surveys Norilsk residents on living standards, employment, migration trends, and
general social sentiment to identify major issues
implements social projects and programmes aimed at supporting employees and
their families, as well as Nornickel’s former employees
• maintains dialogues with stakeholders and conducts questionnaire surveys when
preparing the Group’s public sustainability reports
• provides a range of social support measures to redundant staff under Kola MMC’s
social programmes and develops the Social and Economic Development Strategy of
the Pechengsky District.
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237
SHAREHOLDER
INFORMATION
Nornickel maintains an active dialogue
with a wide universe of investors.
The Company holds regular conference calls
and meetings with investors, participates
in investment conferences and organises site
visits to the Company’s production facilities.
Annual ReportNornickelShareholder information6/72022 238
239
Shareholder information
SHARE CAPITAL
At the end of 2022, Nornickel’s authorised
capital consisted of 152,863,397 ordinary
shares with a par value of RUB 1 each.
The Articles of Association do not provide
for the issuance of preferred shares. All
shares in the Company are voting shares,
with each voting share counted as one
vote.
In the reporting year, following the
decision of the General Meeting of
Shareholders, the Company’s authorised
capital was reduced to RUB 152,863,397 by
cancelling 791,227 ordinary shares in the
Company repurchased earlier through
a share buyback in June 2021. Stakes
of major shareholders were changed
accordingly to reflect the said changes in
the authorised capital.
Shareholding structur
e as of calen
dar year-end (%)
Shareholder
Interros
EN+ GROUP IPJSC
Treasury shares
Other shareholders (including free float)
2020
34.60
27.82
–
37.58
2021
35.95
26.25
0.51
37.29
2022
37.00
26.39
–
36.61
Total shares
158,245,476
153,654,624
152,863,397
The current shareholding structure is available at the Company website.
Nornickel shareholders and their stakes1
0%
50%
100%
2022
9.9%
2,328
2021
6.3%
1,918
2020
5.2%
1,485
99,813
207,078
350,866
90.1%
93.7%
94.8%
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
Individual shareholders
Stake in the authorised capital owned by individuals
Legal entities
Stake in the authorised capital owned by legal entities
1 Data as of the dates of the Annual General Meetings of Shareholders. Stakes in the authorised capital.
Shareholder rights
All shareholders enjoy equal rights and treatment in their relations with Nornickel.
Shareholders can exercise their rights as prescribed by the federal laws On Joint Stock
Companies and On the Securities Market, as well as other regulations of the Russian
Federation that do not limit their right to attend general meetings of shareholders
depending on their location or residence.
SHARES
Nornickel shares have been traded
in the Russian stock market since 2001.
Since 2014, the shares are included
on the First Level quotation list
of the Moscow Exchange (ticker: GMKN).
Securities
Shares (ordinary)
Registered number
1–01–40155-F
Registration date
2001
ISIN
RU0007288411
Ticker
GMKN
Registrar/depository
Registrar IRC – R.O.S.T.
Nornickel’s market capitalisation
at year-end 2022
USD 33 billion,
or
RUB 2,339 billion
ADRs (10 ADRs = 1 share)
N/A
2001
US55315J1025
MNOD, NILSY
Depository: The Bank of New York
Mellon Custodian: Raiffeisenbank
Nornickel6/7Annual Report2022 240
241
About the registrar
IRC – R.O.S.T. is the Company’s registrar. Shareholders, including those owning shares
via nominee holders, can participate in general meetings via e-ballots by using
the Shareholder’s Personal Account service developed by the registrar. The access
procedure for the Shareholder’s Personal Account is detailed on the registrar’s website.
Shareholders can also use the Shareholder.online mobile app.
Nornickel share price and trade volumes on the Moscow Exchange in 2022
1,200,000
900,000
600,000
300,000
AMERICAN DEPOSITARY RECEIPTS
d ADR split
Share an
as of 31 Dec
ember 2022 (%)
30,000
24,000
18,000
12,000
6,000
6.7
152,863,397
Shares
93.3
Shares
ADRs
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Trade volumes, thousand
Share price, RUB
Source: Company calculations based on closing prices on the Moscow Exchange
low
high
average traded price
year-end price
RUB 11,932
RUB 24,040
RUB 17,501
RUB 15,300
Until March 2022, Nornickel American
depositary receipts (ADRs) traded
on the US OTC market, as well as on
the London, Berlin and Frankfurt
exchanges (OTC sections) under
the MNOD and NILSY tickers, with
10 ADRs representing 1 share.
The Bank of New York Mellon acted
as the depository for the Company’s
ADR programme, with Raiffeisenbank
providing custody services. From
March 2022, international exchanges
suspended trading in depositary receipts
of Russian issuers.
On 27 April 2022, amendments to the
Federal Law On Joint Stock Companies
and certain legislative acts of the Russian
Federation came into effect, requiring
Russian issuers to terminate their ADR
programmes. The Company applied
for and obtained a one-year permit to
continue trading its ADRs outside of
Russia until 28 April 2023.
In line with Russian laws, the Company
completed an automatic forced
conversion of ADRs into Company shares
in 2022. The automatic conversion
provided for converting the ADRs, the
rights to which were recorded with
Russian depositories, without any
conversion applications from ADR
holders. The forced conversion covered
those ADRs, the right to which were
recorded with foreign organisations and
whose holders were unable to convert
the ADRs into Company shares by
themselves due to sanctions. Such ADR
holders were entitled from 14 July to
10 November 2022 to apply to the Russian
custodian of the shares represented by
the ADRs (Raiffeisenbank), attaching
documents confirming ownership of
ADRs and other documents. After the
deadline for accepting forced conversion
applications passed, Raiffeisenbank
opened nominee accounts for eligible
applicants and credited the respective
number of the underlying Company
shares to these accounts.
For more details on share
price performance, see
the Company website.
Annual ReportNornickelShareholder information6/72022 242
243
Nornickel
DIVIDEND POLICY
The Company’s Regulations on the
Dividend Policy approved by the Board of
Directors seek to ensure the transparency
of the mechanism for determining the
amount of dividend and the dividend
payment procedure.
Upon the Board’s recommendations,
the General Meeting of Shareholders
determines the dividend amount and
record date, which, as per Russian laws, is
to be set within 10–20 days of the General
Meeting of Shareholders.
Any person who has not received the
declared dividend because their address
or banking details were not available to
the Company or the registrar as required,
or due to any other delays on the part
of the creditor, may request payment
of unpaid dividend within three years
from the date of the resolution to pay the
dividend. Beyond this period, any declared
but unclaimed dividends are recovered
as part of the undistributed profit of the
Company, and there will be no obligation
to pay them.
Dividends to a nominee holder are paid
within 10 business days, while dividends
to persons listed on the shareholder
register are paid through the registrar, IRC
– R.O.S.T., within 25 business days after the
record date.
In 2022, the Company paid dividends
subject to current regulatory
restrictions:
• Shareholders who are customers of
foreign nominee holders and ADR
holders: dividends were paid directly
to security holders; the payment was
made if information to identify the
security holder and other information
required to make the payment was
available
• Certain categories of foreign
shareholders: dividends were paid to
type “C” accounts opened with Russian
credit institutions
Dividends in 2022
On 28 April 2023, the Company’s Board of
Directors recommended that the Annual
General Meeting of Shareholders not
to pay dividends for the financial year
2022. The resolution will be passed at the
Annual General Meeting of Shareholders
on 6 June 2023.
Report on dividend paid1
Total dividends, USD mln
Total dividends, RUB mln
Total for 2021
FY 2
9M
Total for 2020
FY
9M
Total for 2019
FY
9M
6M
6,196
3,146
3,050
3,532
2,198
1,334
5,011
1,264
1,567
2,180
410,917
178,075
232,842
259,893
161,603
98,290
323,482
88,166
95,430
139,886
1 Earlier dividend history is available at our website. Dividends are paid out to shareholders within three years from the respective dividend resolution
date. Beyond this period, any unclaimed dividends are recovered as part of the undistributed profit of the Company, and there will be no obligation to
pay them. The dividend payouts are shown as at 31 December 2022 according to IFRS statements.
2 Including RUB 32.3 billion, or USD 0.5 billion, in dividend payments to ADR holders, transferred to the depository (NSD) and returned to the Company
due to the restrictions imposed by the President’s Executive Order No. 95 dated 5 March 2022 and the Resolution of the Bank of Russia’s Board of
Directors dated 10 June 2022.
SECURITIES TAXATION
Income from securities is taxable
pursuant to the applicable laws of the
Russian Federation.
Under international double taxation
treaties, non-Russian tax residents may
claim a reduced rate of withholding tax
or relief from tax in Russia. To claim these
benefits, non-residents need to submit
the following confirmations to their
Russian tax agent paying the income:
• A confirmation of permanent residence
in a state with which the Russian
Federation has a double taxation treaty
(tax residency certificate);
• A confirmation of the actual right to
receive income;
• A confirmation that they meet other
conditions set forth in the applicable
treaty.
If such confirmations are not provided by
the date of income payment, the tax shall
be withheld at the standard rates.
Shareholder information6/7Annual Report2022 244
245
Taxation of income from securities
Shareholder
INDIVIDUALS
Residents
Non-residents
LEGAL ENTITIES
Residents
Non-residents
From transactions (%)
Interest (%)
Dividend (%)
13/151,2
301
201
204
13/152
13/152
30
20
20
15
133
15
DIVIDEND TAX FORMULA
FOR RUSSIAN RESIDENTS5
AT = P × TR × (D1 – D₂), where
• AT – amount of tax to be withheld
• P – proportion of the dividend amount
payable to one recipient to the total
dividend amount to be distributed
• TR – tax rate stipulated by the Russian
Tax Code
• D1 – dividend amount to be distributed
among all recipients
• D₂ – dividend amount5 received by
Nornickel, provided that previously
this amount was not included in the
taxable income
In November 2022, the Expert RA national
rating agency confirmed the Company’s
highest investment-grade credit rating
“ruAAA”. International rating agencies
withdrew and no longer issue credit
ratings on Russian companies due to
sanctions imposed on Russia.
BONDS AND DEBT
MANAGEMENT
Nornickel maintains a conservative
approach to managing its debt. As of
31 December 2022, its net debt / 12M
EBITDA stood at 1.1x. To raise new debt,
the Company considers both public
instruments and bank loans, striving to
balance both in its debt portfolio. When
choosing debt financing sources, the
Company pays particular attention to the
debt currency and loan parameters.
In October, the Company placed
a RUB 25 billion exchange-traded bond
with a 9.75% coupon and a put option
exercisable in 3 years, named by Cbonds
as the Best Primary Offering of a Metals
Company. In December, the Company
placed two bond issues in Chinese yuans,
a 3-year CNY 4 billion bond and a 3.5-year
CNY 5 billion bond with coupon rates
of 3.95% and LPR 1Y1 + 0.1%, respectively,
and a put option exercisable in 3 years.
The bond with a variable LPR-based
coupon rate was the first placement
of its kind in the Russian market.
During 2022, the Company redeemed two
eurobonds: the USD 500 million eurobond
in March, exercising a call option one
month before maturity to optimise
finance costs, and the USD 1 billion
eurobond, redeemed on time in October.
The Company closely monitors changes
in the external regulatory environment to
enable timely responses, while prioritising
strict compliance with the terms of debt
instruments and promptly aligning loan
documents with applicable laws. The
Company meets all payment schedules
on time, fully servicing its debt as planned.
In addition, the Company timely renews
permits from the Russian Government
required to make payments of principal
and interest in foreign currencies to
foreign creditors.
In September, holders of all of the
Company’s five eurobonds (USD 3.75
billion in total) approved amendments
to transaction documents, including
split payments to Russian and foreign
investors, a simplified redemption
mechanism and appointment of a new
trustee. This complex deal was the largest
of its kind among Russian issuers in
terms of the number and total amount of
issues involved at once. It also ensured full
compliance of offering documents with
Russian laws and enabled the Company to
mitigate the default risks while continuing
payments to foreign depositories through
a paying agent.
Following the amendments to offering
documents in September and October
2022, the Company split interest
payments on all of its eurobonds (separate
payments to holders whose rights
are recorded by Russian depositories
(“Russian holders”) and holders whose
rights are recorded by foreign institutions
(“foreign holders”)). The scheduled
redemption of the eurobond in October
also involved split payments. Russian
holders received their first payments since
February 2022, when funds of the National
Settlement Depository (NSD) were
frozen. The Company was also notified
that international clearing systems
made payments on all of the Company’s
eurobonds to at least some foreign
holders, which makes the Company the
first Russian issuer to achieve such a result
with split payments.
1 Or 0%, if by the selling date the Company shares have been held for more than five years and the requirements for the share of real estate in the
Company’s assets as outlined in Clause 2, Article 284.2 of the Russian Tax Code have been met. The terms and conditions of applying the 0% rate to
international holding companies are set forth in Article 284.7 of the Russian Tax Code. Pursuant to Subclause 1, Clause 1, Article 219.1 of the Russian Tax
Code, individuals who are Russian tax residents are eligible for investment tax deductions in the amount of the profits from sales of the Company shares,
which have been owned by the taxpayer for over three years.
2 Pursuant to Clause 1 of Article 224 of the Russian Tax Code, a tax rate of 15% applies to income over RUB 5 million for the reporting period.
3 Or 0%, if as of the date of the dividend resolution a Russian entity has been owning 50% (or more) of shares (15% or more if the owner is an international
holding company) in Nornickel’s authorised capital for 365 days (or more).
4 If the income is classified as income of a foreign entity from sources in Russia in accordance with Clause 1, Article 309 of the Russian Tax Code.
5 Excluding the dividend amount eligible for a zero tax rate pursuant to Subclauses 1–1.1, Clause 3, Article 284 of the Russian Tax Code.
1 The Loan Prime Rate 1Y (one-year loan prime rate) is available at https://iftp.chinamoney.com.cn/english/bmklpr/.
Annual ReportNornickelShareholder information6/72022 246
247
Debt profile (USD mln
2022
2021
2020
7,189
4,295
233
1.1x
8,616
1,610
235
0.5x
9,622
12
262
0.6x
11,717
10,461
9,896
Long-term debt
Lease liabilities
Short-term debt
Net debt / EBITDA (x)
As of 31 December 2022, the Company’s
total debt was USD 11.7 billion, up
12% year-on-year. The increase was
mainly due to drawdowns from standby
facilities for refinancing purposes amid
rising external challenges.
As of the end of 2022, Nornickel had eight
bond issues outstanding: four eurobond
issues for a total of USD 2.75 billion and
four replacement bonds – two for a total
of RUB 50 billion and two for a total of
CNY 9 billion.
Debt currency mix at the end
of 2022 (%)
Outstanding eurobonds
11
19
Instrument
Eurobond 2023 (LPN)
Eurobond 2024 (LPN)
Eurobond 2025 (LPN)
Eurobond 2026 (LPN)
Issuer
Offering date
Maturity date
Issue size, USD mln
Coupon rate (%)
11.04.2017
11.04.2023
1,000
4.10
28.10.2019
28.10.2024
750
3.375
11.09.2020
11.09.2025
500
2.55
MMC Finance D.A.C.
27.10.2021
27.10.2026
500
2.80
70
Coupon dates
11 October / 11 April
28 October / 28 April
11 September / 11 March
27 October / 27 April
Outstanding replacement bonds
Instrument
Issuer
ISIN
Offering date
Maturity date
Exchange-traded
bond, BО-001P-01
Exchange-traded
bond, BО-001P-02
Exchange-
traded bond,
BО-001P-05-CNY
Exchange-
traded bond,
BО-001P-06-CNY
MMC Norilsk Nickel
RU000A100VQ6
RU000A105A61
RU000A105ML5
RU000A105NL3
01.10.2019
24.09.2024
11.10.2022
05.10.2027 (put option
expiring 14.10.2025)
19.12.2022
15.12.2025
22.12.2022
18.06.2026 (put option
expiring 25.12.2025)
Issue size
RUB 25 bn
RUB 25 bn
CNY 4 bn
Coupon rate (%)
7.20
9.75
3.95
Coupon frequency
Every 182 days starting from the offering date
CNY 5 bn
LPR 1Y+ 0,1
Every 91 days starting
from the offering date
For more details on Nornickel’s debt instruments, see the Company website.
Annual ReportNornickelShareholder information6/72022 248
249
SHAREHOLDER
RELATIONS
Nornickel maintains an active dialogue
with a wide universe of Russian and
international investors and security
analysts. The Company holds regular
conference calls and meetings with
investors, participates in investment
conferences and organises site visits
to the Company’s production facilities.
Nornickel also holds an annual
Capital Markets Day where its senior
management discusses strategic
development.
In 2022, the Company remained
committed to global best practice for
disclosure, using an array of disclosure
tools, including press releases,
presentations, annual and sustainability
reports, corporate action notices, as well
as interactive tools. Nornickel provides
parallel disclosure both in Russian and
in English. Materials for investors are
available in the Investors section of the
Company website.
NORNICKEL HELD MORE THAN
100 MEETINGS AND CALLS WITH
INVESTORS IN 2022
In 2022, Nornickel jump-started its retail
investor strategy:
•
setting up and developing its account
on Tinkoff’s Pulse to provide timely
updates on Nornickel’s corporate
events, available to all users of Tinkoff
Investments brokerage accounts
• participating in Dialogues with Retail
Investors
• participating in the Smart-Lab
conference for private investors
• updating the investor section on
the Company website.
In 2022, in line with its retail investor
strategy, Nornickel’s team held online
conferences for clients of major Russian
brokers and took part in the annual
conference organised by Smart-Lab,
Russia’s largest investment community
that brings together private investors and
traders. As part of its efforts to enhance
communication with retail investors,
Nornickel runs a blog on the SMART LAB,
Pulse and Profit platforms where it posts
the most important Company news
along with financial and operating results
and answers questions from market
participants.
In the reporting period, the number of
Nornickel retail investors increased by
82% to 388 thousand, with their share in
its shareholding structure up almost 50%
year-on-year to 10% of the total authorised
capital. The Company plans to increase
the share of retail investors to 25% in the
long term, including through its employee
incentive programme.
Annual ReportNornickelShareholder information6/72022 250
251
ADDITIONAL
INFORMATION
Annual ReportNornickelAdditional information7/72022 252
253
CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2022, 2021 AND 2020
STATEMENT OF MANAGEMENT’S RESPONSIBILITIES
FOR THE PREPARATION AND APPROVAL
OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2022, 2021 AND 2020
The following statement, which should
be read in conjunction with the auditors’
responsibility stated in the independent
auditors’ report set out on pages 2-5,
is made with a view to distinguishing
the respective responsibilities
of management and those of the auditors
in relation to the consolidated financial
statements of Public Joint Stock Company
“Mining and Metallurgical Company
“Norilsk Nickel” and its subsidiaries
(the “Group”).
Management of the Group is responsible
for the preparation of the consolidated
financial statements that present fairly
in all material respects the consolidated
financial position of the Group at 31 D
ecember 2022, 2021 and 2020 and its
consolidated financial performance,
comprehensive income, consolidated cash
flows and changes in equity for the years
ended 31 December 2022, 2021 and 2020,
in accordance with International Financial
Reporting Standards (“IFRS”).
In preparing the consolidated financial
statements, management is responsible
for:
•
selecting suitable accounting
principles and applying them
consistently;
•
• making judgements and estimates
that are reasonable and prudent;
stating whether International Financial
Reporting Standards have been
followed, subject to any material
departures disclosed and explained
in the Notes to the consolidated
financial statements; and
• preparing the consolidated financial
statements on a going concern basis,
unless it is inappropriate to presume
that the Group will continue
in business for the foreseeable future.
Management, within its competencies,
is also responsible for:
• designing, implementing
and maintaining an effective system
of internal controls throughout
the Group;
• maintaining statutory accounting
records in compliance with local
legislation and accounting standards
in the respective jurisdictions in which
the Group operates;
taking steps to safeguard the assets
of the Group; and
•
• detecting and preventing fraud
and other irregularities.
The consolidated financial statements for the years ended 31 December
2022, 2021 and 2020 were approved by:
Moscow, Russia
10 February 2023
President
V.O. Potanin
Senior Vice President –
Chief Financial Officer
S.G. Malyshev
INDEPENDENT AUDITORS’ REPORT
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF PJSC “MINING
AND METALLURGICAL COMPANY “NORILSK NICKEL”
Opinion
We have audited the consolidated
financial statements of PJSC “Mining
and Metallurgical Company “Norilsk
Nickel” (the “Company”)
and its subsidiaries (the “Group”),
which comprise the consolidated
statements of financial position
as at 31 December 2022, 2021 and 2020,
the consolidated income statements,
the consolidated statements
of comprehensive income, changes
in equity and cash flows for the years
ended 31 December 2022, 2021 and 2020,
and notes, comprising significant
accounting policies and other explanatory
information.
In our opinion, the accompanying
consolidated financial statements
present fairly, in all material respects,
the consolidated financial position
of the Group as at 31 December 2022, 2021
and 2020, and its consolidated financial
performance and its consolidated cash
flows for the years ended 31 December
2022, 2021 and 2020 in accordance
with International Financial Reporting
Standards (IFRS).
Basis for Opinion
We conducted our audit in accordance
with International Standards on Auditing
(ISAs). Our responsibilities under
those standards are further described
in the Auditors’ Responsibilities
for the Audit of the Consolidated
Financial Statements section of our
report. We are independent of the Group
in accordance with the independence
requirements that are relevant to our
audit of the consolidated financial
statements in the Russian Federation
and with the International Ethics
Standards Board for Accountants
International Code of Ethics
for Professional Accountants (including
International Independence Standards)
(IESBA Code), and we have fulfilled
our other ethical responsibilities
in accordance with the requirements
in the Russian Federation
and the IESBA Code. We believe that
the audit evidence we have obtained
is sufficient and appropriate to provide
a basis for our opinion.
Key Audit Matters
Key audit matters are those matters
that, in our professional judgment,
were of most significance in our audit
of the consolidated financial statements
of the current period. These matters
were addressed in the context of our audit
of the consolidated financial statements
as a whole, and in forming our opinion
thereon, and we do not provide a separate
opinion on these matters.
es on the imp
t of the ec
omic situation on the Gr
Disclosur
Please refer to tne Notes 34, 35 in the consolidated financial statements.
on
ac
oup’s operations
e k
ey audit matter
Th
How th
e mat
ter w
as a
essed in our audit
ddr
Starting from 2022 the United States of America, the European
Union and some other countries had toughen up restrictive
measures against the Russian government, major financial
institutions, certain other legal entities and individuals
in Russia, resulting in significant capital markets volatility,
supply and distribution interruptions, and limited availability
of debt financing.
The Group made a comprehensive disclosure on the impact
of economic and geopolitical environment on the Group’s
current and future operations which we consider to be a key
audit matter.
Our audit procedures included the following:
Our audit procedures included the following:
• We obtained and critically reviewed the management’s
assessment of the impact of the economic and geopolitical
situation on the Group’s operations;
• We reviewed the assessment of revenue, production
and capital expenditures levels budgeted for the next
financial year;
• We assessed the Group’s analysis of sensitivity to the major
market, financial and regulatory risks, such as currency risks,
interest rate risks and risks associated with the availability
of external financing;
• We analysed the disclosure of credit risk, including
the Group’s assessment of dependency from major
customers and credit risk concentration. We compared
the information on credit ratings of the banks to external
sources;
• We analysed the disclosure of liquidity risk including
maturity profile and respective cash flows.
We considered the overall adequacy and appropriateness
of the disclosures related to the analysis of the impact
of the economic situation on the Group’s current and future
operations in the consolidated financial statements.
Annual ReportNornickelAdditional information7/72022 254
255
Other Information
Management is responsible for the other
information. The other information
comprises the Financial Overview (MD&A)
(but does not include the consolidated
financial statements and our auditors’
report thereon), which we obtained
prior to the date of this auditors’ report,
and the information included in other
sections of Annual Report for 2022, which
is expected to be made available to us
after that date.
Our opinion on the consolidated financial
statements does not cover the other
information and we do not express
any form of assurance conclusion thereon.
In connection with our audit
of the consolidated financial
Statements, our responsibility is to read
the other information and, in doing
so, consider whether the other
information is materially inconsistent
with the consolidated financial
statements or our knowledge obtained
in the audit, or otherwise appears
to be materially misstated.
If, based on the work we have performed
on the other information that we have
obtained prior to the date of this
auditors’ report, we conclude that there
is a material misstatement of this other
information, we are required to report that
fact. We have nothing to report in this
regard.
Responsibilities
of Management
and Those Charged
with Governance
for the Consolidated
Financial Statements
Management is responsible
for the preparation and fair presentation
of the consolidated financial statements
in accordance with IFRS, and for such
internal control as management
determines is necessary to enable
the preparation of consolidated
financial statements that are free
from material misstatement, whether
due to fraud or error.
In preparing the consolidated financial
statements, management is responsible
for assessing the Group’s ability
to continue as a going concern, disclosing,
as applicable, matters related to going
concern and using the going concern
basis of accounting unless management
either intends to liquidate the Group
or to cease operations, or has no realistic
alternative but to do so.
Those charged with governance
are responsible for overseeing the Group’s
financial reporting process.
Auditors’ Responsibilities
for the Audit
of the Consolidated
Financial Statements
Our objectives are to obtain
reasonable assurance about whether
the consolidated financial statements
as a whole are free from material
misstatement, whether due to fraud
or error, and to issue an auditors’ report
that includes our opinion. Reasonable
assurance is a high level of assurance,
but is not a guarantee that an audit
conducted in accordance with ISAs will
always detect a material misstatement
when it exists. Misstatements
can arise from fraud or error
and are considered material if, individually
or in the aggregate, they could reasonably
be expected to influence the economic
decisions of users taken on the basis
of these consolidated financial
statements.
As part of an audit in accordance
with ISAs, we exercise professional
judgment and maintain professional
scepticism throughout the audit. We also:
•
Identify and assess the risks of material
misstatement of the consolidated
financial statements, whether
due to fraud or error, design
and perform audit procedures
responsive to those risks, and obtain
audit evidence that is sufficient
and appropriate to provide a basis
for our opinion. The risk of not
detecting a material misstatement
resulting from fraud is higher
than for one resulting from error,
as fraud may involve collusion,
forgery, intentional omissions,
misrepresentations, or the override
of internal control.
• Obtain an understanding of internal
control relevant to the audit in order
to design audit procedures that
are appropriate in the circumstances,
but not for the purpose of expressing
an opinion on the effectiveness
of the Group’s internal control.
• Evaluate the appropriateness
of accounting policies used
and the reasonableness of accounting
estimates and related disclosures
made by management.
• Conclude on the appropriateness
of management’s use of the going
concern basis of accounting and,
based on the audit evidence obtained,
whether a material uncertainty
exists related to events or conditions
that may cast significant doubt
on the Group’s ability to continue
as a going concern. If we conclude
that a material uncertainty exists,
we are required to draw attention
in our auditors’ report to the related
disclosures in the consolidated
financial statements or, if such
disclosures are inadequate, to modify
our opinion. Our conclusions are based
on the audit evidence obtained
up to the date of our auditors’
report. However, future events
or conditions may cause the Group
to cease to continue as a going
concern.
• Evaluate the overall presentation,
structure and content
of the consolidated financial
statements, including the disclosures,
and whether the consolidated financial
statements represent the underlying
transactions and events in a manner
that achieves fair presentation.
• Obtain sufficient appropriate audit
evidence regarding the financial
information of the entities or business
activities within the Group to express
an opinion on the consolidated
financial statements.
We are responsible for the direction,
supervision and performance
of the group audit. We remain solely
responsible for our audit opinion.
independence, and where applicable,
actions taken to eliminate threats
or safeguards applied.
We communicate with those charged
with governance regarding, among other
matters, the planned scope and timing
of the audit and significant audit findings,
including any significant deficiencies
in internal control that we identify during
our audit.
We also provide those charged
with governance with a statement that
we have complied with relevant ethical
requirements regarding independence,
and communicate with them all
relationships and other matters that may
reasonably be thought to bear on our
From the matters communicated
with those charged with governance,
we determine those matters that
were of most significance in the audit
of the consolidated financial statements
of the current period and are therefore
the key audit matters. We describe these
matters in our auditors’ report unless law
or regulation precludes public disclosure
about the matter or when, in extremely
rare circumstances, we determine that
a matter should not be communicated
in our report because the adverse
consequences of doing so would
reasonably be expected to outweigh
the public interest benefits of such
communication.
The engagement partner on the audit resulting in this independent
auditors’ report is:
Natalia Velichko
Principal registration number of the entry in the Register of Auditors and Audit
Organizations No. 21906109427 acts on behalf of the audit organization based
on the power of attorney No.375/22 as of 1 July 2022
JSC “Kept”
Audited entity: PJSC “Mining and Metallurgical
Company “Norilsk Nickel”
Principal registration number of the entry in the Register
of Auditors and Audit Organizations No. 12006020351
Independent auditor: JSC “Kept”
Moscow, Russia
10 February 2023
Registration number in the Unified State Register
of Legal Entities No. 1028400000298.
Annual ReportNornickelAdditional information7/72022 256
257
CONSOLIDATED INCOME STATEMENT FOR THE YEARS
ENDED 31 DECEMBER 2022, 2021 AND 2020
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED 31 DECEMBER 2022, 2021 AND 2020
or the y
ear en
ded 31 Dec
ember
US Dollars million
F
or the y
F
ear en
Notes
2022
2021
2020
US Dollars million
Revenue
Metal sales
Other sales
Total revenue
Cost of metal sales
Cost of other sales
Gross profi
General and administrative expenses
Selling and distribution expenses
Impairment of non-financial assets, net
Other operating expenses, net
11, 26, 27
Operating profi
Foreign exchange gain/(loss), net
Finance costs, net
(Loss)/gain from disposal of subsidiaries and foreign joint
operations
Income from investments
Profit be ore tax
Income tax expense
Profit
or the y
ear
Attributable to:
Shareholders of the parent company
Non-controlling interests
Earnings per share
12
21
13
14
23
7
8
9
10
15
16,073
803
16,876
(6,108)
(816)
9,952
(1,353)
(250)
(90)
(678)
7,581
251
(493)
(110)
150
7,379
(1,525)
5,854
5,458
396
5,854
17,103
749
17,852
(5,057)
(746)
12,049
(989)
(191)
(48)
14,977
568
15,545
(4,500)
(564)
10,481
(869)
(167)
(308)
(1,285)
(2,737)
9,536
(53)
(279)
29
52
9,285
(2,311)
6,974
6,512
462
6,974
6,400
(1,034)
(879)
19
73
4,579
(945)
3,634
3,385
249
3,634
Basic and diluted earnings per share attributable to shareholders
of the parent company (US Dollars per share)
22
35.7
41.9
21.4
The accompanying notes on pages 9 - 97 form an integral part of the consolidated financial statements
Profit
or the y
ear
Other comprehensive income/(loss)
Items that are or may be reclassified to profit or loss
in subsequent periods:
Reclassification of translation reserve for disposed foreign
operations to profit or loss (Note 21)
Effect of translation of foreign operations and other reserves
Other comprehensive income/(loss) that are or may
be reclassified to profit or loss in subsequent periods, net
Items not to be reclassified to profit or loss
in subsequent periods:
Effect of translation to presentation currency
Other comprehensive income/(loss) not to be reclassified
to profit or loss in subsequent periods, net
Other comprehensive income/(loss) for the year, net of tax
2022
5,854
2021
6,974
–
29
29
891
891
920
20
(2)
18
80
80
98
Total comprehensive income f
or the y
ear, n
Attributable to:
Shareholders of the parent company
Non-controlling interests
et of tax
6,774
7,072
6,332
442
6,774
6,618
454
7,072
The accompanying notes on pages 8 - 96 form an integral part of the consolidated financial statements
ded 31 Dec
ember
2020
3,634
(10)
1
(9)
(690)
(690)
(699)
2,935
2,763
172
2,935
Annual ReportNornickelAdditional information7/72022 258
259
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2022, 2021 AND 2020
US Dollars million
Notes
t 31 Dec
A
ember
Assets
Non-current assets
Property, plant and equipment
Intangible assets
Other financial assets
Deferred tax assets
Other non-current assets
Current assets
Inventories
Trade and other receivables
Advances paid and prepaid expenses
Other financial assets
Income tax receivable
Other taxes receivable
Cash and cash equivalents
Other current assets
Total assets
Equity and liabilities
Capital and reserves
Share capital
Share premium
Treasury shares
Translation and other reserves
Retained earnings
Equity attributable to shareholders of the parent company
Non-controlling interests
2022
2021
2020
16,264
12,699
10,762
302
121
340
365
265
89
167
345
222
81
755
327
17,392
13,565
12,147
4,945
846
192
40
17
477
1,882
4
8,403
25,795
6
1,212
–
(4,541)
10,448
7,125
1,442
8,567
3,026
468
111
43
203
412
5,547
60
9,870
23,435
6
1,218
(305)
(5,415)
8,184
3,688
1,100
4,788
2,192
537
79
58
7
444
5,191
51
8,559
20,706
6
1,254
–
(5,521)
8,290
4,029
646
4,675
15
16
14
18
18
19
16
17
20
22
22
31
23
Non-current liabilities
Loans and borrowings
Lease liabilities
Provisions
Social liabilities
Trade and other long-term payables
Derivative financial instruments
Deferred tax liabilities
Other non-current liabilities
Current liabilities
Loans and borrowings
Lease liabilities
Trade and other payables
Dividends payable
Employee benefit obligations
Provisions
Social liabilities
Derivative financial instruments
Income tax payable
Other taxes payable
Other current liabilities
Total liabilities
Total equity an
d liabilities
Notes
24
25
26
27
30
14
29
24
25
28
31
29
26
27
30
17
36
t 31 Dec
A
ember
7,189
190
916
613
56
67
415
93
8,616
178
894
633
55
72
73
43
9,622
203
560
84
32
52
43
23
9,539
10,564
10,619
4,295
43
1,381
496
585
180
201
–
169
339
–
7,689
17,228
25,795
1,610
57
2,224
3,146
417
146
158
15
41
269
–
8,083
18,647
23,435
12
59
1,427
47
401
2,162
96
93
358
329
428
5,412
16,031
20,706
The accompanying notes on pages 8 - 96 form an integral part of the consolidated financial statements
Annual ReportNornickelAdditional information7/72022 7,379
9,285
4,579
Net cash used in in
vesting activities
(4,149)
(2,638)
(1,648)
260
261
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED 31 DECEMBER 2022, 2021 AND 2020
US Dollars million
Operating activities
Profit before tax
Adjustments for:
Depreciation and amortisation
Impairment of non-financial assets, net (Note 15)
Loss on disposal of property, plant and equipment
Loss/(gain) from disposals of subsidiaries and foreign joint
operations (Note 21)
Change in provisions and allowances (Notes 26, 27)
Finance costs and income from investments, net (Notes 12, 13)
Foreign exchange (gain)/loss, net
Other
Movements in working capital:
Inventories
Trade and other receivables
Advances paid and prepaid expenses
Other taxes receivable
Employee benefit obligations
Trade and other payables
Provisions
Other taxes payable
Cash generated fr
om oper
ations
Income tax paid
Net cash generated fr
ating activities
om oper
or the y
ear en
ded 31 Dec
ember
F
2022
2021
2020
1,026
90
70
110
236
343
(251)
(106)
928
48
35
(29)
896
227
53
36
943
308
19
(19)
2,477
806
1,034
107
(1,693)
(347)
(60)
(121)
129
(1,096)
(160)
164
5,713
(1,127)
4,586
(796)
38
(30)
31
34
669
(2,145)
(27)
9,253
(2,211)
7,042
(119)
(161)
(32)
125
20
(239)
(186)
(70)
9,592
(1,304)
8,288
or the y
F
ear en
Proceeds from repayment of loans issued
Net change in deposits placed (Note 16)
Proceeds from disposal of property, plant and equipment
Net cash (outflow)/inflow from disposal of subsidiaries and foreign
joint operations (Note 21)
Interest and other investment income received
22
34
11
(46)
157
ded 31 Dec
ember
43
(35)
12
49
84
36
(4)
2
28
67
The accompanying notes on pages 7 - 96 form an integral part of the consolidated financial statements
or the y
ear en
ded 31 Dec
ember
F
2022
2021
2020
Financing activities
Proceeds from loans and borrowings (Note 35)
Repayments of loans and borrowings (Note 35)
Payments of lease liabilities (Note 35)
Dividends paid to non-controlling interest
Receipt of dividends not remitted to ADR holders (Note 31)
(Payments)/proceeds on exchange of flows under cross-currency
interest rate swaps, net
Interest paid
Acquisition of own shares from shareholders (Note 22)
Net cash used in finan
cing activities
Net change in cash and cash equivalents
Cash and cash equivalents at the beginning of the year (Note
20)
Effects of foreign exchange differences on balances of cash
and cash equivalents
9,104
(7,775)
(50)
(6,196)
(73)
544
(19)
(599)
–
(5,064)
(4,627)
5,547
962
1,000
(415)
(55)
(2,198)
–
–
4
(315)
(2,068)
(4,047)
357
5,191
(1)
2,903
(2,552)
(46)
(4,165)
–
–
38
(510)
–
(4,332)
2,308
2,784
99
5,191
Investing activities
Purchase of property, plant and equipment
(4,227)
(2,683)
(1,686)
The accompanying notes on pages 7 - 96 form an integral part of the consolidated financial statements
Purchase of share in associates
Purchase of intangible assets
Loans issued
(29)
(71)
–
(21)
(81)
(6)
(14)
(74)
(3)
Cash an
d cash equivalents at the end of the y
ear (Note 20)
1,882
5,547
8,897
11,479
10,254
Dividends paid (Note 31)
Annual ReportNornickelAdditional information7/72022 262
263
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARS ENDED 31 DECEMBER 2022, 2021 AND 2020
US Dollars million
Balance at 1 January 2020
Profit for the year
Other comprehensive loss
Total comprehensive income
or the y
f
ear
Dividends
Balanc
e at 31 December 20
20
Profit for the year
Other comprehensive income/(loss)
Total comprehensive income
or the y
f
ear
Dividends
Other effects related
to transactions with non-
controlling interest owners
Acquisition of own shares
from shareholders
Cancellation of ordinary shares
from treasury stock
Balanc
e at 31 December 20
21
Profit for the year
Other comprehensive income
Total comprehensive income
or the y
f
ear
Dividends
Cancellation of ordinary shares
from treasury stock
Balanc
e at 31 December 20
22
Equity attributable t
o shar
olders of the p
arent company
eh
Equity attributable t
o shar
olders of the p
Equity attributable t
o shar
arent company
eh
olders of the p
arent company
eh
Notes
Share capital
Share premium
Treasury shares
6
–
–
–
–
6
–
–
–
–
–
–
–
6
–
–
–
–
–
6
1,254
–
–
–
–
1,254
–
–
–
–
–
–
(36)
1,218
–
–
–
–
(6)
1,212
–
–
–
–
–
–
–
–
–
–
–
(2,075)
1,770
(305)
–
–
–
–
305
–
31
31
22
31
22
Translation an
d oth
er
reserves
(4,899)
–
(622)
(622)
–
(5,521)
–
106
106
–
–
–
–
(5,415)
–
874
874
–
–
Retained earnings
7,452
3,385
–
3,385
Total
3,813
3,385
(622)
2,763
(2,547)
(2,547)
8,290
6,512
–
6,512
(5,374)
490
4,029
6,512
106
6,618
(5,374)
490
–
(2,075)
(1,734)
–
8,184
5,458
–
5,458
(2,895)
(299)
3,688
5,458
874
6,332
(2,895)
–
Non-controlling
interests
474
249
(77)
172
–
646
462
(8)
454
–
–
–
–
1,100
396
46
442
(100)
–
(4,541)
10,448
7,125
1,442
Total
4,287
3,634
(699)
2,935
(2,547)
4,675
6,974
98
7,072
(5,374)
490
(2,075)
–
4,788
5,854
920
6,774
(2,995)
–
8,567
The accompanying notes on pages 7 - 96 form an integral part of the consolidated financial statements
Annual ReportNornickelAdditional information7/72022 264
265
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2022, 2021 AND 2020
US Dollars million
1. GENERAL
INFORMATION
Organisation
and principal business
activities
Public Joint Stock Company “Mining
and Metallurgical Company “Norilsk
Nickel” (the “Company” or
PJSC “MMC “Norilsk Nickel”)
was incorporated in the Russian
Federation on 4 July 1997.
The principal activities of the Company
and its subsidiaries (the “Group”)
are exploration, extraction, refining of ore
and nonmetallic minerals and sale of base
and precious metals produced from ore.
Further details regarding the nature
of the business and structure of the Group
are presented in Note 37.
Major production facilities of the Group
are located on Russia’s Taimyr and Kola
Peninsulas and in the Zabaikalsky
Territory, and in Finland
2. BASIS
OF PREPARATION
Statement of compliance
The consolidated financial statements
of the Group have been prepared
in accordance with International Financial
Reporting Standards (“IFRS”).
The entities of the Group maintain
their accounting records in accordance
with the laws, accounting and reporting
regulations of the jurisdictions in which
they are incorporated and registered.
Accounting principles in certain
jurisdictions may differ significantly
from those generally accepted under
IFRS. Financial statements of such entities
have been adjusted to ensure that
the consolidated financial statements
are presented in accordance with IFRS.
The Group issues a separate set of IFRS
consolidated financial statements
to comply with the requirements
of the Russian Federal Law No 208-FZ
On consolidated financial statements
(“208-FZ”) which was adopted
on 27 July 2010.
Basis of measurement
The consolidated financial statements
of the Group are prepared on the historical
cost basis, except for mark-to-market
valuation of certain classes of financial
instruments, in accordance with IFRS 9
Financial Instruments.
3. CHANGES
IN ACCOUNTING
POLICIES
The accounting policies applied
in the preparation of the consolidated
financial statements for the year ended
31 December 2022 are generally consistent
with those applied in the preparation
of the Group’s consolidated financial
statements as at and for the years ended
31 December 2021 and 2020.
Adoption of new
and revised standards
and interpretations
during the year ended
31 December 2022
Adoption of amendments to the following
Standards did not have material impact
on the accounting policies, financial
position or financial results of the Group:
•
•
•
•
•
•
IFRS 9 Financial Instruments
(amended);
IFRS 1 First-time Adoption
of International Financial Reporting
Standards (amended);
IFRS 3 Business combinations
(amended);
IFRS 16 Leases (amended);
IAS 16 Property, plant and equipment
(amended);
IAS 37 Provisions, contingent liabilities
and contingent assets (amended).
Adoption of new
and revised standards
and interpretations
during the year ended
31 December 2021
Adoption of amendments to the following
Standards did not have material impact
on the accounting policies, financial
position or financial results of the Group:
Amendments related to interest rate
benchmark reform:
•
•
•
•
•
IFRS 4 Insurance Contracts (amended);
IFRS 7 Financial Instruments:
Disclosures (amended);
IFRS 9 Financial Instruments
(amended);
IFRS 16 Leases (amended);
IAS 39 Financial Instruments:
Recognition and Measurement
(amended).
Other amendments:
•
IFRS 16 Leases (amended).
Adoption of new
and revised standards
and interpretations
during the year ended
31 December 2020
Adoption of amendments to the following
Standards did not have material impact
on the accounting policies, financial
position or financial results of the Group:
•
•
IFRS 3 Business combinations
(amended);
IFRS 7 Financial Instruments:
Disclosures (amended);
•
•
•
•
•
IFRS 9 Financial Instruments
(amended);
IFRS 16 Leases (amended);
IAS 1 Presentation of Financial
Statements (amended);
IAS 8 Accounting Policies, Changes
in Accounting Estimates and Errors
(amended);
IAS 39 Financial Instruments:
Recognition and Measurement
(amended);
• Revised Conceptual Framework
for Financial Reporting.
Standards
and interpretations
Standards an
d Int
erpretations
IFRS 9 Financial Instruments (amended)
IFRS 17 Insurance Contracts (amended)
issued but not yet
effective
The Group did not early adopt
any standard, interpretation
or amendment that had been issued but
was not yet effective.
or annual per
Effective f
beginnin
g on or aft
er
iods
1 January 2023
1 January 2023
IAS 1 Presentation of financial statements (amended) (Disclosure of accounting policy)
1 January 2023
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (amended)
1 January 2023
IAS 12 Income Taxes (amended)
IFRS 16 Leases (amended)
IAS 1 Presentation of financial statements (amended) (Classification of liabilities
as current or non-current, non-current liabilities with covenants)
1 January 2023
1 January 2024
1 January 2024
Management of the Group plans
to adopt all of the above standards
and interpretations in the Group’s
consolidated financial statements
for the respective periods. These
standards are not expected
to have a material impact on the Group
in the future reporting periods
and on foreseeable future transactions.
Reclassification
At 31 December 2022 management
reassessed classification of certain cost
items in cost of other sales and selling
and distribution expenses. Information
for the years ended 31 December 20
21 and 31 December 2020 was recla
ssified to conform with the current
period presentation and the effect
of the reclassification is immaterial.
The presentation of metal sales
by segments was changed (Note 6).
Annual ReportNornickelAdditional information7/72022 266
267
4. SIGNIFICANT
ACCOUNTING POLICIES
Basis of consolidation
SUBSIDIARIES
The consolidated financial statements
incorporate financial statements
of the Company and its subsidiaries,
from the date that control effectively
commenced until the date that control
effectively ceased. Control is achieved
where the Company is exposed to,
or has rights to, variable returns
from its involvement with the entity
and has the ability to affect those returns
through its power over the entity.
Non-controlling interests in net assets
(excluding goodwill) of the consolidated
subsidiaries are identified separately
from the equity of the shareholders
of the Company therein. Non-controlling
interests include interests at the date
of the original business combination
and a share of changes in net assets
since the date of the business
combination. Total comprehensive
income must be attributed
to the shareholders of the Company
and to the non-controlling interests
even if this results in the non-controlling
interests having a deficit balance.
ent of c
onsolidated
Compon
statements
The Russian rouble (“RUB”)
is the functional currency of the Company,
all of its subsidiaries located in the Russian
Federation, and all foreign subsidiaries
of the Group, except for the below
subsidiaries operating with a significant
degree of autonomy. The functional
currency of Norilsk Nickel Harjavalta
Oy is US Dollar in 2020-2022,
and the functional currency of Norilsk
Nickel Africa Proprietary Limited
and Nkomati Nickel Mine was South
African Rand in 2020 and 2021.
The presentation currency
of the Group’s consolidated financial
statements is US Dollar (“USD”). Using
USD as a presentation currency
is a common practice among global
mining companies. The Group also issues
consolidated financial statements which
use RUB as the presentation currency
to comply with Federal Law 208-FZ.
Components of the consolidated
statement of financial position,
consolidated income statement,
consolidated statement of cash flows
and consolidated statement of changes
in equity are translated into presentation
currency using the following applicable
exchange rates:
Non-controlling interests may
be initially measured either at fair value
or at the proportionate share of non-
controlling interests in the recognised
amounts of the acquiree’s identifiable
net assets. The choice of measurement
basis can be made on a transaction-by-
transaction basis.
All intra-group balances, transactions
and any unrealised profits or losses
arising from intra-group transactions
are eliminated in full on consolidation.
Changes in the Group’s ownership
interest in a subsidiary that do not result
in the loss of control are accounted
for within equity.
When the Group loses control
of a subsidiary it derecognises the assets
and liabilities and related equity
components of the former subsidiary.
Any resulting gain or loss is recognised
in the consolidated income statement.
Any interest retained in the former
subsidiary is measured at its fair value
as at the date of losing the control.
Functional
and presentation
currency
The individual financial statements
of each Group entity are presented
in its functional currency.
Applicable exchange rates
Assets and liabilities
Period-end rate
Income, expenses, and cash flows
Date of underlying transaction or average approximating exchange rates prevailing
at the dates of the transactions
Equity
Historical rates
All exchange differences resulting
from translation of the consolidated
income statement and consolidated
statement of financial position
components are recognised as a separate
component in other comprehensive
income/loss.
The exchange rates of certain
currencies to the Russian Rouble used
in the preparation of the consolidated
financial statements are as follows:
t 31 December 20
A
22
A
t 31 December 20
21
A
t 31 December 20
20
US Dollar/RUB
Euro/RUB
Chinese Yuan/RUB
70.34
75.65
9.89
74.29
84.07
11.65
73.88
90.79
11.31
Revenue recognition
METAL SALES REVENUE
Revenue from metal sales
is recognised at a point of time when
control over the asset is transferred
to the customer and represents
the invoiced value of all metal products
shipped to customers, net of value added
tax (if any).
Revenue from contracts that are entered
into and continue to meet the Group’s
expected sale requirements designated
for that purpose at their inception
and are expected to be settled by physical
delivery of the goods, is recognised
in the consolidated financial statements
as and when the goods are delivered.
A gain or loss on forward contracts
expected to be settled by physical delivery
or on a net basis is recognised in revenue
and disclosed separately from revenue
from contracts with customers.
As a practical expedient, the Group
does not adjust the promised amount
of consideration for the effects
of a significant financing component,
if the expected period between
when the Group transfers promised
goods or a service to a customer
and the customer pays for those goods
or services is one year or less.
Certain contracts are provisionally
priced so that price is not settled
until a predetermined future date,
as of which the delivery price is settled
based on the market price (contracts
with quotation period). Revenue
from such transactions is initially
recognised at the market price
at the date of sale. Price adjustments
under provisionally priced contracts
are recognised in revenue.
OTHER REVENUE
Revenue from contracts with customers
on sale of goods (other than metals)
is recognised at a point of time when
control over the asset is transferred
to a customer in accordance
with the shipping terms specified
in the sales agreements.
Revenue from service contracts
is recognised over the time when
the services are rendered.
Leases
At the inception of a contract, the Group
assesses whether such contract
or its components constitute a lease.
The Group recognises a right-of-
use asset and a corresponding lease
liability, if a lease contract transfers
to the lessee the right to control the use
of the identified asset for a period
of time in exchange for a consideration,
except for current leases with the term
of 12 months or less. The Group recognises
lease payments associated with current
leases as an expense on a straight-line
basis over the lease term. Land plot
lease payments are treated as variable
lease payments, if they are linked
to the cadastral value and changes
in the latter do not depend on market
rental rates. The Group recognises such
variable lease payments as an expense
in the period when the event that triggers
those payments occurs.
Right-of-use assets are initially recognised
at cost that comprises when applicable:
•
the initial amount of the lease liability;
• any lease payments made at or before
the lease commencement date;
• any initial direct costs incurred
by the lessee;
• an estimate of costs to be incurred
by the lessee for retirement
of the underlying asset and restoration
of the site where it is located.
Right-of-use assets are subsequently
measured at initial cost less
any accumulated depreciation
and any accumulated impairment
losses, adjusted for any remeasurement
of the lease liability. Right-of-use assets
are depreciated on a straight-line
basis over their estimated economic
useful life or over the term of the lease,
whichever is shorter. Right-of-use
assets are presented in property, plant
and equipment in the consolidated
statement of financial position.
Lease liabilities (refer to Note 25)
are initially measured at the present
value of the lease payments that are not
paid at the commencement date
and subsequently remeasured to reflect
changes in lease payments. The lease
payments are discounted using interest
rate implicit in the lease (if that rate
can be readily determined) or using
Group incremental borrowing rate
at the commencement date determined
based on lease term and currency
of the lease payments.
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269
Employee benefits
Remuneration to employees in respect
of services rendered during a reporting
period is recognised as an expense in that
period. Deferred costs under subsidised
housing programmes for employees
are recognised as other non-current
assets and amortised over a certain
period of employee participation
in the programme (two to ten years).
Long-term employee benefit obligations
are discounted to present value.
DEFINED CONTRIBUTION
PLANS
The Group contributes to the following
major defined contribution plans:
• Pension Fund of the Russian
Federation;
• Mutual accumulated pension plan.
The only obligation of the Group
with respect to these and other defined
contribution plans is to make specified
contributions during the period
in which they arise. Such contributions
are recognised in the consolidated
income statement when employees have
rendered respective services.
Income tax expense
Income tax expense represents the sum
of the current and deferred tax.
Income tax is recognised as an expense
or income in the consolidated income
statement unless it relates to other
items recognised directly in other
comprehensive income, in which
case the tax is also recognised
in the consolidated statement
of comprehensive income. Where
current or deferred tax arises
from the initial accounting for a business
combination, the tax effect is included
in the accounting for the business
combination.
CURRENT TAX
Current tax is based on taxable profit
for the year. Taxable profit differs
from profit before tax as reported
in the consolidated income statement
because it excludes items of income
or expense that are taxable or deductible
in other years and excludes items that
are not taxable or deductible.
DEFERRED TAX
Deferred tax is recognised in respect
of temporary differences between
the carrying amounts of assets
and liabilities for financial reporting
purposes and the amounts used
for taxation purposes. As a general rule,
deferred tax liabilities are recognised
for all taxable temporary differences,
and deferred tax assets are recognised
for all deductible temporary differences
to the extent that it is probable that
taxable profits will be available against
which those deductible temporary
differences can be utilised. Deferred
tax assets and liabilities are not
recognised in the consolidated financial
statements, if temporary differences arise
from the initial recognition of goodwill
or from the initial recognition of assets
and liabilities other than in a business
combination, which, at the time
of the transaction, affects neither taxable
profit nor accounting profit and do not
give rise to equal taxable and deductible
temporary differences.
Deferred tax liabilities are recognised
for taxable temporary differences
associated with investments
in subsidiaries, joint ventures,
associates and interests in joint
operations, unless the Group is able
to control the reversal of the temporary
difference, and it is probable that
the temporary difference will not reverse
in the foreseeable future. Deferred
tax assets arising from deductible
temporary differences associated
with such investments and interests
are only recognised to the extent that
it is probable that there will be sufficient
taxable profits against which to utilise
the benefits of the temporary differences
and they are expected to reverse
in the foreseeable future.
The carrying amount of deferred tax
assets is reviewed at each reporting
date and adjusted to the extent that
it is probable that sufficient taxable
profits will be available to allow all or part
of the asset to be recovered.
The measurement of deferred tax
assets and liabilities reflects the tax
consequences of the manner in which
the Group expects at the reporting date
to recover or settle the carrying amount
of its assets and liabilities. Deferred tax
assets and liabilities are offset when
there is a legally enforceable right to set
off current tax assets against current tax
liabilities and when they relate to income
taxes levied by the same tax authority.
Property, plant
and equipment
MINING ASSETS
Mine development costs are capitalised
and comprise expenditures directly
related to:
• acquiring mining and exploration
licences;
• developing new mines;
• estimating revised content of minerals
in the existing ore bodies currently
developed;
• expanding mine capacity.
Mine development costs include directly
attributable finance costs capitalised
during mine development.
Mine development costs are transferred
to mining assets and start
to be depreciated when a mine reaches
commercial production quantities.
Mining assets are recognised at cost
less accumulated depreciation
and impairment losses. Mining assets
include cost of acquiring and developing
mining properties, pre-production
expenditure, mine infrastructure,
property, plant and equipment that
process extracted ore, subsoil use
rights, mining and exploration licenses,
finance costs eligible for capitalisation
and discounted value of future
decommissioning costs.
Carrying value of mining assets
is depreciated over the lesser of their
individual economic useful life
on a straight-line basis, or the remaining
life of mine. Life of mine is estimated
based on the Group production
plans. Average useful lives vary from 1
to 47 years.
EXPLORATION EXPENDITURE
Exploration expenditure, including
geophysical, topographical, geological
and similar types of expenditure made
under evaluation, exploration and mining
licences, is capitalised and amortised
over the life of mine from the moment
the commercial viability of the project
is proved. Otherwise, it is expensed
in the period in which it is incurred.
Exploration expenditure written-off before
the start of mine development is not
subsequently capitalised, even if mine
commercial use subsequently occurs.
NON-MINING ASSETS
Non-mining assets include metallurgical
processing plants, buildings,
infrastructure, machinery and equipment,
and other non-mining assets. Such assets
are measured at cost less accumulated
depreciation and impairment losses. Non-
mining assets include property, plant
and equipment used both in operations
directly and to provide social services
in the regions where the Group operates.
Non-mining assets are depreciated
on a straight-line basis over their
economic useful life.
Depreciation charge is calculated
over the following economic useful life:
• buildings, facilities and infrastructure 2
to 50 years
• machinery, equipment and transport 2
to 32 years
• other non-mining assets 1 to 20 years
CAPITAL CONSTRUCTION-IN-
PROGRESS
Capital construction-in-progress
comprises costs directly related
to the construction of mining and non-
mining assets, including:
• advances given for the purchase
of property, plant and equipment
and materials acquired
for the construction of buildings,
processing plants, infrastructure,
machinery and equipment;
irrevocable letters of credit opened
for future fixed assets deliveries
and secured by deposits placed
with banks;
•
• directly attributable finance costs
capitalised during construction.
Depreciation of these assets begins
when they become available for use
and are in the location and condition
necessary for them to be capable
of operating in the manner intended
by management.
CAPITALISATION OF FINANCE
COST
Finance costs directly attributable
to the acquisition, construction
or production of qualifying assets,
which are assets that necessarily
take a substantial period of time to get
ready for their intended use or sale,
are added to the cost of those assets, until
the assets are ready for their intended use
or sale.
Investment income earned
on the temporary investment of specific
borrowings pending their expenditure
Annual ReportNornickelAdditional information7/72022 The Group generally classifies cash
and cash equivalents, trade and other
receivables (excluding trade receivables
measured at fair value through profit
and loss under provisionally priced
contracts), loans issued and bank deposits
as financial assets measured at amortised
cost.
FINANCIAL ASSETS
MEASURED AT FAIR
VALUE THROUGH OTHER
COMPREHENSIVE INCOME
A debt instrument is measured at fair
value through other comprehensive
income if it meets both of the following
conditions and is not designated at fair
value though profit or loss:
•
it is held within a business model
whose objective is achieved by both
collecting contractual cash flows
and selling financial assets;
•
the contractual terms of the financial
asset give rise on specified dates
to cash flows that are solely
payments of principal and interest
on the principal amount outstanding.
At initial recognition, the Group may make
an irrevocable decision to present in other
comprehensive income subsequent
changes in the fair value of an investment
in an equity instrument that is not held
for trading. Such decisions are made
on an instrument-by-instrument basis.
FINANCIAL ASSETS
MEASURED AT FAIR VALUE
THROUGH PROFIT OR LOSS
All financial assets not classified
as measured at amortised cost or at fair
value through other comprehensive
income are classified as financial assets
measured at fair value through profit
or loss.
Trade receivables under provisionally
priced contracts and derivative financial
assets are measured at fair value
through profit or loss. Trade receivables
under provisionally priced contracts
are remeasured at each reporting
date using the forward market price
for the period till the price settlement
date outlined in the contract.
IMPAIRMENT OF FINANCIAL
ASSETS
The Group recognises an allowance
for expected credit losses on a financial
asset measured at amortised cost using
either of the following methods:
Lifetime expected credit losses
Trade and other receivables
Financial assets other than trade and other receivables for which credit risk has
increased significantly since initial recognition
12-months expected credit losses
since the reporting date
Financial assets other than trade and other receivables at initial recognition
Financial assets other than trade and other receivables for which credit risk has not
increased significantly since initial recognition
270
271
on qualifying assets is deducted
from the borrowing costs eligible
for capitalisation.
Intangible assets,
excluding goodwill
Intangible assets are recognised
at cost less accumulated amortisation
and impairment losses. Intangible
assets mainly include patents, licences
and software.
Amortisation of patents, licences
and software is charged on a straight-
line basis over their useful life, which vary
from 1 to 12 years.
Impairment of non-
current assets, excluding
goodwill
At each reporting date, the Group
analyses the triggers of impairment
of its non-current assets to determine
whether there is any indication that those
assets have suffered an impairment loss. If
any such indication exists, the recoverable
amount of the asset is estimated
in order to determine the extent
of the impairment loss (if any).
Recoverable amount is the higher of fair
value less costs to sell or value in use.
In assessing value in use, the estimated
future cash flows are discounted to their
present value using a pre-tax discount
rate that reflects current market
assessments of the time value of money
and the risks specific to the asset or cash-
generating unit. Where the fair value
less costs of disposal of individual assets
is higher than their carrying amount
the Group does not estimates its value
in use. If the recoverable amount
of an asset (or cash-generating unit)
is estimated to be less than its carrying
amount, the carrying amount of the asset
(or cash-generating unit) is reduced
to its recoverable amount. An impairment
loss is recognised in the consolidated
income statement immediately.
Where an impairment loss
is subsequently reversed, the carrying
amount of the asset (or cash-generating
unit) is increased to the revised estimate
of its recoverable amount but only
to the extent that the increased carrying
amount does not exceed the original
carrying amount that would have been
determined had no impairment loss been
recognised in prior periods. A reversal
of an impairment loss is recognised
in the consolidated income statement
immediately.
Inventories
REFINED METALS
The Group’s main jointly produced
metals include nickel, copper, palladium,
platinum; by-products include cobalt,
gold, rhodium, silver, and other
metals. Main products are measured
at the lower of cost of production or net
realisable value. The cost of production
of main products is determined as total
production cost allocated to each joint
product by reference to their relative sales
value. The cost of production includes
export customs duties (if applicable)
incurred before a point of time when
control over the asset is transferred
to a customer. By-products are initially
measured at net realisable value, based
on current market prices. Net realisable
value estimates take into consideration
fluctuations of price or cost directly
relating to events after the reporting
date, to the extent that such events
confirm conditions existing at the end
of the reporting period.
WORK-IN-PROCESS
Work in process includes all costs incurred
in the ordinary course of business
for producing each product including
direct material and labour costs, allocation
of production overheads, depreciation,
amortisation and other costs, given
its stage of completion, less allowance
for adjustment to net realisable value.
Changes in the amount of allowance
are recognised in Cost of metal sales
in the consolidated income statement.
MATERIALS AND SUPPLIES
Materials and supplies are measured
at cost less allowance for obsolete
and slow-moving items.
Financial assets
Financial assets are recognised when
the Group becomes party to contractual
provisions of the instrument
and are initially measured at fair value,
plus directly attributable transaction costs,
except for those financial assets measured
at fair value through profit or loss, which
are initially measured at fair value.
Financial assets are classified
into the following categories:
• financial assets measured at amortised
cost;
• financial assets measured at fair value
through other comprehensive income;
• financial assets measured at fair value
through profit or loss.
The classification of financial assets
depends on the Group’s business
model for managing the financial
assets and the contractual cash flow
characteristics of the financial asset
and is determined at the time of initial
recognition.
EFFECTIVE INTEREST
METHOD
The effective interest method is used
for calculating the amortised cost
of a financial asset and for allocating
interest income over the period.
The effective interest rate is the rate that
exactly discounts estimated future cash
receipts (including directly attributable
transaction costs and other premiums
or discounts) through the expected
life of the financial asset, or, where
appropriate, a shorter period.
Income is recognised on an effective
interest rate basis for debt instruments
other than those financial assets
measured at fair value through profit
or loss or fair value through other
comprehensive income.
FINANCIAL ASSETS
MEASURED AT AMORTISED
COST
A financial asset is measured at amortised
cost if it meets both of the following
conditions and is not designated at fair
value through profit or loss:
•
•
it is held within a business model
whose objective is to hold assets
to collect contractual cash flows;
the contractual terms of the financial
asset give rise on specified dates
to cash flows that are solely
payments of principal and interest
on the principal amount outstanding.
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When determining whether the credit
risk of the financial asset has increased
significantly since initial recognition
and when estimating expected credit
losses, the Group considers reliable
and supportable information, including
both quantitative and qualitative
information and analysis based
on the Group’s historical experience
and forward-looking information.
The Group applies the simplified
approach to measuring expected
credit losses under IFRS 9 Financial
Instruments, which uses a lifetime
expected loss allowance for trade
receivables. The Group assumes that
expected credit loss for all trade and other
receivables which are overdue for more
than 365 days is equal to their carrying
amount. To measure the expected
credit losses, trade and other receivables
that are overdue for less than 365 days
are grouped based on the length
of the overdue period to which respective
expected loss rates are applied.
The expected loss rates are based
on the historical credit loss experience,
adjusted to reflect current and forward-
looking information on the ability
of the customers to settle the receivables.
When trade and other receivables
are considered uncollectable, they
are written off against the respective
loss allowance. Changes in the amount
of allowance are recognised
in the consolidated income statement.
DERECOGNITION
OF FINANCIAL ASSETS
The Group derecognises a financial
asset only when the contractual rights
to the cash flows from the asset expire,
or if it transfers the financial asset
and substantially all the risks and rewards
of ownership of the asset to another
entity. If the Group neither transfers
nor retains substantially all the risks
and rewards of ownership and continues
to control the transferred asset,
the Group recognises its retained interest
in the asset and associated liability
for the amounts it may have to pay. If
the Group retains substantially all the risks
and rewards of ownership of a transferred
financial asset, the Group continues
to recognise the financial asset and also
recognises a collateralised borrowing
for the proceeds received.
Financial liabilities
The Group classifies financial liabilities
into loans and borrowings, trade
and other payables. Such financial
liabilities are recognised initially at fair
value less any directly attributable
transaction costs. Subsequent to initial
recognition, the financial liabilities
are measured at amortised cost using
the effective interest method. Derivative
financial liabilities are measured at fair
value through profit or loss.
EFFECTIVE INTEREST
METHOD
The effective interest method is used
for calculating the amortised cost
of a financial liability and for allocating
interest expense over the period.
The effective interest rate is the rate
that exactly discounts estimated future
cash outflows through the expected
life of the financial liability, or where
appropriate, a shorter period.
DERECOGNITION
OF FINANCIAL LIABILITIES
The Group derecognises financial
liabilities when, and only when liabilities
are discharged, cancelled or expired.
Cash and cash
equivalents
Cash and cash equivalents comprise cash
balances, cash deposits in banks, brokers
and other financial institutions and highly
liquid investments with original maturities
of three months or less and on demand
deposits, which are readily convertible
to known amounts of cash and are subject
to an insignificant risk of changes in value.
Provisions
Provisions are recognised when the Group
has a legal or constructive obligation
as a result of past events for which
it is probable that an outflow of resources
embodying economic benefits will
be required to settle the obligation,
and the amount of the obligation can
be reliably estimated. If, in the course
of discharging an obligation,
the Group recognises property, plant
and equipment, then this settlement does
not result in an outflow of the Group’s
resources and, therefore, no provision
is recognised.
Provisions may be recognised in respect
of the Group social, environmental, asset
decommissioning or other obligations,
and are presented in these consolidated
financial statements accordingly.
In particular, the Group’s social provisions
are presented together with other
liabilities related to its social expenditure
as a separate item Social Liabilities
in the consolidated statement of financial
position.
The amount recognised as a provision
is the best estimate of the expenditure
required to settle the present obligation
at the reporting date, taking into account
the risks and uncertainties surrounding
the obligation. Where a provision
is measured using the future cash flows,
its carrying amount is the present value
of those cash flows.
DECOMMISSIONING
OBLIGATIONS
AND ENVIRONMENTAL
PROVISIONS
Decommissioning obligations include
direct asset decommissioning costs
as well as related land restoration costs.
Future decommissioning costs
and related obligations, discounted
to present value, are recognised when
the legal or constructive obligation
in relation to such costs arises
and the future costs can be reliably
estimated. These costs are capitalised
as part of the initial cost of the related
asset and are depreciated over the useful
life of the asset. The unwinding
of discount on decommissioning
obligations is recognised Finance
cost, net in the consolidated income
statement. Decommissioning obligations
are periodically remeasured for changes
in applicable laws, regulations, expected
closure dates, inflation and discount rates.
Environmental provisions may
include expenditure for remediation
of the damage to the environment,
including land and water bodies clean-up
and rehabilitation costs, restoration
of biological resources, settlement
of legal claims and environmental
damages, fines and penalties imposed
by government authorities in respect
of the environmental incidents.
5. СRITICAL
ACCOUNTING
JUDGEMENTS
AND KEY SOURCES
OF ESTIMATION
UNCERTAINTY
When preparing the consolidated
financial statements, the Group’s
management necessarily makes
estimates and assumptions that
affect the reported amounts of assets
and liabilities, disclosure of contingent
assets and liabilities at the reporting date,
and the amounts of income and expenses
for the reporting period. Estimates
and assumptions require management
judgement based on historical
experience, current and expected
economic conditions, and any other
available information. Actual results may
differ from such estimates. Key
estimates and assumptions made
by the Group’s management are disclosed
below or elsewhere in the notes
to the consolidated financial statements if
applicable.
The most significant areas requiring
the use of management estimates
and assumptions are as follows:
• useful economic life of property, plant
and equipment;
impairment of non-financial assets;
•
• decommissioning obligations
and environmental provisions;
income taxes.
•
Useful economic life
of property, plant
and equipment
The factors that may affect estimates
of the useful economic life of mining
assets include the following:
• changes in proven and probable ore
•
reserves;
the grade of ore reserves changing
significantly over time;
• differences between actual commodity
prices and commodity price
assumptions used in the estimation
and classification of ore reserves;
• unforeseen operational issues at mine
sites;
• changes in capital, operating, mining,
processing and decommissioning
costs, discount rates and foreign
exchange rates that could possibly
adversely affect the economic viability
of ore reserves.
The useful economic life of non-mining
property, plant and equipment is reviewed
by the management periodically, based
on the current condition of the assets
and the estimated period during which
they will continue to bring economic
benefits to the Group.
Impairment of non-
financial assets
At the end of each reporting period,
the Group reviews the carrying amounts
of its tangible and intangible non-
financial assets for an indication
that these assets may be impaired
or that a previously recognised
impairment loss may have decreased
in full or in part. For the purpose
of the impairment test, the assets that
do not generate independent cash
flows are allocated to an appropriate
cash-generating unit. Management
applies judgement in allocating assets
that do not generate independent cash
flows to appropriate cash-generating
units, and in estimating the timing
and amounts of the underlying cash
flows. Subsequent changes to the assets
allocation to cash generating units
or the timing and amounts of cash
flows may affect the recoverable amount
of the respective assets.
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Decommissioning
obligations
and environmental
provisions
The Group’s mining and exploration
activities are subject to various
environmental laws and regulations.
The Group estimates decommissioning
obligations and environmental
provisions based on the management’s
understanding of the current legal
requirements in the various jurisdictions
in which it operates, terms of licenсe
agreements and internally generated
engineering estimates. Decommissioning
obligations and environmental provisions
are measured at present value using
inflation and discounts rates at the date
of respective cash outflows.
Environmental provisions
are recognised based on the best
estimate of the consideration required
to settle the environmental obligation
at the reporting date, taking into account
risks and uncertainties surrounding
the present obligation, including
probable compensations under civil
lawsuits and costs to be incurred
under corresponding environmental
programmes. Where it is possible
to determine a reliable timing
of the environmental obligations,
estimates are based on the discounted
value of cash flows required to settle those
obligations, otherwise the management
uses the best estimate of the future cash
outflows related to the environmental
obligations.
Actual costs incurred in future
periods may differ materially
from the amounts of the provisions.
Additionally, future changes
to environmental laws and regulations, life
of mine estimates, discount rates, court
decisions and government actions may
affect the carrying amount of these
provisions.
Income taxes
The Group is subject to income taxes
in numerous jurisdictions. Significant
judgement is required in determining
provisions for income taxes paid in various
jurisdictions due to the complexity
of legal frameworks. There are many
transactions and calculations for which
the ultimate tax determination
is uncertain. The Group recognises
provisions for taxes arising from tax
audits based on estimates of whether
additional taxes will be due. Where,
following the tax disputes, the final tax
amount differs from the amounts that
were initially recognised, such differences
are recognised in the consolidated
financial statements for the period when
such determination is made.
The carrying amount of deferred tax
assets is reviewed at each reporting
date and adjusted to the extent that
it is probable that sufficient taxable
income will be available to enable full
or partial utilisation of the deferred tax
asset.
Various factors are considered when
assessing the probability of the future
utilisation of deferred tax assets,
including past operating results,
the Group’s operational plan, expiration
of tax losses carried forward, and tax
planning strategies. If actual results differ
from these estimates or if these estimates
are to be adjusted in future periods,
the financial position and financial results
of the Group may be affected.
6. SEGMENTS
Reporting segments are based
on internal reports on components
of the Group that are regularly reviewed
by the Management Board.
Management has determined
the following reporting segments:
• GMK Group segment includes main
mining, processing and metallurgy
operations as well as transport services,
energy, repair and maintenance
services located on Taimyr Peninsula.
GMK Group metal sales to external
customers include metal volumes
produced from semi-products
purchased from the South Cluster
and GRK Bystrinskoye segments.
Intersegment revenue from metal
sales includes primarily sale of semi-
products to the KGMK Group segment
for further processing. Metal sales
to external customers include
an approximately equal portion of base
and precious metals sales in 2022,
while in 2020 and 2021 the share
of base metals sales did not exceed
45%. GMK Group’s intersegment other
sales include revenue from metal
processing services provided to other
segments. GMK Group’s other sales
to external customers primarily include
revenue from energy and utilities
services provided on Taimyr Peninsula;
• South Cluster segment includes certain
ore mining and processing operations
located on Taimyr Peninsula.
Intersegment revenue from metal
sales includes sale of semi-products
to GMK Group for further processing.
The South Cluster segment revenue
from other sales includes intersegment
ore processing services under tolling
arrangements provided to the GMK
Group segment;
• KGMK Group segment includes ore
mining and processing operations,
metallurgy operations, energy,
and exploration activities located
on Kola Peninsula. KGMK Group’s
metal sales to external customers
include metal produced from semi-
products purchased from the GMK
Group segment. Intersegment revenue
from metal sales includes sale of semi-
products to GMK Group and NN
Harjavalta for further processing. Metal
sales to external customers include
an approximately equal portion of base
and precious metals sales in 2022, while
in 2020 and 2021 the share of base
metals sales did not exceed 40%.
KGMK Group’s revenue from other
sales includes intersegment metal
processing services provided to other
segments and energy and utilities
services provided to external customers
on Kola Peninsula;
• NN Harjavalta segment includes
refinery operations located in Finland.
NN Harjavalta’s metal sales to external
customers primarily include base
metal produced from semi-products
purchased from GMK Group segment
and KGMK Group segment.
• GRK Bystrinskoye segment includes
ore mining and processing operations
located in the Zabaikalsky Territory
of the Russian Federation. Metal
sales to external customers include
an approximately equal portion of base
and other metals sales;
• Other mining segment primarily
included a 50% interest of the Group
in metal mining and processing
joint operations of Nkomati
Nickel Mine (“Nkomati”), which
was disposed of during the year ended
31 December 2021, and also includes
certain other mining and exploration
activities located in Russia and abroad.
In 2021 and 2020 the Other mining
segment’s sales primarily included 50%
share of the Group in the sales of metal
semi-products produced by Nkomati;
• Other non-metallurgical segment
includes resale of third-party refined
metal products, other trading
operations, transport services, supply
chain management, energy and utility,
research and other activities located
in Russia and abroad. Metal sales
to external customers include mainly
base metals sales in 2022 and precious
metals sales in 2020,
and approximately equal portion
of base and precious metals sales
in 2021. In 2021 and 2020 the Other
non-metallurgical segment also
included resale of 50% of metal semi-
products produced by Nkomati. Other
sales of the Other non-metallurgical
segment primarily included revenue
from passenger and freight air
transportation services and fuel sales.
Corporate activities of the Group do
not represent a reporting segment,
include primarily the headquarters’
general and administrative expenses
and treasury operations of the Group
and are presented as Unallocated.
The amounts in respect of reportable
segments in the disclosure below
are stated before intersegment
eliminations, excluding:
• balances of intercompany loans
and borrowings and interest accruals;
• balances of intercompany investments;
• accrual of intercompany dividends.
Amounts are measured on the same basis
as those in the consolidated financial
statements.
The following tables present revenue,
measure of segment profit or loss
(EBITDA) and other segment information
from continuing operations regarding
the Group’s reportable segments
for the years ended 31 December 2022, 20
21 and 2020, respectively.
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277
or the y
ear
ded31 December 20
F
en
22
Revenue from external customers
Metal sales
Other sales
Intersegment revenue
Metal sales
Other sales
Total revenue
Segment EBITDA
Unallocated
Consolidated EBITDA
Depreciation and amortisation
Impairment of non-financial
assets, net
Finance costs, net
Foreign exchange gain, net
Income from investments
and loss from disposal
of subsidiaries
Profit be ore tax
Other material cash
and non-cash items
purchase of property, plant
and equipment and intangible
assets
Depreciation and amortisation
Impairment of non-financial
assets/(reversal of impairment)
Change in provisions
and allowances
GMK Group
South cluster
KGMK Group
NN Harjavalta
GRK Bystrinskoye
Other mining
Other
non-metallurgical
Eliminations
Total
5,213
246
6,405
378
12,242
4,316
–
5
728
239
972
450
7,556
32
2,862
1
10,451
3,915
1,741
18
603
1
2,363
157
1,160
1
135
29
1,325
934
–
–
–
1
1
(11)
403
501
3
651
1,558
9
–
–
(10,736)
(1,300)
(12,036)
(9)
GMK Group
South cluster
KGMK Group
NN Harjavalta
GRK Bystrinskoye
Other mining
Other
non-metallurgical
Unallocated
3,307
298
350
741
72
198
57
4
–
23
2
13
22
24
–
–
72
148
(1)
2
10
–
4
3
239
33
9
1
–
–
–
19
16,073
803
–
–
16,876
9,761
(1,064)
8,697
(1,026)
(90)
(493)
251
40
7,379
Total
4,298
1,026
90
236
Annual ReportNornickelAdditional information7/72022 278
279
or the y
F
31 December 20
ear ended
21
Revenue from external
customers
Metal sales
Other sales
Intersegment revenue
Metal sales
Other sales
Total revenue
Segment EBITDA
Unallocated
Consolidated EBITDA
Depreciation and amortisation
Impairment of non-financial
assets, net
Finance costs, net
Foreign exchange loss, net
Income from investments
and loss from disposal
of subsidiaries and foreign
joint operation
Profit be ore tax
Other material cash
and non-cash items
purchase of property, plant
and equipment and intangible
assets
Depreciation and amortisation
Impairment of non-financial
assets/(reversal of impairment)
Change in provisions
and allowances
GMK Group
South cluster
KGMK Group
NN Harjavalta
GRK Bystrinskoye
Other mining
Other
non-metallurgical
Eliminations
Total
6,480
188
4,852
316
11,836
5,456
–
1
618
148
767
397
7,687
26
2,179
1
9,893
3,758
1,106
7
380
–
1,493
59
1,200
3
109
34
1,346
1,076
28
–
–
–
28
(16)
602
524
–
407
1,533
11
–
–
(8,138)
(906)
(9,044)
716
GMK Group
South cluster
KGMK Group
NN Harjavalta
GRK Bystrinskoye
Other mining
Other
non-metallurgical
Unallocated
2,002
304
205
622
(101)
760
30
–
6
84
137
19
26
12
–
–
62
122
2
1
12
1
–
–
153
57
10
–
–
–
–
110
17,103
749
–
–
17,852
11,457
(945)
10,512
(928)
(48)
(279)
(53)
81
9,285
Total
2,764
928
48
896
Annual ReportNornickelAdditional information7/72022 280
281
or the y
F
31 December 20
ear ended
20
Revenue to external
customers
Metal sales
Other sales
Intersegment revenue
Metal sales
Other sales
Total revenue
Segment EBITDA
Unallocated
Consolidated EBITDA
Depreciation and amortisation
Impairment of non-financial
assets, net
Finance costs, net
Foreign exchange loss, net
Income from investments
and loss from disposal
of subsidiaries
Profit be ore tax
Other material cash
and non-cash items
purchase of property, plant
and equipment and intangible
assets
Depreciation and amortisation
Impairment of non-financial
assets, net
Change in provisions
and allowances
GMK Group
South cluster
KGMK Group
NN Harjavalta
GRK Bystrinskoye
Other mining
Other
non-metallurgical
Eliminations
Total
5,427
156
6,907
210
12,700
6,171
–
–
532
162
694
407
6,897
27
2,001
1
8,926
1,757
949
5
354
–
1,308
70
897
3
98
6
1,004
717
129
8
–
–
137
(14)
678
369
–
340
1,387
31
–
–
(9,892)
(719)
(10,611)
(556)
GMK Group
South cluster
KGMK Group
NN Harjavalta
GRK Bystrinskoye
Other mining
Other
non-metallurgical
Unallocated
1,275
596
43
2,362
114
28
–
–
155
152
264
(14)
17
32
–
–
98
110
1
–
2
1
–
22
99
24
–
1
–
–
–
106
14,977
568
–
–
15,545
8,583
(932)
7,651
(943)
(308)
(879)
(1,034)
92
4,579
Total
1,760
943
308
2,477
Annual ReportNornickelAdditional information7/72022 282
283
The following tables present assets and liabilities of the Group’s reportable segments at 31 December 2022, 2021 and 2020, respectively.
t 31 December 20
A
22
Intersegment assets
Segment assets
Total segment assets
Unallocated
Total assets
Intersegment liabilities
Segment liabilities
Total segment liabilities
Unallocated
Total liabilities
t 31 December 20
A
21
Intersegment assets
Segment assets
Total segment assets
Unallocated
Total assets
Intersegment liabilities
Segment liabilities
Total segment liabilities
Unallocated
Total liabilities
GMK Group
South cluster
KGMK Group
NN Harjavalta
GRK Bystrinskoye
Other mining
Other
non-metallurgical
Eliminations
1,345
15,446
16,791
503
3,606
4,109
143
1,117
1,260
25
352
377
2,287
4,364
6,651
715
493
1,208
597
643
1,240
799
73
872
133
1,546
1,679
4
161
165
–
55
55
1
65
66
103
1,796
1,899
2,561
322
2,883
(4,608)
(1,240)
(5,848)
(4,608)
–
(4,608)
GMK Group
South cluster
KGMK Group
NN Harjavalta
GRK Bystrinskoye
Other mining
Other
non-metallurgical
Eliminations
804
11,605
12,409
205
2,676
2,881
60
827
887
32
250
282
635
3,111
3,746
739
578
1,317
188
731
919
508
64
572
39
1,508
1,547
7
135
142
–
98
98
1
72
73
60
1,266
1,326
294
1,319
1,613
(1,786)
(1,445)
(3,231)
(1,786)
–
(1,786)
Total
–
23,727
23,727
2,068
25,795
–
5,072
5,072
12,156
17,228
Total
–
17,701
17,701
5,734
23,435
–
5,094
5,094
13,553
18,647
Annual ReportNornickelAdditional information7/72022 284
285
t 31 December 20
A
20
GMK Group
South cluster
KGMK Group
NN Harjavalta
GRK Bystrinskoye
Other mining
Other
non-metallurgical
Eliminations
2,848
10,150
12,998
350
3,794
4,144
162
412
574
24
129
153
720
3,440
4,160
2,645
322
2,967
Intersegment assets
Segment assets
Total segment assets
Unallocated
Total assets
Intersegment liabilities
Segment liabilities
Total segment liabilities
Unallocated
Total liabilities
7. METAL SALES
The Group’s metal sales to external customers are detailed below (based on external customers’ locations):
or the y
F
ear en
Europe
Asia
North and South America
Russian Federation and CIS
2022
7,522
4,966
2,335
1,250
16,073
ded 31 Dec
ember
2021
9,036
4,688
2,647
732
17,103
165
480
645
266
84
350
2020
6,755
5,266
2,400
556
14,977
Revenue from metal sales for the year
ended 31 December 2022 included net
loss of
USD (64) million in respect of forward
contracts measured at fair value that
are expected to be settled by physical
delivery or on a net basis (for the year
ended 31 December 2021: net loss
in the amount of
USD (41) million and for the year ended
31 December 2020: net loss in the amount
of
USD (104) million).
For the year ended
31 December 2022 metal revenue
included net gain of USD35 million
from price adjustments in respect
of certain provisionally priced contracts,
primarily for sale of nickel (for the year
ended 31 December 2021 primarily for sale
of rhodium and other metals: net gain
in the amount of
USD25 million and for the year ended
31 December 2020 primarily for sale
of palladium: net gain in the amount
of USD38 million).
109
1,526
1,635
8
107
115
14
49
63
–
79
79
45
1,150
1,195
770
1,139
1,909
(4,063)
(2,020)
(6,083)
(4,063)
–
(4,063)
Total
–
15,187
15,187
5,519
20,706
–
5,654
5,654
10,377
16,031
8. COST OF METAL SALES
Cash operating costs
Labour
Mineral extraction tax and other levies
Materials and supplies
Third party services
Purchases of refined metals for resale
Transportation expenses
Fuel
Electricity and heat energy
Purchases of raw materials and semi-products
Export custom duties
Other costs
Total cash operating costs
Depreciation and amortisation
Increase in metal inventories
Total
or the y
F
ear en
2022
2,123
1,192
1,069
784
437
275
166
136
33
–
326
6,541
1,015
(1,448)
6,108
ded 31 Dec
ember
2021
2020
1,406
1,307
627
715
410
581
130
122
118
95
442
228
4,874
843
(660)
5,057
248
731
276
482
90
109
151
298
–
194
3,886
845
(231)
4,500
Annual ReportNornickelAdditional information7/72022 286
287
9. GENERAL AND ADMINISTRATIVE EXPENSES
or the y
F
ear en
Staff costs
Third party services
Depreciation and amortisation
Taxes other than mineral extraction tax and income tax
Transportation expenses
Other
Total
10. SELLING AND DISTRIBUTION EXPENSES
2022
833
230
107
94
9
80
1,353
or the y
F
ear en
Transportation expenses
Marketing expenses
Staff costs
Other
Total
11. OTHER OPERATING EXPENSES, NET
2022
100
52
33
65
250
or the y
F
ear en
Social expenses (Note 27)
Environmental provisions (Note 26)
Loss on disposal of property, plant and equipment
Change in other provisions and liabilities
Expenses on industrial incidents response
Change in provision on production facilities shut down
(Note 26)
2022
407
93
70
43
35
14
ded 31 Dec
ember
2021
577
191
83
76
18
44
989
2020
529
142
67
69
18
44
869
ded 31 Dec
ember
2021
2020
81
48
23
39
191
ded 31 Dec
ember
2021
1,048
176
35
(3)
69
(3)
72
44
19
32
167
2020
505
2,242
19
24
–
(10)
or the y
F
ear en
Change in decommissioning obligations (Note 26)
Other, net
Total
12
4
678
12. FINANCE COSTS, NET
or the y
F
ear en
Interest expense, net of amounts capitalised
Unwinding of discount on provisions and payables
Loss/(gain) from currency conversion operations
Fair value loss/(gain) on the cross-currency interest rate
swap contracts
Interest expense on lease liabilities
Changes in fair value of other non-current and other
current liabilities
Income received as a result of early debt repayment
Other, net
Total
13. INCOME FROM INVESTMENTS
2022
330
185
111
18
16
–
(172)
5
493
ded 31 Dec
ember
(5)
(32)
1,285
ded 31 Dec
ember
2021
225
59
(24)
(68)
15
66
–
6
279
Interest income on bank deposits
Other, net
Total
2022
133
17
150
or the y
F
ear en
ded 31 Dec
ember
2021
51
1
52
2
(45)
2,737
2020
364
61
(8)
182
12
262
–
6
879
2020
43
30
73
Annual ReportNornickelAdditional information7/72022 288
289
14. INCOME TAX EXPENSE
Current income tax expense
Deferred tax expense/(benefit)
Total income tax expense
or the y
F
ear en
2022
1,306
219
1,525
A reconciliation of theoretic income
tax, calculated at the statutory rate
in the Russian Federation, the location
of major production assets of the Group,
to the amount of actual income tax
expense recognised in the consolidated
income statement is as follows:
or the y
F
ear en
Profit before tax
Income tax at statutory rate of 20%
Changes in unrecognised deferred tax assets
Non-deductible social expenses
Effect of different tax rates of subsidiaries
Income tax provision related to the compensation
of environmental damages
Tax effect of other reserves and liabilities
Tax effect of other permanent differences
Total income tax expense
2022
7,379
1,476
36
67
(13)
–
40
(81)
1,525
DEFERRED TAX BALANCES
t 31
A
December
2021
in in
Recognised
come
statement
Recognised
in oth
er
comprehensive
income
Disposed
on disposal
of
subsidiaries
of tr
Effect
anslation
presentation
currency
o
t
t 31
A
December
2022
Property, plant
and equipment,
right-of use assets
Inventories
Trade and other
receivables
Decommissioning
obligations
Environmental
provisions
Other provisions
Loans
and borrowings,
trade and other
payables, lease
liabilities
Other assets
Other liabilities
Tax loss
carry-forwards
Net deferred tax
(assets)/liabilities
490
110
(174)
3
(115)
(6)
(89)
(145)
15
33
(106)
(94)
15
(28)
16
5
30
58
8
24
(19)
219
–
–
–
–
–
–
–
–
7
–
7
(15)
8
593
–
–
–
–
–
21
–
(5)
(1)
–
(44)
21
(2)
(2)
1
(51)
1
–
11
(57)
(203)
(4)
(101)
(3)
(58)
(117)
24
59
(115)
75
ded 31 Dec
ember
2021
1,695
616
2,311
ded 31 Dec
ember
2021
9,285
1,857
15
177
(45)
460
–
(153)
2,311
2020
1,685
(740)
945
2020
4,579
916
14
93
(38)
–
–
(40)
945
In 2022 tax effect of other permanent
differences was mainly represented
by an income tax rate credit applicable
to a Group’s subsidiary and was partially
offset, in approximately equal parts,
by unrecognized losses of Group`s
foreign subsidiaries and unrecognised
expenses for the disposal of investments
in the total amount of USD100 million
(in 2020 and 2021: was represented mainly
by the income tax rate credit applicable
to a Group’s subsidiary).
The corporate income tax rates in other
countries where the Group has a taxable
presence vary from 0% to 30%.
Annual ReportNornickelAdditional information7/72022 290
291
Property, plant
and equipment, right-of use
assets
Inventories
Trade and other receivables
Decommissioning
obligations
Environmental provisions
Other provisions
Loans and borrowings, trade
and other payables, lease
liabilities
Other assets
Other liabilities
Tax loss carry-forwards
Net deferred tax (assets)/
liabilities
t 31
A
December
2020
in in
Recognised
come
statement
Recognised
in oth
er
comprehensive
income
of tr
o pr
t
Effect
anslation
esentation
currency
t 31
A
December
2021
389
104
(448)
6
(94)
(416)
(51)
(117)
21
21
(23)
(712)
285
(3)
(22)
407
(38)
(37)
6
11
(97)
616
–
–
–
–
–
–
–
–
2
–
2
(3)
(11)
–
1
3
–
9
(12)
(1)
14
–
490
(174)
3
(115)
(6)
(89)
(145)
15
33
(106)
(94)
t 1 Januar
A
y
2020
in in
Recognised
come
statement
Recognised
in oth
er
comprehensive
income
of tr
o pr
t
Effect
anslation
esentation
currency
t 31
A
December
2020
Property, plant
and equipment, right-of use
assets
492
(9)
Inventories
(279)
(258)
Trade and other receivables
Decommissioning
obligations
Environmental reserves
Other provisions
Loans and borrowings, trade
and other payables, lease
liabilities
Other assets
Other liabilities
(10)
(113)
–
–
(153)
22
36
16
7
(439)
(50)
1
(5)
(6)
–
–
–
–
–
–
–
–
–
(94)
389
89
–
12
23
(1)
35
4
(9)
(448)
6
(94)
(416)
(51)
(117)
21
21
Deductible temporary differences
Tax loss carry-forwards
Total
Deferred tax assets have not been
recognised in respect of these items
because it is not probable that future
taxable profit will be available against
which the Group can utilise the benefits
therefrom.
t 1 Januar
A
y
2020
in in
Recognised
come
statement
Recognised
in oth
er
comprehensive
income
of tr
o pr
t
Effect
anslation
esentation
currency
t 31
A
December
2020
Tax loss carry-forwards
(33)
3
Net deferred tax (assets)/
liabilities
(38)
(740)
–
–
7
66
(23)
(712)
Accounting for foreign exchange
differences for tax purposes
due to changes in legislation is presented
in Note 34.
Certain deferred tax assets and liabilities
have been offset to the extent they
relate to taxes levied on the Group’s
entities which entered into the tax
consolidation group in 2020 and 2021.
Deferred tax assets and liabilities
are presented on a gross basis
in 2022 due to the cancellation
of the agreement on the consolidated
group of taxpayers from 1 January 2023.
Deferred tax balances presented
in the consolidated statement of financial
position were as follows:
Deferred tax liabilities
Deferred tax assets
Net deferred tax liabilities/(assets)
UNRECOGNISED DEFERRED TAX ASSETS
Deferred tax assets have not been recognised as follows:
t 31 Dec
A
ember
2022
415
(340)
75
2022
150
124
274
2021
73
(167)
(94)
t 31 Dec
A
ember
2021
194
201
395
2020
43
(755)
(712)
2020
218
182
400
At 31 December 2020 and 31 December 2
021 a deferred tax asset of USD136 million
and USD135 million, respectively, relating
to tax losses of prior years on disposal
of shares of OJSC “Third Generation
Company of the Wholesale Electricity
Market”, was not recognised as it had
occurred before the Company joined
the tax consolidation group.
Deferred tax assets have not been
recognised in respect of these items
because it is not probable that future
taxable profit will be available against
which the Group can utilise the benefits
therefrom.
Annual ReportNornickelAdditional information7/72022 292
293
At 31 December 2020 and 31 December 2
021 a deferred tax asset of USD136 million
and USD135 million, respectively, relating
to tax losses of prior years on disposal
of shares of OJSC “Third Generation
Company of the Wholesale Electricity
Market”, was not recognised as it had
occurred before the Company joined
the tax consolidation group.
Taking into account the termination
of the institution of the tax consolidation
group from 1 January 2023 and the amo
unt of tax losses potentially recoverable
before 1 January 2025, the Group asseses
this unrecognised deferred tax asset
at USD38 million at 31 December 2022.
The remaining part of the deferred tax
asset in the amount of USD105 million
is currently assesed by the Group
as non-recoverable, taking into account
the features of determining the result
of the disposal of shares of OJSC “Third
Generation Company of the Wholesale
Electricity Market” in the Company’s
tax accounting and the procedure
for recognizing tax losses on completed
transactions with securities that arose
before 31 December 2014.
At 31 December 2022 unrecognis
ed deferred tax assets in the amount
of USD86 million related to other tax
loss carry-forwards may be recognised
without expiry due to specific rules stated
by art. 283 “Carry-Forward Of Losses”
of the Tax code of the Russian Federation
(31 December 2021: USD66 million
and 31 December 2020: USD222 million).
At 31 December 2022, the Group did not
recognise a deferred tax liability in respect
of taxable temporary differences
of USD6,611 million (31 December 2021:
USD3,499 million and 31 December 2020:
USD2,031 million) associated
with investments in subsidiaries,
because management believes that
it is in a position to control the timing
of reversal of such differences and does
not expect its reversal in foreseeable
future.
15. PROPERTY, PLANT AND EQUIPMENT
Non-mining assets an
d r
ight-of-use assets
Buildings,
facilities
infrastructure
d
an
Machinery,
equipment
d tr
ansport
an
Other
Capital
construction-
in-progress
Total
an
d min
Mining assets
e
development
cost
Cost
Balance
at 1 January 2020
Additions
Transfers
Change
in decommissioning
provision
Additions of right-
of-use assets
and remeasurement
of the lease liability
Disposed on disposal
of subsidiary (Note 21)
Acquired on acquisition
of subsidiaries
Disposals
9,976
3,560
4,106
295
1,560
19,497
943
–
42
–
(68)
–
(32)
–
192
2
(9)
–
25
–
361
–
69
–
1
–
21
–
5
–
–
942
1,885
(574)
–
–
–
–
–
44
65
(68)
26
(25)
(29)
(2)
(12)
(100)
Other
(31)
10
20
(1)
(9)
(11)
Non-mining assets an
d r
ight-of-use assets
Effect of translation
to presentation
currency
Balance
at 31 December 20
20
Additions
Transfers
Change
in decommissioning
provision
Additions of right-
of-use assets
and remeasurement
of the lease liability
Disposals
Other
Effect of translation
to presentation
currency
Balance
at 31 December 20
21
Additions
Transfers
Change
in decommissioning
provision
Additions of right-
of-use assets
and remeasurement
of the lease liability
(1,557)
(567)
(645)
(46)
(244)
(3,059)
9,273
3,188
3,883
272
1,663
18,279
1,237
–
134
–
(68)
(3)
(82)
–
302
21
7
(55)
(6)
(21)
–
465
–
18
–
26
–
8
1,750
2,987
(793)
–
–
–
155
33
(107)
(51)
(17)
(298)
(2)
(22)
(1)
(2)
–
(12)
(21)
(148)
10,491
3,436
4,235
252
2,582
20,996
1,703
–
(34)
–
437
(27)
–
–
2,756
4,459
787
160
(1,384)
–
–
–
(61)
167
–
–
–
125
27
15
Disposals
(87)
(79)
(179)
(11)
(22)
(378)
Annual ReportNornickelAdditional information7/72022 Non-mining assets an
d r
ight-of-use assets
Non-mining assets an
d r
ight-of-use assets
21
410
4
140
16
(28)
135
6
(13)
129
–
820
Effect of translation
to presentation
currency
Balance
at 31 December 20
21
40
8
12
1
2
63
(3,806)
(1,719)
(2,510)
(130)
(132)
(8,297)
12,504
4,036
5,021
394
4,048
26,003
Charge for the year
(582)
(183)
(424)
(48)
Disposals
Impairment loss, net
Other
Effect of translation
to presentation
currency
Balance
at 31 December 20
22
Carrying value
t 31 December 20
t 31 December 20
t 31 December 20
A
A
A
20
21
22
77
(50)
(2)
(172)
65
(17)
(2)
(93)
91
(12)
(5)
7
2
7
(91)
(4)
–
9
(1,237)
249
(13)
(90)
–
(2)
(2)
(362)
(4,535)
(1,949)
(2,951)
(166)
(138)
(9,739)
5,969
6,685
7,969
1,510
1,717
1,615
1,725
133
122
1,535
10,762
2,450
12,699
2,087
2,070
228
3,910
16,264
Capitalised borrowing costs for the year
ended 31 December 2022 amounted
to USD 277 million (for the year ended
31 December 2021: USD95 million
and for the year ended 31 December 2020:
USD118 million). The capitalisation
rate used to determine the amount
of borrowing costs was 5.05% per annum
for the year ended 31 December 2022
(for the year ended 31 December 2021:
3.12% and for the year ended
31 December 2020: 4.10%).
At 31 December 2022 mining assets
and mine development cost included
USD3,738 million of mining assets
under development (31 December 2021:
USD2,560 million and 31 December 2020:
USD2,593 million).
294
295
Other
Effect of translation
to presentation
currency
Balance
at 31 December 20
22
Accumulated
depreciation
and impairment
Balance
at 1 January 20
20
Charge for the year
Disposals
Impairment loss, net
Disposed on disposal
of subsidiary (Note 21)
Other
Effect of translation
to presentation
currency
Balance
at 31 December 20
20
Charge for the year
Disposals
Impairment loss, net
Other
Non-mining assets an
d r
ight-of-use assets
Buildings,
facilities
infrastructure
d
an
Machinery,
equipment
d tr
ansport
an
Other
Capital
construction-
in-progress
Total
an
d min
Mining assets
e
development
cost
(3,159)
(1,760)
(2,286)
(139)
(160)
(7,504)
(466)
27
(247)
50
28
463
(175)
(338)
(24)
25
(18)
–
(10)
1
–
–
–
–
9
(1,003)
80
(2)
(308)
–
–
50
9
359
23
25
1,159
18
(41)
–
(9)
289
(3,304)
(1,678)
(2,268)
(139)
(128)
(7,517)
(479)
57
(123)
3
(179)
(357)
(24)
51
75
4
89
13
1
32
(2)
2
–
5
(11)
–
(1,039)
234
(48)
10
Annual ReportNornickelAdditional information7/72022 296
297
At 31 December 2022 non-mining assets
included USD39 million of investment
property (31 December 2021:
USD38 million and 31 December 2020:
USD39 million).
Impairment
As at 31 December 2022, the Group
performed an impairment analysis
of assets and found no assets subject
to economic impairment, except
for the ore mining and processing assets
of KGMK, described below.
In 2020 a federal law set a 3.5 times
increase of mineral extraction tax
on the types of ores mined by the Group.
The Group assessed this change in the tax
legislation as an indicator for impairment
of one of the cash-generating units within
JSC “Kolskaya GMK”: KGMK ore mining
and processing operations.
The recoverable amount of the cash-
generating unit was determined based
on value in use calculations. As a result
of the impairment test the carrying value
of KGMK ore mining and processing
production assets in the amount
of USD264 million were fully impaired
as at 31 December 2020. At 31 D
ecember 2022 and 31 Decembe
r 2021 the Group concluded that
the recoverable amount didn’t change
and recognised further impairment
in respect of additions to property, plant
and equipment in the cash-generating
unit. The impairment loss in the amount
of USD2 million was recognised within
impairment of non-financial assets
in the consolidated income statement
for the year ended 31 December 2022
(31 December 2021: USD137 million
and 31 December 2020: USD264 million).
The most significant estimates
and assumptions used in determination
of value in use are as follows:
• Future сash flows were projected
based on budgeted amounts,
taking into account actual results
for the previous years. Forecasts
were assessed up to 2047.
Measurements were performed based
on discounted cash flows expected
to be generated by a separate cash-
generating unit;
• Management used adjusted
commodities price forecasts
for copper-nickel concentrate
price forecast. Prices adjustments
were made based on current contract
terms;
•
• Production information was primarily
based on internal production reports
available at the date of impairment
test and management’s assumptions
regarding future production levels;
Inflation indices and foreign currency
trends are in general consistent
with external sources of information.
Inflation used was projected within
2.5-6.9% (31 December 2021: 3.0-4.6%
and 31 December 2020: 3.6-4.5%),
exchange rates USD/RUB were within
the range of 76.68-89.79
(31 December 2021: 72.23-84.76 and 31 D
ecember 2020: 72.02-84.76);
• A pre-tax nominal discount rate
of 19.1% (31 December 2021: 12.2%
and 31 December 2020: 13.7%)
was calculated based on weighted
average cost of capital and reflects
management’s estimates of the risks
specific to the cash-generating unit.
Since 2021 the Group developed
and partially implemented optimization
plans in order to increase KGMK ore
mining and processing operations’ cash
flows and mitigate the negative impact
of higher mineral extraction tax.
During the year ended
31 December 2022 the Group recognised
additional impairment losses
in the amount of USD88 million in respect
of specific individual assets (for the year
ended 31 December 2021: USD26 million
and for the year ended 31 December 2020:
USD3 million).
The Group didn’t identify any indicators
of impairment in respect to other
cash generating units (CGUs)
as at 31 December 2022.
In 2015 the Group recognised the gas
extraction assets as a separate cash-
generating unit, with its value in use
determined using a discounted cash flow
model at each subsequent reporting date.
As a result of the performed assessment
of the value in use, an impairment
loss of USD41 million was recognised
in the consolidated income statement
for the year ended 31 December 2020.
During the year ended
31 December 2021 due to change
in circumstances and changes
in the operating environment the Group
reviewed the aggregation of assets
into a separate cash-generating unit.
As a result, the gas extraction assets
were included in a cash-generating
unit, which includes operations
of the core production assets in Norilsk.
The Group did not identify indicators
of impairment in respect of the above
cash-generating unit and reversed
the previously recognised impairment
losses from the gas extraction assets, net
of respective accumulated depreciation
that would have been accrued had no
impairment been recognised, included
in reversal of impairment of non-
financial assets, in the consolidated
income statement in the amount
of USD115 million.
Right-of-use assets
Balance at 1 January 2020
Additions of right-of-use assets
and remeasurement of the lease
liability
Acquired on acquisition
of subsidiaries
Depreciation
Effect of translation to presentation
currency
Balanc
e at 31 December 20
20
Additions of right-of-use assets
and remeasurement of the lease
liability
Depreciation
Balanc
e at 31 December 20
21
Additions of right-of-use assets
and remeasurement of the lease
liability
Disposals (Note 21)
Depreciation
Effect of translation to presentation
currency
Balanc
e at 31 December 20
22
Buildings,
facilities
infrastructure
d
an
Machinery,
equipment
d tr
ansport
an
Other
Total
139
(9)
25
(20)
(20)
115
7
(30)
92
125
(4)
(34)
(9)
170
66
69
–
(12)
(12)
111
18
(21)
108
27
(69)
(8)
(22)
36
7
5
–
(3)
(1)
8
8
(2)
14
15
(3)
(4)
(2)
20
212
65
25
(35)
(33)
234
33
(53)
214
167
(76)
(46)
(33)
226
16. OTHER FINANCIAL ASSETS
Non-current
Loans issued and other receivables
Bank deposits
Investments in associates
Other
Total non-current
t 31 Dec
A
ember
2022
2021
2020
90
11
8
12
121
58
12
17
2
89
56
11
14
–
81
Annual ReportNornickelAdditional information7/72022 298
299
Current
t 31 Dec
A
ember
Derivative financial instruments at fair value through other
comprehensive income
Loans issued
Deposits
Total current
17. OTHER TAXES
30
10
–
40
8
1
34
43
1
57
–
58
t 31 Dec
A
ember
Taxes receivable
Value added tax recoverable
Advance payments of other taxes
Less: impairment of value added tax recoverable
Offset of taxes receivable and taxes payable paid on a net
basis
Other taxes receivable
Taxes payable
Social security contributions
Value added tax
Mineral extraction tax
Property tax
Other
Offset of taxes receivable and taxes payable paid on a net
basis
Other taxes payable
2022
2021
2020
584
10
594
(8)
(109)
477
135
112
78
18
105
(109)
339
410
9
419
(7)
–
412
51
75
50
19
74
–
269
434
17
451
(7)
–
444
48
199
15
12
55
–
329
18. INVENTORIES
Refined metals and other metal products
Work-in-process and semi-products
Less: allowance to net realisable value for finished goods
and work-in-process
Total metal inventories
Materials and supplies
Less: allowance for obsolete and slow-moving items
Materials an
d supplies, n
et
Inventories
t 31 Dec
A
ember
2022
1,967
1,870
(81)
3,756
1,257
(68)
1,189
4,945
2021
767
1,572
(78)
2,261
823
(58)
765
3,026
2020
547
1,159
(84)
1,622
644
(74)
570
2,192
At 31 December 2022 a part of the metal
semi-product stock in the amount
of USD163 million net of impairment
in the amount of USD92 million
was presented in other non-current
assets in line with the Group’s production
plans (31 December 2021: USD121 million
net of impairment of USD69 million
and 31 December 2020: USD73 million net
of impairment of USD57 million).
19. TRADE AND OTHER RECEIVABLES
t 31 Dec
A
ember
Trade receivables
Other receivables
Receivables from the registrar on transfer of dividends
to shareholders (Note 31)
Less: allowance for expected credit losses
Trade an
d oth
er receivables, net
2022
675
250
–
925
(79)
846
2021
345
171
–
516
(48)
468
2020
411
150
32
593
(56)
537
Annual ReportNornickelAdditional information7/72022 300
301
In 2022, 2021 and 2020, the average credit
period on metal sales varied from 0
to 30 days. Trade receivables are generally
non-interest bearing.
At 31 December 2022, 2021 and 2020 t
here were no material trade accounts
receivable which were overdue
or individually determined to be impaired.
At 31 December 2022 trade and other
receivables include USD563 million
of accounts receivable measured at fair
value through profit or loss, Level 2
of fair value hierarchy (31 December 2021:
USD248 million and 31 December 2020:
USD339 million). At the reporting
date the fair value is measured using
the forward market price corresponding
to the quotation period specified
in the contract.
The average credit period on sales
of other products and services for the year
ended 31 December 2022 was 39 days
(for the year ended 31 December 2021:
42 days and for the year ended
31 December 2020: 37 days). No interest
was charged on these receivables.
Included in the Group’s other receivables
at 31 December 2022 were debtors
with a carrying value of USD65 million
(31 December 2021: USD109 million
and 31 December 2020: USD83 million)
that were past due but not impaired.
Management of the Group believes that
these amounts are recoverable in full.
The Group did not hold any collateral
for accounts receivable balances.
Ageing of other receivables past due but
not impaired was as follows:
Less than 180 days
180-365 days
Movement in the allowance for expected credit losses was as follows:
Balance at the beginning of the year
Change in allowance
Accounts receivable written-off
Effect of translation to presentation currency
Balanc
e at the end of the y
ear
t 31 Dec
A
ember
2021
97
12
109
t 31 Dec
A
ember
2021
56
2
(10)
–
48
2022
54
11
65
2022
48
22
(2)
11
79
2020
75
8
83
2020
66
3
(2)
(11)
56
During the year ended 31 December 2022,
the Group recognised an impairment
of receivables under certain contracts
with foreign equipment suppliers
for the total amount of USD35 million,
for which the probability of recovery
is low despite the presence of collateral
due to the failure of both suppliers
and guarantors to meet their obligations.
If pre-trial recovery of compensation
of the receivables is not possible,
the Group plans to go to court.
20. CASH AND CASH EQUIVALENTS
Current accounts
• RUB
• USD
• CNY
• other
Bank deposits
• RUB
• USD
• CNY
• other
Other cash and cash equivalents
• RUB
• USD
• other
Total
t 31 Dec
A
ember
2022
266
591
209
70
74
584
57
–
3
28
–
2021
249
1,691
14
41
2,402
1,132
5
–
6
7
–
2020
41
3,744
64
56
39
1,237
2
6
–
–
2
1,882
5,547
5,191
Bank deposits
Interest rate on USD-denominated
deposits held in banks at 31 Decemb
er 2022 was in the range from 1.00%
to 3.00% (31 December 2021: 0.05%
to 0.88% and 31 December 2020: 0.15%
to 0.41%) per annum. Interest rate
on RUB-denominated deposits held
in banks at 31 December 2022 was 7.30%
(31 December 2021: from 7.20%
to 9.12% and 31 December 2020: 3.75%)
per annum. Interest rate on CNY-
denominated deposits held in banks
at 31 December 2022 was from 0.4%
to 2.20% (31 December 2021: 2.40%
and 31 December 2020: 3.80%) per annum.
21. DISPOSAL OF SUBSIDIARIES AND FOREIGN JOINT OPERATIONS
On 25 March 2022, the Group sold
its interest in the subsidiary JSC “Nordstar”
engaged in transportation services
for a consideration of RUB1 million
(USD0.02 million) resulting in a net cash
outflow from disposal of the subsidiary
recognised in the consolidated
statement of cash flows in the line Net
cash (outflow)/inflow from disposal
of subsidiaries. Loss on disposal
in the amount of USD110 million
was recognised in the consolidated
income statement for the year ended
31 December 2022.
With regard to suspended production
of the joint operations of Nkomati,
the Group reclassified the foreign
currency translation reserve of foreign
operations to the profit or loss
for the year ended 31 December 2021
in the amount of USD20 million.
In October 2021, the Group received
cash consideration in the amount
of USD51 million and incurred associated
costs in the amount of USD2 million
under the settlement agreement
in relation to the cancelled sale
of Nkomati. The amount was presented
in Disposal of foreign joint operations
in the consolidated income statement
and consolidated statement of cash flows.
Annual ReportNornickelAdditional information7/72022 302
303
In September 2020, the Group
sold a number of assets in Australia,
including Honeymoon Well nickel
project, held by the Group subsidiary
MPI Nickel Pty Ltd for a consideration
of USD29 million (AUD 40 million).
Net cash inflow from the disposal
of the subsidiary in the amount
of USD28 million was recognised
in the consolidated statement of cash
flows, net of costs to sell in the amount
of USD1 million. Gain on disposal
in the amount of USD19 million
was recognised in the consolidated
income statement.
22. SHARE CAPITAL
Authorised and issued
ordinary shares
At 31 December 2022 and 20
21 the number of the Group’s
authorized and issued shares taking
into account cancellation amounts to
152,863,397 and 153,654,624 respectiv
ely. At 31 December 2020 the number
of the Group’s authorised and issued
ordinary shares was 158,245,476.
On 11 August 2022, the extraordinary
General meeting of shareholders
of the Company decided to reduce
the Company’s share capital by cancelling
791,227 ordinary shares. The state
registration of the amendments
to the Company’s Charter related
Earnings per share
to the reduction of the Company’s share
capital was carried out on 17 October 2022.
The cancellation of treasury shares
was recognised in the consolidated
statement of changes in equity
for the year ended 31 December 2022.
On 27 April 2021, the Board of Directors
of the Company decided to acquire
the Company’s own outstanding
shares. The Company completed
acquisition of 5,382,079 ordinary
shares on 29 June 2021 and presented
the purchase of treasury shares
in the consolidated statement
of changes in equity in the amount
of USD2,075 million (RUB149,630 million).
Cash consideration was fully paid
and recognised in the consolidated
statement of cash flows in the amount
of USD2,068 million (RUB149,630 million)
at the USD/RUB exchange rates effective
on payment dates.
On 19 August 2021, the extraordinary
General meeting of shareholders
of the Company decided to reduce
the Company’s share capital by cancelling
4,590,852 ordinary shares. The state
registration of the amendments
to the Company’s Charter related
to the reduction of the Company’s share
capital was carried out on 14 October 2021.
The cancellation of treasury shares
was recognised in the consolidated
statement of changes in equity
for the year ended 31 December 2021.
or the y
ear en
ded 31 Dec
ember
F
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets
Weighted average number of shares outstanding
Shares outstanding at 1 January
152,863,397
158,245,476
158,245,476
June 2021: acquisition of own shares from shareholders
–
(5,382,079)
–
2022
2021
2020
or the y
ear en
ded 31 Dec
ember
F
Shares outstandin
g at 31 Dec
ember
Weighted avera
in the calculation of b
asic an
d dilut
ding shares used
ed earnings per share
ge number of outstan
152,863,397
152,863,397
158,245,476
152,863,397
155,502,830
158,245,476
23. NON-CONTROLLING INTEREST
At 31 December 2022, 2021 and 2020 a
ggregate financial information relating
to the subsidiary, LLC “GRK “Bystrinskoye”,
that has material non-controlling interest,
before any intra-group eliminations,
is presented below:
d dilut
ed earnings per share (US Dollars per
Basic an
share):
2022
35.7
2021
41.9
2020
21.4
Net assets attributable t
o n
on-controlling interest
The earnings and weighted average number of outstanding shares used in the calculation of basic and diluted earnings per share
are as follows:
or the per
iod attributable t
eholders
o shar
Profit
of the p
arent company
or the y
ear en
ded 31 Dec
ember
F
2022
5,458
2021
6,512
2020
3,385
Net profit for the year
Other comprehensive income/(loss) for the year
Total comprehensive income f
or the y
ear
Profit attributable to non-controlling interest
Other comprehensive income/(loss) attributable t
controlling interest
o n
on-
t 31 Dec
A
ember
2022
1,268
1,774
(88)
(86)
2,868
1,434
or the y
F
ear en
2022
793
90
883
396
45
2021
1,254
1,061
(66)
(65)
2,184
1,093
ded 31 Dec
ember
2021
924
(15)
909
462
(7)
2020
1,298
762
(718)
(67)
1,275
656
2020
497
(147)
350
248
(73)
Annual ReportNornickelAdditional information7/72022 The Group is obliged to comply
with a number of restrictive financial
and other covenants, including
maintaining certain financial ratios
and restrictions on pledging and disposal
of certain assets.
At 31 December 2022, loans were not
secured by property, plant and equipment
(31 December 2021 and 31 December 2020:
USD8 million).
25. LEASE LIABILITIES
Average borrowing rate during
, %
ded 31 Dec
th
ember
ear en
e y
Lease liabilities
Currency
RUB
2022
9.52%
2021
7.23%
2020
7.37%
USD
2.81%
4.10%
4.07%
EUR
6.88%
6.31%
6.20%
other
–
–
2.06%
Total lease liabilities
Less: current lease liabilities
Non-current lease liabilities
Maturity
2023-
2071
2024-
2032
2023-
2050
t 31 Dec
A
ember
2022
210
12
11
–
233
(43)
190
2021
113
107
15
–
235
(57)
178
2020
126
114
20
2
262
(59)
203
At 31 December 2022 lease liabilities with original maturity in excess of 15 years amounted to USD67 million (31 December 2021:
USD13 million and 31 December 2020: USD12 million).
304
305
Cash flows from operating activities
Cash flows used in investing activities
Cash flows used in financing activities
Net (decrease)/incre
ase in cash and cash equiv
alents
24. LOANS AND BORROWINGS
Currency
or flo
Fixed
ating
interest
rate
Average n
during th
ominal % r
e y
31 Dec
ate
ear ended
ember
or the y
F
ear en
2022
783
(650)
(177)
(44)
Maturity
ded 31 Dec
ember
2021
1,083
(407)
(675)
1
2020
619
(413)
(215)
(9)
t 31 Dec
A
ember
Unsecured
loans
Secured
loans
Total loans
2022
2021
2020
2022
2021
2020
USD
floating
3.17%
1.53%
1.99%
2023-2028
5,055
5,624
5,319
EUR
floating
0.99%
0.85%
0.85%
2023-2028
19
24
30
RUB
floating
12.83%
–
–
2023-2025
1,692
RUB
fixed
–
9.75%
9.75%
2022
–
–
4
–
8
6,766
5,652
5,357
Bonds
USD
fixed
3.38%
4.20%
4.39%
2023-2026
2,743
4,238
3,736
CNY
floating
3.75%
CNY
fixed
3.95%
–
–
–
–
2025
703
2025
562
–
–
–
–
RUB
fixed
8.48%
7.20%
8.85%
2024-2025
710
336
541
Total bonds
Total loans an
d bor
rowings
Less: current portion due within twelve months and presented as current loans
and borrowings
4,718
4,574
4,277
11,484
10,226
9,634
(4,295)
(1,610)
(12)
Non-current loans an
d bor
rowings
7,189
8,616
9,622
Annual ReportNornickelAdditional information7/72022 Effect of translation to presentation currency
(106)
306
307
26. PROVISIONS
Balance at 1 January 2020
Accruals
Utilization
Change in estimates
Unwinding of discount
Balanc
e at 31 December 20
20
Accruals
Utilisation
Change in estimates
Unwinding of discount
Effect of translation to presentation currency
Balanc
e at 31 December 20
21
Accruals
Utilisation
Change in estimate
Unwinding of discount
Effect of translation to presentation currency
Balanc
e at 31 December 20
22
including the current portion:
t 31 December 20
t 31 December 20
t 31 December 20
A
A
A
20
21
22
Decommissioning
Environmental
Tax
Other
Total
662
26
(16)
17
32
615
146
(24)
1
39
(9)
768
–
(32)
(36)
73
(37)
736
66
86
146
–
2,136
(48)
106
–
(113)
2,081
–
(1,984)
176
–
(14)
259
–
(18)
93
29
(13)
350
2,072
48
24
4
1
–
–
–
–
5
2
(1)
(1)
–
(1)
4
7
(4)
(4)
–
1
4
5
4
4
19
17
(9)
(6)
–
–
21
11
685
2,180
(73)
117
32
(219)
2,722
159
(20)
(2,029)
(3)
–
–
9
8
(4)
(7)
–
–
6
173
39
(24)
1,040
15
(58)
46
102
(49)
1,096
19
2,162
8
6
146
180
SIGNIFICANT EVENT – FUEL
SPILL IN NORILSK
On 29 May 2020, an incident occurred
at the site of heat and power plant No. 3
(HPP-3) in the Kayerkan neighbourhood
of Norilsk: diesel fuel storage reservoir
was damaged through sudden failure
of support posts, which resulted
in approximately 21.2 kt of diesel fuel
leakage. According to the Group’s
assessment, the incident was caused
by defects in design and construction,
as well as by unusually hot weather, which
led to the thawing of permafrost resulting
in sinking of support posts.
The incident resulted
in the contamination of nearby water
bodies and land in the area of leakage,
as well as damage to biological resources.
The main stage of clean-up works
following the incident was completed
in 2020.
On 10 September 2020 Yenisei
interregional administration
of the Federal Environment
Supervision Agency (Rosprirodnadzor)
filed a lawsuit to the Arbitration Court
of the Krasnoyarsk Territory against
Joint Stock Company Norilsk-Taimyr
Energy Company (JSC “NTEK”) claiming
compensation of damages to water
bodies and soil caused by diesel fuel
spill at HPP-3 in Norilsk in the amount
of RUB147.78 billion (USD1,943 million
at RUB/USD exchange rate at the date
of filing).
On 10 March 2021, in accordance
with the court decision on the lawsuit
filed by Rosprirodnadzor, the Group paid
RUB146.177 billion (USD1,968 million)
in compensation of damages to water
bodies and soil.
In 2021, expenditure for the compensation
was deducted against taxable profits.
On 3 December 2021, the Group
received a decision of the off-site tax audit
for the consolidated taxpayers group
for the first half of 2021 that invalidated
income tax deduction of the damages
compensation. Taking into consideration
all the facts and circumstances and based
on an assessment of the probability
of economic benefits outflows, the Group
recognised an income tax provision
in the amount of USD402 million offset
against income tax prepayments
at 31 December 2021. The Group’s appeal
filed in the first quarter of 2022 was not
satisfied. The provision was utilised during
the first quarter of 2022.
In April 2021, the Company’s
subsidiary, JSC“NTEK”, signed a three-
party agreement with the Ministry
of Environment Protection and Natural
Resources of the Krasnoyarsk
Territory and the Siberian Federal
University in order to develop, approve
and implement a set of measures
to remediate the damage caused
by the oil spill to the wildlife and broader
environment of the Krasnoyarsk Territory.
On 29 July 2021, Yenisei territorial
administration of the Federal Agency
for Fishery (Rosrybolovstvo) filed a lawsuit
for compensation of damages to aquatic
bioresources for the total amount
of RUB58.65 billion (USD810 million).
Subsequently, on 15 April 2022 the amount
of claims was increased by the Federal
Agency for Fishery to RUB58.96 billion
(USD725 million).
On 3 September 2021, during
the court hearing, the parties agreed
to proceed with the dispute settlement
by negotiating an amicable agreement,
which would include compensation
in kind of the damage caused to aquatic
life by constructing fish breeding plants,
artificially reproducing the affected
fish species and releasing the fry
into the water bodies.
On 22 July 2022, the court approved
the amicable agreement between
the parties. In accordance
with the agreement, JSC“NTEK” will fully
compensate the damage to aquatic
bioresources in kind by releasing
the fry of different fish species
(sturgeon, muksun, broad whitefish,
whitefish and nelma) to the water
bodies of the Norilskaya-Pyasino lake
and river system affected by the incident
in 2033–2050.
Before 2033, JSC “NTEK” plans an annual
early release of the Siberian sturgeon fry
to the Yenisey River starting 2023.
In addition, to ensure scientific support
of recovery measures JSC“NTEK” will
finance a research to be conducted
in 2023–2051 by Russian Federal
Research Institute of Fisheries
and Oceanography (VNIRO) to assess
the condition and habitat of water
bioresources.
The key assumptions for determining
the amount of liabilities under
the amicable agreement inherently
contain a high degree of uncertainty,
primarily due to the following: fishery
research results, the cost of construction
and operation of the fish breeding
infrastructure, operating expenses
related to the measures to be performed
at the Norilskaya-Pyasino lake and river
system, the future fry purchase prices,
the possibility of achieving a stable
recovery and reproduction of water
bioresources, macroeconomic
assumptions (including applicable
inflation rates and risk-free rates),
and the material effect of the discount
factor for longer terms.
On 2 December 2022, the Russian
Supreme Court received a cassation
appeal from the Prosecutor General’s
Office against judgements of lower
instance courts that upheld
and confirmed the legitimacy
of an amicable agreement between
the Federal Agency for Fishery
(Rosrybolovstvo), JSC NTEC and Russian
Federal Research Institute of Fisheries
and Oceanography (VNIRO)
in a lawsuit initiated by Rosrybolovstvo
seeking to recover RUB58.96 billion
(USD838 million) in compensation
for the damage to aquatic biological
resources as a result of the HPP-3 incident
in Norilsk. On 30 January 2023, a judge
of the Supreme Court ruled to reject
the submission of the cassation
appeal of the Prosecutor General’s
Office for a court hearing
by the Judicial Chamber for Economic
Disputes of the Supreme Court.
On 6 February 2023, the Prosecutor
General’s Office filed a complaint
against the ruling of the Supreme
Court to reject the submission
of the cassation appeal of the Prosecutor
General’s Office to a court hearing
by the Judicial Chamber for Economic
Disputes. As at the date of approval
of these consolidated financial
Annual ReportNornickelAdditional information7/72022 308
309
statements, the Group is assessing
the prospects of complaint consideration
by the Supreme Court.
In the year ended 31 December 2022,
the Group incurred clean-up
and remediation expenditures
amounting to USD16 million
(for the year ended 31 December 2021:
USD16 million). The Group continues
with the rehabilitation measures
and post-incident environmental
monitoring.
At 31 December 2022, 2021 and 2
020, the total discounted amount
of the provision in relation to the diesel
fuel spill at HPP-3 in Norilsk
was recognised in the environmental
provisions in the consolidated statement
of financial position.
The amount of the provision is subject
to a high degree of uncertainty and will
be adjusted in the future reporting
periods as new facts and circumstances
arise, including the review of the cost
forecast for environmental remediation,
changes in macroeconomic indicators,
and other factors. However, to the best
of its knowledge and in accordance
with the requirements of law, the Group
does not expect new significant claims
to be filed with respect to the HPP-3 fuel
spill in future periods.
Key assumptions used in the estimation of decommissioning obligations and environmental provisions were as follows:
Discount rates Russian entities
7.2% – 11.1%
8.2% – 8.7%
4,2% – 7%
Expected closure date of mines
up to 2125
up to 2054
up to 2057
2022
2021
2020
t 31 Dec
A
ember
Balance at 1 January 2020
Accruals of provision and payables
Utilisation and payment
Change in estimates
Unwinding of discount
Effect of translation to presentation currency
Balanc
e at 31 December 20
20
Accruals of provision and payables
Utilisation and payment
Change in estimates
Unwinding of discount
Effect of translation to presentation currency
Balanc
e at 31 December 20
21
Expected inflation over the period from 2023 to 2042
2.7% – 6.9%
2.8% – 4.9%
2,8% – 4,1%
Accruals of provision and payables
Expected inflation over the period from 2043 onwards
2.4% – 2.7%
2.5% – 2.8%
2.5% – 2.8%
Settlement of long-term provisions (at present value) is planned as follows:
t 31 Dec
A
ember
Due in years 2 – 5
Due in years 6 – 10
Due in years 11 – 15
Due in years 16 – 20
Due thereafter
Total
2022
2021
412
230
134
23
117
916
317
231
86
66
194
894
2020
228
88
62
82
100
560
27. SOCIAL LIABILITIES AND CONTINGENT SOCIAL COMITTMENTS
Social liabilities of the Group include social
provisions and payables relating to social
commitments of the Group.
The table below represents changes
in social liabilities of the Group
for the years ended 31 December 2022, 20
21 and 2020.
Utilisation and payment
Change in estimate
Unwinding of discount
Effect of translation to presentation currency
Balanc
e at 31 December 20
22
including the current portion:
t 31 December 20
t 31 December 20
t 31 December 20
A
A
A
20
21
22
t 31 Dec
A
ember
Due in years 2 – 5
Due in years 6 – 10
Due in years 11 – 15
Due in years 16 – 20
Due thereafter
Total
2022
320
213
77
2
1
613
2021
296
216
117
2
2
633
Social liabilities
Incl. Comprehensive plan
provision
89
494
(403)
11
5
(16)
180
1,079
(448)
(31)
18
(7)
791
475
(454)
(68)
78
(8)
814
96
158
201
–
13
–
–
–
–
13
517
(12)
(3)
4
(1)
518
–
(23)
(14)
50
(2)
529
13
48
100
2020
66
11
3
2
2
84
Annual ReportNornickelAdditional information7/72022 310
311
Carrying value of social provisions
is determined based on the discounted
cash flows required to settle the present
obligation. The discount rate was between
7.2% and 10.5% at 31 December 2022
(31 December 2021: 8.2% to 8.7%;
31 December 2020: 4.3% to 5.6%).
In 2017–2022, the Group entered
into several agreements
with the governments of the regions
where it operates, namely the Zabaikalsky
Territory, the Krasnoyarsk Territory
and the Murmansk Region. These
agreements imply the Group’s
financial commitments in respect
of the social and economic development
of the regions, including the construction
of social infrastructure facilities.
At 31 December 2022 the provision
recognised with respect to the above-
mentioned agreements in Social liabilities
in the consolidated statement of financial
position amounted to USD67 million
(31 December 2021: USD115 million
and 31 December 2020: USD61 million).
COMPREHENSIVE
SOCIAL AND ECONOMIC
DEVELOPMENT PLAN
FOR NORILSK
In February 2021, the Group entered
into a four-party agreement
with the Ministry for the Development
of the Russian Far East and Arctic,
the Krasnoyarsk Territory Government,
and the Norilsk Municipality to implement
comprehensive social and economic
development programmes in Norilsk.
In December 2021, the Government
of the Russian Federation approved
the Comprehensive Social and Economic
Development Plan for Norilsk
(the “Comprehensive Plan”), which
includes a schedule of mutual financial
commitments of the Government
of the Russian Federation, the Krasnoyarsk
Territory Government, and the Group
for the social and economic development
of the city up to 2035. The Comprehensive
Plan covers housing renovation,
the overhaul and modernisation
of the city’s engineering and utilities
infrastructure, construction, repair,
reconstruction and development of social
infrastructure facilities and resettlement
of Norilsk and Dudinka citizens to areas
with more favourable living conditions.
In addition, the Comprehensive
Plan provides for the preparation
and subsequent update of the Norilsk
development strategy setting
the city as a core hub for Taimyr
development, designing the concept
of regional tourism development
and implementation of support
programmes for small and medium-
sized businesses in Norilsk. The financial
commitments of the Company
for 2021–2035 amount to RUB81.3 billion
(USD1,094 million at the USD exchange
rate at 31 December 2021).
In line with the Group’s accounting
policy (Note 4), in respect of the part
of its obligations under the four-party
agreement and the Comprehensive Plan
amounting to RUB69.3 billion, the Group
recognised a provision in its consolidated
income statement for the year ended
31 December 2021 at the present
value of cash outflows in the amount
of RUB37.9 billion (USD514 million).
The remaining RUB12 billion
(USD162 million) in financial
commitments under the Comprehensive
plan are recognised in the consolidated
statement of financial position as part
of property, plant and equipment once
the expenditure is incurred.
At 31 December 2022, the Group
recognised USD2 million under
the Comprehensive Plan within property,
plant and equipment in its consolidated
statement of financial position.
In case of any changes to the nature,
timing or amount of financing
of particular measures stipulated
by the Comprehensive Plan during
its implementation, the Group will
update the amount of social provisions
in its consolidated financial statements
accordingly.
Apart from the financing committed
under the four-party partnership
agreement and the Comprehensive
Plan, in 2021 the Company announced
an additional financing programme
for the social and economic
development of Norilsk for RUB150 billion
(USD2,019 million). As of the date
the consolidated financial statements
are authorised for issue, the schedule,
amounts and terms of financing
of the programme’s individual activities,
as well as the mechanism for their
implementation, have not been approved.
The implementation of the programme
is subject to the Company’s verification
procedures and corporate approval, which
have not been received as of the date
these consolidated financial statements
were authorised for issue.
In the year ended 31 December 2022,
the Group also accrued USD121 million
(for the year ended 31 December 2021:
USD127 million; for the year ended
31 December 2020: USD198 million)
of social provisions under various social
programmes and contributions other
than those referred to above.
28. TRADE AND OTHER PAYABLES
Financial liabilities
Trade payables
Payables for acquisition of property, plant and equipment
Other creditors
Total fina cial liabilities
Non-financial liabilities
Advances received on contracts with customers
Total non-fina cial liabilities
Total
t 31 Dec
A
ember
2022
2021
2020
614
546
171
1,331
50
50
1,381
416
417
397
1,230
994
994
2,224
The maturity analysis for the Group’s financial liabilities that shows the remaining contractual maturities was as follows:
Due within 1 month
Due from 1 to 3 months
Due from 3 to 12 months
Total
29. EMPLOYEE BENEFIT OBLIGATIONS
Provision for annual leave
Wages, salaries and bonuses
Other
Total obligations
Less: non-current obligations
Current obligations
2022
950
340
41
1,331
2022
341
302
36
679
(94)
585
t 31 Dec
A
ember
2021
854
312
64
1,230
t 31 Dec
A
ember
2021
238
190
31
459
(42)
417
267
242
116
625
802
802
1,427
2020
322
246
57
625
2020
218
178
27
423
(22)
401
Annual ReportNornickelAdditional information7/72022 312
313
Defined contribution plans
Amounts recognised in the consolidated income statement in respect of defined contribution plans were as follows:
Dividends
or the per
f
iod
Declaration
period
Dividends declared
Dividends paid
or the y
F
ear en
Pension Fund of the Russian Federation
Mutual accumulated pension plan
Other
Total
2022
454
8
3
465
ded 31 Dec
ember
2021
325
6
5
336
2020
283
6
5
294
Per
share
RUB
Per
share
USD
Total
USD
million
Payment
period
Total USD
million
Total
USD million
9 months 2020
December 2020
623.35
8.50
1,346
December 2020
1,334
Annual 2019
May 2020
557.20
7.59
1,201
June 2020
1,264
9 months 2019
December 2019
604.09
9.66
1,529
January 2020
1,567
–
–
–
of dividen
Receipt
ds
not remitted
o ADR
t
holders
30. DERIVATIVE FINANCIAL INSTRUMENTS (CROSS-CURRENCY INTEREST RATE
SWAPS)
At 31 December 2022 the fair value
of the cross-currency interest rate swap
contracts was presented in non-current
liabilities in the amount of USD67 million
(31 December 2021: non-current
liabilities in the amount of USD72 million
and 31 December 2020: non-current
and current liabilities in the amount
of USD52 million and 84 million
respectively).
The fair value of cross-currency interest
rate swap contracts (Level 2 of fair value
hierarchy) is calculated as the present
value of future cash flows discounted
at the interest rates applicable
to the currencies of the corresponding
cash flows and available at the reporting
date. The fair value is subject to a credit
risk adjustment that reflects the credit
risk of the Group and of the other party
and is calculated based on credit spreads
derived from current tradable financial
instruments (Note 36).
At 31 December 2022 dividends
payable for 2021 not remitted
to American Depositary Receipt (ADR)
holders following the restrictions
of Presidential Decree of 5 March 2022
No. 95 and the decision of the Board
of Directors of the Central Bank
of 10 June 2022 and dividends payable
to minority shareholders of the Group’s
companies in the total amount
of USD496 million are recognized within
dividends payable in the consolidated
statement of financial position.
Dividends not received by ADR holders
were transferred to NPO JSC “The National
Settlement Depository” and subsequently
returned to the Group and remain
on demand by the holders.
At 31 December 2022 dividends paid
by the Company to the shareholders
registrar but not transferred
to shareholders bank accounts amounted
to USD0.3 million and were recognised
in trade and other receivables
(at 31 December 2021: USD0.3 million
and at 31 December 2020: USD32 million).
32. RELATED PARTIES TRANSACTIONS AND OUTSTANDING BALANCES
31. DIVIDENDS
Dividends declared and paid in Russian
roubles were translated to US dollars
using prevailing RUB/USD rates
at the declaration date and payment date,
respectively, as presented in the table
below.
Dividends
or the per
f
iod
Declaration
period
Dividends declared
Dividends paid
of dividen
Receipt
ds
not remitted
o ADR
t
holders
Per
share
RUB
Per
share
USD
Total
USD
million
Payment
period
Total USD
million
Total
USD million
Annual 2021
June 2022
1,166.22
18.94
2,895
June 2022
3,146
544
9 months 2021
December 2021
1,523.17
20.81
3,181
January 2022
3,050
Annual 2020
May 2021
1,021.22
13.86
2,193
June 2021
2,198
–
–
Related parties include major
shareholders and entities under their
ownership and control; associates,
joint ventures and joint operation;
and key management personnel.
The Group defines major shareholders
as shareholders, which have significant
influence over the Group activities.
The Company and its subsidiaries,
in the ordinary course of their business,
enter into various sale, purchase
and service transactions with related
parties. Transactions between
the Company and its subsidiaries, which
are related parties of the Company,
have been eliminated on consolidation
and are not disclosed in this note.
Transactions and outstanding
balances are included in the disclosure
starting the date the counterparty has
become a related party.
Details of transactions between the Group
and other related parties are disclosed
below.
Annual ReportNornickelAdditional information7/72022 314
315
Transactions
with related
parties
Loans
and borrowings
received
Loans
and borrowings
repaid
Purchase
of assets
and services
and other
operating
expenses
Fair value gain
on the cross-
currency
interest rate
swap contracts
Interest expense
accrued
Interest expense
repaid
Interest income
accrued
Interest received
Sales of goods
and services
and other
income
Outstanding
balances
with related
parties
Cash and cash
equivalents
Loans
and borrowings
Entities under ownership an
of the Gr
oup’s major shareholders
d c
ontrol
Associates, joint ventures an
d joint oper
ation
Entities under ownership an
d c
ontr
shareholders
ol of the Gr
oup’s major
Associates, joint ventures
d joint oper
ation
or the y
F
or the y
F
or the y
F
or the y
F
or the y
F
ear
ended
ember
2022
ear
ended
ember
2021
ear
ended
ember
2020
ear
ended
ember
2022
ear
ended
ember
2021
31 Dec
31 Dec
31 Dec
31 Dec
31 Dec
or the y
F
31 Dec
ear
ended
ember
2020
Accounts
payable
and lease
liabilities
Derivatives
(liabilities)
Accounts
receivable
26
21
–
13
–
1
19
–
–
an
–
–
1
5
–
10
15
–
7
1,025
800
116
41
10
10
4
4
1
–
–
103
–
–
–
–
–
–
–
–
92
–
–
–
–
–
–
–
–
36
–
–
–
–
–
12
–
–
–
–
66
120
–
–
–
–
–
–
–
–
–
–
–
–
At 31 December 2022 the Group received
guarantees in respect of advances
to its suppliers from a related party
amounted to 42 million USD.
During the year ended 31 December 2021,
the Company acquired own shares
from the entities under ownership
and control of the Group’s major
shareholders for a consideration
of USD1,421 million (Note 22).
During the year ended 31 December 2020,
the Group acquired from a related party
an entity, which holds the right-of-use
assets and lease liabilities in the amount
of USD25 million.
33. COMMITMENTS
Transactions with related parties
are made on terms equivalent to those
that prevail in arm’s length transactions.
31 December 2021: USD91 million
and for the year ended 31 December 2020:
USD78 million).
Compensation of key
management personnel
Key management personnel
of the Group consists of members
of the Management Board and the Board
of Directors. For the year ended
31 December 2022 remuneration of key
management personnel of the Group
included salary and performance bonuses
amounted to USD80 million (for the year
ended
Capital commitments
Leases
At 31 December 2022, contractual
capital commitments amounted
to USD2,299 million (31 December 2021:
USD3,338 million and 31 December 2020:
USD2,021 million).
The Group is a party to a number
of lease contracts with variable lease
payments that do not depend on an index
or market rental rates, and hence
are not recognised as lease liabilities.
At 31 December 2022 total future non-
discounted variable lease payments
under such contracts with the maturity
up to 2071 amounted to USD358 million
(31 December 2021: USD322 million
and 31 December 2020: USD316 million).
At 31 December 2022 there were no future
non-discounted lease payments for leased
items not transferred to the Group
as a lessee and not recognised
as lease liabilities (31 December 2021:
USD36 million and 31 December 2020:
none).
Entities under ownership an
d c
ontr
shareholders
ol of the Gr
oup’s major
Associates, joint ventures
d joint oper
ation
an
t 31
A
December
2022
t 31
A
Decembe
2021
t 31
A
December
2020
t 31
A
December
2022
t 31
A
December
2021
t 31
A
December
2020
258
225
–
–
–
–
–
–
–
–
–
–
Annual ReportNornickelAdditional information7/72022 316
317
34. CONTINGENCIES
By their nature, contingencies will
only be resolved when one or more
future events occur or fail to occur.
The assessment of such contingencies
inherently involves the exercise
of significant judgement and estimates
of the outcome of future events.
Legal contingent
liabilities
The Group has a number of legal
contingent liabilities with the probability
of outflow of economic benefits
being assessed by the management
of Group as possible, including matters
arising from claims and disputes
of a civil law and public law nature.
At 31 December 2022 these liabilities
amounted to USD14 million
(31 December 2021: USD3 million
and 31 December 2020: USD7 million).
Tax contingencies
in the Russian Federation
The Russian Federation currently
has a number of laws related to various
taxes imposed by both federal
and regional governmental authorities.
Applicable taxes include value-added
(VAT), income tax, mandatory social
security contributions to non-budget
funds, mineral extraction tax and other
levies. Tax returns, together with other
legal compliance areas (for example,
customs and currency control matters),
are subject to review and investigation
by government authorities, which
are authorised by law to impose severe
fines, penalties and interest charges.
Generally, tax returns remain open
and subject to inspection for a period
of three years following the fiscal year.
Federation could take a different view
with regard to interpretive issues. This
uncertainty may expose the Group
to additional taxation, fines and penalties.
guidelines, but creating additional
uncertainties as regards the actual
application of tax legislation.
In March 2022, amendments to Russian
tax legislation were adopted. According
to them, foreign exchange gains
are accounted for tax purposes
in the reporting period, when
the underlying asset or liability is repaid.
Starting from 1 January 2023, the same tax
accounting will apply to foreign exchange
losses. In December 2022 amendments
to Russian tax legislation were adopted,
providing early implementation
of new tax accounting for foreign
exchange losses for the year ended
31 December 2022. The Group used this
option.
In accordance with Article 3
of Federal Law No. 302-FZ
dated 3 August 2018, a duration
of the agreement
to establish a consolidated taxpayers
group (CTG), expires on 1 January 2023.
In this regard, all entities of the Group
that were previously part of the CTG
will calculate and pay income
tax independently, starting
from 1 January 2023.
On 1 January 2023, amendments
to the Tax code of the Russian Federation
were adopted. According to them,
the Group pays taxes in a single tax
payment (STP) to a single tax account.
At 31 December 2022, the total balance
of payments to the budget included
all taxes receivables and payables (net
of especially separate amounts), therefore
this information will be presented on a net
basis in the consolidated statement
of financial position.
The impact of any additional taxation
in relation to transfer pricing may
be material to the financial statements
of the Group. Yet, the probability of such
additional taxation cannot be reliably
assessed.
The transfer pricing rules provide
for an obligation for the taxpayers
to prepare transfer pricing documentation
with respect to controlled transactions
and stipulate the principles
and mechanisms for accruing additional
taxes and interest in case prices
in the controlled transactions differ
from the market level.
Current Russian transfer pricing
legislation requires businesses to conduct
transfer pricing analysis for the majority
of cross-border and major domestic inter-
company transactions. Starting 2019,
transfer pricing control, as a general rule,
is applied to domestic transactions only
if both criteria are met: the parties apply
different income tax rates, and the annual
turnover of transactions between them
exceeds RUB1 billion (USD16 million
at RUB/USD rate at 31 December 2022).
In addition to performing transfer pricing
audits, Russian tax authorities may
also review prices used in intra-group
transactions. They may impose additional
taxes if they conclude that taxpayers
have received unjustified tax benefits
as a result of those transactions.
Russian tax authorities continue
to exchange transfer pricing
as well as other tax related information
with tax authorities of other countries.
This information may be used by the tax
authorities to identify transactions
for additional in-depth analysis.
While the management of the Group
believes that it has recognised
adequate provisions for tax liabilities
based on its interpretation of current
and previous legislation, the risk remains
that the tax authorities in the Russian
Transfer pricing legislation enacted
in the Russian Federation starting
1 January 2012 provides for major
modifications making local transfer
pricing rules closer to the OECD
Environmental matters
The Group is subject to extensive federal,
regional and local environmental controls
and regulations in the countries where
it operates. The Group’s operations result
in air and water pollutant emissions,
as well as generation and disposal
of production waste.
The Group periodically evaluates
its environmental provisions pursuant
to the environmental legislation
in the countries where it operates.
Such provisions are recognised
in the consolidated financial statements
as and when obligating events occur.
The management of the Group believes
that there are no material obligations
for environmental damage other than
those recognised in these consolidated
financial statements. However, potential
liabilities, which may arise due to changes
in environmental laws and regulations,
cannot be reliably estimated but may
be material. The Group is unable
to predict the timing or extent to which
environmental laws and regulations may
change. Such change, if it takes
place, may require that the Group
modernise its technological processes
to meet more stringent statutory
requirements.
Russian Federation risk
The Group’s operations are primarily
located in the Russian Federation.
Consequently, the Group is influenced
by the economic and financial markets
of the Russian Federation, which display
the characteristics of an emerging
market. The legal, tax and regulatory
frameworks continue to develop, which
poses a risk of their varying interpretations
and frequent change. This, together
with other legal and fiscal impediments,
creates additional challenges for entities
operating in the Russian Federation.
Starting 2014, the United States
of America, the European Union
and some other countries have imposed
and gradually expanded restrictive
economic measures against a number
of Russian individuals and legal entities.
Starting February 2022, the above
countries have been imposing additional
stringent restricitve measures against
the Russian Government, large
financial institutions and other legal
entities and individuals in Russia.
In addition, restrictions were imposed
on exports and imports of certain
goods and business-relevant services,
including accounting, auditing,
tax and management consulting
and certain legal and IT consulting
services, as well as aviation
and maritime transportation sectors.
In light of the imposed restrictive
measures, a number of large international
companies from the USA, the European
Union and some other countries ceased,
materially reduced or suspended their
activities in the Russian Federation
and business relationships with Russian
citizens and legal entities. Moreover,
there is a risk that further restrictive
measures and similar types of pressure
will be imposed. In response, the Russian
Government has implemented a set
of economic measures in order to secure
and stabilise the Russian economy,
as well as retaliatory restrictive measures,
currency control measures, a number
of key interest rate changes and other
special economic measures.
The imposition and further tightening
of the restrictive measures has led
to an increased economic uncertainty,
including the lowering of liquidity
and high volatility in the equity
markets, volatility of the Russian
rouble exchange rates and key interest
rate, a reduction in both local and foreign
direct investment inflows, procedural
difficulties in currency payments
for Russian issuers and significant
limitations in the availability of debt
financing. In addition, many Russian
companies are practically devoid
of access to international stock and debt
capital markets, thus having to look
for alternative ways to raise financing
and growing more dependent
on the state support. The Russian
economy is in the process of adaptation,
involving the substitution of export
markets that become unavailable,
replacement of procurement
and technology import markets,
as well as changes in the logistics
and production chains.
On 28 February 2022, the stock market
of the Moscow Exchange discontinued
trading in shares and corporate bonds.
Trading in shares and corporate bonds
on the Moscow Exchange was resumed
in late March 2022, while restrictions
continue to apply to a number
of securities transactions made by non-
residents of Russia. On 3 March 2022,
the London Stock Exchange suspended
trading in depositary receipts issued
for the Company’s ordinary shares; trading
has not been resumed as of the date
of approval of these consolidated financial
statements. In accordance with Federal
Law No. 114-FZ On Amendments
to the Federal Law On Joint-Stock
Companies and Certain Legislative Acts
of the Russian Federation automatic
and a forced conversion of depositary
receipts into the Company’s shares
was implemented. Depositary receipts
the rights to which are recorded
by Russian depositories were converted
automatically. Depositary receipts
the rights to which are recorded
by foreign depositaries could
be converted based on an application
until 10 November 2022. Before the end
of the reporting period as a part
of the forced conversion, the Company’s
shares were credited to the applicants
that submitted the required documents.
At 31 December 2022, the total percentage
o Company shares remaining on depo
accounts of depository programs
corresponded to 6.7% of share capital
of the Company.
On 28 April 2023, the permit for circulation
of the Company depositary receipts
outside Russia lapses. From that day
forward any Company shares accounted
for on depo accounts of depository
programs will not be vested with voting
Annual ReportNornickelAdditional information7/72022 318
319
rights for holders, will not be counted
when votes are tallied and no dividends
will be accrued on them.
to assume that some counterparties
might reconsider their trade, financial
or other operations with the Group.
On 21 July 2022 and on 26 July 2022 t
he European Union and Great Britain
respectively, introduced a ban against
the import of gold of Russian origin on top
of other restrictive measures.
The longer-term effects of potential
additional restrictive measures
are difficult to determine. Still, they may
have a significant impact on the Group`s
business.
On 16 December 2022, the European
Union, among other restrictive measures,
introduced a ban on investments
in the mining industry in Russia and also
banned the supply of various equipment,
including industrial. At the same time
in accordance with the European Union
ruling these restrictive measures do
not apply to mining and production
of palladium, nickel, copper, cobalt,
rhodium and iron ore.
On 29 June 2022, the United Kingdom
imposed personal restrictions against
the Potanin V. O. These restrictions
are mandatory within the UK and for all
British citizens and legal entities
registered in the UK. According
to the advice of an external legal counsel
and the management’s assessment, these
restrictions do not expand to the Group
and its subsidiaries. On 15 December 2022,
the US Department of the Treasury’s
Office of Foreign Assets Control (OFAC)
updated Specially Designated Nationals
and Blocked Persons List (SDN List)
to include Potanin V. O. SDN list also
included legal entities associated with one
of the major shareholders.
OFAC also explicitly stated that
the restrictive measures do not
apply to the Company. However,
in the current geopolitical circumstances,
as each counterparty doing business
with the Group independently decides
on the application of its own internal
restrictions on interaction with Russian
legal entities, the management has
Supply and distribution
channels reconfiguration
In 2022, a number of suppliers fully
withdrew from the Russian market, while
others suspended deliveries of goods
and services to Russian legal entities.
As a result, procurement from these
suppliers has become unavailable
to the Group. Although the Group
has started transition to alternative
suppliers, full replacement of suppliers
who left the Russian market may
take a considerable time and involves
additional costs and rescheduling
of certain investment projects and capital
commitments. Due to the need to replace
some of the components, the Group
is actively looking for alternative
suppliers and substituting imports
in order to fulfill the production program
for 2023. The Group is also in the process
of reconfiguring its distribution channels,
which led to extended sales logistics
chains and alongside with restrictive
measures and time-consuming processes
of reengineering the Company`s
customer base and sales markets
significantly increased finished goods
inventories. The Group’s management
expects that the stocks of finished goods
accumulated in 2022 will be significantly
reduced in 2023 in line with the Group’s
sales plans for 2023.
Impact
of the COVID-19 outbreak
on the Group’s
operations
On 11 March 2020, the World Health
Organization declared the COVID-1
9 outbreak a pandemic. The spread
of COVID-19 led to lockdowns
and business disruption in many
countries, which, together with other
factors, led to an increased volatility
in financial markets, including commodity
markets, and general economic
uncertainty. The wave-like pattern
of the spread of the COVID-19 infection
continues to create uncertainty
in business.
The Group operates primarily in mining,
refining of ore and sales of base
and precious metals, which have not been
significantly impacted by the outbreak
of COVID-19.
Based on the analysis of possible
outcomes and their consequences
for the economic environment
and operations of the Group, the Group’s
management has developed
and implemented a number of measures
to ensure normal operating activities.
For the year ended 31 December 2022,
the Group spent USD22 million
in cash net of VAT (for the year ended
31 December 2021: USD66 million
and for the year ended 31 December 2020:
USD157 million) to prevent and combat
the spread of COVID-19. Expenses
in the amount of USD37 million
were recognised in the consolidated
income statement for the year ended
31 December 2022 (for the year ended
31 December 2021: USD67 million
and for the year ended 31 December 2020:
USD123 million). These expenses
are presented in the following line items:
ems of the c
Line it
income statement
onsolidated
or the y
ear en
ded 31 Dec
ember
F
Cost of metal sales
Labour
Materials and supplies
Other costs
Cost of other sales
Labour and other costs
General and administrative
expenses
Staff costs and other costs
Other operating expenses
Social expenses
2022
2021
1
7
4
3
4
18
10
4
6
6
11
30
2020
45
5
5
11
8
49
The part of the amount paid for the year
ended 31 December 2022 included capital
expenditures of USD1 million (for the year
ended 31 December 2021: USD3 million
and for the year ended 31 December 2020:
USD12 million). The change in inventory
balances and prepayments for future
supplies amounted to USD (16) million
(for the year ended 31 December 2021:
USD (2) million and for the year ended
31 December 2020: USD22 million).
OVERALL IMPACT OF RISKS
AND UNCERTAINTIES
ON THE GROUP’S FINANCIAL
POSITION AND FINANCIAL
RESULTS
These consolidated financial statements
provide the management’s point of view
on the current business environment
in the Russian Federation impacting
the Group’s operations and financial
position. The Group’s management
is making every effort to mitigate the risks
associated with the economic restrictions
imposed and COVID-19 pandemic
and based on the assessment
of the current situation doesn`t
expect a significant adverse impact
on the financial position and financial
results of the Group for at least 12 months
after 31 December 2022. The actual impact
of the future business environment may
differ from the management’s
assessment.
The management will continue
to monitor the situation closely
and implement necessary measures
to respond to possible adverse events
as they occur.
Annual ReportNornickelAdditional information7/72022 320
321
35. FINANCIAL RISK MANAGEMENT
Capital risk management
The Group manages its capital
in order to safeguard the Group’s
ability to continue as a going
concern and to maximise the return
to shareholders through the optimisation
of debt (long and short-term borrowings)
and equity (share capital and retained
earnings) structure.
Management of the Group regularly
reviews its level of leverage calculated
as the ratio of Net Debt to EBITDA
to ensure that it is in line with the Group’s
financial policy aimed at preserving
investment grade credit ratings.
At 31 December 2022, 2021 and 2020 t
he Company maintains credit ratings
from Russian rating agency Expert RA
at RUAAA investment grade level.
Financial risk factors
and risk management
structure
In the normal course of its operations,
the Group is exposed to a variety
of financial risks: market risk (including
interest rate and currency risk), credit
risk and liquidity risk. The Group has
an explicit risk management structure
aligned with internal control and analysis
procedures that enable it to assess,
evaluate and monitor the Group’s
exposure to financial risks, including their
change due to the current economic
situation and imposition of restrictive
economic measures.
INTEREST RATE RISK
Interest rate risk relates to changes
in interest rates that could adversely
impact the financial results of the Group.
The Group’s interest rate risk arises
from loans and borrowings with floating
interest rates.
In order to mitigate and manage the risk,
the Group carries out arrangements
to maintain the balanced structure
of debt portfolio which includes loans
and borrowings with fixed and floating
interest rates. The Group also considers
this risk factor together with changes
in the macroeconomic environment,
particularly economic growth
and increase in commodity prices, which
is normally associated with higher base
rates.
During the year ended 31 December 2022,
the Central Bank changed its key interest
rate several times following restrictive
measures imposed by the USA, the EU
and other countries and changes in key
macroeconomic parameters, such
as inflation rate and rouble exchange
rate. The key interest rate was increased
to 20% in the end of February, followed
by a gradual decrease to 7.5% by the end
of December. There were no significant
fluctuations during 2021 and 2020.
At 31 December 2022, the amount
of loans and borrowings of the Group
with the rate linked to the key interest
rate of the Central Bank of the Russian
Federation is 15% of the total amount
of loans and borrowings (see Note 24).
The negative impact of the temporary
increase in the key interest rate
and the strengthening of the rouble
starting the second quarter of the current
year on the amount of the Group’s interest
expenses was not significant.
Management believes that the Group’s
exposure to the interest rate risk
is acceptable.
A fundamental reform of major interest
rate benchmarks is being actively
implemented globally, including
the replacement of some interbank
offered rates (IBORs) with alternative
nearly risk-free rates (referred to as ‘IBOR
reform’). The Group monitors market
developments and manages transition
to alternative rates. The Group’s
unsecured US dollar-denominated
floating rate loans use USD LIBOR1M rates,
which according to current plans will
cease to be published after 30 June 2023.
The Group signed amendments to certain
loan agreements to replace LIBOR rate
with the alternative rate – Term Secured
Overnight Financing Rate (Term SOFR)
not later than USD LIBOR publication stop
date and intends to switch the remaining
loan agreements with floating interest
rates to the alternative rates during 2023,
not later than LIBOR rates publication
stop date.
CURRENCY RISK
Currency risk relates to changes in the fair
value or future cash flows of a financial
instrument denominated in foreign
currency because of changes in exchange
rates.
The major part of the Group’s revenues
and related trade accounts receivable
are denominated in US dollars, while
expenditure is primarily denominated
in Russian roubles and therefore
the Group is exposed to fluctuations
of the USD exchange rate. Currency
risk arising from other currencies
is assessed by management of the Group
as immaterial.
Restrictive measures imposed
by the USA, the EU and some other
countries with respect to the Central
Bank of the Russian Federation
and Russia’s international reserves
as well as the counter-measures
of the Russian government
and the Central Bank relating
to capital flows controls and currency
control led to an increased volatility
of the rouble exchange rate. During
the year ended 31 December 2022,
the RUB/USD exchange rate ranged
from 51.16 roubles for 1 US Dollar
to 120.38 roubles for 1 US Dollar. Taking
into account the exchange rates at 31 D
ecember 2022, 2021 and 2020, the Group
preserves its financial stability.
The currency risk is managed by analysis
of currency position, efficiency control
of currency exchange operations
and the best possible matching of cash
inflows and cash outflows denominated
in the same currency, although
the restrictive measures and Russia’s
respective counter-measures limit
the efficiency and availability of the above
mentioned instruments of the Group
currency risk management.
If necessary, the Group uses derivative
financial instruments primarily cross-
currency interest rate swaps to reduce
exposure to currency risk by balancing
revenue cash flows denominated in US
dollars and liabilities denominated
in Russian roubles.
The carrying amount of cross-currency
interest rate swaps is presented in Note
30. At 31 December 2022, 2021 and 2020,
the carrying amounts of monetary assets
and liabilities, excluding cross-currency
interest rate swaps, denominated
in foreign currencies other than functional
currencies of the individual Group entities
were as follows:
t 31 December 20
A
22
t 31 December 20
A
21
t 31 December 20
A
20
USD
CNY
Other
currencies
USD
CNY
Other
currencies
USD
CNY
Other
currencies
1,169
266
70
2,811
18
4,940
66
Cash and cash
equivalents
Trade and other
receivables
Other assets
Total assets
Trade and other
payables
Loans
and borrowings
Lease liabilities
Other liabilities
1,425
22
2,616
761
–
–
266
3
134
792
53
257
63
55
3,658
353
7,798
1,265
20
9,862
12
7
–
–
11
8
107
23
–
–
18
–
–
–
–
–
41
35
20
96
122
638
32
5,610
277
24
9,055
15
–
114
16
161
9,462
–
–
66
–
–
–
–
–
63
15
12
90
106
30
22
2
160
Total liabilities
8,578
1,268
102
10,345
Given that the Group exposure
to the currency risk for the USD-
and CNY-denominated monetary
liabilities is offset by the revenue
from metal sales denominated in USD,
as well as the high correlation of the CNY
and the USD, management believes that
the Group’s exposure to the currency risk
is at an acceptable level.
Annual ReportNornickelAdditional information7/72022 322
323
THE SENSITIVITY ANALYSIS OF INTEREST RATE AND CURRENCY RISKS
Increase/(decre
ase) of pr
or the y
ear ended
31 Dec
ofit be ore tax f
ember
2022
2021
2020
(45)
(17)
(7)
(1,261)
(200)
(35)
(8)
–
(1,421)
4
(34)
(18)
–
(1,034)
13
Interest rate risk
1 p.p. USD rate increase impact
1 p.p. RUB rate increase impact
1 p.p. CNY rate increase impact
Currency risk
USD20% strengthening against RUB
CNY 20% strengthening against RUB
The sensitivity analysis is prepared
including cross-currency interest
rate swap effects and assuming that
the amount of loans and borrowings
at floating rates outstanding
at the reporting date was outstanding
for the whole reporting period.
CREDIT RISK
The Group mitigates the credit risk
through its allocation to a large number
of counterparties and respective credit
limits approval based on counterparties’
financial position analysis and uses, if
possible, trade financing and insurance
instruments, bank guarantees
and documentary forms of settlement.
by calculating financial indicators
and analysing the counterparty’s financial
statements for several reporting periods.
The outstanding balances of five
financial institutions and five largest
customers are presented below.
At 31 December 2022 сredit rating
of Russian banks according to the national
scale Expert RA was not lower than
RUAAA and of international banks
on the international Fitch scale was not
lower than A (at 31 December 2021:
was not lower than BB+ on the Fitch scale
and at 31 December 2020: was not lower
than BB+ on the Fitch scale).
Credit risk means that a debtor will
default on its contractual obligations
as they fall due resulting in a financial
loss to the Group. Credit risk arises
from cash and cash equivalents, bank
deposits, uncollateralised trade and other
receivables, as well as loans issued.
To analyse counterparty solvency,
the Group uses information from credit
rating agencies about the counterparty’s
assigned credit ratings and projections
for its changes; should such information
be lacking, financial stability
and overall creditworthiness is assessed
Outstanding balanc
e at 31 Dec
ember
Trade and other receivables
Customer A
Customer B
Customer C
Customer D
Customer E
Other
Total
163
160
47
38
34
404
846
149
24
19
18
13
245
468
108
32
26
21
21
329
537
Management of the Group believes
that the credit risk associated with cash
and cash equivalents and trade and other
receivables is at an acceptable level
due to the high credit rating of the banks
where these cash and cash equivalents
are placed, as well as the implementation
of measures to manage the credit risk
associated with counterparties the Group
interacts with.
The revision of the set of working
capital management instruments
and other changes in terms
of financing of the Group’s transactions
with its customers led to a longer
cash collection cycle and an increase
in the accounts receivable.
At 31 December 2022, the Group does not
expect a significant increase in expected
credit losses on receivables and other
financial assets.
The Group is not economically dependent
on a limited number of customers
because the majority of its products
are metals traded on the global
commodity markets.
Information on sales to the Group’s
customers is presented below:
or the y
F
ear ended
or the y
F
ear ended
or the y
F
ear ended
31 December 20
22
31 December 20
21
31 December 20
20
Revenue
USD million
1,950
5,861
7,811
9,065
%
12
35
47
53
Revenue
USD million
3,431
6,169
9,600
8,252
%
19
35
54
46
USD
Revenue
million
2,541
5,596
8,137
7,408
%
16
36
52
48
Largest customer
Next 9 largest customers
otal 10 lar
T
gest customers
Remaining customers
Outstanding balanc
e at 31 Dec
ember
Cash and cash equivalents
Bank A
Bank B
Bank C
Bank D
Bank E
Other
Total
2022
510
366
258
204
88
456
1,882
2021
1,548
902
572
541
405
1,579
5,547
2020
2,512
800
712
170
160
837
5,191
Total
16,876
100
17,852
100
15,545
100
Annual ReportNornickelAdditional information7/72022 324
325
The following table provides information about the exposure to credit risk for financial assets:
Cash and cash equivalents
Derivative financial instruments (assets)
Loans and other long-term receivables
Trade and other receivables (excluding trade
receivables measured at fair value through profit
and loss)
Cover for irrevocable letters of credit
Bank deposits not included in cash and cash
equivalents
Note
20
16
16
19
15
16
t 31 Dec
A
ember
2022
1,882
42
100
283
–
11
2021
5,547
10
59
220
–
46
2020
5,191
1
113
198
14
11
LIQUIDITY RISK
Liquidity risk is the risk that the Group will
not be able to settle all liabilities as they
fall due.
The Group’s centralised treasury regularly
monitors forecasted and actual cash flows
and analyses the repayment schedules
to take timely and appropriate measures
in order to minimise potential adverse
effects, including through liquidity
management and proactive loan portfolio
management aimed at minimising
the amount of short-term debt
and maintaining the weighted average
term of the loan portfolio at an acceptable
level.
Current liquidity management involves
detailed budgeting procedures,
as well as analysis and structuring
of a daily payment position for a 30-day
period. The payment position is calculated
separately for each currency and bank
account. In addition to the continuous
analysis of the payment position, at least
three times a month the Group updates
its rolling cash flow forecast model
with a horizon of up to 12 months.
The Group manages liquidity risk
by creating a reserve of liquid funds
and maintaining a portfolio of committed
credit facilities and overdrafts
from a number of banks at a level
sufficient to cover possible revenue
fluctuations taking into account market
risks.
In accordance with the granted
government licence on foreign currency
payments of debt and interest to foreign
creditors, the Group continues to service
its debt in compliance with the terms
of respective loan or bonds facilities,
including timing and currency
of payments.
In particular, the Group had available
committed credit facilities and overdrafts
to finance its day-to-day liquidity
requirements of USD2,788 million
at 31 December 2022 (31 December 2021:
USD3,500 million and 31 December 2020:
USD3,313 million).
The Group continues its activities
on the expansion of credit limits capacity
and diversification of its portfolio
of committed and treasury credit
lines from the biggest Russian banks.
The Group considers all available options
for raising financing on the Russian
market and holds negotiations
with international financial institutions
as part of proactive debt portfolio
management in order to optimise
the average duration of the debt portfolio
and avoid excess concentration of debt
payments.
In September 2022, the consent
of the holders of all 5 Eurobond issues
of the Group was obtained to amend
the transaction documentation,
according to which the Company received
the right to make payments to holders
of Eurobonds in Russian depositories,
bypassing a foreign paying agent,
which allowed to (a) ensure compliance
with the requirements of Russian
legislation and (b) continue payments
to foreign depositories through a payment
agent.
The following table shows the maturity
profile of the Group’s borrowings, lease
liabilities and derivative instruments
(maturity profiles for trade and other
payables are presented in Note 28) based
on contractual undiscounted payments,
including interest
t 31 Dec
A
2022
ember
Total
Due in
e first
th
year
Due in
th
e sec
ond
year
Due in
e thir
d
year
th
Due in
e f
ourth
year
th
Due in th
e
fifth ear
Due th
ere-
after
Fixed rate
bank loans
and borrowings
Principal
Interest
Floating rate
bank loans
and borrowings
Principal
Interest
Lease liabilities
4,022
387
4,409
7,488
480
1,000
155
1,155
3,303
240
7,968
3,543
1,105
134
1,239
2,084
147
2,231
1,417
84
1,501
1,675
80
1,755
500
14
514
414
13
427
–
–
–
7
–
7
–
–
–
5
–
5
Lease liabilities
522
63
54
34
23
21
327
Cross-currency
interest rate swap
Payable
Receivable
375
(368)
7
11
(23)
(12)
364
(345)
19
–
–
–
–
–
–
–
–
–
–
–
–
Total
12,906
4,749
3,543
3,290
964
28
332
t 31 Dec
A
2021
ember
Total
Due in
e first
th
year
Due in
th
e sec
ond
year
Due in
e thir
d
year
th
Due in
e f
ourth
year
th
Due in
e fifth
th
year
Due th
ere-
after
Fixed rate
bank loans
and borrowings
Principal
Interest
Floating rate
bank loans
and borrowings
Principal
Interest
4,591
407
1,504
1,000
1,087
193
97
76
4,998
1,697
1,097
1,163
5,676
221
5,897
107
88
195
2,166
2,100
71
40
2,237
2,140
500
27
527
614
14
628
500
14
514
676
8
684
–
–
–
13
–
13
Annual ReportNornickelAdditional information7/72022 326
327
t 31 Dec
A
2021
ember
Total
Due in
e first
th
year
Due in
th
e sec
ond
year
Due in
e thir
d
year
th
Due in
e f
ourth
year
th
Due in
e fifth
th
year
Due th
ere-
after
Lease liabilities
Lease liabilities
279
65
50
45
31
20
68
Cross-currency
interest rate swap
Payable
Receivable
426
(409)
17
12
(24)
(12)
12
(24)
(12)
402
(361)
41
–
–
–
–
–
–
Total
11,191
1,945
3,372
3,389
1,186
1,218
–
–
–
81
t 31 Dec
A
2020
ember
Total
Due in
e first
th
year
Due in
th
e sec
ond
year
Due in
e thir
d
year
th
Due in
e f
ourth
year
th
Due in
e fifth
th
year
Due th
ere-
after
Fixed rate
bank loans
and borrowings
Principal
Interest
Floating rate
bank loans
and borrowings
Principal
Interest
Lease liabilities
4,299
656
4,955
5,387
312
5,699
Lease liabilities
288
Cross-currency
interest rate swap
Payable
Receivable
Total
1,364
(1,305)
59
11,001
4
213
217
7
105
112
61
938
(893)
45
435
1,504
203
1,707
345
103
448
1,000
106
1,106
2,558
74
1,088
86
1,174
2,055
29
2,632
2,084
500
36
536
400
1
401
61
48
41
26
12
(24)
(12)
12
(24)
(12)
2,204
3,774
402
(364)
38
3,337
–
–
–
963
288
203
12
215
22
–
22
51
–
–
–
Reconciliation of changes in liabilities and cash flows from financing activities:
Balanc
e at 1 January 20
20
Proceeds from loans and borrowings
Repayments of loans and borrowings
Payments of lease liabilities
Proceeds on exchange of flows under cross-currency
interest rate swaps
Changes fr
om finan
cing cash fl ws
Other non-cash changes:
Recognition of lease liabilities
Changes in fair value of the cross-currency interest rate
swap
Effect of changes in foreign exchange rates
Borrowing costs and amortisation of loans at effective
interest rate
Balanc
e at 31 December 20
20
Proceeds from loans and borrowings
Repayments of loans and borrowings
Payments of lease liabilities
Proceeds on exchange of flows under cross-currency
interest rate swaps
Changes fr
om finan
cing cash fl ws
Other non-cash changes:
Recognition of lease liabilities
Changes in fair value of the cross-currency interest rate
swap
Effect of changes in foreign exchange rates
Borrowing costs and amortisation of loans at effective
interest rate
Balanc
e at 31 December 20
21
Proceeds from loans and borrowings
Repayments of loans and borrowings
Payments of lease liabilities
Loans and
borrowings
Lease
liabilities
9,620
2,903
(2,552)
–
–
224
–
–
(46)
–
351
(46)
–
–
(321)
(16)
9,634
1,000
(415)
–
–
585
–
–
(4)
11
10,226
9,104
(7,775)
–
90
–
(6)
–
262
–
–
(55)
–
(55)
37
–
(9)
–
235
–
–
(50)
Derivatives
fina cial
instruments
(liabilities)
(101)
–
–
–
38
38
–
182
17
–
136
–
–
–
4
4
–
(68)
–
–
72
–
–
–
Total
9,743
2,903
(2,552)
(46)
38
343
90
182
(310)
(16)
10,032
1,000
(415)
(55)
4
534
37
(68)
(13)
11
10,533
9,104
(7,775)
(50)
Annual ReportNornickelAdditional information7/72022 328
329
Payments on exchange of flows under cross-currency
interest rate swaps
Changes fr
om finan
cing cash fl ws
Other non-cash changes:
Recognition of lease liabilities
Changes in fair value of the cross-currency interest rate
swap
Effect of changes in foreign exchange rates
Сhanges arising from disposal of subsidiaries
Borrowing costs and amortisation of loans at effective
interest rate
Other
Balanc
e at 31 December 20
22
Loans and
borrowings
Lease
liabilities
Derivatives
fina cial
instruments
(liabilities)
Total
–
–
(19)
(19)
1,329
(50)
(19)
1,260
–
–
153
–
(224)
–
11,484
169
–
(17)
(96)
–
(8)
233
–
18
(4)
–
–
–
169
18
132
(96)
(224)
(8)
significant estimates and assumptions
used in determination of the fair value
were as follows:
• Future cash flows were forecast up
to 2044 based on budgeted amounts,
taking into account actual results
for the previous years as well as capital
expenditure budgets;
• Prices for metal concentrates and iron
ore were estimated by the Group’s
management using consensus
forecasts for commodity prices;
• Metals concentrate (copper and iron
ore concentrate) production and sales
forecast was based on production
reports available at the reporting
date and the life of mine plan taking
into account the current production
capacity and current estimates
of metal content in ore reserves;
• The inflation and exchange rate
forecasts were based on Oxford
Economics data consistent
with a consensus forecast
of investment banks. Forecast
for exchange rate was made based
on expected RUB and USD inflation
indices;
• An after-tax nominal RUB discount
rate of 13.9% at 31 December 2021
(31 December 2020: 13.8%)
was estimated by reference
to the weighted average cost of capital
and the management’s estimates
of the risks specific to the asset.
Change in the fair value of the liability
on the execution of the put option
for 2021 till the date of derecognition
amounted to USD66 million included
in the financial costs of the consolidated
income statement (31 December 2020:
USD262 million). The estimation of fair
value of the liability on the execution
of the put option was sensitive to changes
in the number of key assumptions.
The sensitivity analysis at 31 December 20
20 is disclosed in the table below:
Chan
ge of p
arameters
ase in f
air
alue of the liabilit
Incre
v
on the e
xecution
of the put option
y
in disc
Decrease
ount rate
y 1 p
.p.
b
Weakenin
USD e
g of RUB/
xchange rate
y 10%
b
ase of c
Incre
price b
opper
y 10%
Incre
ase of gold
y 10%
price b
Interest payable on loans and borrowings
and lease liabilities (Note 25)
arising from financing activities
is short-term and is paid within 12 months
from the date of accrual.
36. FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial instruments that are measured
at fair value subsequent to initial
recognition, are grouped into Levels
1 to 3 of fair value hierarchy based
on the degree to which their fair value
is observable as follows:
• Level 1 fair value measurements
are those derived from quoted
prices (unadjusted) in active markets
for identical assets or liabilities;
• Level 2 fair value measurements
are those derived from inputs
other than quoted prices included
within Level 1 that are observable
for the assets or liabilities, either
directly or indirectly;
• Level 3 fair value measurements
are those derived from valuation
techniques that include inputs
for the assets or liabilities that are not
based on observable market data.
The management believes that
the carrying value of financial instruments
such as cash and cash equivalents (Note
20), other financial assets (Note 16), trade
and other receivables except for trade
and other receivables at fair value through
profit or loss (Note 19), trade and other
payables (Note 28) and lease liabilities
(Note 25) either approximates to their
fair value or may not significantly differ
from it. The fair value of trade and other
receivables at fair value through profit
or loss, as well as the level of the fair value
hierarchy and the method of measuring
are disclosed in Note 19.
At 31 December 2020 other current
liabilities measured at fair value
through profit or loss included a liability
on the execution of a put option
held by owners of 13.3% non-
controlling interest in the share
capital in LLC “GRK “Bystrinskoye”
in the amount of USD428 million.
67
11,784
At 31 December 2020
25
70
37
36
The information below presents financial instruments not measured at fair value, including loans and borrowings (Note 24), trade
and other long-term payables (Note 28).
Since the non-controllling interest
owners did not exercise their right
under the put option before its expiry
date of 31 December 2021, the Group
derecognised the liability on the execution
of the put option as at 31 December 2021.
The Group presented derecognition
of the liability directly in the consolidated
statement of changes in equity as Other
effects related to transactions with non-
controlling interest owners in the amount
of USD490 million, which was its fair value
at 31 December 2021 immediately before
derecognition. The fair value of the liability
at all applicable dates was determined
based on the discounted cash flows
of LLC “GRK “Bystrinskoye” less its net
debt taking into account the amount
of working capital at the reporting
date and with the relevant discount
reflecting the non-controlling ownership
interest. The fair value estimate is within
Level 3 of fair value hierarchy. The most
t 31 December 20
A
22
t 31 December 20
A
21
t 31 December 20
A
20
Carrying
value
Fair value
Level 1
Carrying
value
Fair value
Level 1
Carrying
value
Fair value
Level 1
Fixed rate bonds
Total bonds
4,156
4,156
3,323
3,323
4,574
4,574
4,639
4,639
4,277
4,277
4,512
4,512
Carrying
value
Fair value
Level 2
Carrying
value
Fair value
Level 2
Carrying
value
Fair value
Level 2
Floating rate loans
6,766
6,535
5,648
5,439
5,349
5,309
Fixed rate loans
Fixed rate bonds
–
562
–
562
4
–
4
–
8
–
8
–
Total loans
7,328
7,097
5,652
5,443
5,357
5,317
Trade and other long-term
payables
Total trade an
long-term payables
er
d oth
Carrying
value
Fair value
Level 2
Carrying
value
Fair value
Level 2
Carrying
value
Fair value
Level 2
56
56
56
56
55
55
55
55
32
32
32
32
Annual ReportNornickelAdditional information7/72022 330
331
The fair value of financial liabilities
presented in the table above
is determined as follows:
•
the fair value of corporate bonds
(Level 1 of fair value hierarchy)
was determined as their market price
at the reporting dates;
•
the fair value of floating rate
and fixed rate loans and borrowings
and corporate bonds (Level 2 of fair
value hierarchy) at 31 December 2
022, 2021 and 2020 was determin
ed as the present value of future
cash flows (principal and interest),
discounted at the market interest
rates, which are determined
as of the reporting date based
•
on the currency of a loan, its expected
maturity and credit risks attributable
to the Group;
the fair value of trade and other
long-term payables at 31 Decembe
r 2022, 2021 and 2020 was determi
ned as the present value of future
cash flows, discounted at the best
management estimate of market
interest rates.
37. INVESTMENTS IN SIGNIFICANT SUBSIDIARIES
Subsidiaries b
ating
y oper
segments
GMK Group
Country
Nature
of busin
ess
JSC “Norilsky Kombinat”
Russian Federation
Rental of property
JSC “Norilskgazprom”
Russian Federation
Gas extraction
JSC “Norilsktransgaz”
Russian Federation
Gas transportation
JSC “NTEK”
Russian Federation
Electricity
production
and distribution
LLC “ZSC”
Russian Federation
Construction
LLC “Norilsknickelremont”
Russian Federation
Repairs
LLC “Norilskyi
obespechivaushyi complex”
Russian Federation
Production
of spare parts
South Cluster
Effectiv
e % h
eld
31
December
2022
31
December
2021
31
December
2020
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
LLC “Medvezhyi ruchey”
Russian Federation
Ore mining
and processing
100
100
100
KGMK Group
Subsidiaries b
ating
y oper
segments
GRK Bystrinskoye
Country
Nature
of busin
ess
Effectiv
e % h
eld
31
December
2022
31
December
2021
31
December
2020
LLC “GRK “Bystrinskoye”
Russian Federation
LLC “Vostokgeologiya”
Russian Federation
Ore mining
and processing
Geological works
and construction
50.01
50.01
50.01
100
100
100
Other non-metallurgical
Metal Trade Overseas A.G.
Switzerland
Distribution
Norilsk Nickel (Asia) Limited
Hong Kong
Distribution
Norilsk Nickel Metal Trade
(Shanghai)
China
Distribution
Norilsk Nickel USA, Inc.
USA
Distribution
LLC “Institut Gypronickel”
Russian Federation
Research
JSC “TTK”
JSC “ERP”
Russian Federation
Supplier of fuel
Russian Federation
River shipping
operations
LLC “Aeroport Norilsk”
Russian Federation
Airport
JSC “AK “NordStar”
Russian Federation
Air company
Joint operations b
ating
y oper
segments
Country
Nature
of busin
ess
100
100
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Effectiv
e % h
eld
31
December
2022
31
December
2021
31
December
2020
JSC “Kolskaya GMK”
Russian Federation
Mining
and metallurgy
LLC “Pechengastroy”
Russian Federation
Repairs
100
100
100
100
100
100
Other mining
Nkomati Nickel Mine
Norilsk Nickel Harjavalta
Norilsk Nickel Harjavalta OY
Finland
Metallurgy
100
100
100
Republic of
South Africa
Ore mining
and processing
50
50
50
Annual ReportNornickelAdditional information7/72022 332
333
GLOSSARY
. Crude metal (nickel or copper)
Anode
obtained from anode smelting and fed for
electrolytic refining (electrolysis) whereby
it is dissolved.
. Pure metal (nickel or copper)
Cathode
obtained as a result of electrolytic refining
of anodes.
The process of extracting
Refi ement.
high purity precious metals through their
separation and removal of impurities.
. Solid residue from filtering pulp
Cake
during leaching of ores, concentrates
or metallurgical intermediates, and
purification of processing solutions.
. Oxidation process to turn
Conversion
matte into converter matte (in smelting
copper-nickel concentrates) or blister
copper (in smelting copper concentrates)
and remove slag (carbon, sulphur, iron
and other impurities).
. A product of ore
Concentrate
concentration with a high grade of the
extracted mineral, which gives its name to
the concentrate (copper, nickel, etc.).
. Ores containing 20% to
ores
Cuprous
70% sulphides, with the following metal
grades: 0.2–2.5% for nickel, 1.0–15.0% for
copper, 5–50 g/t for platinum group
metals.
. Heating ore to high
Roasting
temperatures to trigger chemical changes
that enable subsequent metal recovery
processes.
. Ores with high sulphide
ores
Rich
content (over 70%) and the following
metal grades: 2–5% for nickel, 2–25% for
copper, and 5–100 g/t for platinum group
metals.
. Estimated based
ore
Probable
reserves
on the economically mineable part of
indicated and, in some circumstances,
measured mineral resources, including
possible dilution and losses during mining
operations.
. Ores containing
ores
Disseminated
5% to 30% sulphides, with the following
metal grades: 0.2–1.5% for nickel, 0.3–2% for
copper, and 2–10 g/t for platinum group
metals.
. Selective dissolution of one
Leaching
or several components of the processed
solid material in organic solvents or water
solutions of inorganic substances. Kinds
of leaching: acid leaching (leaching with
acids as reagents), chlorine leaching.
. Estimated based
ore
reserves
Proven
on the economically mineable part of
measured mineral resources, including
possible dilution and losses during mining
operations.
slag and matte, with intensive injection
of air-oxygen mixture. The heat from
oxidation reactions is actively used in the
process.
smelter
. An autogenous smelter
Flash
for processing dry concentrates, where
the smelted substance is finely ground
feedstock mixed with a gaseous oxidiser
(air, oxygen), which holds melted metal
particles suspended. The heat from
oxidation reactions is actively used in the
process.
Pyrrhotite
copper-nickel ore concentration.
concentrate
. By-product of
. Pyrometallurgical process
Smelting
carried out at temperatures that ensure
complete melting of the processed
material.
caving
. An underground mining
Sublevel
method in which ore blocks are developed
from top to bottom via sublevels, and
ore is extracted by blasting or causing
sublevels to cave in. The voids formed
after extraction get filled with fractured
rock.
. A mixture of finely ground rock with
Pulp
water or a water solution.
. Artificial improvement of
Concentration
metallurgical feedstock mineral grades by
removal of a major portion of waste rock
not containing any valuable minerals.
. Natural minerals containing metals
Ore
or their compounds in economically
valuable amounts and forms.
. A compound of a chemical
Oxide
element with oxygen.
Mine
ores.
. A mining location for extraction of
extraction
. The ratio between the
Metal
quantity of a component extracted from
the source material and its quantity in
the source material (as a percentage or a
fraction).
pit
. A complex of hydraulic
Tailings
structures used to receive and store
mineral waste / tailings.
. An autogenous
furnace
Vanyukov
smelter for processing concentrates,
where smelting is performed in a bath of
. Separation of liquid (water)
Thickening
and solid particles in dispersion systems
(pulp, suspension, colloid) based on
natural gravity settling of solid particles
in settlers and thickeners, or centrifugal
settling of solid particles in hydrocyclones.
. The ratio between the
grade
Metal
weight of metal in the dry material and
the total dry weight of the material
expressed as a percentage or grammes
per tonne (g/t).
. Compounds of metals and
Sulphides
sulphur.
. Removal of moisture from
Drying
concentrates performed in designated
drying furnaces (to a moisture level below
9%).
. An agreement
agreement
Tolling
to process foreign feedstock with
subsequent shipping of finished product.
The feedstock and end product are
exempt from customs duties.
. A metallurgical
matte
Converter
intermediate produced as a result of
matte conversion. Depending on the
chemical composition, the following types
of converter matte are distinguished:
copper, nickel and copper-nickel.
. The process of reducing the
Filtration
moisture level of the pulp by forcing it
through a porous medium.
. A concentration process where
Flotation
specific mineral particles suspended
within the pulp attach to air bubbles.
Poorly wettable mineral particles attach
to the air bubbles and rise through
the suspension to the top of the pulp,
producing foam, while well wettable
mineral particles do not attach to the
bubbles and remain in the pulp. This is
how the minerals are separated.
. Waste materials left over after
Tailings
concentration processes and containing
mostly waste rock with a minor amount of
valuable minerals.
. A mixture of materials in
mixture
Ore
certain proportions needed to achieve the
required chemical composition of the end
product.
. Melted or solid substance with
Slag
a varying composition that covers
the surface of a liquid product during
metallurgical processes (resulting from
ore mixture melting, melted intermediate
processing and metal refining) and
includes waste rock, fluxes, fuel ash,
metal sulphides and oxides, and products
of interaction between the processed
materials and lining of melting units.
. Powder product containing
Sludge
precious metals settling during
electrolysis of copper and other metals.
. Intermediate product in the form
Matte
of an alloy of sulphides of iron and non-
ferrous metals with a varying chemical
composition. Matte is the main product
accumulating precious metals and metal
impurities the feedstock contains.
. A series of electrochemical
Electrolysis
reduction-oxidation reactions at
electrodes immersed in an electrolyte as
a result of passing of an electric current
from an external source.
. Electrodeposition of
Electrowinning
metal from ores that have been put in
solution. Ore or concentrate is leached
with agents that dissolve metal-
containing minerals or the entire material,
so that the metal is deposited on the
cathode. The electrolyte is typically reused
in the process. The end product is high-
purity metal cathode.
Annual ReportNornickelAdditional information7/72022
334
335
Measurement units
Length
1 km
1 m
1 cm
1 mi
1 foot
1 in
Area
1 sq m
1 sq km
1
1 sq ft
1 sq m
1 acre
Weight
1 kg
1 metric tonne
1 short tonne
1 troy ounce
1 lb
1 g
2.2046 lb
1,000 kg
907.18 kg
31.1035 g
0.4535924 kg
0.03215075 oz t
Currency exchange rates in 2020–2022
Index
Average rate Russian Rouble / US Dollar
Average effective rate Russian Rouble / US Dollar
(for CAPEX)
2020
72.15
73.15
2021
73.65
73.42
2022
68.55
66.96
0.6214 mi
3.2808 ft
0.3937 in
1.609344 km
0.3048 m
2.54 cm
10.7639 sq ft
0.3861 sq mi
2.4710 acres
0.09290304 sq m
2.589988 sq km
0.4046873 ha
Annual ReportNornickelAdditional information7/72022 336
337
CONTACTS
Сompany address
MMC Norilsk Nickel
15, 1st Krasnogvardeysky Drive, Moscow,
123100, Russia
Phone: +7 (495) 787-76-67
E-mail: gmk@nornik.ru
Web-site: nornickel.ru
nornickel.com
Phone.: +7 (800) 700–19–41 (45)
E-mail: skd@nornik.ru
Corporate Trust Line
Investor relations
For shareholders
Public relations
Vladimir Zhukov, Vice President, Investor
Relations and Sustainable Development
Mikhail Borovikov,
Head of Investor Relations
Phone.: +7 (495) 786–83–20
E-mail: ir@nornik.ru
E-mail: ESG@nornik.ru
Oksana Kuznetsova, Head of the Share
Capital Division
Phone.: +7 (495) 797–82–44
E-mail: gmk@nornik.ru
Andrey Chuprasov, Head of Corporate
Communications Department
Phone.: +7 (495) 785–58–00
E-mail: pr@nornik.ru
Registrar
JSC IRC - R.O.S.T.
ADR Depositary
THE BANK OF NEW YORK MELLON
Raiffeisenbank
Auditor
Kept
Head office: 18 bldg. 5B, Stromynka
Street, 107076 Moscow, Russian
Federation
Phone.: +7 (495) 989–76–50
E-mail: info@rrost.ru
Web-site: www.rrost.ru
240 Greenwich Street, 22nd Floor West,
New York, NY 10286, USA
Phone.: +1 (212) 815–41–58
17 Troitskaya Street, Building 1, Moscow,
129090
Phone.: +7 495 775–52–90
10 Presnenskaya Embankment, Block C,
Naberezhnaya Tower complex, Moscow,
123112, Russian Federation
E-mail: moscow@kept.ru
Web-site: www.kept.ru
In line with global best practices, the
Annual Report is also prepared in the
XBRL format. Considering that report
disclosures in this format are voluntary,
the Company does not assume any
obligation to comply with any legal
requirements for the disclosure of its
statements in this format, including
obligations to comply with the
requirements of UK legislation.
Any and all logos and trademarks used in
this annual report are the property of their
immediate owners, and use thereof in this
annual report should not be construed as
a promotion or advertisement for those
owners’ goods or services.
Disclaimer
The information herein relies on the data
available to MMC Norilsk Nickel as at the
date of this Annual Report.
After this Annual Report was prepared,
the Company’s operations, forecasts
and descriptions of the «current
situation», and the report content may
have been affected by external or other
factors, including the escalation of the
geopolitical conflict in Ukraine, sanctions
imposed by the United States of America,
the European Union, the United Kingdom
and other nations against the Russian
Federation, Russian individuals and legal
entities, Russian Federation’s response to
sanctions, economic and other measures
introduced to maintain the economic
and financial stability of the Russian
Federation, the COVID-19 pandemic and
other factors beyond the Company’s
control. In particular, the United States,
the European Union, the United Kingdom,
and other nations have imposed
export controls against the Russian
Federation that restrict, among other
things, supply of industrial equipment
to the Russian Federation. These export
controls may have a negative impact on
the manufacturing capabilities of MMC
Norilsk Nickel, should it be unable to
purchase and deliver equipment to the
Russian Federation.
The Annual Report discloses the
Company’s short-, medium-, and long-
term goals and plans. All plans and
intentions outlined in this Annual Report
are provisional and subject, among other
things, to a number of economic, political
and legal factors, including the factors
mentioned above, beyond Nornickel’s
control.
Forward-looking statements are subject
to risks and uncertainties as they refer
to events and depend on circumstances
that may or may not occur in the future.
Forward-looking statements are not
guarantees of the Company’s future
operational and financial performance,
and actual results of the Company’s
operations, its financial position, liquidity,
prospects, growth, strategy, and the
development of the industry in which
MMC Norilsk Nickel operates may
differ materially from those expressed
or implied by the forward-looking
statements contained in this annual
report. MMC Norilsk Nickel hereby
disclaims any liability for any loss resulting
from the use of this annual report, and
assumes no obligation to update any
forward-looking statements contained
herein.
Information about market share and
other statements regarding the industry
in which MMC Norilsk Nickel operates, as
well as the Company’s position relative
to its competitors is based on publicly
available information published by
other metals and mining companies
or obtained from trade and business
organisations and associations. Such
data and statements have not been
independently verified, and the financial
and operating performance metrics of
MMC Norilsk Nickel’s competitors used
to assess and compare positions may
have been calculated differently from the
method used by MMC Norilsk Nickel.
This Annual Report is not part of a
securities advertisement, an offer or
invitation to sell, issue or offer the right to
sell or subscribe for MMC Norilsk Nickel
shares and other securities.
Annual ReportNornickelAdditional information7/72022