Strategy of sustainable growth GRI 2-6

A low-carbon pathway of the global economy and actions to curb rising average temperatures present unique opportunities for Nornickel to become a leading producer of green metals essential for the energy transition. In the long run, our rapid growth will be driven by increasing demand for our key products needed to improve energy efficiency of transportation and develop renewable energy.

We are aware that sustainable development is impossible without a holistic approach to managing natural resources that would respect the interests of all stakeholders. In particular, our customers set the bar high for our products as regards their compliance with the sustainability principles. Our success also depends on how effectively we cooperate with our shareholders, NGOs, local communities and other stakeholders. Thus, the ESG agenda is set to become the main driver and the cornerstone of Nornickel’s strategic initiatives and investment projects.

Our approved strategic priorities through 2030 include a dramatic environmental uplift in the regions of operation, capacity upgrade, construction of new capacities to build up production of key metals, and maintaining financial strength.

As regards the resource base, our strategy envisages stripping of new deposits within the existing license blocks, comprehensive development of deposits to mine all types of ores, large-scale upgrade of production capacities, and maximum utilisation and expansion of production capacity at existing mines, including output ramp-up as a result of the South Cluster development. This will help us considerably increase the output saleable products by 2030 and meet the growing demandFor more details on our strategic projects to increase and upgrade production, please see our Annual Report 2022..

To reduce our environmental footprint, we carry on with our Sulphur Programme. After we finished its stage on the Kola Peninsula in 2021, sulphur dioxide emissions went down 90% in 2022 compared to the 2015 baseline. In 2023, the Company plans to complete the first stage at Nadezhda Metallurgical Plant in the Norilsk Industrial District, which will reduce emissions in the Polar Division by 45% vs 2015.

Sulphur Programme roadmap

On top of that, our plans include the modernisation of the energy infrastructure enabling adaptation to physical risks with a climate factor and better reliability of power supply to our production assets in the long run.

Power infrastructure modernisation through 2030

Programme objective:

modernise generating capacities and the grid infrastructure to replace the retiring equipment and grids, reduce physical risks and enhance long-term reliability.

Gas and gas condensate upstream and transportation

• Upgrade of over 150 km of gas and condensate pipelines;
• Ramp-up of gas well drilling at the Pelyatkinskoye deposit post 2028.

Water and heat supply networks

• Replacement of 110 and 220 kV power lines (over 1,000 km);
• Modernisation of water and heat supply networks.

Contribution to energy efficiency:

focus on enhancing performance of new CHP power units and an overall reduction of energy losses along the energy generation and transmission chain.

Heat and power plants

• Construction of four power units at CHP-2 and five power units at CHP-3;
• New more efficient fuel-saving equipment to minimise energy losses.

Hydropower plants

• Upgrade of all seven hydro turbines at Ust-Khantayskaya HPP completed;
• Upgrade of Kureyskaya HPP aiming to increase the installed capacity and energy efficiency and to boost the capacity of low-carbon hydropower plants.

The Company is currently going through an active phase of its investment cycle. In 2022, our CAPEX was USD 4.2 bn, with USD 4.7 bn expected to be spent on key investment projects in 2023. In the next reporting year, we plan to review design solutions and update our investment programme for 2024–2030.

Geography

Long-term trends supporting consumption growth for the metal basket. Our strategic projects GRI 2-6

Long trends of global development will have a positive impact on the worldwide demand for the majority of Nornickel’s metal basket. Our metals meet the needs in car manufacturing, electronics, electrical engineering, petrochemical and oil refining, power generation, construction, consumer goods, healthcare, and other global industries.

Nickel is the core metal for stainless steels used in multiple sectors – from mechanical engineering and construction to renewable energy. Together with cobalt, nickel is essential in producing electrochemical cells for the new and future generation batteries, which in turn play a vital role in developing electric transport.

Copper is critical for transitioning to the low-carbon economy as it is used in high-tech equipment, including that for making RES-based hardware. Over 70% of refined copper produced globally are used for manufacturing various cables and wires. By 2040, additional 10 mtpa of copper will be needed to meet the demandVs 2022..

At present, the automotive industry is the key consumer of platinum (40%) which goes to auto catalytic converters. Another important application area is jewellery which consumes around 25% of platinum. Platinum is also used in glass manufacturing to produce equipment (bushings) for making glass fibre and optical glass, and in electronics.

PGM are catalysts for the production of key chemicals. Platinum and iridium are part of catalysts used for green hydrogen production. Palladium enables transportation of hydrogen at long distances and its purification. Palladium, platinum and rhodium are used in manufacturing HEVs. Catalytic converters mainly for gasoline engines are the biggest palladium consumers (over 80%) in the mid term. This metal is used in catalytic converters to detoxify exhaust fumes. In most countries, such converters are legally required to be installed on all cars. Palladium is also used in electronics, dentistry, jewellery, chemicals and pharmaceuticals.

We analyse risks and opportunities related to global economic trends and assume that potential changes in demand for metals in some industries will be offset by its growth in others.

Key drivers affecting long-term demand for Nornickel’s key products

Based on the study of trends across industries that are key consumers of Nornickel metals, we expect an increase in the long-term demand for nickel and copper and a neutral effect on PGM.

In 2022, Nornickel forecast changes in key metal demand based on three scenarios for the global economy and climate change For more details on our social and economic scenarios, please see the Climate Change and Energy Efficiency section. : “Rapid Transformation”, “Sustainable Palladium” and “Global Growth”. According to our estimates of prospective demand and supply, we can say that demand for our metals will grow and our strategy is resilient to changes in climate risk factors. The key expected risks are related to demand for palladium.

Potential revenue breakdown in 2030, %

Long-term outlook for the metals market