NORNICKEL ANNOUNCES CONSOLIDATED PRODUCTION RESULTS FOR 1H2020

PRESS RELEASE

Public Joint Stock Company «Mining and Metallurgical Company «NORILSK NICKEL» (PJSC "MMC "Norilsk Nickel", "Nornickel" or the "Company")  

NORNICKEL ANNOUNCES CONSOLIDATED PRODUCTION RESULTS FOR 1H2020

Moscow, 29 July, 2020 - Nornickel, the world's largest producer of palladium and high-grade nickel and a major producer of platinum and copper, announces preliminary consolidated production results for the second quarter and the first half of 2020.

First Vice-President, Chief Operating Officer, Sergey Dyachenko commented on the 1H2020 production results:

«First of all, I would like to reiterate that a reduction of environmental impact remains our absolute strategic priority and confirm our commitment to radically improve the environmental situation in the regions of our operations.

The Company is applying its maximum efforts to mitigate the impact of the fuel spill at the HPP-3. To date, the clean-up of the Ambarnaya River and the collection of contaminated soil have been practically completed and the most complex and labour-intensive work on cleaning and rehabilitation of soil has been launched. We have started construction of a temporary pipeline for the transportation of the collected water-fuel mixture to a special treatment and disposal site. Jointly with the government and independent consultants Nornickel is exploring the most effective solutions for the disposal of contaminated soil and the restoration of disturbed ecosystems. The Company is engaged into an active dialogue with all stakeholders and will continue to update regularly the investment community on the remediation efforts of the fuel storage incident at HPP-3.

As part of the long-term planning of our operations in permafrost conditions and mitigation of environmental risks, Nornickel is developing a real-time monitoring system of the soil conditions and the foundations' stability of the main production facilities. We expect that this programme will be designed and rolled out by the end of 2021. Meanwhile, the capabilities of the existing permafrost diagnostics center will be enhanced already this year, alongside an additional comprehensive audit of hazardous production facilities.

In its fight against the spread of the COVID-19, the Company is taking maximum precautions to protect the health and safety of its employees and providing full support to the regional communities and authorities, which helps to maintain production processes without any interruptions. I would like to confirm that the COVID-19 outbreak has not had any material adverse impact on our operations.

In 2Q2020, the output of all key metals have increased against the previous quarter. However, 1H2020 production of saleable products have declined year-on-year primarily due to hot commissioning of a nickel refining shop with new chlorine leaching technology at Kola MMC. The decrease of PGMs output was attributed mostly to a high base effect of 1H2019, when Krasnoyarsk Precious Metals Plant processed earlier accumulated work-in-progress inventory. The decline in copper production was driven by lower processing volumes of concentrate purchased from Rostec as well as the short-term reduction of capacity utilisation rate of our smelting operations at Kola MMC owing to unfavorable meteorological conditions in order to reduce environmental impact.

At the same time, Bystrinsky GOK continued to ramp-up to designed capacity, having increased production of copper in concentrate by almost 50% year-on-year.

Overall, we reiterate our production guidance for FY2020».

NORNICKEL GROUP

Nickel

In 2Q2020, consolidated nickel production increased 8% quarter-on-quarter (q-o-q) to 56 kt, almost all of which were produced from the Company's own Russian feed (55 kt, +8% q-o-q). The growth was attributed to the gradual ramp-up of nickel refinery at Kola MMC using new chlorine-leaching technology. As part of strategic diversification of sales into premium products, carbonyl nickel production at Kola MMC increased to 1.6 kt (+3% q-o-q).

In 1H2020, total nickel output decreased 2% year-on-year (y-o-y) to 108 kt, almost all of which were produced from the Company's own Russian feed (107 kt, -1% y-o-y). The decline was attributed to hot commissioning of a refining shop using new chlorine leaching technology at Kola MMC.

In 1H2020, carbonyl nickel output increased 41% y-o-y to 3.2 kt.

Copper

In 2Q2020, consolidated copper production increased 9% q-o-q to 125 kt, almost all of which were produced from the Company's own Russian feed. The growth was driven by a temporary increase in processed volumes of concentrate purchased from Rostec, and copper cake supplied from Norilsk Nickel Harjavalta to Copper Plant of the Polar Division for further refining, as well as an increase in copper feed for copper smelting at Polar Division due to a reduction of copper content in the matte shipped for further processing to Kola MMC.

In 1H2020, total copper output decreased 5% y-o-y to 240 kt, almost all of which were produced from the Company's own Russian feed. The decline was attributed to lower processing volumes of concentrate purchased from Rostec in comparison to 1H2019, as well as a decrease of copper production at Kola MMC due the short-term reduction of capacity utilisation rate of its smelting operations owing to unfavorable meteorological conditions in order to reduce environmental impact.

Bystrinsky Project was ramping up on schedule, having increased production of copper in concentrate by 49% y-o-y to 30 kt.

Platinum Group Metals

In 2Q2020, palladium and platinum output amounted to 722 koz (+32% q-o-q) and 172 koz (+15% q-o-q), respectively.  The increase of PGM output was mostly driven by processing of work-in-progress material at Krasnoyarsk Precious Metals Plant and shipment of copper cake (containing PGMs) from Norilsk Nickel Harjavalta to Boliden for further processing under contractual obligations.

In 1H2020, palladium and platinum output amounted to 1,270 koz (-17% y-o-y) and 323 koz (-17% y-o-y), respectively. The decrease of PGMs was attributed mostly to a high base effect of 1H2019, when Krasnoyarsk Precious Metals Plant processed earlier accumulated work-in-progress inventory.

RUSSIAN OPERATIONS

In 1H2020, all saleable metals were produced by the Company's Russian operations from their own feed.

Nickel

In 2Q2020, nickel output at Kola MMC increased 12% y-o-y to 39 kt. The increase was attributed to the scheduled ramp-up of nickel refinery at Kola MMC operating new chlorine-leaching technology. In 1H2020, Kola MMC decreased nickel output 7% y-o-y to 74 kt. The decline was attributed to hot commissioning of a refining shop with a new chlorine leaching technology.

Copper

In 2Q2020, copper output at the Company's operations in Russia increased 8% q-o-q to 124 kt. The growth was driven by a temporary increase in processed volumes of concentrate purchased from Rostec, and copper cake supplied from Norilsk Nickel Harjavalta to Copper Plant of the Polar Division for further refining, as well as an increase in copper feed for copper smelting at Polar Division due to a reduction of copper content in the matte shipped for further processing to Kola MMC.

In 1H2020, total copper output decreased 2% y-o-y to 239 kt. The decline was attributed to lower processing volumes of concentrate purchased from Rostec in comparison to 1H2019, as well as decrease of copper production at Kola MMC due the short-term reduction of capacity utilisation rate of its smelting operations owing to unfavorable meteorological conditions in order to reduce environmental impact.

Bystrinsky Project was ramping up on schedule, with copper in copper concentrate production increased 49% y-o-y to 30 kt.

Platinum Group Metals

In 2Q2020, the Company's Russian operations produced 716 koz (+31% q-o-q) of palladium and 172 koz (+15% q-o-q) of platinum. The growth of PGMs was attributed mostly to processing of work-in-progress material at Krasnoyarsk Precious Metals Plant.

1H2020, palladium and platinum output amounted to 1,264 koz (-16% y-o-y) and 322 koz (-15% y-o-y), respectively. The decrease of PGMs output was attributed mostly to a high base effect of 1H2019, when Krasnoyarsk Precious Metals Plant processed earlier accumulated work-in-progress inventory.

NORILSK NICKEL HARJAVALTA (FINLAND)

Nickel

In 2Q2020, nickel production at Norilsk Nickel Harjavalta remained largely unchanged q-o-q at 17 kt. In 1H2020, nickel output increased 12% y-o-y to 33 kt. The growth was attributed to change in the maintenance schedule, with the scheduled repairs postponed from May to August.

Copper

In 2Q2020, copper output at Norilsk Nickel Harjavalta amounted to 1 kt (6-fold growth q-o-q). The increase was attributed to the shipment of salable copper cake to Boliden in line with an existing contract. In 1H2020, total copper output decreased 82% y-o-y to slightly above 1 kt. The decrease was due to the scheduled shipment of copper cake from Norilsk Nickel Harjavalta to Copper Plant of the Polar Division for further refining.

Platinum Group Metals

In 2Q2020, output of saleable palladium and platinum (both contained in copper cake) amounted to 6 koz (10-fold growth q-o-q) and 1 koz (11-fold growth q-o-q), respectively. The increase was attributed to the shipment of salable copper cake (containing PGMs) to Boliden under an existing contract. 1H2020, output of palladium and platinum reached 7 koz (-82% y-o-y) and 1 koz (-85% y-o-y), respectively. The decrease was attributed to the scheduled shipment of copper cake from Norilsk Nickel Harjavalta to Copper Plant of the Polar Division for further refining.

NKOMATI (SOUTH AFRICA) (*)

In 1H2020, Nkomati (50% - owned by Norilsk Nickel Group) produced 3 kt of nickel (-31% y-o-y), 1 kt of copper (-42% y-o-y), 13 koz of palladium (-32% y-o-y) and 6 koz of platinum (-29% y-o-y). The decrease in metal production was attributed to the decision taken early to put the mine into care and maintenance and depletion of the existing open pit reserves.

Note: (*) Nkomati production results are not consolidated in the Group's total operating results.

Production Guidance from the Company's Own Russian Feed for 2020:

Note: (1) Nornickel owns 50.01% of Bystrinsky (Chita Copper) Project. Production results are shown metal in concentrate for sale on 100% basis. Production results are consolidated in total operational results on 100% basis. The concentrator at the Bystrinsky project was launched in 2018 as part of the hot commissioning stage and was fully commissioned in September 2019.

Notes:

1. Totals may value from the sum of numbers as a result of rounding. The production results of Nkomati is not reflected in totals of Norilsk Nickel Group.
2. Norilsk Nickel Group owns 50.01% of Bystrinsky GOK (Chita Copper Project). Production results are shown metal in concentrate for sale on 100% basis and fully consolidated in total operational results. The concentrator at the Bystrinsky project was launched in 2018 as part of the hot commissioning stage and was fully commissioned in September 2019.
3. Norilsk Nickel Group owns 50% of Nkomati. Production results report metal contained in saleable concentrate on a 50% basis and are not consolidated in the Group's total operating results. In 2019, the Group and its operating partner, African Rainbow Minerals, reached an agreement to scale down production at Nkomati Nickel Mine during 2020. As part of this process, the partners will elaborate in due course a plan contemplating the cessation of the mining operations and the placing of the mine in care and maintenance.

This announcement contains inside information in accordance with Article 7 of EU Regulation 596/2014 of 16 April 2014.

Full name and position of person making the announcement - Vladimir Zhukov, Vice - president, Investor Relations

ABOUT THE COMPANY

MMC Norilsk Nickel is a diversified mining and metallurgical company, the world's largest producer of palladium and high-grade nickel and a major producer of platinum and copper. The company also produces cobalt, rhodium, silver, gold, iridium, ruthenium, selenium, tellurium, sulphur and other products.

The production units of Norilsk Nickel Group are located at the Norilsk Industrial District, on the Kola Peninsula and Zabaykalsky Krai in Russia as well as in Finland and South Africa.

MMC Norilsk Nickel shares are listed on the Moscow and on the Saint-Petersburg Stock Exchanges, ADRs are traded over the counter in the US and on the London, Berlin and Frankfurt Stock Exchanges.             

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