Annual report 2013

Main Vectors of Investment Policy

In 2013, the Company’s investment activity was aimed at solving strategic tasks, including maintaining and developing the raw mineral base and modernizing and updating production facilities in order to raise economic performance and For more on investment projects aimed at reducing the negative impact on the environment, see the section on “Environmental Responsibility.”the environmental safety of production.

The investment programme of the Company’s main Russian production enterprises in the reporting year included more than 250 major construction projects amounting to over 50 billion roubles. Total investments in 2013 amounted to 38.8 billion roubles for the Zapolarny Branch and 5.7 billion roubles for Kola MMC.

Capital investments in the Group’s foreign enterprises were used to implement projects for optimising production expenditures and projects for maintaining capital assets. The decrease in investment volume in 2012 from USD38.8 million to USD26.7 million in 2013 was related to the unfavorable situation in the world non-ferrous metals market.

Raw Mineral Complex Development Projects

The main expenditures in the raw mineral complex—more than 20 billion roubles—went to implementing projects for processing the available supplies, replenishing retired capacities, as well as ensuring their development with an increase in impregnated ore production volumes at all of the Company’s ore-producing enterprises. Most of the investments, over 19 billion roubles, were used to implement development projects of the Zapolarny Branch’s mineral resources sector. KMMC has invested more than 0.9 billion roubles in the development and modernisation of mining production areas.

Enrichment Industry Reconstruction and Modernisation Projects

In the year under report, 6 billion roubles were spent on implementing investment projects to develop and reconstruct the Norilsk and Talnakh ore enrichment plants in the Company’s Zapolarny Branch. Implementation of a project was continued to resolve impoundment problems at the Norilsk and Talnakh ore-enrichment plants for preserving production volumes and ensuring the requirements of environmental protection legislation.

In 2013, one of the stages of an extensive enrichment plant modernisation programme was completed at Kola MMC. An investment project was implemented at a cost of more than 500 million roubles to modernise electric motors and the control systems of two large-volume ball mills that provide for more than 40% of the productivity of the entire enrichment plant. A project has also been implemented to replace the flotation machines in order to improve the qualitative indices of dividing the nickel matte into copper and nickel concentrates. Expenditures at year end totalled 115.5 million roubles.

The Chita Project

Within the framework of private and government partnership, MMC Norilsk Nickel is engaged in developing fields in the Baikal Region. Investfond RF, which is co-financing the construction of a railroad to the fields, is the Company’s partner in the Chita project.

In 2013, more than 4.4 billion roubles were spent on implementing projects to develop the Bystrinsky copper, gold, silver, and iron field, as well as the Bugdansky molybdenum field. Capital assets amounting to 2.7 billion roubles were used to build the Bystrinsky OEP. The engineering documentation has been executed in full and positive conclusions of a state experts’ examination have been obtained.

Modernisation and Technical Re-Equipment of Metallurgical Capacities Projects

In 2013, 2.5 billion roubles were spent on implementing metallurgical projects, not counting sulphur utilisation projects, at the Zapolarny Branch, including around 833 million roubles to implement a comprehensive project to close down the agglomeration and smelting production sites of the Nickel Plant and increase the capacities of the pyrometallurgical production unit at the Nadezhda Metal Plant (NMP) for refining all of ZB’s crude nickel. A total of 1.2 billion roubles has been spent on projects of the Copper Plant.

The manufacture of high grade electrolyte cobalt on the Kola Peninsula is a strategic investment project of Norilsk Nickel. It will lead to expansion of the Company’s commercial line thanks to a product with high added value that is competitive in the global market. In the year under report, Kola MMC continued to implement a project called “Cobalt Production.” Investments in the project in 2013 amounted to 516.6 million roubles.

Kola MMC specialists, in cooperation with colleagues from the Gipronikel Institute, have invented a new method of obtaining nickel from crude sulphide ore. It is based on a solvent extraction method with oxygen and chlorine supply. This new way of obtaining nickel from crude sulphide will make it possible to exclude pyrometallurgical production processes for refining ore concentrate from the production cycle and cut back the significant material and operational expenditures related to them. In addition, the new method will make it possible to extract up to five percent more commercial product from the crude ore. The invention of the Kola metallurgists is patent-protected in the Russian Federation.