Mining and Metallurgical Norilsk Nickel : Сorporate Environmental and Climate Change Strategy

CORPORATE ENVIRONMENTAL AND CLIMATE CHANGE

STRATEGY

Strategy update

Strategy 2021

Prerequisites

for the update

Updated strategy

The Environmental and Climate Change Strategy was developed in 2020 and approved by the Company's Board of Directors in 2021

• 21 goals of which 16 are numerical indicators in six areas, and five relate to compliance with international standards
• 360+ measures with an indicative budget of RUB 536 bn until 2031

Tightened environmental laws of the Russian Federation, growing role of the state in the regulation of environmental operations, and geopolitical changes

New geopolitical environment and the previous experience of implementing the strategy have laid the groundwork for the update.

The role of the state continues to grow, and budgets are subject to a major redistribution within the Company. At the same time, our clients expect us to be compliant with international requirements/standards.

The strategy is divided into mandatory and voluntary parts

• The mandatory part is aimed at ensuring compliance with requirements of the Russian environmental legislation in order to prevent the Company from incurring penalties and damages caused to environment components
• The voluntary part includes optional focus areas related to the environment

Interrelation between the Environmental and Climate Change Strategy and the Company's general development strategy

Central elements of the

general strategy

Core Production Strategy

Marketing/

Sales Strategy

Fixed Assets Reliability

Strategy

Technology Innovation

Strategy

Other industry-specific strategies1

Sustainable Social

Development Strategy

Other function-specific strategies2

Environmental Strategy

Integration of goal-setting into the environmental strategy

Assessing environmental impact in line with the core production development scenario, compliance with the national environmental legislation

Ensuring compliance of products with industry environmental standards and customer requirements to ensure competitiveness

Taking into account climate-related physical risks, risk-based approach

Reducing environmental impact (quantity and concentration of polluting emissions / discharges / production waste)

Taking into account critical environmental risks

Meeting sustainability standards, taking into account relevant critical requirement of key stakeholders

Taking into account the updated regulatory environment and import substitution (including postponement of the CEP execution for two years)

Implementation of the

Company's general strategy

Development and implementation of a programme to mitigate critical environmental risks, compliance with Russian environmental laws, regulations, critical obligations of the Company, minimisation of environmental impact in the long term, factoring into the configuration of the core production and auxiliary/supporting infrastructure

Note: 1. Fuel and Energy Strategy, Transportation and Logistics Function Strategy, Production Support Operations Strategy, GE Strategy. 2. Human Capital Development Programme, IT and Information Security	3
Strategy, Facility Security Strategy, Occupational Health and Safety Strategy, Financial Strategy

Environment remains one of the Company's strategic priorities

Risk management of core

and auxiliary production continuity

Fixed Assets Reliability Strategy
•	Updating infrastructure facilities
•	Taking into account critical technical and
	production risks, including those related to	25%
	climate factors

• Ensuring reliable operation of fixed assets of the core and auxiliary production facilities

Core Production Strategy

• Ramping up production
• Maximising capital returns
• Mitigating market risks

Environmental Strategy

• Taking into account environmental risks
• Ensuring compliance with environmental laws for the continuity of core and auxiliary production (fuel and energy complex, logistics, production of auxiliary materials, etc.)

САРЕХ

75%

Sustainable Social

Development Strategy

• Implementing the local communities development programme
• Supporting employees
• Developing social infrastructure
• Taking into account the Company's critical social commitments to mitigate material reputational risks

⁓12 of the framework investment programme is aimed at implementing the Environmental Strategy to secure a licence % to operate for the core production, and mitigating risks that are not related to core production

4

survey. 6. Baseline indicator of IIEHbase

of 2022.

Key objectives of the mandatory part of the Environmental Strategy

(compliance with environmental laws, regulations, obligations of the Company)

Element

Number of emergencies

Air

Water

Tailings and waste

Land

Biodiversity

Proposed updated targets

Number of interregional and federal emergencies affecting the environment in the regions of operation

SO2 emissions, kt

Reduction of SO2 emissions, %1

Compliance with the Russian standards as regards pollutant concentration in discharges

Compliance with fresh water withdrawal limits, %

Compliance of waste disposal facilities with Russian regulations

Rehabilitation of disturbed territories in 2022-2031 (reclamation3, reforestation4, and sanitation, ha)

Achievement of net zero biodiversity losses as a result of the Company's operations (∆ Integral Indicator of Ecosystem Health (IIEH))5

	Updated values
Baseline	Actual
2020	2022
1	0
20092	1,778
0%	7%

• 56%
  100% 100%

95% 95%

0360

0.89 0 6

Targets	Risks (in accordance with the Russian laws)
2031

0 • Recovery of damages

• Recovery of damages to the air

300 • Charges for excess emissions

• Suspension of operations of up to 90 days

≈ 90%	•	Turnover penalty (for facilities with quotas assigned)
100%	• Recovery of damages to water resources
•	Charges for excess effluents
	• Suspension of operations of up to 90 days
100%
	•	Recovery of damages
100%	• Revocation of waste management licence
•	Suspension of operations of up to 90 days

	• Penalties for failure to perform reclamation obligations
4,247	• Penalties for reforestation violations, as well as return of land to the
government for non-compliance with the terms of forest lease
≥ 0	• Recovery of damages to aquatic biological resources

Stock exchange requirements

Compliance with	stock exchange requirements	−	−	100%	• Delisting and reduced liquidity of the Company's products
(London Metal	Exchange, Shanghai Futures

Exchange, etc.)

Note: 1. Against the 2015 base year. 2. Baseline 2015. 3. Activities to prevent land degradation and/or to restore its fertility by making it fit for its initial purpose and permitted use, including inter alia by rectifying the implications of soil	5
pollution, restoring fertile soil layer, and protective forest planting. 4. Reforestation in Trans-Baikal Division only. 5. Calculated as ∆ IIEH = IIEHrep - IIEHbase, i.e. the difference in IIEH of the reporting year relative to the baseline year of the

Mandatory part of the Strategy

157 measures, with a total indicative budget of RUB 555 bn for 2023-20311

			8 targets
		157 measures
		Mandatory part of the Environmental and Climate Change Strategy
	8 goals	7 goals	8 goals	5 goals
Division's programme	Norilsk Division	Energy Division	Kola Division	Trans-Baikal Division
	78 measures	36 measures	30 measures	13 measures
		Division-level measures
Water	32 measures	19 measures	7 measures	5 measures
Air	11 measures	1 measure	4 measures	-
Tailings and waste	10 measures	4 measures	4 measures	2 measures
Land (reclamation,	10 measures	9 measures	9 measures	2 measures
reforestation, and sanitation)
Emergencies, permafrost	6 measures	-	-	-
Biodiversity	9 measures1	3 measures	6 measures	4 measures
	RUB XX bn			RUB XX bn
Indicative budget	RUB 41/453 bn	RUB 11/6 bn	RUB 18/23 bn	RUB 0.8/3 bn
ОРЕХ/САРЕХ

6

Note: 1. Including Sulphur Programme and IT projects at divisions

Voluntary part of the Strategy

(compliance with international standards, public image events, climate change)

Element

Climate change2

Land

Tailings and waste

Standards

Proposed updated targets

Volume of GHG emissions (Scopes 1 and 2), mt of CO2 equivalent

Specific GHG emissions (of facilities involved in the manufacturing of finished metal products) per tonne of Ni equivalent, tonnes of CO2 equivalent

Share of renewable energy use

Rehabilitation of disturbed territories in 2022-2031 (landscaping), ha

Share of non-mineral waste recycling, %

Share of mineral waste (other than gypsum waste) recycling, %

Share of gypsum waste recycling5,%

Compliance with sustainability standards

Updated values

Baseline	Actual	Targets
2020	2022	2031
8.51	8.61
4.06	4.28	TBD6
46%3	51% 3
0	12	95
16%	6%7
20%	20%	TBD6
-	-

Implementation of TCFD compliance roadmap Implementation of ICMM compliance roadmap Implementation of IRMA compliance roadmap and achieving IRMA 50 performance level Efforts to ensure compliance with GISTM

Prerequisites for the performance

1. Strategy of Socio-economic Development of the Russian Federation with Low Greenhouse Gas Emissions until 2050
   (No. 3052-r dated 29 October 2021)
2. Federal Law No. 296 On Limiting Greenhouse Gas Emissions dated 2 July 2021 (annual report)
3. Carbon Border Adjustment Mechanism (CBAM)
4. Charges for exceeding greenhouse gas emission quotas (if the Russian Tax Code is amended)

1. Voluntary obligations of Kola MMC to the government

1. Waste recycling, reduction of pollution charges.
2. Compliance with the Order on approval of the list of production and consumption waste types which include useful components banned from landfilling

1. Retention of existing and potential new customers
2. LME requirements4
3. ECOVADIS requirements
4. TСFD requirements form the basis for IFRS S2 disclosures

Note: 1. Baseline 2021, net of GHG emissions from supplying local communities and other electricity and heat consumers, including the Sulphur Programme and logistics. 2. The Concept of Carbon Neutrality Strategy must be approved. 3.	7
Sustainability Report. 4. London Metal Exchange. 5. The use of gypsum is being researched. The targets will be defined once the work streams and technologies have been identified. 6. The targets will be updated in 2024-2025. 7. The decrease

in recycling rate in 2022 is due to the inclusion of the Energy Division in the Strategy and the fact that Norilsk Division is carrying out sanitation generating large amounts of construction waste that is being landfilled rather than recycled.

Voluntary part of the Strategy

8 targets

187 measures

Voluntary part of the Environmental and Climate Change Strategy

7 goals

2 goals

8 goals

8 goals

8 goals

Division's

Norilsk Division

Energy Division

Kola Division

Trans-Baikal Division

Logistic

programme

assets

32 measures

13 measures

87 measures

17 measures

38 measures

Division-level measures

Climate change

27 measures

13 measures

44 measures

9 measures

23 measures

10 measures

Tailings and waste

4 measures

-

20 measures

4 measures

Land (landscaping)

1 measure

10 measures

-

-

-

-

13 measures

4 measures

Standards

1 measure

4 measures

RUB 4/24 bn

RUB 0.8/66 bn

RUB 0.4/77 bn

RUB 5.1/6.9 bn

RUB 0.6/2.7 bn

8

NOTE

9

TOP - mandatory measures of Norilsk Division

Element	Description

Target deadlines

Air

Waste, land

1. Integrated Sulphur Programme project to reduce pollutant emissions at NMP and Copper Plant
2. Off-gastreatment facility of AP No. 1-4 anode furnaces in Smelting Shop No. 3 of Copper Plant
3. Equipment modernisation at the drying section in Smelting Shop No. 1 of NMP
4. Provision of Norilsk Division with automatic monitoring systems (as part of emission quotas and CEP)

1. Technical and biological rehabilitation of 430 ha of legacy process material spills along the NMP slurry pipeline
2. Modernisation of waste dump 1 in line with global industry standards
3. Technical and biological rehabilitation of 5.25 ha of a mining water stream at discharge point No. 170

2024/2027

2029

2033

2025/2027

2030

2030

2030

CEP - comprehensive environmental permit

EPEP - environmental performance enhancement programme

10