Climate risk management

Global warming and other consequences of climate change may affect the Company’s operations in the longer run. Their impact may include abnormal weather or lasting changes in weather patterns. Physical consequences of climate change can include droughts and permafrost thawing, which can have a material adverse effect on Nornickel’s operations.

As part of its risk management strategy, Nornickel implements a range of measures to monitor and control these risks. These activities enable Nornickel to keep climate risks at an acceptable level. Occurrence of climate risks may also unlock additional opportunities for Nornickel, driven by a strong demand for metals essential for the development of a low-carbon economy:

Furthermore, the metals produced by the Company are widely used in transition to low-carbon economy: platinum group metals (PGMs) are used in auto catalytic converters, nickel is a key component in EV batteries, and copper is used in EV charging infrastructure.

Hydropower is the main source of renewable energy for the Company. The use of other renewables such as solar, geothermal, and wind energy is limited, as Nornickel’s main production assets are located north of the Arctic Circle in harsh climatic conditions.

Since its establishment in 1935, the Company has been developing in these challenging climatic conditions and had to consider them in building its energy assets, relying on low-carbon fuels, i.e. natural gas (about 90 % of the energy mix), and renewable hydropower (about 10%).

harsh climatic conditions of the arctic circle

Air temperatures stay below freezing point for about eight months a year

Strong gusts of wind with speeds of up to 50 m/s are followed by dead calms lasting for weeks

Polar nights and twilights last for more than 100 days

On average, there are no more than 70 sunny days per year

Permafrost is 300 to 500 metres deep

Soils and ice are prone to seasonal thawing

Key climate change risks

Insufficient water resources: water shortages in storage reservoirs of Nornickel’s hydropower facilities may result in insufficient water head at HPP turbines leading to lower power output as well as drinking water shortages in Norilsk.

Insufficient water resources

Category	Description
Key risk factors	Extreme weather events (droughts) caused by climate change
Impact on Nornickel’s development goal and strategy	Efficient delivery of finished products (metals) in line with the production programme. Timely supply of products to consumers. Social responsibility: comfort and safety of people living in Nornickel’s regions of operation
Risk assessment	Impact on goals: medium. Source of risk: external. Year-on-year change in risk: none
Mitigation	The Company manages the risk through: Closed water circuits to reduce water withdrawal from external sources Regular hydrological observations to forecast water levels in rivers and other water bodies Cooperation with the Federal Service for Hydrometeorology and Environmental Monitoring (Rosgidromet) in setting up permanent hydrological and meteorological monitoring stations to improve the accuracy of water level forecasts for major rivers across Nornickel’s regions of operation Dredging the Norilskaya River and reducing energy consumption at production facilities in case of risk occurrence Replacing hydropower plant equipment to increase electricity output through improving the efficiency of hydropower units (implementation period: 2012–2021)

Permafrost thawing: loss of bearing capacity of soil under pile foundations can lead to deformation and subsequent collapse of buildings and structures.

Permafrost thawing

Category	Description
Key risk factors	Climate change, increase in average annual temperature over the last 15 to 20 years Increased depth of seasonal permafrost thawing.
Impact on Nornickel’s development goal and strategy	Efficient delivery of finished products (metals) in line with the production programme. Timely supply of products to consumers. Social responsibility: comfort and safety of people living in Nornickel’s regions of operation
Risk assessment	Impact on goals: medium. Source of risk: external. Year-on-year change in risk: none
Mitigation	The Company manages the risk through: Regular monitoring of soil condition under the foundations of buildings and structures built on permafrost Geodetic monitoring of buildings movement Measurements of soil temperatures under building foundations Monitoring the compliance of its facilities with operational requirements for crawl spaces Recommendations and corrective action plans to ensure safe operating conditions for buildings and structures