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MMC Norilsk Nickel: NORILSK NICKEL PRESENTS ITS ANNUAL STRATEGY UPDATE

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MMC Norilsk Nickel: NORILSK NICKEL PRESENTS ITS ANNUAL STRATEGY UPDATE

19.05.2014 / 18:30

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NORILSK NICKEL PRESENTS ITS ANNUAL STRATEGY UPDATE

London, May 19th, 2014 - MMC Norilsk Nickel (hereinafter, Norilsk Nickel or
the Company), the world's largest nickel and palladium producer, hosted
today its annual strategy update providing the investor community with a
comprehensive review of its progress on the new strategy approved in 2013.

The new approach to managing the business with its focus on the return on
capital produced results already in 2013 as Norilsk increased its
year-on-year cash flow by a factor of five despite an unfavorable commodity
market environment and declining nickel prices.

Today the company unveiled the reconfiguration program for its downstream
assets. The program entails modernizing processing facilities,
consolidation of smelting and refining capacity to maximize the economies
of scale for the operations and a corresponding shutdown of outdated
facilities, including the Nickel Plant in the city of Norilsk. Capital
investment in the program of downstream restructuring will amount to $1.5bn
and will cover upgrading Talnakh concentrator facility and expansion of
Nadezhda smelter in the Polar division as well as upgrading and scaling up
the Monchegorsk refinery by 2016-17.

With regard to the planned shutdown of its Nickel Plant in Norilsk by 2016,
the company is engaged in the dialogue with the Government of Russian
Federation in order to define a co-investment approach for this important
social and environmental project.

The company has also developed and implemented operational improvement
"roadmaps", which are expected to have a material impact on profitability
already in 2014. Efficiency gains and investments into modernization should
result in additional EBITDA of more than $650 million per annum starting
from 2018.

As a part of the ongoing strategic portfolio review, Norilsk Nickel
received an independent technical assurance for Bystrinsky project
confirming the viability of its financial model. The Company approved the
project at its Investment Committee and is considering project finance
options for Bystrinsky GOK aiming to launch it in 2017.

Important constituents of the new strategic plan are corporate initiatives
targeting additional shareholder value over the period of 2013-2016, which
is expected to be equivalent to an annual EBITDA. The initiatives include
halving of working capital (from $4 bn to $2 bn), release of more than $1