Approach to mineral supply chain due diligence management

The Company rolls out a responsible supply chain to promote the sustainability agenda among its suppliers and contractors, to encourage their compliance with the respective corporate standards, and to improve the procurement performance by comprehensively assessing their reliability, identifying and responding to potential supplier risks in a timely manner.

The Company relies on a systemic approach to supply chain management. Nornickel adheres to the requirements of the leading international initiatives for responsible mining of minerals and sustainable supply chains. The Company implements the relevant standards and recommendations across its operations and pays special attention to its suppliers’ compliance with the sustainability principles.

Nornickel’s approach to building a responsible supply chain

Nornickel’s general approach to building a responsible supply chain includes:

  • analysis of requirements and best practices for a responsible supply chain – looking into national and international requirements for a responsible supply chain, potential risks and opportunities associated with them, and stakeholder expectations;
  • development of corporate documents and systems – formulating and regularly revising documents governing supply chain management and supplier assessment to ensure compliance with international standards and global best practices;
  • supply chain analysis – monitoring supplier activities and assessing their responsibility;
  • interaction with suppliers – building a dialogue with suppliers, also as part of due diligence, including trainings on key sustainability and responsible supply chain principles;
  • audit and reporting – carrying out independent assessments of the Company’s supply chain management processes and publishing the findings following audits and supplier due diligence.

Mineral supply chain Due Diligence Management System

In 2021–2022, the Company developed a supply chain Due Diligence Management System (the “DDMS” or the “System”) for minerals which structures and consolidates the procedure of suppliers due diligence against risks related to human rights violations, money laundering, fraud, and corrupt practices.

The System was deployed at Kola MMC in 2021 and rolled out in 2022 to Norilsk and Trans-Baikal divisions, specifically to Polar Divison and GRK Bystrinskoye, respectively.

The DDMS relies on the following standards:

Mineral supplier due diligence procedure

The supplier due diligence procedure includes the following stages:

  1. analysing external (geography and nature of business) and internal (management system maturity, experience with relevant audits) aspects of the supplier’s business to identify risk indicators;
  2. enhanced supplier due diligence, with a detailed review of its operations, including, if necessary, an on-site visit to the actual production site (upon identification of risk indicators)Stages 1 and 2 are further detailed in Section 2: Identification and Assessment of Supply Chain Risks.;
  3. developing and implementing a risk management plan (in case of risks confirmation)This stage is further detailed in Section 3: Risk Management Plan.;
  4. reporting on the findings and the measures taken.