1.1. Mineral supply chain Due Diligence Management System

Nornickel’s mineral supply chain Due Diligence Management System under the OECD Five‑Step Framework

The following chart describes the mechanism of the System broken down into five steps of due diligenceThe System’s methodology is based on the OECD Guidance Five-Step Framework for Risk-Based Due Diligence in the Supply Chain of Minerals..

The System relies on the following standards:

• OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict‑Affected and High‑Risk Areas;
• London Metal Exchange Red Flag Assessment Template;
• Joint Due Diligence Standard for Copper, Lead, Molybdenum, Nickel and Zinc (JDDS);
• Pilot Cobalt Refiner Supply Chain Due Diligence Standard developed jointly by the China Chamber of Commerce of Metals, Minerals and Chemicals Importers & Exporters, the Responsible Cobalt Initiative (Responsible Cobalt Initiative) and the Responsible Minerals Initiative (RMI);
• Standard for Responsible Mining of Initiative for Responsible Mining Assurance (IRMA);
• Performance Expectations of the International Council on Mining and Metals (ICMM);
• China Chamber of Commerce of Metals, Minerals and Chemicals Importers & Exporters Due Diligence Guidelines for Responsible Mineral Supply Chains (CCCMC).

Management framework and responsible parties

In line with the OECD Guidance, Nornickel established a mineral supply chain due diligence management framework in the Group.

The Head Office has its Sustainable Development Department in charge of the System development, monitoring and implementation coordination. Among other things, it is responsible for drafting and approving the regulations governing interaction with suppliersThe documents governing interaction with mineral suppliers as part of suppliers due diligence.. This Department also provides necessary guidance on the System’s operation to divisions.

Divisions have their respective sustainability units to take charge of the System implementation. Also involved in the System implementation at different steps are the Head Office’s and divisions’ departments responsible for procurement, production, and safety, the risk management function, as well as legal, corporate relations, marketing and public relations departments.

The System underlies the internal mineral suppliers due diligence standards developed for Polar Division, Kola MMC and Bystrinsky GOK (“standards”) aimed at the responsible mineral supply chain management and compliance with the OECD Guidance and LME requirements. In Q4 2023, a similar standard was adopted at Medvezhy Ruchey LLC. Each standard factors in divisional specifics, governs interactions between business units, and defines the responsible parties and their responsibilities.

The employees in charge of the System management have the following key duties:

• developing and endorsing amendments to the Policy, Code and other regulations and guidelines as part of the System;
• organising and coordinating, as well as monitoring and assessing the System performance;
• making the employees involved in the mineral supply chain aware of the requirements of corporate documents and internal standards for responsible supply chains;
• updating mineral suppliers on the Code requirements and holding consultations (where necessary);
• identifying and assessing supply chain risks, conducting due diligence on mineral suppliers in line with the divisional System standards;
• developing risk management plans in cooperation with suppliers and overseeing their implementation;
• producing reports: internal reports on mineral supply chain due diligence for the management, including performance assessment and risk management results, as well as preparing public annual responsible supply chain reports;
• developing and providing employee training for those involved in the System operation;
• organising independent audits of mineral suppliers;
• ensuring compliance of Nornickel’s products with the LME requirements.

If necessary, the respective business unit or function of Polar Division, Medvezhy Ruchey LLC or Kola MMC may also be involved in mineral suppliers due diligence. The responsible supply chain is regularly discussed by the Company’s Board of Directors Sustainable Development and Climate Change Committee.

Mineral supply controls and transparency

Nornickel regularly monitors mineral flows throughout its supply chain and continuously improves the mechanisms to ensure transparency and quality of on‑site material acceptance. The System complements the existing supply chain controls by ensuring compliance with the OECD Guidance.

The Group’s entities rely on their internal controls to monitor minerals received from suppliers. Each of Nornickel’s mining assets has its own system for accounting and monitoring the acceptance of materials in terms of their quality and quantity.

Mineral supply controls are exercised by production units and internal business units involved in material acceptance and processing. Material acceptance and verification in terms of quality and quantity seek to confirm that no conflicts exist under supply agreements and the applicable regulations for acceptance of consumer and non‑consumer goods in terms of quality and quantity.

Such verification covers suppliers’ primary accounting documents, as well as shipping documents.

All relevant documents and data are kept at Nornickel for at least five years. Mineral suppliers due diligence records are also stored in electronic files on the Company’s servers.