President’s Letter


The total number of retail shareholders in the Company topped 380 thousand, evidencing the confidence that Russian investors have in our business in such challenging times.

Dear shareholders!

The year 2022 has come to an end, and I would like to take the opportunity to look back on what we have achieved, as well as share our short-term plans as we deal with very high uncertainty going into 2023.

Operational and financial performance

Last year, Nornickel and the broader Russian economy grappled with severe sanctions, which, coupled with high inflation and volatility rates across global commodity and financial markets, could not but affect the Company’s key financials.

We have fully restored operations at the Taimyrsky and Oktyabrsky Mines and Norilsk Concentrator after incidents in 2021 and have ramped up our output of all key metals. Despite the geopolitical challenges and related disruptions to international logistics, the Company also successfully met all its obligations to customers in 2022. Meanwhile, lower prices for copper and palladium, as well as higher metal inventories in transit due to longer supply chains, have caused our revenue to fall by 5% to USD 16.9 billion.

Our cost of goods sold has also been affected. The direct impact of inflation aside, it has been affected by the additional incentives we paid to employees and the wage indexation above inflation in Russia, as well as changing the calculation of the MET rates. As a result, our EBITDA for the year was USD 8.7 billion, while EBITDA margin remained above 50%. 

Our net debt has increased, but its ratio to EBITDA remains at a comfortable 1.1x. Amidst the ongoing turbulence, with Russia cut off from traditional global capital markets, leverage and liquidity management have become another top priority, and we have successfully risen to this challenge by refinancing our dollar-denominated debt through RUB- and RMB-denominated instruments.

Over the year, we also continued to ramp up our investments in growth projects and programmes aimed at reducing our environmental footprint and boosting industrial safety. As a result, our capital expenditure grew to USD 4.3 billion, an all-time high for the Company.


CAPEX programme

As mentioned earlier, the Company is currently at the peak of its investment cycle, which implies further growth in total capital expenditure in 2023 to about USD 4.7 billion. This money is earmarked for financing production growth projects at the Talnakh mines and the South Cluster, expanding Talnakh Concentrator and the environmental Sulphur Project, maintaining and upgrading the energy infrastructure of the Norilsk Industrial District, replacing equipment, carrying out capitalised repairs, and running social projects. Our capital expenditure for asset upgrade and replacement will remain at a consistently high level above 50% of our total investment budget.

Clearly, the extraordinary events that have led to restrictions on exports of process equipment into Russia have significantly changed our long-term strategic plans. We have redesigned a number of major initiatives to reflect these changes and are engaged in comprehensive efforts to source alternative technical and engineering solutions, equipment suppliers and contractors. We are planning to finalise this work before the year’s end and present an updated investment programme for 2024–2030 in Q4 2023.

Environment and occupational health

Our Environmental Strategy is centred around the project to reduce sulphur dioxide emissions in the Norilsk Industrial District. Throughout 2022, we made strong progress on the first phase of this project at Nadezhda Metallurgical Plant. At present, construction and installation works are over two thirds of the way to completion, with equipment and pipeline pre-commissioning already underway, which makes us confident that the project will be launched before year-end.

Last year also saw the completion of our CHPP-3 fuel spill response work, as well as a large-scale biodiversity study across our entire footprint and further efforts under our sanitary clean-up and remediation programme.

Nornickel continued its building and structure monitoring programme as part of its climate risk management: by late 2022, we had connected 17 of our enterprises to a special diagnostic system, monitoring over 700 structures in real time.

In 2022, we were able to demonstrate significant progress on industrial safety by considerably reducing the number of work-related fatalities across our operations. Tragically, four of our colleagues lost their lives at work during the last year. All accidents were thoroughly investigated, with the resulting reports submitted to the Board of Directors and action plans developed to eliminate their root causes. I would like to reiterate the Company’s commitment to achieving zero work-related fatalities, which is our top strategic priority.

Social responsibility

In line with the key provisions of Norilsk’s social and economic development programme, we have launched efforts to renovate housing and upgrade or overhaul local utilities and engineering infrastructure. We also continue to develop the Corporate Healthcare project to set up private healthcare facilities complementing the public healthcare system across our footprint so as to drastically improve healthcare services for local communities.

Finally, we were the first Russian company to launch a process for obtaining the free, prior and informed consent of indigenous communities, which we have used with the people of Tukhard on the Taimyr Peninsula as part of the Tukhard relocation and development programme. This move has become an important milestone in our relations with the indigenous peoples of the North.

On a final note to our shareholders, I would like to mention that last year, the total number of retail shareholders in the Company topped 380 thousand, evidencing the confidence that Russian investors have in our business in such challenging times – I hope that we live up to your expectations.

Vladimir Potanin President, Chairman of the Management Board MMC Norilsk Nickel