Annual report 2013

The Company’s Development Strategy

In September 2013, the Board of Directors approved Approved by the Board of Directors of MMC Norilsk Nickel on September 12, 2013 the new corporate strategy. Later, in October, the directors of MMC Norilsk Nickel undertook a road show to give a presentation of this strategy in London and New York, and in November they did the same thing in Krasnoyarsk.

“We did not mean to create a strategy like a highway to be followed without deviations. What we need is a compass to find our bearings at the crossings which every company meets regularly – a compass that would transmit signals easy to understand for the investment community and our entire team,” Norilsk Nickel General Director Vladimir Potanin says about the essence of the Company development programme.

The Company strategy sets reference points without determining key indices and the timetable for programme implementation. At the same time, the Company began in 2013 to arrange its strategic objectives and values into goal-oriented plans concerning every field of company activities – a job set to finish in 2014, when a comprehensive roadmap the Company will follow is to be drawn as it implements its strategy. The Company will regularly update this document as outer conditions change and the Company undergoes internal transformation.

The new strategy makes it the Company’s priority to ensure sustainable development in any economic conditions in the non-ferrous metals markets. This requires a shift in focus to first-class Russian-based assets that are large-volume, highly profitable, and of high quality. In addition, it requires a rapid transition to a new and more effective production arrangement and concentrates the Company’s efforts on replenishing the raw mineral base and increasing investments in geological exploration as a separate efficient business. Projects to build mines will be continued. A modern world class ore-enriching complex will be established on the basis of the Talnakh Ore-Enrichment Plant, which will undertake refinement of all the ores produced at the operating enterprises. The Company will also carry out the optimisation and modernisation of current competitive metallurgical capacities. A decision has been made to close the Nickel Plant in Norilsk that used outmoded technology. The modernised and enlarged Nadezhda Metal Plant and the Talnakh Ore-Enrichment Plant will be responsible for all nickel refining and will leave Norilsk Nickel output at the previous level despite the liquidation of outdated assets.

Closing the Nickel Plant will have a positive impact on the economic and social development of the Polar regions. Moreover, the implementation of projects to utilise sulphur dioxide will significantly improve the environmental situation in Norilsk. There are no plans to reduce the number of staff, while the employees made redundant as part of the streamlining of resources currently existing in the region will be given jobs at the Company’s other enterprises. The reconstruction and construction of new capacities in the Arctic regions will provide work for construction, assembly, and research enterprises, including from the Krasnoyarsk Territory.