Russia’s Norilsk Nickel, the world’s largest producer of palladium and high-grade nickel and a major producer of platinum and copper, hosted its annual Capital Markets Day on Monday.
The Company’s environmental program has reached a number of milestones in Kola division, while the delivery of the Sulphur Program in Norilsk division is on track and Nornickel has been successful at ramping up capex this year, which is expected to increase by more than 50% from 2020, its top managers said during the presentation.
"The efforts which have been applied to support the expansion of capital investments in 2021, give us confidence in our ability to deliver on the new even more ambitious capex targets," the Company said.
The company states that the management’s strategic goal is to navigate Nornickel to the premier league of the future green economy and become a leader in sustainability. This means not just compliance with the national technical and legal requirements, but adherence to the industry’s highest ESG standards.
“We are expecting that sulphur dioxide emissions in Kola will reduce in 2021 by about 85% from the base year (2015), when the program started”, Andrei Bougrov, Nornickel’s senior vice president for ESG said. “Importantly, cross border emissions have been completely eradicated.”
In Norilsk, the group’s program is scheduled in 2 phases, with a first one targeting a 45% reduction and due for completion by 2023.
In a bid to make the air cleaner in Norilsk, the company this year is launching real time air quality monitoring in the residential area of Norilsk. “Our ultimate goal is to have this system fully automated, with the city resident being able to check air quality via a phone application in real time,” Bougrov added.
“This year we entered into active implementation of this program, having set up a dedicated 750-men-strong department in Norilsk with over 120 pieces of various equipment as we target to dismantle over 175 obsolete buildings and structures this year and remove over 0.5 million tonnes of waste”, said Bougrov at the investor day presentation. The clean-up program is scheduled for 10 years with a total budget of approximately $0.6 billion he added.
“It is very much backward looking, penalizing heavily for the past and not giving much credit for the outlook”, said Bougrov.
“This is totally different to how financial markets approach valuation of stocks as we all well know. Nevertheless, we hope that the delivery against our environmental and other ESG targets will eventually translate into ESG rating upgrades. But this will take time”.
Nornickel’s newly elected chief operating officer Sergey Stepanov, speaking at the presentation of the company's long-term strategy, noted that more than 40 buildings in Arctic Norilsk, including those related to urban infrastructure, were decommissioned in 2021 due to damage related to global warming.
Stepanov said that at the beginning of this year Norilsk Nickel set up a special monitoring center where it collects information on the impact of climate change on infrastructure and business.
The company believes that “in order to lead the transition to a ‘green economy’, Nornickel has to settle all legacy environmental issues such as sulphur dioxide emissions and legacy pollution. Managing climate change has become a separate item on the strategic agenda, with the focus put on the management of physical risks of operating in permafrost conditions, but also on opportunities for our commodity basket offered by the global decarbonization trend.”