«Norilsk Nickel»

Norilsk Nickel is the largest mining and metallurgical company in Russia, and one of the world’s largest producer of precious and nonferrous metals. The Company accounts for over 18% of the world nickel production,  10% of cobalt, 2.5% of copper, 50% of palladium and 13% of platinum.

The Norilsk Nickel enterprises are located throughout Russia and abroad. The key structural units include Arctic Branch (Taymyr Peninsula), and Kolskaya Mining and Metallurgical Company (Kolsky Peninsula). Norilsk Nickel owns controlling interest in the American Stillwater Mining Company. The Company’s units dealing in metal sales are located throughout North America, Western Europe, and Southeast Asia.

The Company’s output is used in different areas, including machine building, construction industry, electrical engineering, electronics, manufacturing of power engineering equipment, chemical industry, etc.

The early stages in the development of the nickel and copper deposits on the Taymyr and Kolsky peninsulas date back to 1920s-1930s. Later, these early operations were used for building enterprises, which have later become part of the Norilsk Nickel State Concern. In 1993, a resolution by the Russian President transformed the Concern into the Russian Joint Stock Company for Production of Precious and Nonferrous Metals Norilsk Nickel, which was subsequently reincorporated. At the end of 1995, 38% of shares owned by RAO Norilsk Nickel (51% of voting shares) went under the management of the Interros Group, and were acquired by the Group in August of 1997.

By the time the Interros management team arrived at RAO’s enterprises, the Norilsk Nickel debts exceeded $4 billion, and the wages hadn’t been paid for four months. The Company was running into yearly losses of $800 million. Interros commenced the restructuring of Norilsk Nickel, and came up with a combined development strategy, which provided both for restoration of the production activities, and to bringing life in the Norilsk industrial region back to normal.

Since 1997, all enterprises, which were part of RAO Norilsk Nickel back then, have been paying taxes to the budgets and extrabudgetary funds regularly and in full. Principal arrears to the budgets of all levels, as well as wages to RAO employees, have been fully eliminated. The monthly income of the Norilsk Nickel employees had increased by more than 2.2 times already by the end of 1998.

Pursuing the interests of its shareholders, Norilsk Nickel started a restructuring process in 2000 with the view to shift the capitalization focus from the management (RAO Norilsk Nickel) to fixed productive assets. The restructuring was geared toward improving the Company’s performance and investment appeal. The Norilsk Mining Company, renamed into Norilsk Nickel Mining and Metallurgical Company (MMC Norilsk Nickel) in February 2001, became the focal point of capitalization in the new company.

MMC Norilsk Nickel shows dynamic growth rates, and engages in acquisition of Russian and foreign companies. The Polyus Company, Russia’s leader in gold production, was purchased in the fall of 2002 as part of the approved strategy for business diversification. A sequence of «gold» purchases allowed Norilsk Nickel to establish a major Russian Gold Mining Company, which ranks high among the world’s leaders in gold production.

In June 2006, MMC Norilsk Nickel and Interros acquired 35% of shares in Plug Power Inc., a leading American developer and producer of equipment for hydrogen power engineering. Norilsk Nickel looks forward to expanding the range of use of platinum and palladium that are currently extensively employed in fuel cell production, through its participation in projects for the development of new promising technologies in the area of hydrogen power engineering. Another case in point is that the Norilsk Nickel enterprises are located beyond the Arctic Circle, and need reliable and efficient sources of energy supplies, which can eventually be achieved through the use of fuel cells.

Norilsk Nickel is one of the largest private investors in the Russian power engineering industry. 

The increased presence of Norilsk Nickel in this sector of economy is due to both strategic and economic considerations, including the desire to provide energy security to the Company’s core mining operations through uninterrupted supplies and streamlining of the electrical and thermal power engineering costs.

In order to implement these issues, MMC Norilsk Nickel has offered a record price for Russian energy sector (RUR 80.976 bln) for the entire 37.9% stake in OGK-3 being sold through an additional issue.

The Norilsk Nickel output is consistent with the international standard requirements. At the beginning of 2005, the Norilsk Nickel Board approved the Company’s environmental and quality assurance policy. At the end of 2005, Norilsk Nickel successfully passed the certification audit by the integrated quality and environmental management systems for compliance with ISO 9001:2000 and 14001:2004 standards.

In January 2006, Norilsk Nickel received certificates for compliance of its integrated quality and environmental management systems with ISO 9001:2000 and 14001:2004 standards in the area of Production, Sales and Delivery Management (nickel, copper, cobalt, precious metals, sulfur, selenium, and tellurium).

According to BVQI (Holding) SA, worldwide leader in systems certification services, the certification of an integrated management system for compliance with two standards at a time, and issuance of a single certificate covering both, is an unprecedented event in the international practice.  

In December 2005, Fitch Ratings Ltd. assigned MMC Norilsk Nickel a BBB- long-term rating with stabe outlook.

In August 2005, the Standard & Poor’s Ratings Services announced the promotion of the Norilsk Nickel Mining and Metallurgical Company long-term credit rating to BB+ from BBB-. The rating change forecast is «steady».

In October 2006, Moody's Investors Service upgraded the corporate rating of OJSC MMC Norilsk Nickel to Baa2 from Ba1, bringing it two notches up into the category of «Investment Grade».

MMC Norilsk Nickel is the first private company in Russia to receive the international investment rating from a leading international rating agency.

These ratings reflect the unique resource base and sustainable financial standing of the Company, as well as MMC Norilsk Nickel’s leading positions on the international markets of nickel, palladium, platinum and copper.)

	JSC MMC Norilsk Nickel Director General, Vladimir Strzhalkovsky. Chairman of the BoD, Alexander Voloshin. Address: 22 Voznesenskiy per., Moscow, 125993 Russia, phone: (+7 495) 787 7667, fax: (+7 495) 785 5808, e-mail: info@nornik.ru site: www.nornik.ru

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