Strategy
NEW GROWTH OPPORTUNITIES
October 2018. Dedicated to meeting the growing demand for battery materials used in electric vehicles, the strategic partnership between BASF and Nornickel became a landmark event for achieving sustainable development goals. As BASF’s new production facility will be constructed adjacent to Nornickel’s refining facility in Harjavalta, Finland, this will provide BASF with exclusive access to local nickel and cobalt supplies.
2020 will see about 300,000 electric vehicles per year using batteries with components produced as part of the partnership between Nornickel and BASF.
Context
102–15
Significant impact of large companies on the development of regional and national industries, as well as their integration at the global level has made business a key player in addressing modern challenges.
Norilsk Nickel Group is a leader of Russia’s metals and mining industry. The Company meets the Russian and global economy’s growing demand for materials required to manufacture products that are vital for improving the quality of life.
The Company’s products are supplied to 34 countries and are in high demand in power generation, electronics, transportation, mechanical engineering, construction, consumer goods, healthcare, food, chemical and other industries.
As one of the largest employers and taxpayers in Russia, Nornickel plays an important role in the social and economic development of the regions where it operates.
MMC Norilsk Nickel considers social responsibility and commitment to the principles of sustainable development as key operational priorities for business development, community and investor relations, and environmental impact management.
The Company became one of the first Russian companies to sign up, in 2005, to the Social Charter of the Russian Business adopted by the Russian Union of Industrialists and Entrepreneurs (RSPP). In 2016, Norilsk Nickel Group joined the UN Global Compact, which marked the transition to a new strategic development cycle.
Supporting the United Nations’ Sustainable Development Goals and sharing the UN’s call to transform the business to the benefit of society, environment and the future of the planet, Nornickel started implementing its Long-Term Development Strategy until 2023, which drives its ambition to grow further as an advanced, cost efficient and environmentally responsible company.
Nornickel’s support for sustainable development initiatives and standards
102–12 102–13|
Standard/initiative |
Nornickel |
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UN and International Labour Organisation conventions |
Declaring support and aligning its by-laws accordingly |
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UN Global Compact |
Supporting officially |
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National Global Compact Network Association (Russia) |
Member |
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Sustainable Development Goals of the UN 2030 Agenda |
Declaring support and aligning governance practices accordingly |
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ISO 14001:2015 |
Compliance of MMC Norilsk Nickel, Kola MMC, and Norilsk Nickel Harjavalta management systems with the standards |
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ISO 9001:2015 |
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OHSAS 18001:2007 |
Compliance of MMC Norilsk Nickel and Norilsk Nickel Harjavalta management systems with the standard |
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ISO 26000:2010 |
Declaring support and providing reports |
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GOST R ISO 26000-2012 |
Declaring support and providing reports |
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AA1000AP, AA1000SES |
Declaring support and providing reports |
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International Platinum Group Metals Association |
Member |
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International Information Security Research Consortium |
Member |
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Nickel Institute |
Member. Since 2017, Nornickel’s Head of Marketing has been chairing the Institute’s Board of Directors |
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World Wildlife Fund (WWF) |
Ranking among the leading environmentally responsible mining companies in Russia according to the WWF |
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National Association of International Information Security |
Member and supporter |
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Security Charter for Critical Industrial Facilities |
Charter developer, member and signatory |
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FTSE4Good Index |
Inclusion in the FTSE4Good Emerging Index |
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Sustainalytics |
Assigned independent ESG ratings |
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MSCI |
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Social Charter of the Russian Business adopted by the RSPP |
Member and signatory |
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Anti-Corruption Charter of the Russian Business adopted by the RSPP |
Member and signatory |
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RSPP Responsibility and Transparency index and Sustainable Development Vector index |
One of the index leaders (in 2014, 2015, 2016, 2017, and 2018) |
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RSPP Committee on Corporate Social Responsibility and Demographic Policies |
Member |
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Environmental Charter of the Krasnoyarsk Territory |
Signatory |
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Organisational member |
GRI Gold Сommunity
Nornickel’s products for better quality of life, environmental improvements and green economy
The Taimyr unique resource base seems to be made to respond to the challenges facing humanity in the 21st century.
Playing a vital part in contributing to the reduction of air pollutant emissions, platinum group metals (PGM) are used as catalysts for the production of key chemicals, including agricultural fertilisers, that are essential for providing the planet’s growing population with foods. Platinum and palladium along with their co-metals are widespread in medicine, particularly in its forefront areas such as oncology and production of pacemakers and other implants.
The most common electronic products use nickel, copper, platinum, palladium, rhodium, iridium, ruthenium, cobalt, gold, silver and other metals produced by the Company.
It will be impossible to reduce air pollution in urban areas as planned or combat climate change as set out in the Paris Agreement unless hybrid cars with PGM catalysts are used extensively in the coming decades. In the long run, roads will be dominated by fully electric vehicles using lithium-ion batteries with high content of nickel and cobalt, as well as by hydrogen vehicles using platinum in their fuel cells. Electric vehicles will transform the global nickel and PGM industries. As the world’s leading supplier of these metals, Nornickel is uniquely positioned to contribute to this change.
Development of renewable energy is also impossible without stainless steel, nickel alloys and fibreglass as key structural materials used in wind and solar farms or without special conductive pastes for solar cell surfaces. However, high-quality stainless steel cannot be made without nickel; fibreglass cannot be produced without equipment that uses platinum and rhodium, and no conductive paste for solar batteries is made without silver. Apart from renewable generation, metals produced by Nornickel are essential for environmentally friendly energy storage systems that use nickel- and cobalt-based batteries or gases (hydrogen or methane) which are stored and processed also using PGM.
The Company provides comprehensive support for the green economy both in Europe and worldwide and reaffirms its commitment to sustainable use of resources and its status as a responsible global supplier of materials for sustainability purposes.
Mission and values102–16
The Company focuses on developing a group-wide corporate culture of mutual respect, trust and openness shared by its every employee. The corporate culture ensures effective implementation of the Company’s strategy based on sustainable development principles. 6
Our mission
Through the efficient use of natural resources and equity, we supply mankind with non-ferrous metals, which make the world a more reliable place to live in and help people realise their aspirations for development and technological progress.
Corporate strategy
Adopted in 2013, Nornickel’s corporate strategy primarily aims to unlock the resource potential of the Taimyr and Kola Peninsulas, improve the Company’s operating efficiency and raise the quality of investment and capital management. In 2013–2017, MMC Norilsk Nickel ran a number of strategic initiatives that fundamentally changed the Company’s technological landscape and can rightly be considered unique and pioneering. In 2017, the Company completed the first cycle of its development strategy. As a result, Polar Division upgraded dramatically its concentration facilities and reconfigured its metal production processes with Nickel Plant shut down. This significantly reduced environmental footprint of the Company in the region.
In 2018, the Company reaffirmed its ambition to grow further as an advanced, efficient and environmentally responsible company and presented Nornickel’s strategic priorities in sustainable development and growth areas for the medium and long terms.
Nornickel’s corporate values
The next development cycle will be centred around an unprecedented RUB 150 bn environmental initiative focusing on the reduction of emissions and environmentally friendly production. In 2018, the Company launched the large-scale Sulphur Project at Polar Division’s Copper Plant as part of its environmental programme.
Roadmap to advanced, efficient and environmentally friendly production
Nornickel’s strategic priorities
- 20% LTIFR reduction each year
- Zero work-related fatalities
- Implementation of the comprehensive environmental programme aiming at a 75% reduction in SO2 emissions in the Norilsk Industrial District
- 5–8% growth in metals output in the short term< style="height: 100%;"/li>
- Strict cost control to keep cost growth below the inflation rate
- Up to 15% increase in labour productivity (2020 vs 2017)
- 15–20% growth in metals output in the long term (2025+)
- Mining projects at the existing deposits of the Talnakh Ore Cluster, development of the Southern Cluster, and construction of Talnakh Concentrator—3
- Evaluation of potentially the world’s largest greenfield PGM cluster, a unique blue-sky partnership project (Arctic Palladium)
The mid-term strategic priority for the Company is an efficiency improvement programme covering its entire production chain. Key focus areas of the programme are upgrade and reconfiguration of production facilities, introduction of new standards and processes, innovative management approaches, and comprehensive digitisation and automation of production processes. The programme aims at improving efficiency, increasing labour productivity, boosting industrial safety and transforming corporate culture. In 2018–2021, Nornickel plans to invest about RUB 5.3 bn in digital technology alone.
MMC Norilsk Nickel will continue increasing its share in new market segments and industries that are likely to generate demand for its products in the future. One of such fast growing industries is production of materials for electric vehicles and batteries.
2018 non-financial performance highlights:
- dramatic improvements in industrial safety and health: in 2018, the lost time injury frequency rate (LTIFR) decreased from 0.44 to 0.23, down by 48% y-o-y, reaching the Company’s record low and remaining below the average across the metals and mining peers. Over 2013–2018, LTIFR dropped by 65%;
- production launch and phased capacity ramp-up at Bystrinsky GOK, a cutting-edge high-tech facility compliant with high environmental, technological and social standards;
- launch of the Sulphur Project at Polar Division’s Copper Plant, the Company’s most ambitious green initiative aimed at dramatic improvements in the regional environment.
103–2
When working towards its strategic development priorities, the Company factors in non-financial risks and principles of human rights and environment protection:
- unconditional respect for human rights;
- comprehensive measures to support indigenous peoples of the North;
- lower impact on the climate;
- alternative energy development (where applicable).
Sustainable development goals
In 2015, the United Nations adopted the 2030 Agenda for Sustainable Development, setting 17 Sustainable Development Goals (SDG) for the global community and 169 associated targets as enablers of the SDG achievement. Since the SDGs cannot be achieved by the efforts of only governments or public organisations, the UN encourages businesses to focus on the SDGs in their operations. “Business is a vital partner in achieving the Sustainable Development Goals. Companies can contribute through their core activities, and we ask companies everywhere to assess their impact, set ambitious goals and communicate transparently about the results” (Ban Ki-moon, United Nations Secretary-General).
103–2
Nornickel fully supports the 2030 Agenda for Sustainable Development and the UN SDGs, consistently integrating them into the Company’s strategy and everyday operations. In its public
non-financial reports for 2016 and 2017, the Company disclosed key sustainability targets and performance against relevant UN SDGs.
As the next step of integrating the UN SDGs, the Company grouped its major projects and programmes by SDG. For this purpose, 12 SDGs were selected on the basis of a survey conducted among stakeholders. The SDG-based grouping helped determine actual and budgeted costs per project/programme and assess the Company’s actual non-financial performance. The results achieved will be used in 2019 to analyse and prioritise SDGs and concentrate efforts on priority SDGs. National and international contexts of achieving such SDGs will also be analysed to assess their impact on business-related risks and opportunities.
The chart below presents current costs and capital expenditures for the most relevant SDG-related projects as a share of the Company’s consolidated revenue for 2018.
Current costs and capital expenditures for the most relevant UN SDGs as a share of 2018 consolidated revenue
Nornickel’s contribution towards the achievement of the UN SDGs103–2
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UN SDG |
SDG target |
SDG integration in Nornickel’s corporate governance framework |
Key initiatives and projects implemented by Nornickel |
Achievements of 2018 |
Plans for 2019 |
|---|---|---|---|---|---|
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Strategic priority |
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3.4 By 2030, reduce by one third premature mortality from non-communicable diseases through prevention and treatment and promote mental health and well-being 3.6 By 2020, halve the number of global deaths and injuries from road traffic accidents 3.9 By 2030, substantially reduce the number of deaths and illnesses from hazardous chemicals and air, water and soil pollution and contamination |
Occupational Health and Safety Policy Environmental Impact Assessment Policy Occupational Health and Safety Policy |
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24,631 employees 18,854 employees |
24,485 employees 50,510 employees |
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4.4 By 2030, substantially increase the number of youth and adults who have relevant skills, including technical and vocational skills, for employment, decent jobs and entrepreneurship |
Strategy Equal Opportunities Programme |
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87,462 employees 311 students 25 projects |
312 students |
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6.3 By 2030, improve water quality by reducing pollution, eliminating dumping and minimising release of hazardous chemicals and materials, halving the proportion of untreated wastewater and substantially increasing recycling and safe reuse globally |
Environmental Policy |
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7.1 By 2030, ensure universal access to affordable, reliable and modern energy services
7.3 By 2030, double the global rate of improvement in energy efficiency |
Strategy Mission and values Renewable Energy Sources Policy |
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ASCAPC design documents and cost estimates for the PD units developed and approved 3,098 TJ 10 MW |
ASCAPC rollout at Copper Plant, Nadezhda Metallurgical Plant, Komsomolsky and Skalisty mines and Common Storage Facilities 13 MW |
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8.2 Achieve higher levels of economic productivity through diversification, technological upgrading and innovation, including through a focus on high-value added and labour-intensive sectors 8.4 Improve progressively, through 2030, global resource efficiency in consumption and production and endeavour to decouple economic growth from environmental degradation, in accordance with the 10-Year Framework of Programmes on Sustainable Consumption and Production, with developed countries taking the lead 8.5 By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value 8.8 Protect labour rights and promote safe and secure working environments for all workers, including migrants, in particular women, and those in precarious employment |
Human Rights Policy Working Conditions Policy Occupational Health and Safety Policy Freedom of Association Policy Policy Regarding Support for Small and Medium Enterprises Environmental Policy Environmental Impact Assessment Policy |
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RUB 111,600 81% 25 social facilities |
28 social facilities |
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9.1 Develop quality, reliable, sustainable and resilient infrastructure, including regional and trans-border infrastructure, to support economic development and human well-being, with a focus on affordable and equitable access for all 9.4 By 2030, upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes, with all countries taking action in accordance with their respective capabilities 9.5 Enhance scientific research, upgrade the technological capabilities of industrial sectors in all countries, in particular developing countries, including encouraging innovation and substantially increasing the number of research and development workers per 1 million people and public and private research and development spending by 2030 |
Strategy Mission and values Local Community Relations Policy Policy Regarding Support for Small and Medium Enterprises
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1,081 m On 21 September 2018, Norilsk Airport received a certificate of compliance from the Federal Air Transport Agency On 29 October 2018, the airport received a certificate of compliance with the Federal Aviation Requirements from the Federal Air Transport Agency 10 MW 69 318 hours/year |
Norilsk Airport’s infrastructure to be upgraded 13 MW 38 |
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10.7 Facilitate orderly, safe, regular and responsible migration and mobility of people, including through the implementation of planned and well-managed migration policies |
Equal Opportunities Programme |
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545 former employees 533 apartments 316 people |
Complementary corporate pensions to be paid to 450 apartments |
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11.6 By 2030, reduce the adverse per capita environmental impact of cities, including by paying special attention to air quality and municipal and other waste management |
Environmental Policy |
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12.2 By 2030, achieve the sustainable management and efficient use of natural resources 12.4 By 2020, achieve the environmentally sound management of chemicals and all wastes throughout their life cycle, in accordance with agreed international frameworks, and significantly reduce their release to air, water and soil in order to minimise their adverse impacts on human health and the environment 12.5 By 2030, substantially reduce waste generation through prevention, reduction, recycling and reuse 12.6 Encourage companies, especially large and transnational ones, to adopt sustainable practices and integrate sustainability information into their reporting cycle |
Information Policy Regulation Biodiversity Conservation Policy Environmental Policy |
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15.1 By 2020, ensure the conservation, restoration and sustainable use of terrestrial and inland freshwater ecosystems and their services, in particular forests, wetlands, mountains and drylands, in line with obligations under international agreements 15.5 Take urgent and significant action to reduce the degradation of natural habitats, halt the loss of biodiversity and protect and prevent the extinction of threatened species by 2020 |
Environmental Policy Environmental Impact Assessment Policy Biodiversity Conservation Policy |
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16.5 Substantially reduce corruption and bribery in all their forms |
Anti-Corruption Policy |
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100% of operating business units 100% employees |
100% of operating business units 100% employees |
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17.16 Enhance the Global Partnership for Sustainable Development, complemented by multi-stakeholder partnerships that mobilise and share knowledge, expertise, technology and financial resources, to support the achievement of the Sustainable Development Goals in all countries, in particular developing countries |
Environmental Policy Environmental Impact Assessment Policy |
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21 3,700 volunteers |
Reporting on the progress resulting from accession to the UNGC |
