PJSC Mining and Metallurgical Company Norilsk Nickel

Good day, everyone and welcome to our Financial – First Half Financial Results Conference Call. As you may have seen we published a presentation dedicated ahead of this call and some people complaint the document, but I would like to highlight that the reason for being for this document to be that length is that we have actually quite a few important developments over the past – over the course of past six to seven months, which we would like to cover.

And it is also my honor and pleasure to introduce to you three of our new team members. This is Sergey Stepanov, Senior Vice President, who has been recently appointed to lead our Operations.

This is Evegeny Fyodorov, Vice President who has been appointed to look after our Energy Assets; and Stanislav Seleznev, who has been recently promoted to Vice President in charge of Ecology, Health and Safety. And it’s – now I’m passing the microphone over to Sergey Malyshev, Chief Financial Officer.

Good afternoon, everyone. Let me start give you our financial performance for the first half of 2021 with selected financial highlights.

Consolidated revenue increased 33% year-on-year to $8.9 billion, primarily driven by high metal prices as well as increase in PGMs sales volume. This was fully offset by the negative impact of production losses in the 2021, due to the accident of two underground mines, Norilsk Concentrator and Norilsk Division.

Our EBITDA increased 3x times to $5.7 billion, primary due to the effect of low base of the first half of last year, when as you remember, we recognized the environment provision of $2.1 billion related to the diesel spill incident. Acquisition of business to our EBITDA increased year-on-year by almost $300 million, primarily driven by high prices on copper and iron.

Our first half EBITDA already includes the impact of increasing mineral extraction tax rate 3.5x, which became effective on January sales. EBITDA margin increased to 64%, which incurs among the leaders in the global mining industry.

Network working capital was $1.8 billion, primarily due to one-off and seasonal factors. Most of this we expect to reverse in the second half of 2021.

We expect the target for working capital target at $1 billion. Free cash flow decreased by almost 50% to $1.4 billion, primarily due to the settlement of our environmental obligations, high capital expenditures and high income tax paid.

Our CapEx almost doubled to $1 billion mainly as a result of active construction of Sulfur project in Norilsk at Nadezhda and increased investments into modernization upgrade of equipment facilities aiming at improvement of industrial safety. Net debt EBITDA ratio remained almost unchanged at 0.7x, the demand is at conservative level.

Investment grade credit ratings have been confirmed in all three major international rating agencies. Total payments to shareholders in the first half of 2021 amounted to $4.3 billion, which included the fund dividends for 2020 in the amount of $2.2 billion and the share buyback in the amount of $2.1 billion.

In July 2021, we’ve got a lawsuit from the Federal Agency for Fishery for RUB58.7 billion. The ecological provision of RUB3.6 billion was recognized in the financial statements for the first half this year, based on the assessment that the Federal Agency for Fishery’s as a condition of damages to aquatic bio-resources is out of line of the applicable law and based on the preliminary estimate of the expansionary for reproduction of aquatic bio-resources.

And now let me give the floor to Sergey Stepanov.

Thank you. Please, let go to the Slide number 5.

On the Slide number 5 we see our results. In safety in the first half of 2021 and unfortunately we have several incidents mainly related to maintenance program and the underground cases.

As you know, our maintenance program was increased quite substantially and much more people now involved in this program. And we had two incidents at the beginning of this year related to injury cases in this regard.

And in this area as well in underground work area, we will increase our focus in safety Stanislav Seleznev and definitely we need to improve our control systems and performance in here. As well I would like to mention from these slides, you see in the left side, that we switched to more strict approach in cases recording, meaning that we look carefully at the micro injuries and try to record more injuries with proper investigations, which led to some increase in LTIFR.

But we believe that it’s worth to have proper investigational basis and fact basis to base our mattress in HSE program. Let switch – just turning to Slide number 6.

On the Slide number 6 we can see that we have gradual improvement in our HSE culture in the company, but still we believe that for the next three, five years, we need to have some progress in this area especially in the – to have much more open culture with open discussion on the issues which we have. We have very good base in terms of low LTIFR, and very good base in terms of history of big investments in good equipment and good safety system.

And we believe that the culture is one of the area where we really can make a step forward together with the good base, which we have in all areas of safety. And on the Slide 7, you see our actual progress in the SO2 emission track especially for core division, it’s related to closure to smelting facilities.

And our plan on the upper slide – on the upper part of the slide what we’d like to do with SO2 emission. But I think Sergey Dubovitsky in his section will tell much more about the sulphur project and our plans to reduce sulphur in 2023.

And now I would like to pass towards to Andrey Bougrov.

Thank you very much. I have to say that the number of events in the area of sustainable development and the amount of quite radical changes is pretty big.

So please bear with me, although we try to report to you in a fairly condensed form. On the issue of environment in early June, the Board of Directors has approved the environmental and climate change strategy.

We also had as much as 85% reduction in SO2 the emissions of Kola in 2021, and it was on track following the shutdown of metallurgical shop in March. The clearly big cleanup program of the city of Norilsk has been launched, the cost is about RUB40 billion that is focused on the demolition of obsolete buildings, scrap and debris collection and land rehabilitation.

Full environmental remediation of the 2020 diesel spill incident is in progress. Great Norilsk Expedition phase now in its phase 2 scientists’ field trip to study the environment and assess the efficiency of diesel spill remediation is in progress.

And last but not least, 200,000 Siberian sturgeon fry have been released into the Yenisei River. On the issue of climate change, we have improvements in industrial safety, upgrade of fuel storage facilities and energy infrastructure.

Pilot real-time monitoring of the foundations of emergency fuel storage facilities launched. We use satellite and drones monitoring.

We also have technical inspections of buildings and construction. Central permafrost-based foundations monitoring center being designed.

Upgrade of emergency fuel leak liquidation plans and upgrade of emergency response teams has been done. And reduction of CO2 emissions have been achieved, which led to the production of carbon neutral Nickel.

In the area of corporate governance, we have in the aftermath of the annual meeting of the shareholders created the new Sustainable Development and Climate Change Board Committee. We’ve strengthened the management team the positions of Senior Vice President, Director of Operations and Vice President, Energy have been introduced.

Organizational changes in the Norilsk division have been made to improve cooperation with indigenous population and dedicated department of the Polar division and Indigenous Communities Coordination Council have been created. We revamped environmental oversight function and risk management and the monitoring service.

We also improved our climate change and ESG disclosure. Annual Group KPIs have been amended to include environmental incidents and long-term ESG and climate change related KPIs are pending due to internal approvals.

On the next slide, you can see the data on our social records, as we are a leader in social investments in the Russian industry. In response to coronavirus, we expect U.S.

$190 million total spending in 2020-2021. And that is used to support the regional healthcare infrastructure to provide full support to employees to organize vaccination in the regions of operations and in terms of corporate spending the company has been named by Forbes Russia, number one.

I might also add that the vaccination is subsidized by the government that is free of charge to all of the participants. A special focus was made on supporting local communities, which included construction of a hospital and educational facilities, development of new tourist clusters implementation of the relocation program in Norilsk and special agreement with Krasnoyarsk region to support selected investment projects.

Expected social spending in 2021, including charities expenditures would exceed $500 million. Another area of attention was the issue of renovation of Norilsk Housing and Infrastructure.

We have signed a four-party agreement with the federal and regional governments on the renovation of the city of Norilsk housing and social infrastructure, the agreement extends to year 2035, and is funded in the amount of RUB120 billion, RUB80 billion would out of the company’s budget. So and last but not least, engagement with indigenous people, we provide support to indigenous people of Taymir Peninsula, first batch of 28 grants were awarded to tribal communities, NGOs municipal and public institutions.

We also support the indigenous population of the Murmansk region and new agreement with Sami people were signed. The agreement to support the Taymir indigenous population is for five years, 2020-2025, and it is funded as the logo of RUB2 billion.

Now in the next slide, you can see a selected environmental climate change targets for until 2030. So on climate change, we maintain absolute Scope 1 plus 2 GHG emission from operations at 10 million tons of CO2 equivalent up until 2030.

We will sustain industry leading position in the first quartile global nickel industry GHG intensity curve. And we would decrease the energy intensity index per nickel equivalent by 14% from the level achieved in 2013.

On here we are on track with our appliance, we do reduce the SO2 emissions of the Kola division by 85% in 2021 and in Polar division by 90% in 2025 and this is all in relation to the levels that we had in 2015. On water, we aim to reduce the volume of pollutants discharged by 25% from 2019 level and achieved the permissible discharge standards on 159,000 tons by 2031.

We would maintain fresh water intake except for an underground mine water for production below 120 million tons – cubic meters – 120 million cubic meters. And we would maintain the level of water recycling and reuse above 80%.

In the area of tailings storage facilities and waste, we would aim to dispose of a 100% of waste from new projects to environmentally safe facilities provided with best-in-class technology starting in 2025. We would dispose meaning collect and recycle, 100% of accumulated waste by year 2030.

The increase/maintain the share of mineral waste utilization above the 30%. We would also increase or maintain the share of non-mineral waste utilization, except the gypsum waste.

On land, the plans are to rehabilitate 117 hectors per year of disturbed land and cleanup lands in towns and cities and near production sites. On biodiversity, which is the last area of this environmental strategy, we would take measures to reduce negative impact on biodiversity, including forest conservation near production sites.

Now next slide is on the incident last year, full environmental remediation is in progress. On the left side of the slide, there is information that you probably all know about the completion of Phase 1 and 2 of cleanup and transportation and utilization of contaminant contaminated materials.

For 2021, we have entered Phase 4, rehabilitation is in full progress, and we are washing off river shores and treating contamination with residues on the land with sorbents. This is a continuation of the work started last year.

We would rehabilitate the collected contaminated soil using microbiological remediation technology. We would continue with the land reclamation and grass seeding.

We installed booms ahead of the flooding, snow, the ice melting and ice drift. We would continue monitoring of water bodies soil and flora and fauna continued – again, work continued from 2020 and the Great Norilsk Expedition in the Phase 2 would provide us with recommendations on various aspects of the liquidation of contamination.

For year 2021-2022, we would – we’re planning to continue washing of river shores and collection of contamination residues and we would focus on reproduction of aquatic bio-resources. Now on energy infrastructure, we have started a Comprehensive Physical Risk Mitigation program.

And this relates to reassessment of risks related to hazardous facilities. It includes ad-hoc audit of all industrial buildings and facilities, inspection of technological fuel pipelines, the emergency plans and the design of bunding perimeters of all fuel tanks, they have been recalculated based on the most aggressive spilling scenarios assuming 100% of fuel.

The immediate upgrade of fuel storage facilities with demolition of selected number of emergency fuel tanks that posed a potential risk, we’ve done upgrade of the remaining fuel tanks that included anticorrosion treatment, upgrade of the bunding perimeters, fuel pumps, installation of new gas detectors and upgrade of automatic leakage control systems. The amount of fuel held in emergency storage would probably halve in 2021 through optimization of available fuel reservoirs.

Now a major effort relates to long-term initiatives in the energy infrastructure. A major $4 billion program of energy modernization and upgrade, until 2030 is in progress, including replacement of equipment at heat and hydro power stations, upgrade of power grid and gas pipeline systems and modernization of fuel tank storages.

Replacement of diesel fuel reservoirs as a source of emergency fuel for Norilsk heat and power plants which are fed by natural gas as a primary source with a second gas pipeline considered as a long-term strategic option. Now on the next slide we have information on the rollout of online permafrost-based foundations monitoring in Norilsk.

The Monitoring Center of Buildings and Structures has been upgraded, staff expanded. Satellite monitoring of permafrost-based structures has been carried out.

So up until the end of year 2021, we would install 750 real-time sensors at the basements of fuel storage facilities and another 113 buildings and structures in Norilsk, with a real time data to be collected and analyzed by a central monitoring center. We would drill over 375 wells to install over 470 real-time thermo sensors to monitor temperature distribution in the subsoil of building foundations.

We’d launch of a special monitoring center of deformations of foundations and subsoil temperature of building foundations. We would conduct geodesic measurements of the deformations of buildings and structures.

Complete technical inspections of selected buildings and structures. And we’d conduct technical inspections of underfloor spaces.

A digital platform has been developed for monitoring of 11 emergency fuel tanks, all of which have been equipped with incline, thermistor chains, humidity and ground water level sensors. On the next slide, we have information on the major legacy waste collection program launched in Norilsk.

The first phase of this clean-up effort has been launched, the dedicated department, work with territories and landscaping, has been created in Norilsk Division with 1,000 employees and 72 units of specialized machinery. The program aims at the demolition of old abandoned buildings and structures, pipelines, utility lines and networks, and the removal of scrap metal accumulated around industrial sites in the city of Norilsk and its area.

Progress to date is that the area of over 300,000 square meters of waste and old equipment have been cleaned up since the early summer, target for the start of the winter season would 6 million square meters, 45 obsolete buildings and structures have been demolished, 47,000 tons of waste and 3,000 tons of scrap metal have been collected and removed. The overall funding for the program is $500 million-ish until year 2030.

On the next slide, we have information on climate change strategy and the key actions for 2021 would be to develop and launch monitoring system of the industrial and municipal foundations that are based on permafrost in Norilsk and that includes satellite distance reviews, we would introduce and implement divisional and asset-level strategy, design key initiatives to achieve higher physical risks mitigation, increased energy efficiency and reduction of CO2 emissions, develop capital expenditures plans and projects timelines and most importantly, we’d align climate change disclosure with TCFD requirements. Now, the next slide we have information on position of Norilsk Nickel in terms of greenhouse gas emissions.

And the conclusion of the analysis is that we are significantly lower than global competitors. So you could see the greenhouse emissions scope one plus two, we are at 9.7 million tons of CO2 equivalent.

On scope three, the number is 2.6 million tons. In the total electricity consumption in the Norilsk region, the average share of renewables in 2017, 2019 was 50% and average year of renewables in total electricity consumption for the group as a whole is 43%.

On the next slide, we have a chart that shows that the company has one of the nickel industry, lowest CO2 emissions intensity. So combined leadership of Nornickel on both cost and CO2 intensity curves ensures unique competitive advantage in the economy of tomorrow and long-term target to sustain the industry-leading positions in the first quartile of the emission intensity curve is our goal.

Next Slide is devoted to changes in corporate governance. We had a very substantial review of the existing practice that we have.

In fact, we’ve created – you could see that in the new elements in a green color. Risk management committee that is chaired by the President to improve risk controls and put environmental risks under greater scrutiny.

A position of Senior Vice President for sustainable development, who is in charge of control and monitoring of developments related to sustainable development of the company has been created together with Sustainable Development Department. We have created the Environmental Department for oversight of environmental climate change strategy in parallel to that we have created Ecological Monitoring Center that is in charge of design and launch of real-time ecological monitoring system.

And we also, as part of the risk management function, we have environmental inspection in charge of ecological risk assessment and audit. And I have already mentioned that we’ve – at the level of the board, we have created a Standing Board Committee on sustainable development and climate change.

And the committee is chaired by the Chairman of the Board of Directors, Mr. Gareth Penny.

Now the next slide, we have some elements of near term objectives in sustainable development agenda. And let me just mention the main ones.

We would prepare sustainable development strategies at the divisional level and decompose group strategic KPIs to management levels. We would prepare key initiatives and estimate associated capital expenditures.

We would carry on the waste collection and land reclamation program in Norilsk that has been launched earlier this year. We would continue full environmental remediation for the diesel spill incident.

We would design and rollout of permafrost-based foundations real time monitoring center in Norilsk. We would improve internal procedures, systems and risk management in accordance with ICMM and IRMA principles.

We shall prepare a TCFD compliance roadmap. We would obtain independent verification of the calculation of the carbon footprint of the company’s key metals.

We would finish our work on different policies and environmental positional statements, and that includes new Stakeholder Engagement policy, Sustainable Development policies, Supplier Code of Conduct, Responsible Sourcing initiative, climate change and environmental policies that would cover issues of Water, Biodiversity, Tailings Management. We also plan to prepare forest disclosure to CDP, and we would have some progress with applications to ICMM and IRMA.

Now in the next slide, we have information on participation in selected international sustainable development initiatives. We joined IRMA as a pending member in March 2021.

We have ESG rating from EcoVadis. We have complied with the global reporting initiative and had went through a procedure of public verification, first social responsibility report was issued back in 2003.

We are signatory to UN Global Compact since 2016. We joined responsible sourcing block chain network in 2021.

And since 2005, we are members of Nickel institute and since 1999 International Platinum group metals association. Now last slide in my presentation, related to most recent ESG ratings, we have – despite the fact that the year 2020 was quite a difficult one for the company.

We have some improvement in the ESG risk rating from Sustainalytics – with Sustainalytics and ISS. We have from MSCI, ESG rating B has been confirmed.

With the FTSE4Good reiterated as an index constituent. And overall, ESG score 4/5, which is an improvement from 2013, that puts Norilsk Nickel in the top percentile.

And some other rating agencies were quite appreciative of the efforts that the company has been the taking. Now let me give the floor to Anton Berlin, who would provide you with a market update.

Thank you.

Our market section starts on Slide 23. If we look at the global economy, obviously we has been impacted by the pandemic last year and this year.

The recovery is happening quite well. And it has been supported by low interest rates and injections of liquidity.

So we’re doing better than expected. Although, last year, the world hopes that pandemic would be short lead, say, half a year, unfortunately, this did not materialize, but it seems the global economy has adopted to this pandemic and lockdowns and things are improving from the economic point of view.

If we go to Slide 24, we can see the current industrial production. It’s differs percentage wise from metals to metals, from country to country, but on a global scale each an improvement.

And obviously, there’s a very different geographical structure of metal consumption. In base metals, China is dominated in the space.

They do consume more than a half of a nickel and copper. The PGM consumption is a bit more balanced and China is a sizeable market, but so as Europe and North America.

So the geographical declare is the impact the recovery in industrial demand. Also what has been impacting our markets and will continue to impact for years to come is the climate change and decarbonization.

Slide 25 gives a list of initiatives that are happening in the major markets. Now the U.S.

is now back in the Paris agreement and there’s $2 trillion potential investment that can go into climate change. The U.S.

has had the emissions targets for transportation. There are subsidies for zero emission vehicles, so that will be pushing the development in the car fleet.

Europe is trying to be ahead of the crowd with the installing different targets in climate change. So there’s a carbon neutrality industry-base, there’s carbon neutrality as a ultimate goal for 2050.

There is €1 trillion of investment for next 10 years. And Europe is focusing very much on building the best value chain domestically inside the region.

China is also part of the carbon neutrality move. They have set their own targets, which is 2060.

But China is actually head of Europe in pushing for electrified vehicles. And they have been quite successful in doing this, and there is a set of initiatives help them move to battery electric vehicles and hybrids.

Japan and South Korea also have carbon neutrality target by 2050, which is not that far away to think about it. So all of those countries need to start build their plans and moving today.

If we look at the mid-term versus long-term for our main markets on Slide 26, the picture is really different. In the mid-term, we see very solid demand for palladium and nickel, our core products.

For palladium, even in view of all the electrification car fleet, we still see emission sighting and IC production will continue. We don’t see a viable subsidy for ICs, at least for another 10 years or so, but there are some plans that we’d saw from the demand like substitution with platinum.

Then on the other hand, you have enough rhodium for the car catalyst, which makes more use for palladium. So we do see this deficit sustain until 2025.

2030 is a lot more complicated. It would depend on the size of the car market, on the share of EVs versus hybrids versus traditional IC engines.

It would depend on what kind of emission regulation we would have by then. And it also would depend on the development in mine recycling.

Though recycling is a bit more forecastable because it typically follows the pattern of car sales. Mine is a lot more complicated and we do realize that palladium mining is very much dependent, not just on palladium prices, but rhodium price as well.

So it’s a rather complicated equation with too many moving parts to give a fine view of 2030. But we do have strong views on this market.

As for nickel, we have obviously growing demand in battery sector, and this is the most hype part of the nickel market recently, and will continue to be so for the next few years. We do see growing supply of nickel units, but it’s very diverse.

Most of supply is happening on the MTI side, which is a great part for stainless steel making, but it’s not that suitable for other applications. We see battery demand very robust and we believe that the next couple of years it will become second stainless steel only.

But still with the supply coming up in Asia, Brazil is risk of modest surplus by 2025. In the long run, probably this market can go to a deficit as the demand for nickel will continue to grow.

And at this point we’re not certain whether the mine side will be able to cope with that growth. If we move on to our metals market specifically, Slide 27, we do have a holistic view of what’s happening to them.

So we’re recovering from the pandemic. For nickel, surprisingly we’re expecting somewhat of a surplus for this year earlier.

And we had to change our views, we actually expect a balanced market with a very theoretical deficit of may 31 kilotons, but we do expect this market to move to surplus next year and that’s just 100 kilotons. And this is mostly due to supply exceeding demand, although demand is developing well, supply is doing even better.

On the copper side, we see it as a fairly balanced market. It has statistical ups and downs, but given the size of the market, 300 kilotons of surplus or deficit is not that material.

And we believe it’s a very robust and healthy. On the palladium side, even in the midst of the pandemic, this market stayed in deficit, and the deficit is sustained this year and next year.

And this has to do with the decrease we expect the company this year mining output, but structurally this market has been in deficit for a while, and we expect that it can handle the deficit next year. On the platinum side, markets fairly balanced last year, but now we’re moving to surpluses at least statistically as a gap between consumption and production of metals.

However, investment demand has been very sizable for this metal, and we can expect that it would absorb most of the surplus. Moving to the Nickel market Slide 28, we kept seeing a bit of an evolution in exchange stocks.

They’ve actually decreased as the market slipped into deficit, but there’s still at what we would see as the typical level. Nickel historical average, as days of consumption has been a somewhat higher than normal level of 37 days, at Spot, the nickel in production of 29 days, so not that far away and still slightly above what we would see as normal and that’s15 to 25 days.

If we’ll look at the evolution of the Nickel markets Slide 27 – sorry, Slide 29. Stainless steel is going through a very healthy growth.

Stainless steel recovered last year better than expected with China taking the lead. And China continues to lead this year.

They are getting the biggest incremental output of stainless. But so do other countries, namely Indonesia.

So we expected the total of stainless steel production to increase by 5 million tons this year, which is a substantial source of demand for nickel units. And Stainless steel has been expensive, this continuous growth for half a century.

On the battery side, which is exciting to us actually, batteries are demonstrating three-digit growth. There are not that many areas in the global economy can find with this kind of numbers.

So that’s exciting. But then again, we realize that it’s sign of a somewhat lower base.

This market is in its early days, so it didn’t reach maturity yet. And this will allow for incredible growth as the metric we using the battery electric equivalent sales.

So we just recalculate all kinds of electrified cars into be the equivalent, because this gives a better scale and benchmark. And globally the BEV sales increase almost threefold, which is exciting prospect for Nickel use in the batteries.

The battery production is obviously in line with the electric vehicles production. LFP, which is zero nickel technology is about one-third of the total battery production.

And we’re very much excited by that the vast majority that is doing it nickel. LFP is a more affordable technology, but doesn’t have the same performance as Nickel based batteries, be it Nickel, Cobalt, Manganese or nickel cobalt aluminum.

So we believe that the diversity in batteries would continue, there will be different chemistries. There will be different niches that are being filled, but Nickel would continue to dominate this space.

If look into nickel production, Slide 31, the additional supply looks impressive at over 0.5 million tons, but not only for this grades is equal, if we look at the developments that are happening today, the batteries, which are a big source of new demand. The concept just any form of nickel, it has to be Class 1 fine Nickel.

They cannot to be with MTI or foil Nickel. And also it’s not just a nickel unit.

If you look at the drivers behind the electric vehicles, it’s about climate change. So the metal intake is very sensitive to ESG credentials and carbon footprint.

So this puts a lot of restrictions on the future supply that not every ton of Nickel produce would suffice the demand in the battery sector. And if we look at the data, the high grade nickel is only fraction this growth and going forward, it will be a challenge to satisfy the best value chain with the quality of Nickel required and the ESG credentials required, including climate change and carbon footprint.

If we look at the market down Slide 32, we believe that the current deficit shortly we’ll go back to surplus rather soon. And this has to do with a very sizable growth of production in the Pacific predominantly in Indonesia, both on the MTI side, stainless steel making and export of MTI If we move to Slide 33, we have a very solid view of the long-term outlook for Nickel.

Obviously, batteries are great source of demand. There are very different assumptions.

What size the battery market will be terms of nickel units, as well as gigawatt per hour. Still the range is 600 to 900 tons of nickel incremental demand by 2030 annually.

And that’s a very impressive number for this market, which is just slightly above 2 million tons. The drivers of the growth of the battery vehicles are hybrids, the growth of power generation that is based on energy, and as well as distribution and storage of this energy, so all of this is positive for Nickel.

Slide 34 speaks about the carbon footprint challenge. As a company, we think we are in leading position and we tend to keep our lead position in sense of carbon footprints, but it is challenging for many competitors in the market to keep their carbon footprint low.

Some of the competition has come from and we’re not certain how many of our competitors will be able to improve their carbon footprint. So this would create a chance for the battery change in the future.

We still have a few years to cope with this as the global industry, but time is right now. Moving to the copper market on Slide 35, this market is a very mature and very much sustainable.

We see ups and downs every year, but that’s where there will be a shortage – physical shortage for copper or the time when we would not be able to source enough units in the market, even if a mine is lagging behind. We’re seeing that copper has regular prospects in sense of climate change and electrification of power generation, but we don’t see a major challenge in sourcing enough copper units in the future.

It will depend on the copper pricing, but the reserves are available and the industry has the efficacy to provide those tons to the market. Moving to ETF, we have to look at the automotive as the biggest ultimate use of ETFs by 36.

It’s more than 80% of a Palladium demand and almost 40% of Platinum demand. Automotive was very much affected last year.

We are on the recovery path and we’re getting closed levels due to accounts free levels, but unfortunately there is a bit of a short fall coming of the chip shortage, which prevents car makers from making and selling as many cars as they could, which impacts PGM usage if they’re not making sound the car probably didn’t want the capitalists. We hold this with next here and what we finally on the back on the trajectory with car sales above 2019 levels.

If we look at the investment side of PGMs on Slide 37. PGM sort of palladium investment demand has been very modest, 1%, which is not surprising given the record high prices and that not that many moves in the market and about 8% of Platinum demand was investment demand, which makes sense.

In our view, Platinum is still a rather under valid. It’s a very important and crucial material for future technologies.

It will find a much more demand than it does today and the price will be reflected for this. So that’s a very good entry point to invest into platinum long-term.

Moving back to Palladium market Slide 38, we expect most of the growth to happen automotive, not surprising as it’s the biggest consumer. And it’s driven by the number of cars we use as well as the environmental regulation.

It has a major leap with Europe and China moving to new stage of regulation. And now we’ll be new steps into use.

Europe has stated that there will be a €7, although they didn’t give a specification for it, but we can assume that it would be an increase in usage of PGMs. We’ll look at into the platform market Slide 39.

Again, automotive is the biggest increase in demand. Jewellery had a bit of increase, but it’s less than what we would like to see as the industry.

The Jewellery market is lower than it used to be for platinum few years ago. And the surplus that is expected this year and next year, it could be absorbed by investment demand, but it does exist, so this market is still on the path of finding a better balance in production.

The lower platinum prices had an impact on South African mining, but with a better pricing in palladium and rhodium, this was offset and their economics are little cheeky, much better than they were a couple of years ago. Now, looking into the structure of the electrification in the car fleet, Slide 40, we still expect hybrids to dominate the space.

We did alter our forecast, but marginally, so we have decreased the share of hybrids and increased the share of BEVs, but it’s not a major change and is beneficial to our basket as hybrids including client hybrids will require both the PGM catalyst and a nickel battery. So this is the trend that we’ll see in the electrification.

As to the ICE engine, Slide 41, in the current environment, still the ICE is economically much more competitive than the battery electric vehicle. If we’ll look both at the retail price and the total cost of ownership for the lifecycle, we can see that BEVs still require stimulus or a lot of aspiration from the public to actually put their money behind BEVs.

This should change over time for BEVs becoming more competitive, but this is not the case as of today. If we look at the longer-term projections, Slide 42, the ICEs are still a crucial component of the transportation, whether it’s the conventional car or hybrid car, there is an aspiration to move to a greener transportation, but actually hybrids offer a very sizable improvement in climate change, not as good as BEVs, but a fivefold improvement over conventional ICEs.

So the recent targets looked very ambitious and this would – if they are implemented as promised like the ban in ICE for vehicles in EU by 2035, we would see a sizable decline, but this is post 2030. But for next ten years, ICEs would drive the demand and would require the PGM catalyst to be associated with them.

So if we look at the overall global decarbonization and what it means for our metals, Slide 43, we still see growth in gasoline not for diesel, at least not for the current regulation, and certainly very sizable development in BEVs and even fuel cells, although fuel cells are going to be a small market share. And this does impact our full metal basket, nickel, copper and PGMs and no matter how these technologies would develop their own represent very sizable demand for a metal basket.

If we’ll look at it as a risk assessment exercise on Slide 44, you can see that the vast majority of vans are actually positive for our baskets and we are excited to do the changes in the automotive segment. And last but not least, our Slide 45 speaks about the digital transaction and tokenization of the metal trade.

We have joined RSBN, which uses the blockchain to track the traceability and the covenants of the metal supply. This has become an important part of the metal trade.

It’s not just about delivering physical tons from Point A to Point B. It’s also about being able to confirm the ethical aspects and environmental aspects of ESG of your product, and also carbon footprint.

And in our view, digital and blockchain is the only viable solution as it also – it not just allows to store data, but to verify. And we know as a company that data generation is just the tip of the iceberg.

Verification audit is another important component, which is very much time consuming and it does have a cost. We have done our first transaction tokens last year.

We have launched investment for precious metals in January of this year and recently in June we’ve launched products for the base metals. And we see the digital products as a very important component for our sales and a very important component of which to both industrial and investment customers on a global scale.

And let me pass the floor to Mr. Sergey Malyshev, our Chief Financial Officer.

Thanks, Anton. Slide 47, now let me comment on our financial performance in a bit more details.

I start with revenue from metal sales. Volumes for our base metal sales, nickel and copper decreased by 3% and 32% respectively.

This was primarily the result of the production losses due to the temporary suspension of two underground mines at Norilsk concentrator in Norilsk Division. Overall, nickel production volume was partly compensated by sales of nickel from our stocks, which were accumulated last year, when demand for our metal reduced as a result of global COVID driven economic division.

This in turn with temporary suspension of mines and concentrator had a small impact on our PGM sales volumes in the first half of 2021 as PGM have a longer lead time from mines to refined metal. In fact, palladium sales actually increased 5% in the back of production growth, which was attributed to the ramp up of new precious metals processing client and Core MIC.

Prices for entire metals basket, significantly increased driven by the post-COVID recovery, local markets, as well as instigation of global decompensation and green economy returns. In terms our sales structure, we would like to highlight that combined attributed combined for more than 50% of metal sales.

Whereas sales volume increased to 7% of total sales and it became their first largest metal in out metal basket, overtaking platinum. Moving Slide 48, on this slide show our revenue, the metal in those terms, as you see revenue from our core metals increased no the back of high metal prices and increase in sales volumes which also offset the negative impact of production losses.

Slide 49, consolidated metal revenue increased 33% to $8.6 billion with the main contribution from high prices of $2.3 billion, which offset production losses worth $1.4 billion. Another just $1 billion was contribute by increase in metal sales volume, excluding the impact of production losses.

Re-sales of metals was primarily comprised of copper, which purchased from third parties to fulfil the contract obligations. In terms of geographical breakdown sales incremental largest markets is increasing to 49% of total sales.

Our next slide about EBTIDA now let’s our EBTIDA increased three-fold to $5.7 billion, while EBITDA margin increased to 64%. As we had already discussed high realized metal prices made a significant over $2.3 billion contribution to the growth of our EBITDA.

Secondly, as the effect of the first half of 2020 when we recognized more than $2 billion environmental provision had immense impact on our EBITDA growth rate this year. The overall negative EBITDA impact of production losses stemming from that temporary suspension on the ground mines in Talnakh concentrator were assessed just over $1 billion.

Of the two temporary suspend mines at Jabberwocky, mine resumed full production in May, whereas, Taimyrsky is already operating at 80% capacity, it just concentrate it back to 85% of its design capacity. Both the mine and the concentrator we expect to recover full by the end of this year.

We believe that production losses had the most negative impact on the first half results. However, owing to up to six months lag between mining and production of refines some negative, but small effects will affect our second half results as well.

In terms of macro factors we will like to highlight the change in tax legislation. The pre and half times increase of inflation rates from June results translated to EBITDA loss of $183 million.

The positive effects, Russian rubel depreciation, again, used to offset the inflationary growth of expense. In terms of the operation factors higher sales volumes, net of production losses resulted in additional $95 million of our EBITDA.

The metals drive repeat was the result of ramp up of our new pre-precious metals production line Kola MMC. Social expenses increased by $89 million.

This was driven primarily by the provisional related to the agreement of social economic development of . Move to Slide 51.

In the first half of 2021 our cash operating cost increased 18% to $2.2 billion, primarily as of result of higher purchases of refined metals for sale mainly copper, in order to cover the production losses and fulfill the contract obligations and 3.5 times increase in mineral extraction tax. Effect of domestic inflation of cash operation cost was fully offset by the depreciation of Russian rubel against U.S.

dollar. Cash costs adjusted for ForEx and purchases of refined metal and semi products increased by 13% as a result of increase in manual inflation tax.

Temporary suspension of two mines and the concentrator in Norilsk, resulted in a lot consumption of materials. In terms of our cost structure, labor remained the largest cash cost item accounting for 29% of total.

In the first half of 2021 labor cost remained unchanged as COVID related shipment payments in place reduced year-on-year, but sellers which were right in line with the metal inflation. The sales of metals and semi products purchases temporarily increased to 29% as more metals were purchased for resale.

Let’s discuss our networking capital change in Slide 52. In the first half of 2021 networking capital increased to $1.8 billion primarily as a result of one off and seasonal factors, most of which, I believe, will be largely reversed in the second half of the year.

Macro factors, primary changes in income tax receivable led to an increase in net working capital by $540 million. Nickel inventory increased by $200 million, primarily oriented to professional tax expenses capitalized in our work in progress products.

The depreciation of advances received from customers is altered in our net working capital increased by $363 million. We estimate the total impact from this one off and seasonal factors over $600 million.

And again, we feel quite uncomfortable with component of mid-term target for $1 billion. Turning to next Slide 53, in the first half of 2021 our capital expenditure increased by 80% to almost $1 billion, with a lot of high investment in both commercial and stay-in business projects as well as environmental program.

In one of the key drivers of growth, we would like to highlight the increase of investment in industrial separate inventory division of companies, facilities across all business units, including investment in energy, which almost doubled. Our energy CapEx has already proceeded to the improvement of energy efficiency and production of carbon dioxide emissions.

Construction of our Sulphur Program in Norilsk due to smelter continues to pick up the speed. The mentioned growth projects such as South Cluster and Talnakh concentrator going for expansion.

Slide 54, given that the higher leverage for financial performance has accelerated. Let me touch quickly on the latest sensitivity results.

The portion of operating and capital expenditures is ruble denominated and ruble denominated operating and capital expenditures were 91% and 81% respectively. As you can see from the chart, U.S.

dollar per ruble rate of 72.41 change of the rate, that is $41 million of EBITDA change and $110 million of free cash change. Next Slide 55, free cash flow in first half of 2021, our cash flow decreased to $1.4 billion, mainly as a result of cash reimbursement of environmental obligations in the amount of $2 billion and increase in capital expenditures, as well as high income tax paid.

These negative effects will probably compensate by increase in cash flow from operations related to high metal revenue. Balance sheet management Slide 56, at the end of the first half of 2021, the company’s net debt amounted to $7.7 billion.

Net debt to EBITDA ratio increased slightly to 0.7 times. The company maintains strong equity position of $4.1 billion compared to $1 billion of cash and $2.1 billion of committed credit lines.

However, on June 30, we have signed two new committed revolver credit lines amounted to RUB80 billion in total which become available starting from July 2021. This level of liquidity covers the debt repayment for approximately next two and a half years including current year.

Debt structure remains stable due to the sale of short-term debt increased to 7%. In February, we have full required bonds in the amount of RUB15 billion, both in international rating agency confirmed our credit rating as investment grade.

And next Slide finance cost reduction in terms of our balance sheet management we are quite proud to highlight the major progress in reducing the cost of debt structures to a record low level in our corporate history. In spite of an increase in the average amount of our gross debt offset by 21% since 2016, our debt portfolio effective interest rate decreased by 2.3 percentage points and totaled 2.8% at the end of the first half of 2021.

The reduction of our effective interest rate was well ahead of the 0.7 percentage point reduction of the base interest rate over that same period. We believe that this result is fully attributable to our constant focus on the proactive debt management and improvement of lending terms with our main debt providers.

Slide 58, given the recent change in taxation. Let me discuss this a bit more detail.

The Russian government has recently announced several amendments to Russian tax legislation. First of all, it was the increase in mineral extraction tax rate by 3.5 times and now there is export duties which to be introduced and will affect our second half results.

As you can see from our analysis, the announced change taking our expected royalties, revenues base in 2021 twice above our global peers and considerable high other countries minus of while with the commodity markets remain strong, the tax burden is variable but it makes our position less competitive against our global peers. And as you will know yourself, we’re a global company as we have to compete in global markets.

Thank you very much. And now let me turn the floor to Stepanov.

Thank you, Sergey. As Sergey Malyshev mentioned, recovery of Oktyabrsky and Taimyrsky mines goes on schedule.

You see some information regarding that on the slides 60, 61, 62 and 64. Basically what’s going on, Oktyabrsky mine already operates on 100% of its planned capacity for the year 2021.

Taimyrsky works on 75% to 80% of its capacity. And we have gradual plan to increase these production in the next three months.

Work generally going on, that Taimyrsky mine still has some issues on the very low horizons. Water was located therefore basically four or five months.

And what we are doing now, we work very carefully in these area, which has been flooded due to safety issues because now water creates some cracks and we work very careful, still we have 80% of our production in Taimyrsky mine as well. And we believe that generally we will make it close to 100% in the next three months.

Concentrator – Norilsk Concentrator is ready to work 100% because we basically restore – rebuild its crushing unit in other configuration and other technical configuration. Now in July, Norilsk Concentrator works sounds like 85% due to lack of ore from Taimyrsky, but whenever Taimyrsky is operating 100% basically the concentrator our agents have taken and verified these volumes.

And the last thing to say on this Slide 64 that we confirm our production guidance for 2021, which we provided about three, four months ago. So that’s all for my section.

I’ll let Dubovitsky.

So good afternoon, ladies and gentlemen. So let me take you through our major projects as well as our overall investment program.

So I’ll start on the Slide 65 with Bystrinsky project. Actually, it’s not already a project that’s – that has been the project – that has been successfully delivered.

And it’s already up and running at full speed. So we’re talking about production assets already.

So we confirm for 2021, the operations have capacity of 10 million plus tons of ore production processing. So slightly above the planned capacity and the financial result for the first half of the year with EBITDA exceeding $0.5 billion I think speaks for itself as far as the quality of the asset is concerned.

So the next project Slide 66 is South Cluster development, already well known to everybody. And that’s ongoing mining projects consisting all three elements.

So one element is open-pit mine that should reach 7 million tons of ore production by 2027 gradually, then the expansion of underground mine from the current 1.2 million to 2 million tons of ore production, and also construction and modernization of required infrastructure for such potential development. So these assets will contribute primarily PGMs.

So it will contribute 750,000 to 850,000 ounces of PGMs. And first on – from the developments to be mined already by the end of this year.

So next project that is also linked to the South Cluster development is the construction of the third production line, Talnakh Concentrator. That’s one of our strategic projects.

And the goal of this project is to expand concentrating capacity in orders by 8 million tons, and as said its projected for the South Cluster development as well as Talnakh mine’s expansions. So additionally till the capacity expansion, so there’ll be positive impact on recovery draws with the expected EBITDA impact of $150 million.

The construction of this project is underway. So key contracts signed and based on actual contracts the budget is estimated at approximately $1 billion.

Construction will be completed by the end of 2023, and ramp up is expected within the year 2024. So next new project, but also already known to the investment community is expansion of our Nadezhda Smelter, our flagship smelter which actually smelts all the nickel concentrates produced in the Norilsk area.

That’s part of our growth strategy and this new production line to expand – is to expand Nadezhda Smelter capacity by 30%. As said, it’s required to achieve metal production growth that belong to our strategic plans.

This third line is fully accommodated into software projects. So meaning that no additional burden in terms of environment will be caused by this project.

So launch date is 2025. So the investment decision on this project was taken recently in the end of June.

And now we are at the final round for EP contracts tender. So the next project on Slide 69 is another metallurgical growth project.

It’s the construction of new copper refinery line based on roasting-leaching-electrowinning technology. So this project is to replace the capacity of 75 kilotons of copper production.

That was shutdown I said earlier. In the first half of this year as part of our environmental program and also this project is to add another 75 kilotons of copper production to reflect mining growth plans.

So in total, so the capacity to be constructed will be 115 kilotons of copper. So once date is also 2025 is also have a similar status with the third line of Nadezhda smelter expansion.

So meaning that investment decision is taken and the contracting is ongoing. So the next Slide 70 speaks about our large elements, which is infrastructure – energy infrastructure, modernization upgrade that consists of actually many major projects and programs.

We are talking about long-term program to actually with the name to renew and expand all critical elements of the energy infrastructure from gas production and transportation to power generation and greets. So the first phase projects are that are that already execution or have been already launched.

It counts for $4 million in investments. And also additional projects and programs are being assessed that might further effect our investment program to the upside, especially in the horizon of 2026, 2030.

We also mentioned many times in different elements of this presentation that the environmental and climate change agenda is at the top of our priorities. One of the initiatives that I wanted to also to mention is the new initiative around carbon neutral nickel production.

As you know and we already chose only couple of slides here in the presentation, Norilsk Nickel already one of the industry leaders in terms of the low carbon footprint. So being in the first quarter in terms of emissions per metal produced and with ambition to be a crucial player in the future green economy, we not only worked on keeping this industry position in terms of the carbon footprint physically, but also develop comprehensive value proposition for our clients, providing transparency of the value chain.

And as such this initiatives – this initiative around carbon nickel production is one of the first steps in this direction and it brings very specific measures that we undertake to reduce CO2 emissions. And that’s by the way, verified by independent auditors with certain stages of our production and namely first 5 kilotons of nickel has been already produced on the initiative.

Next Slide 72 speaks about one of the core elements of our environmental program, unprecedented software program to reduce SO2 emissions at all our operations. Very important milestone that was already mentioned today was achieved in the first half of this year with bringing our call operations in line with our strategic target to reduce SO2 emissions at these operations by 85%.

Next and even more ambitious in terms of materiality elements is execution of the software program in Norilsk region that will bring us total emissions down by factor of 10 in 2025, just a couple of boards on the status of this software program. So the next slide, the program is on the way.

The first week of phase of the program at Nadezhda smelter is already under construction. And the fact that we are not only talking about actual building is reflected in the quarter that you see in front of you, but also in the numbers that were already mentioned by Mr.

Malyshev in terms of the first half topics with the expands of on software program growing almost 7 times half on half. In terms of the second phase that is linked to Corpus dream projects.

So we completed already the basic engineering. It was completed by June.

As it was initially scheduled. We also took all the necessary investment decisions and now also conducting in key contracts conflict tenders.

And we are on track to deliver those projects in 2025 as committed. On the back of actual tenders and overall trends of the price escalation in construction market derived from higher metals and material prices, as well as labor force scarcity amid COVID, the current budget estimate is around $4.1 billion or $ 4.3 billion.

Next Slide 74 on overall CapEx guidance. We expect this – the this year its number will be around $3 billion that is within our previously announced rates range, but skewed towards the lower end of this range given the ruble depreciation as budgeted numbers, as well as remaining COVID restrictions.

These numbers – this number represents almost 70% growth year-on-year, but as already mentioned, this trends is already reflected by our first half results with first half CapEx growing almost 80% half on half. Average for 2020 to 2025 is estimated in the upper hands of the range that we already announced previously around $4 billion reflecting primarily already mentioned cost inflation in the construction market.

We also indicate the upside risk for $4 billion CapEx number for 2020 plus period as mentioned earlier, some additional projects that initiatives are still being assessed in relation to energy infrastructure, renewal, first of all, but also production asset modernization, including further long-term initiatives of our comprehensive environmental program. Thank you very much.

Let me pass the floor back to Mr. Malyshev.

Thanks, Sergey. On the slide, you can see summary of our metal expectation and metal production guidance.

In terms of CapEx, I have already mentioned we expect capital expenditures to below the level of 2021, we expect networking capital to be at about $1 billion and as always like to remind you of that nickel added to EBITDA, we estimate spot metal prices at approximately below the levels. Thanks.

This ends our presentation. We’re happy to take your questions.

Thank you for your patience.

Ladies and gentlemen, thanks for this conference presentation. Two questions for me, please.

The first one is on the cost bridge. Have you made an estimate of the overall impact for the cost of free pair that we can strip out?

My second question is a broader one on the flooding and on the origin of the flooding. Are you making any connection with the transformation of permafrost or something that we should be more concerned about going forward as a potential risk that could repeat itself?

Or do you read those events as completely disconnected and treating that completely different? Thank you.

Regarding your question, in terms of one ways to make that recovery of two-folded mines, and we are of course, approximately involved $150 million in OpEx and as far as small CapEx approximately $22 million was spent in fiscal year and remaining RUB8.6 billion is budget in the second half of this year. This has been recorded this other operating expenses.

And regarding the second question, we believe that temperature has no direct relations, because it’s too deep. It’s basically 350 meters approximately.

And the temperature here is stable. It’s stable temperature.

Steel, we believe that we do need to do additional efforts in hydro geological survey across the whole our mines, all our mines, because we believe that we should not underestimate the amount of water we have in any areas. And we will do some additional – we are doing currently additional drilling and our tool just now works very careful on all other mines with all potential dangerous areas.

Okay. Maybe just to follow-up if I could please on dividends, obviously, you agreed on the new formula this year, which was more in line with what the company was looking at establishing as 50% of free cash flow.

Should we treat that as the new framework or should we still assume that 2022 should be back to the previous agreement and that’s any change would only take phase from 2023? Thank you.

No, you should not treat this as a new long-term formula. There was a ad hoc decision by major shareholders regarding the final dividend payout for year 2020.

The current formula is part of major shareholder’s agreements. And this year 2021 is the last financial year to which this formula is applicable.

However, the agreement itself, I remind you expires at the very end of 2022. And it’s up to major shareholders to agree on how exactly and how much exactly they want to pay dividends both for this financial year as well as for the next one.

Okay. Thanks.

Thank you.

Hi guys. Thanks for the presentation.

My first question is a follow-up related to dividends and appreciate the decision on the formula is based and driven by the major shareholders. But as far as your understanding, I see that your definition of free cash flow in the first half includes the payment of the $2 billion fine associated with the fuel spill.

Is that a fair assumption to assume that if free cash flow based dividend formula was to be adopted, it would be based on that definition shown in the first half of the year.

Just to reiterate that decision to make free cash flow based payout regarding the final dividend of 2020 wasn’t lack of decision. You should not read it as a new basically long-term formula.

The formula that is part of major shareholders is EBITDA based formula, and until shareholders agreed differently, it’s still remains in place.

Okay. Thanks.

Very clear. And then next comment, and again, appreciate, it might not be that easy to comment on it, but I noticed in the CEO statement there’s a comment suggesting alterations to taxation may not be fully complete.

Can you give us any stair on whether you’re having any negotiations actively with the government around taxation change? I know some of your peers in the steel sector have specifically said that on a – sort of on a conference call.

So are you in discussions and can you give us any sense of what we should expect there?

If you can appreciate, we are not in a position to comment on other Goldman’s potential considerations or we can say now that we consider the risk of increase in taxation is quite significant.

Okay. Thanks.

And then one very quick one additionally, if I may you mentioned the RUB275 million additional costs for metals purchase for resell is should we assume that as a non-recurring item going forward?

Correct. This metal was predominantly comprised of copper, which we have purchased from third parties to cover and to meet our contract obligations, given the shortfall in production in the first half.

And as we mentioned most of the production losses this year we encourage in the first half, but there’ll be some in the second half, but to the smallest size. So therefore this amount of metal purchase for resale is non-recurring.

But you should not forget also that we have this recurring operation every year, which is the purchase of palladium from third parties for resale, and this was a recurring operation, but it has nothing to do with recovering for our production losses.

Very clear. Thanks so much.

Hi gentlemen, thanks for a very detailed presentation. Two questions from my side.

So firstly, from your palladium production guidance for 2021, if we strip out this fact affect your production on the first half from the annual guidance, it will be put in play that you expect your quarterly production in third and fourth quarter to be down actually versus second quarter. The reason the question is, what is the assumption?

Why do you expect the decline? The first one.

Generally we have after six month lag between what is mined and what is produced in the precious metals. So the only kind of subsequent substantial factor is these kind of production part.

So, indeed you expect your production is set in the second half of this year or in the third and fourth quarter to be a lower in the second quarter this year and your breakeven.

Sorry, first quarter and second quarter, half and second half.

A core production in the second half versus second quarter of this year?

Let’s – let us come back to, Vladimir will come back to you, we will provide some with quarterly kind of forecast on that and we can come back to do it thoroughly.

Sure. Thank you.

My second question…

Boris, if you can add two things, you have our actual first half production results, which have been published, second, our production guidance for this year, which has been reiterated. The difference, whatever you want to take, you want to take me to the point of production guidance, the bottom of the range, the top end of the range.

That’s implied second half. I mean, I’m not sure what else we can add here.

That’s clear this way. Thank you.

If I may have the second question is – you’re not on your practice for sulfur project, if I’m not mistaken, it’s up from $3.6 billion to $3.1 – $4.1 billion to $4.3 billion. The question is what is the reason for the increase?

So, yes, as I told the primary reason is the overall construction costs increase that everybody’s experienced – experience in the market that is resulting from the higher prices for metals and materials, eastern construction, but also the leading construction labor cost inflation because of the illegal forced scarcity given the COVID limitations. There are also some other factors in terms of more detailed destination of the scope, because we, as I said in June progress to the next stage for the copper stream projects so that also contributed with some dream scope specification and some risk mitigation measures to the overall budget.

So these are the factors.

Yes. Thank you very much.

Actually I had also the third question, if I may. It’s basically on your…

Good day. Thank you very much for taking my question.

So the first question is regarding the disaster consequences. You’ve already paid $2 billion fine for this accident and now you get the second claim from Rosrybolovstvo.

Could there be any other claimants for additional damages and if there is any legal timeframe within which new claims can be filed against the company? Thank you.

And then we’ll ask the second question after this answer.

Hi, Nina. This is Vladimir Zhukov.

Well, the claim basically just for everyone – to remind everyone, we have already successfully settled the claim with the Russian environmental watchdog and paid about $2 billion in cash, which was the reimbursement of damage to water and soil. We have also reached an agreement regarding settling and damage to bioresources that was with a regional government, and we have agreed to settled in inclined and the damage to the fish resources that is, and the lawsuit that has been recently filed against us is the only other claim outstanding, which we’re aware of.

Basically not aware of any other potential claimants regarding the damages caused by environmental damages caused by diesel fuel spill.

Understood. Thanks Vladimir.

The second question is a follow-up on dividend. When do you think we can hear on interim dividend, and if the company can launch new buyback in addition to the one undertaken earlier this year?

We as the management we have obligation to pay at least one interim dividend a year. But in terms of the exact number of dividends and the amounts, each time decisions are made earthquake by major shareholders.

As soon as the reach a decision regarding an interim dividend for Regarding share buyback, we just completed one. We consider share buybacks whenever our share price is under kind of a downward pressure as an attractive investment opportunity, however, similar to dividends, share buyback decisions the ones that are made by major shareholders.

And again, if they deem a new share buyback appropriate, we will let them know.

Very well. Thank you.

And the last question from my side is – rhodium revenue is now exceeding the platinum revenue for the company. Can Anton probably mention outlook for this commodity as well?

Rhodium outlook is virtually impossible. It’s a byproduct.

Its production is not very stable because it changed overtime for any given individual mine. It’s a demand – is also very volatile because car companies tend to start and stop using it roughly same time.

So this creates ways of demand. And if you look at the east market every 5% years in spite south, and then it collapses.

It’s very small occupation to the major PGMs is roughly one part of platinum market. And this is the reason why this is not very stable unless for this way and ultimately one of the areas where it’s used.

It has other applications that don’t have a substitute for volume, ultimately typically does palladium can replace rhodium, but with the current pricing environment that was incentive to try and use more volume. So this boots to me moving parts to give any viable forecast for 12 months or beyond 12 months.

reasons with a very different revenue stream from this commodity.

Thank you for answers, I’ll pass the flour to other analysts.

Good afternoon and thank you very much for presentation. I have several questions.

My first question relates to capital guidance for the year, the compliance of that are your CapEx in the second half of this year should bubble versus the CapEx spend in the first half of this year. How difficult is this, and is there any likelihood that we may see some delays in this CapEx implementation?

Thank you.

Sergey Dubovitsky, so as I said in my part of the report, so the trend there. So that’s if you look at our past years, so the ramp towards spent of one-thirds in the first half and two-thirds in the second half is there.

And as you can see in the first half results as we said, so the CapEx increase was almost 80%, half-and-half. So putting these two elements together, we think that it’s realistic because we see – we experienced the ramp-up of the – in many projects ongoing.

So our sulfur project, Southwest development, Thelma concentrate upgrades, energy infrastructure projects, et cetera, et cetera. So we are mobilizing the contractor force.

So the number of contractors in the recent two years almost doubled. So – and we are not only talking about the quantity, but also the quality of contractors.

So there are a few big names in the construction market that actually entered into the Northeast region in the past, this year. So as said, the transit there, so we are talking about 70% increasing in cap expanse year-on-year.

And again, if you compare half-and-half results, so we are talking about 80% increased already.

Thank you. My second question relates to the working capital guidance.

You’re guiding that the working capital will effectively decrease by about $800 million roughly by the end of this year, which is quite significant. Is it subject to any kind of metal prices downfall, for example, you might be assuming a decline in metal prices?

No. No, no, actually price with the level of floating capital.

The main drivers for the reduction of working capital, which you anticipate, is there – there was a seasonal thing related to income tax. And also there have been depreciation of some of our amortization, some of customer cash advances in the first half, some of which we expect to renew in the second half.

So it’s not on this drivers for the reduction working capital will really depend on metal prices?

Thank you, Bougrov and Sergey. And finally my last question on the timeline for the interim dividend announcement you said that the company has to pay at least one interim dividend a year.

Does it imply that you need to announce and pay until the calendar year end, or you may announce some paid in the following year for this year?

Well, the requirements for at least one in term dividend applies to a requirement to announce at least one – one interim dividends within a calendar year.

Calendar year. Okay.

Thank you.

Yes. Hello.

The majority of my questions have been answered already. I’ve got two small ones on the operations.

The first one you mentioned that the Norilsk Concentrator has been rearranged with some temporary crushing solution. The question is, is it as far as it looks on the soil company provided was complete isolated building with internal concentrate – the concentrate kind of cross material stockyard?

And have you kind of there are actually thing you are building which covers everything or when temperature falls in Autumn, there can be some complications when material freezes, if it’s – if it’s some covered? And the second one with regards to the flooded areas at the mines, you isolated them that’s clear, but do you plan to recommend production at this horizon anytime soon, and if not, is there any risk of state penalties for the reserves loss?

Thank you.

So regarding the first question, we have two stages. Initially it was temporary solution, just mobile crushers on the warehouse on the stockpile and it worked, so currently what we have done we actually has built so far, it’s an open crusher, but constant crusher, if you see the Slide 63, you see these kinds of circle, the red circle.

So if you go little bit to the right, so there is an entry point, the answer gallery to the plant itself, and we built crusher exactly in this place. So far is construction.

It’s currently no roof but it works so open constant crusher. So these crusher basically what it does, it’s better – because the second crushing unit, quite old thing and we basically substituted the secondary cursing unit by just more than good crusher.

So that’s what we have done. And currently we are doing some ramp up of this.

The mobile crushers, you can operate but we believe that this solution will work constantly. We are now thinking about kind of should recover it because even uncovered it works and it could work even better is kind of reliable experience.

Regarding the timer scheme or underground mine. There are only the lowest horizons, which has been considerably kind of under which spends considerable time underwater.

So basically we just say that 70% of the time – is okay and we are now producing from up horizons and mid horizons. So the low horizon is, we can say problem, we should not work there extensively due to safety reasons, but we believe that step-by-step, we will just kind of reenter all the roadways.

And we believe that in three and three, maybe five months we will have 100% of these lowest horizons as well. So we do not believe that we will lose a new reserves at all.

So just kind of fruition of timing and working care for that. And we believe that in September we will have increased the volumes from up – from mid horizon, which will basically cover our needs of this or for the next for six months.

And during this time we completely and safely restore the lowest horizon. If it’s okay, so I would probably stop here.

Yes, that’s completely fine. Thanks a lot.

Hi, thanks for your time this afternoon. And good to hear from the new members of the team as well.

Just a couple of questions from me firstly, in regard to what you’re saying about the, the CO2 impact of nickel production, especially on a nickel equivalent basis, can you first let us know, what you use sort of nickel equivalent basis for your other metals. And can you give us any indication of what the current CO2e per nickel equivalent is for north nickel?

It’s a pure chemical calculation. We just take the prices for commodities and we kind of recalculate them back into, what would be the equivalent number for nickel units.

This is disconnected from CO2 because CO2 emissions by metal. They depend on the specific manufacturing process.

So it’s not uniform across metals and there is a methodology that allows us to allocate it between metals and even within that also, between different forms of metal periods.

Okay, understood. So I mean, are you looking incorporating similar sort of reporting in the future, on a sort of a per ton on CO2 basis?

I think some of the other global miners do something similar or have attempted to and just thinking about sort of compare about comparing different companies on those sort of metrics?

Are you referring to metals other than the nickel because we do have a number for nickel on page 71? And this was the first time we’ve done this calculation.

We have the overall CO2 footprint for the company. This is the first time we’ve done allocation for, this specific metal.

Okay, yes. I miss that.

Thank you.

Yes. And there is another chart on the Page 17, and that shows you the nickel intensity curve prepared by Wood Mackenzie, so one of the prominent agencies.

Okay. So that Norilsk Nickel threshold is the 8.1 on Slide 71.

That’s the actual number, it’s not threshold, this is the reality as of today.

Okay. That’s pretty helpful.

Thanks. And just to second, slightly unrelated question just to get your thoughts on the current financing environment the attractiveness of the European market and ahead of the maturity of your 2022s in the first half of next year?

Thanks for the question. As of today, the company enjoys a comfortable level of building refinance risk and available liquidity.

At the same time over the next year, we have two – and several bilateral bankers’ lines maturing, and in this regard, we will continue to closely monitor market conditions, and I kind of exclude that should be that capital markets remain supportive to issues like overfills will proceed, we see once placement already this year or beginning of next year.

That’s pretty helpful. Thank you.

Thank you for the presentation. Just two quick questions from our side.

First, could you please comment, how much metal did your global palladium fund held as of June? That’s the first question.

May I ask why you want to know the global palladium fund specifically? We have – both with the GPF and other sales company.

So as a group, we did tend to look at them comparatively.

You just provided guidance previously on the funds, the holdings of metal, but if you could comment on the combined inventory that will also be helpful.

It was

Thanks. And the second question is, currently the corporate pricing environment remains pretty favorable.

Could you please comment on the current status of talks about or decision about the potential idea of different we got?

Sergey Dubovitsky, so the status is changed. So we as I said earlier, so we said that the prerequisite for potential IPO being one of the officers for the asset was the ramp up to all the asset to full capacity.

So as I also talked in my part of the presentation, so the – as it is already producing at full capacity, so the prerequisite is fulfilled and the shareholders were informed in due course. So the bowl is on their parts right now, but as said, nothing new on this front.

Basically the decision to go with IPO of cheaper project or the strength is pending shareholders approval. From the start of the process, it will take about two years to complete the spinoff.

Thank you.

Yes. Hi, again, sorry, I had the connection loss – lower for me.

Basically to sum it up, do you see like the effect of this year’s flooding of the mines and the concentrator collapse on your 2022 onward guidance?

Sergey Stepanov, kind of we can say now 95% more. There could be some consideration of our 2022 mining plan in September, October for Taymyrsky mine.

We believe that kind of, we will be fully in line with the previous guidance. But we need to understand details, which we described like 10, 15 minutes ago.

So to know, but to some reconsideration we will conduct September, October.

Perfect. Thank you so much.

Thank you, everyone for dialing in, and thank you for your patience again. I hope that we have satisfied your interest.

And we’re looking to see you at our future events, such as the Capital Markets Day towards the end of the year. Thank you.