1H 2018 FINANCIAL RESULTS 1H 2018 Financial Results Presentation - - PowerPoint PPT Presentation

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1H 2018 Financial Results Presentation

August 13, 2018 Moscow

1H 2018 FINANCIAL RESULTS

Disclaimer

The information contained herein has been prepared using information available to PJSC MMC Norilsk Nickel («Nornickel» or «NN») at the time of preparation of the presentation. External or other factors may have impacted on the business of Norilsk Nickel and the content of this presentation, since its preparation. In addition all relevant information about Norilsk Nickel may not be included in this presentation. No representation or warranty, expressed or implied, is made as to the accuracy, completeness or reliability of the information. Any forward looking information herein has been prepared on the basis of a number of assumptions which may prove to be incorrect. Forward looking statements, by the nature, involve risk and uncertainty and Norilsk Nickel cautions that actual results may differ materially from those expressed or implied in such

• statements. Reference should be made to the most recent Annual Report for a description of major risk
• factors. There may be other factors, both known and unknown to Norilsk Nickel, which may have an

impact on its performance. This presentation should not be relied upon as a recommendation or forecast by Norilsk Nickel, which does not undertake an obligation to release any revision to these statements. Certain market share information and other statements in this presentation regarding the industry in which Norilsk Nickel operates and the position of Norilsk Nickel relative to its competitors are based upon information made publicly available by other metals and mining companies or obtained from trade and business organizations and associations. Such information and statements have not been verified by any independent sources, and measures of the financial or operating performance of Norilsk Nickel’s competitors used in evaluating comparative positions may have been calculated in a different manner to the corresponding measures employed by Norilsk Nickel. This presentation does not constitute or form part of any advertisement of securities, any offer or invitation to sell or issue or any solicitation of any offer to purchase or subscribe for, any shares in Norilsk Nickel, nor shall it or any part of it nor the fact of its presentation or distribution form the basis of, or be relied on in connection with, any contract or investment decision.

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1H 2018 Highlights

Consolidated Revenue

$5.8bn

up 37% vs 1H’17

Realized metal prices (except for Pt) Output of PGMs and Cu Sales of Pd from stock Pt price, Ni output

Free Cash Flow

$2.6bn

up 5x vs 1H’17

EBITDA

$3.1bn

up 77% vs 1H’17

Net Working Capital

$1.7bn

down 20% vs Dec’31

EBITDA increase Reduction of working capital Lower CAPEX Higher metal revenue Implementation of operational efficiency programme

CAPEX

$0.5bn

down 25% vs 1H’17

CAPEX was lower as large investment projects including active phase of Bystrinsky (Chita), modernization of Talnakh Concentrator and a number of energy infrastructure projects were completed in 2017

Annual 2017 dividends

$1.5bn Annual dividends in the amount of USD

9.63 per share were announced in June 2018 and paid in July-August Sale of palladium stock accumulated in 2017 Optimization of capital structure

3

Net Debt/EBITDA ratio

1.1x

down from 2.1x

Net debt/EBITDA ratio back to mid- cycle level. In January Moody’s rating agency has raised Nornickel credit rating to the investment grade level Baa3 and changed the outlook from «Stable» to «Positive»

0.47 0.75 0.39 0.36 0.27 1H 14 1H 15 1H 16 1H 17 1H 18

Health & Safety: Improving Safety Records

4

LTIFR: Improved to Record Low Levels Accident Statistics Improved

employees

• LTIFR remains below the global mining industry

average, down 25% y-o-y

• Company is committed to create a strong safety culture

at all levels of the organization

• The management considers the health and safety of

employees as the key strategic priority and reiterates its commitment to reduce fatalities to zero

• Total recordable fatal accidents and lost time inquiries

rates decreased 27% y-o-y

• 22 internal audits of Occupational Safety and Health

management system were conducted in 1H 2018

• 37 employees violated cardinal health and safety rules

(versus 55 in 1H 2017), of which 33 employees were fired (versus 44 in 1H 2017)

LTIFR (1*10-6)

31 48 29 21 15 5 4 6 1 1 1H 14 1H 15 1H 16 1H 17 1H 18 Lost time injury Fatal

Commitment to Developing Sustainable Value

Independent Recognition of Company’s ESG Efforts

Assigned «С-» rating in December 2017

5

Rating updated in June 2018 Governance score 5/10 (2) Environmental score 4/10 Social score 2/10 Upgraded to Average performer from Underperformer Score of 58/100 (up from 49 in 2016) Upgraded to «B-» from «CCC» in November 2017 Reiterated as an index constituent in July 2018 Score of 3.1/5 (1) (up from 2.3 in 2017) Ranked #4/33 in the first environmental ranking of Russian mining companies

Note: 1. of which 5 – is the highest; 2. of which 1- is low, 10 – is high risk

Signatory to UN Global Compact since 2016

Markets Overview

113 120 Jan-17 Jan-18

Metals Markets Outlook

Source: Company data Note: 1. Excluding ETFs, investment demand and industry stocks movement. Numbers are rounded separately

Metal Stocks, days of consumption Market Balance Forecast Medium-term Fundamentals Long-term Fundamentals

Non-exchange Exchange

Ni Pd Pt Cu

Other non-elastic Other elastic ETF Non-exchange Exchange Deficit (1) Balanced(1) Deficit Balanced

  

47 80 (180) (80) 2017 2018E 2019E 9 12 Jan-17 Dec-18

kt moz moz kt

(106) (124) (87) 2017 2018E 2019E

kt

80 42 Jan-17 Dec-18 7

• 230
• 1.4
• 100

57 37

2017 2018E 2019E (0.6) (0.8) (1.5) ETF Other +0.6

Jan-17 Dec-18 Jan-17 Dec-18

0.3 0.3 0.3 2017 2018E 2019E

moz moz kt

2.8 2.5 6.8 USA Europe China

GDP 2018 Q1, % y-o-y

Macro Fundamentals – Mixed Backdrop for Commodities

Strong GDP Growth Rates Globally, while Inflation is Picking Up… … and USD Strengthening, which is Normally Inversely Correlated with Base Metal Prices

Source: Thomson Reuters Datastream

8

• 0.1

0.1 0.5 1.1 1 1.1 1.8 2.5 1.9 2.0 2.1 2.2 2.7 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18

USA CPI, % y-o-y

1,550 2,050 2,550 3,050 3,550 4,050 80 82 84 86 88 90 92 94 96 98 Jan-15 Nov-15 Sep-16 Jul-17 May-18 US trade-weighted value of USD against major currences LME index (rhs)

410 276 (84) (38) (12) end of 2017 Consumed Relocated to bonded Other financing end of July 2018 228 71 56 197 292 200 15 3 45 44 20 486 410 276 Jan 2016 Dec 2017 end of July 2018 LME Full Plate LME Briquettes LME Other shapes FP SHFE

Source: Company data, SMM Note: 1. As of July 31, 2018, 2. According to markets participants, customers

Nickel Stocks Are Rapidly Falling

Total Exchange Nickel Inventories: Down 33% or 136kt (1) YTD vs. 55kt in 2017

5

9

… and Not All Exchange Stocks Were Drawdown for Consumption … More than Halved from Peak Levels of Early 2016, but Still Twice Above Normal…

Days of Consumption

12 15-25 (2) 37 43 92 Cu Spot Ni Normal Level Ni Historical Average Nickel Spot Nickel High

kt kt

10

Historical Ni Price Correlations are Broken – Helped by the Battery Hype?

Source: LME, Metal Bulletin, SMM

80% 90% 100% 110% 120% 130% 140% 150% 160% 170% 180% Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 LME Ni Cash Index LME Co Cash Index 80% 100% 120% 140% 160% 180% 200% Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 LME Ni Cash Index SMM 304 Flat AVG Index 10

Ni vs. Stainless Steel: Break Up of Historical Relationship… …and a New Relationship Established: Ni vs. Co price

1 1

Source: Company data Note: 1. Revised of in-house forecast from March 2018

Nickel Market Short-Term Outlook: Forecast Larger Deficit

Ni Demand: Strong Growth in Stainless Steel in Indonesia and China and the Battery Sector Nickel Market Balance: Sizeable Deficit to Extend in 2018

kt

2,141 2,343 2,505 143 (4) 35 32 2017 China Indonesia STS Other Asia STS Batteries Other 2018E 2019E +9% +7%

kt

11

Ni Supply: Growth Driven by NPI Production in Indonesia and China, Class 1 - Down

2,035 2,218 2,418 85 92 25 (19) 2017 Indonesia NPI China NPI Fe-Ni Class I 2018E 2019E

kt

(10) (106) (124) (87)

138 42 202 184 163 200

2016 Demand Supply 2017 Demand Supply 2018E Demand Supply 2019E Deficit Deficit Deficit Deficit +9% +9% Deficit forecast for 2018E revised from -15kt (1) to -124kt:

• Faster-than-expected expansion of stainless output in Indonesia

and China

• NPI output curtailments due to environmental restrictions in China

Source: Company data, Trade Statistics

Record High NPI Output is Coupled With Major STS Growth in Indonesia & China

Nickel Ore Supply to China is Rising on Rising Ore Exports from Indonesia Ni Ore Export from Indonesia Ramps Up Quickly: 2018YTD Quotas for 34 Mln Exports Have Been Granted

508 489 386 366 388 480 500 29 87 173 259 350 508 489 415 453 561 739 850 2013 2014 2015 2016 2017 2018E 2019E China Indonesia

Global NPI Production: Supply from China & Indonesia Expected to Grow Strongly in 2018-19

kt, Ni Units

12

12 4.9 6.1 34

• re, mln (wmt)

Actual exports in 2017 49 61 342

Ni unites, contained kt

>50% NPI integrated into SS mills +10% 41 11 18 20 30 36 34 31 29 30 30 71 47 34 31 34 48 50 2013 2014 2015 2016 2017 2018E 2019E Indonesia Philippines Others +10% +41% +4%

mt of ore

1H 18: Philippines +2% Y-o-Y 1H 18: Indonesia 6-fold Y-o-Y

mln t

7.2 7.6 8.0 8.6 8.8 10.9 11.8 13.0 14.7 16.3 4.0 4.5 4.6 5.0 5.8 22.1 23.9 25.6 28.2 30.9 2015 2016 2017 2018E 2019E 200S 300S 400S +8% +10% +13% +10% +8% +7% +10% +9%

Strong Nickel Demand Growth in Stainless in China and Indonesia Combined

Y-o-Y

Ni Demand, Y-oY Actual exports in Jan-Apr 2018 2018 YTD quotas

500 700 900 1,100 2000 4000 6000 8000 10000 12000 2010 2011 2012 2013 2014 2015 2016 2017 2018E Capex Expansion (Sulphides+HPALs) (LHS) Capex Sustaining (Sulphides+HPALs) (LHS) Production volume of Class I & Chemicals

Source: Wood Mackenzie, Companies official reports, Company Data Note: 1. Analysis is based on 46 sulpide and laterite projects

Limited Growth Potential for Nickel Supply from Sulphide Ores

Underinvestments Impacting Class I and Battery Grade Ni Production(1) Nickel Production Increase is Driven Mostly by Low-grade Ni Products from Laterite Ores while Ni Production from Sulphide Ores is Down

13 <2

USD mln kt of Ni units kt of Ni

13

• 60%

2,035 2,218 2,418

2017 Class I & Chemicals Class II 2018E Class I & Chemicals Class II 2019E +9% +9%

Ni units, mt Ni units, mt

Growing Volumes of Low Grade Ni Feed Unlocks Class 1 Ni for Other Applications

Source: Company data Note: 1. As of July 31, 2018

2018 Production/Consumption Flow Source of Ore

Substitution potential

Suphide Ore HPAL/Laterite Laterite Ore 0.7 0.3 1.2 NiSO4 (Ni 22%) Other NPI (Ni 8-12%) Fe-Ni (Ni 20-35%) Cathode/Briqs/ Special Forms (Ni 99.9%) Batteries Alloys/ Special Steel/ Plating Other industries Stainless Steel

Ni Products Ni Feed

0.7 0.4 0.1 0.1 0.9 1.7 0.5 0.1

Substitution potential Ni Consumption

14

14

Class 2 Ni Class 1 Ni

200 76 Briqs Other forms Exchange stocks (1)

Palladium Market - Structural Deficit Continue in 2018-2019

Source: Company data Note: 1. Excluding ETFs, investment demand and industry stocks movement. Numbers are rounded separately

Global Palladium Market Balance: Apparent Production/Consumption Deficit Expanding in 2018

( 0.1) ( 0.4) ( 0.2) ( 0.5) ( 0.6) ( 1.1) ( 0.6) 2011 2012 2013 2014 2015 2016 2017 2018E 2019E

moz Surplus/(Deficit) (1)

Automotive is the Main Driver of Consumption Growth while Recycling is a Major Source of Additional Supply

koz

15

15 Drivers:

USA

(640) 300 100 (840) 620 (60) (1,520) 2017 Demand Supply 2018E Demand Supply 2019E

Platinum Market Remains Balanced on Stable Demand

moz

Global Platinum Market Balance: Apparent Deficit Has Evaporated on Rising Supply

Surplus/(Deficit) (1)

Source: Company data Note: 1. Excluding ETFs, investment demand and industry stocks movement. Numbers are rounded separately

1.0 0.8 0.5 ( 0.8) 0.0 0.2 0.3 2011 2012 2013 2014 2015 2016 2017 2018E 2019E

Recovery of Demand Expected to Match Supply in 2019

koz

16

16

SA SA

350 (10) (30) 330 160 160 330 2017 Demand Supply 2018E Demand Supply 2019E

Key Auto Trends Impacting Metals Demand

Demand Implications PGMs Pd Pt Ni

Sustainable global automotive production growth Diesel substitution by gasoline vehicles Growth of hybrids market share Growth of SUVs market share and engine downsizing termination Strengthening in emissions legislation Electric vehicles/batteries

      

NOx

17

600 700 800 900 1,000 1,100 1,200

• 1,000
• 500

500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Speculative Long Speculative Short Speculative Net Pd price (rhs)

18

Decrease in ETF Holdings, NYMEX Longs Liquidation and Fears of Further Sanctions on Russia Increased Pd Price Volatility in 1H 2018

Net Outflows from Palladium ETFs Continued… …while Net Long Positions on NYMEX were Reduced due to Profit Taking by Investors – Negative for Pd Price

moz

0.0 0.5 1.0 1.5 2.0 Jan-17 May-17 Sep-17 Jan-18 May-18

• 740 koz (-43%) (1)

Source: Company data, UBS, СFTC, Reuters Note: 1. January 2017-June 2018

18

koz USD/oz

Premium of Palladium to Platinum is Sustainable in the Mid-Term

Palladium Established a Sustainable Premium to Platinum on Stronger Fundamentals… … as Pd Loadings in Gasoline Vehicles are Supported by Higher Fair Value-in-Use

Source: Company data

USD/oz

19 500 1,000 1,500 2,000 2,500 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jul-12 Jul-13 Jul-14 Jul-15 Jul-16 Jul-17 Jul-18

Pt Pd Turbocharging, hybridization & Real Driving Emissions testing limit substitution

• pportunity

Palladium is more efficient than platinum in current gasoline engine exhaust gas after treatment systems Palladium premium over platinum is sustainable in the medium term 2+ years required to certify and roll out new loadings

55 44 38 47 39 33

2011 2017 2018YTD 2019E Western Europe Germany

Current Changes in Autos’ Mix are Not Short-Lived

Source: Company data, LMC Automotive, JATO, ACEA Note: LV – light vehicles, BEV – battery electric vehicles, PHEV – plug-in hybrids. Numbers are rounded separately.

Electric Vehicles Grow Fast, Pd Intensive Hybribds Keep Up Pace

mln units

Share of Diesel in New Passenger Cars in Europe Continues to Decline

share in global LV production %

20

3% 4% 6% 9%

2.2 2.4 3.2 5.7 0.4 0.5 0.9 1.3 0.5 1 1.7 2.4 2016 2017 2018E 2019E HEV PHEV BEV

1% 4% 8% 5% 9%

2017 2020E 2025E Market consensus Nornickel consensus

CAGR: 28% (1) Max - 17 mln Min - 3 mln

Li-ion EV Battery Trends and Their Impact on Nickel Demand

Technological Shift to More Ni-intensive NCM Driven by Higher Energy Density Requirements and Substitution Away from Cobalt NCM 1:1:1

2015

NCM 6:2:2 NCM 8:1:1

<2020 >2020 Ni weight content in cathode material

Dominating NCM Chemistry

Global Consumption of Ni in EV Li-ion Batteries could Reach 365kt if Consensus Materializes

34 331

2017 2020E 2025E Actual demand (as of 2017) Incremental demand Ni, kt

185 365

Wide Range of EVs Forecasts due to Major Uncertainties Regarding the Evolution of Battery Technologies

21

20% 36% 48%

Source: Company data, market consensus Note: 1. CAGR for the period 2016-2025E. Ni consumption in batteries shown at the precursor material basis

Autos Driven Metals Demand Outlook in 2017-2025E

Source: Company data Note: 1. Assuming additional 18 mln units of light vehicle sales, 2. Ni consumption in batteries shown at the precursor material basis

Pd

moz

Pd in catalytic converters Ni in batteries Ni in stainless steel, alloys and parts Cu in electric engines and generators Cu in wires Cu in charging stations

Consumption

0.7 2.7 1.6 0.4

ICE only Hybrids PHEV Total

kt

244 331 42 45

BEV PHEV Hybrids Total

390 860 420

Charging stations Hybrids inc PHEV BEV Total

kt

Metal Ni Cu

22

1,670

Norilsk Nickel’s Metal Basket Content by Light Vehicle Type

Source: Company estimates, LMC Automotive, Bloomberg; Note: 1. CAGR for 2017-2025E, 2. Expected market share in 2025 based on production; 3. Excluding additional infrastructure demand of 1-8 kg per charger; 4. Metal values calculated at spot prices as of July 4, 2018

CAGR1 Market Share2

Ni Cu PGM

0%

Gasoline

61% 0%

Diesel

17%

2-4 kg 2-4 kg

+27%

Hybrid

• incl. PHEV

17% +26%

BEV

6%

5–15 kg 30–110 kg

+21%

FCEV

<1%

2–3 kg 20-25 kg 20-25 kg 75-803 kg 45-50 kg 70-75 kg 3-6 g 2-5 g 2-6 g

• 25-35 g

Pt:Pd ratio 1:4 8:1 1:4 +Batteries +Electric Motor, Generator Winding Fuel Cell Catalysts Stainless Steel & Parts Wires & Parts

Metal value per vehicle, USD (4)

$250-420 $250-390 $510-730 Up to $1,700 Up to $1,400

23

23.0 23.5 24.1 2017 China Others 2018E China Others 2019E +2.4% +2.5%

Copper Market: Balanced Market, Inventories Slightly Declining

Copper Price Strong, Exchange Stocks Have Been Trending Lower China Remains the Main Driver of Global Copper Consumption Growth in 2018-2019

kt USD/t

Source: Company data, Bloomberg, as of July 2018

mt

24

Copper Market Balance: Marginal Deficits in 2018-2019

160 150 70 200 80 (180) (80) 2013 2014 2015 2016 2017 2018E 2019E

kt

24

1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 100 200 300 400 500 600 700 800 900 1,000 Jan-17 Jul-17 Jan-18 Jul-18 LME Copper Invertory COMEX SHFE LME Copper Cash

Copper: Demand Concerns Add to Supply Disruptions

Copper Supply Disruptions: 2018 YTD – Well Below Expectations

Source: Company data, Wood Mackenzie

mt

1.4 0.9 0.8 1.0 1.0 0.6 1.1 1.2 1.0 1.0 0.2

8% 6% 5% 6% 5% 4% 6% 6% 5% 5% 1%

0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 0.5 1 1.5 2 2.5 3 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018YTD Copper mine disruptions (ex.cost related closures) % of original production target 25

25

LME Copper Price in 2018 Declines as US-China Trade Tensions Rise

5,500 6,500 7,500 01-Jun-18 16-Jun-18 01-Jul-18 16-Jul-18 31-Jul-18

USD/t

Key supply disruptions events Industry wide labour strikes in Chile and Peru – did not materialize Potential labour strike at Escondida – still a possibility Resolution on Grasberg in Indonesia - positive New demand concerns Negative demand implications from US-China trade tensions RMB depreciation vs. USD

Tariffs on USD34 bn of Chinese imports have been announced Tariffs on USD200 bn of Chinese-made products have been unveiled

1H 2018 Financial Results

27

Note 1. All information is reported on the 100% basis, excluding sales of metals and semi-products purchased from third parties. Note 2. Metal volumes represent metals contained in semi-products. 99 98 7 1H’17 1 2 1H’18 106 101

• 5%

International 3rd party feed Russian feed Semi-product (Russian feed)(2) 173 191 1H’18 1H’17 6 3 10 182 201

Nickel(1) [kt] Copper(1) [kt]

Base Metals Sales: Reduction of 3rd Parties Feed PGM Sales: Additional Sales of Metals from Stock, but Reduction of 3rd Parties Feed Realized Metals Prices: All Up but Platinum on Strong Commodity Markets Sales Breakdown by Metals: Palladium is the Largest Contributor to the Revenue

1,264 1,505 23 1,328 1H’17 1H’18 23 41 1,528 Russian feed Semi-product (Russian feed)(2) International 3rd party feed 299 349 1H’18 12 1H’17 4 318 353 +11%

Palladium(1) [koz] Platinum(1) [koz]

1H’18 1H’17 10,067 14,141 +40%

Nickel [USD/t] Copper [USD/t] Palladium [USD/koz] Platinum [USD/koz]

1H’17 1H’18 5,789 6,989 +21% 791 1H’18 1H’17 +30% 962 930 1H’17 1H’18

• 3%

Metal Sales Volumes and Realized Prices

Platinum 8% 5% 31% 29% 27% 1H’17 5% 6% 26% 27% 36% 1H’18 Other Semi-product Copper Nickel Palladium 3,896 5,473 +40% +15% +10% 7 1,032

[USD mln]

27

315 335

• 10

316 225 1,065 212 431

28

[USD mln]

Nickel Revenue: Up 34% on Higher Prices Copper Revenue: Up 32% on Higher Prices and Sales Volumes Palladium Revenue: Up 62% on Higher Prices and Sales Volumes Platinum Revenue: Up 6% on Higher Sales Volumes

Metals Revenue: Up on Strong Commodity Markets and Sales Volumes

[USD mln] [USD mln] [USD mln]

• 51

Realized price 1,114 Sales volume 1H’17 1H’18 1,494 +34% 1,405 1H’17 Sales volume Realized price 1H’18 128 +32% Realized price 1H’18 Sales volume 1H’17 30 +6% Resale 1H’17 Realized price Sales volume 1H’18 1,206 203 1,950 +62% 28

1,068 225

29

Consolidated Metal Revenue

Metal Revenue Up on Higher Prices and Sales Volumes Geographical Breakdown of Metal Sales

[USD mln] [% of USD sales]

North and South America Europe Russia and CIS Asia

1H’17 1H’18

7% 5% 55% 57% 1 2 23% 26% 15% 12%

Increase of realized metal prices of all metals, but platinum, on strong commodity markets Higher metal sales volume due to the sale

• f palladium from stock and higher copper

volumes on Rostec concentrate processing Re-sale of metals (mainly palladium)  Europe remains the single largest market accounting for 57% of metal sales  Increase of sales to Asia to 26%, due to higher physical sales of copper and nickel, mainly to China  North and South America sales reduced to 12% of total: physical sales volumes increased but less than sales to Asia

1H’17 Sales volume Realized price Re-sales

• f metals

1H’18 3,896 284 5,473 Macro factors Company performance USD 509 mln 29

1,795 2,104 1,744 2,251 3,079 47% 48% 41% 46% 53% 1H'16 2H'16 1H'17 2H'17 1H'18

[USD mln]

EBITDA and EBITDA Margin

Higher realized metal prices (+USD1,007 mln) Depreciation of RUB against USD (+USD29 mln) Domestic inflation (-USD64 mln) Decrease in expenses on one-off social projects (+USD91 mln) Higher production volumes and operating efficiency (+USD236 mln)

1H 2018 EBITDA Bridge vs. 1H 2017

EBITDA and EBITDA Margin

12p.p. 77% Macro factors +972 One-off factors +91 Operating factors +272 1,744 3,079 1,007 29

• 64

91 236 36

1H 2017 Commodity prices FOREX Domestic inflation Social projects Production volume Other 1H 2018 [USD mln]

EBITDA margin back to industry leading 53%

30

682 675 337 370

106 91

277 288

1H'17 - adjusted by FX, metals& semiproducts 1H'18 - adjusted by metals& semiproducts

1,402 1,424 +2%

Operating Cash Costs Adjusted by FX, Refined Metal and Semi-product(1) Purchase at +2% - below Inflation

36% 24% 20% 5% 15% Labour Metals and semi-products

Materials and fuel Services Other

1,879

Operating Cash Costs Changes in 1H 2018

694 675 276 455 342 370

105 91

280 288

1H'17 1H'18

1,697 1,879 +11%

Reported Operating Cash Costs: Up on Purchased Metals and Copper Concentrate 1H 2018 Cash Costs Breakdown

Operating Cash Costs

[USD mln]

Other +4% Services Materials and fuel +10%

• 14%

Labour

• 1%

YoY change, %

Other +3% Services +65% Materials and fuel +8% Semi-products and metals

• 13%

Labour

• 3%

YoY change, %

[%] [USD mln]

Note 1. Including Rostec and Nkomati

1,697 1,879

• 20
• 36

19 55 91 62 11 1H'17 Forex Commodity prices Domestic inflation Production factors Head count reduction Metal purchase Other 1H'18 [USD mln]

Macro factors +54 Operating factors +128 31

Net Working Capital in 2016 – 2018

39 257

• 129
• 213
• 480

96

455 2,149 1,719 ~1,000

31 Dec 2016 31 Dec 2017 FOREX Commodity prices, inflation Accumulation

• f metal

inventory Decrease in palladium stock Optimization

• f capital

structure Other 30 Jun 2018 est. 31 Dec 2018

[USD mln]

Operating factors

• 340

Macro factors

• 90

32

512 2,600

• 175

(63) 761 1,335 (50) (70)

1H 2017 Capex Other investing activities WC change Change in EBITDA Other non-cash items Income tax paid 1H 2018 1,591 (140)

[USD mln]

1H2018 FCF Increased 5-Fold on EBITDA Growth and Release of Working Capital

33

OPEX(1) CAPEX

At USD/RUB rate of 62.8, 1% change in exchange rate translates into EBITDA change of USD34.7 mln, FCF change of USD53.4 mln CAPEX and OPEX Break Up by Currency

Financial Results Sensitivity to USD/RUB Exchange Rate

Note: 1. Cash costs (change in stock excluded), Cost of non-metal sales, SG&A; normalized by cost of refined metals for resale

34

86% 14% RUB Non- RUB

1H 2018

77% 23%

1H 2017

RUB Non- RUB 86% 14% RUB Non- RUB

1H 2017

90% 10% RUB Non- RUB

1H 2018

43.5 39.6 36.3 34.7 31.1 29.0 67.0 60.9 55.8 53.4 47.8 44.6 20 40 60 80 [USD mln] exchange rate as at 30.06.2018

FCF EBITDA

55.0 50.0 60.0 USD/RUB 62.8 75.0 70.0

35

[USD mln]

CAPEX(1) Breakdown by Projects CAPEX Allocation(1): Commercial and Stay-in-Business

Allocation of Capital Investments

[USD mln] 258 142 75 62 146 70 69 134 68 69 53 17 36 42

1H’18 1H’17

Other mine development

6

Other commercial GRK Bystrinskoe (Chita)

711

Kola Talnakh Concentrator Skalisty mine Projects related to the shutdown of Nickel Plant

536 0.9 0.2

Note: 1. CAPEX in Cash flow statement, net of VAT Other stay-in-business Commercial Stay-in-business

299 181 412 355

1H'17 1H'18 536 711 35

Historical Leverage: ND/EBITDA Back to 1.1x

Balance Sheet Management

Liquidity and Debt Repayment Schedule Change in Debt Structure

2.6 2020 3.4 Liquidity position 2022+ 2018 2021 2019 6.0 0.1 0.2 2.0 2.4 4.5

Debt repayments Avaliable credit lines Cash

[USD bn]

9% 1% 91% 99% ST 2017 LT 1H 2018 15% 13% 85% 87% 2017 1H 2018 Non-RUB RUB 62% 51% 38% 49% 2017 1H 2018 FLOAT FIX

• Diversification of the portfolio of available credit lines: new credit lines were signed for

the total amount of USD1.6bn, increasing the total amount of available credit lines to USD3.1bn (including USD2.6bn of committed lines)

• Working capital optimization: USD600m of advances received from the Company’s

customers

• Reduction of average cost of debt by over USD 100m in 2018: driven by repricing of

several credit lines and refinancing of relatively expensive liabilities, incl. redemption

• f USD 750m Eurobonds due April 2018, at the cost of 5-year USD 2.5bn syndicated

term loan, secured in December 2017 at the interest rate of LIBOR + 1.50%

• In January 2018, Moody’s assigned Baa3 issuer rating to the Company and changed
• utlook from “Stable” to “Positive”. As of June 30, 2018, the Company maintained

investment grade credit ratings from all three major international rating agencies

Proactive Debt Management

Debt Maturity Debt Currency Debt Type

[USD bn]

2 4 6 8 10 2015 2.1x 0.6x 2017 2014 2016 1.0x 1.2x 1.1x 1H 2018 3.5 4.2 4.5 8.2 5.8

Net debt/EBITDA Net debt

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Projects Overview

Skalisty Mine: Project Development on Track

38

Project overview Project timeline Project update

Norilsk

• Production capacity – 2.4 Mtpa
• Ore reserves – 65.9 Mt
• Project IRR (as of 01.2013) – 29%
• Total Capex 2013–2025 of USD2.3 bn
• Total mining capacity 1.75 Mtpa in 2017
• Next launch – 500 Ktpa in 2018, 2.4 Mtpa by 2024
• Completion of ventilation shaft #10 in 2018
• Completion of main shaft in 2019
• Completion of infrastructure construction in 2020
• Remaining Capex 2018–2025: USD1.0 bn
• Progress by 1H 2018:

Shaft sinking: 2.024 m Shaft №10 (98% complete) 1.779 m Skip-cage shaft (main shaft) (87% complete)

Skalisty Mine

Upgrade of Kola Nickel Refinery: Tankhouse Refurbishment

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Project overview Project timeline Project update Monchegorsk

Murmansk

• CapEx 2018: USD170 mln
• Construction underway at all facilities
• Construction progress: ~70% completed
• Completion of infrastructure by the end of 2018
• Gradual capacity commissioning by the end of 2018
• Reaching design capacity and parameters in 2019
• Target: increase the nickel refining capacity from

145 ktpa to 190 ktpa

• Increase in nickel recovery from high-grade

matte by over 1.0%

• Optimisation of the work-in-progress inventory

levels

• Total Capex of USD400 mln

Comprehensive Environmental Program: Current Status of the Sulphur Project at Polar Division

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Project overview Project timeline Project update

Norilsk

• Target: reduction of Sulphur dioxide emissions in

Norilsk industrial area by 75% by 2023 vs. 2015

• Construction of new converters (replacing converter

furnaces at Copper Smelter) at Nadezhda Smellter

• Expansion and upgrade of sulphur production facilities

at Copper Smelter; Construction of Sulphur Capture and neutralization at Nadezhda smelter

• Total Capex of USD2.5 bn
• Preparation of engineering project documentation and
• btaining the government watchdog (Glavgosexpertisa)

approval for the project in 2018

• Project completion in 2022
• Preparation of the construction site in progress at

Nadezhda Smelter

• Arranging a tender to select a contractor for further

implementation of the project at Copper Plant

Nadezhda Smelter

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▪ Project overview

Project timeline Project update Nickel Town

Murmansk

• Contract for engineering and equipment supplies

singed with Outotec

• Utility systems dismantling and relocation

completed

• Construction of the copper-nickel ore concentrate

shipment facility at Zapolyarny in 2018

• Construction of flotation shop for separation of ore

concentrate to low-grade and high grade concentrates

• Decommission of ore-thermal furnace №3 in the

smelting shop

• Target: reduction of Kola smelting operations at the

Norwegian border by 50% by 2019 vs. 2015

• Shut down of ore-thermal furnace in the smelting

shop

• Sale of low-grade concentrate from Kola MMC to third

parties

• Total Capex of USD80 mln

Comprehensive Environmental Program: Optimization of Smelting Operations at Kola Refinery

• Hot commissioning started in 2017
• Ore reserves: 333 Mt, grades: Cu – circa 0.7%; Fe – circa 23%; Au – circa 0.9 g/t
• Site infrastructure: open pit, concentrator (grinding and flotation), camp, etc.
• External infrastructure:

Project overview

234 km of 220 kV power lines constructed 223 km railway to the site constructed (public–private partnership)

Project highlights

Annual production volumes Cu (in concentrate) Kt 20-25 65 Au (in concentrate) Koz 90-110 220 Fe (1) (magnetite concentrate) Kt 570-630 2 100 2018 2021+ ~1.7 CAPEX 0.4–0.5 EBITDA’20+

USD bn

0.3-0.4 Cash cost

42

Bystrinsky (Chita Copper) Project

Note: 1. Fe – 66%

• First shipment of copper concentrate to customers in May 2018
• 1H 2018 positive EBITDA contribution of USD5 mln
• Project completion – commercial operation by 4Q 2018

Project update

Bystrinsky (Chita Copper) Project Update

43 Shipment Facility – Loading of Big Bags Milling Milling Flotation

Source: Company data

43

44

Update on Infrastructure Projects

Power plant 3 Ust-Khantayskaya hydro power plant Kureyskaya hydro power plant Gas pipeline Power plant 1 Pelyatkinskoye field Messoyakhskoye field Severo-Soleninskoye field Yuzhno- Soleninskoye field Port Airport Fuel storages

Logistics infrastructure: Reconstruction of critical facilities (ports, fuel storages and supply infrastructure etc.)

Power plant 2

Gas transportation system: modernization of gas distribution networks Power supply: Gradual replacement of retiring power units (550 MW) Utilities: Comprehensive programmes to replace / modernize power lines , gas distribution networks, clean water supply system in Dudinka, etc.

Bolshoi Leontievsky Island

Dudinka

Norilsk

Bolshaya Kheta River

Power line

Total Capex of USD200 mln for 2018

Production Guidance for 2018 (1)

kt

Ni Pd

kt

Cu

Note: 1. Metals produced from own feedstock

• 2. Norilsk Nickel owns 50.1% of Bystrinsky (Chita Copper) Project. Production results shown on 100% basis and fully consolidated in Company’s

financial and operational results

45

197 210 210-215 2016 2017 2018E 344 398 400-420 20-25 (2) 2016 2017 2018E Russian own feed Chita 344 398 420-445 2,526 2,728 2,630-2,725 2016 2017 2018E

Pt

koz koz 610 650 600-650 2016 2017 2018E

2H 2018 Outlook

Note 1. Metal production guidance from Russian feed including Bystrinskiy GOK Note 2. Assuming 2H 2018 average exchange rate USD/RUB 61.6

Cu 

Metals market outlook

Ni  Pd  Pt 

Capex 2018 Capex of USD1.9 billion(2) Working capital USD1.0 billion by 2018YE Net debt/EBITDA 1.0-1.3x by 2018YE subject to market conditions, FX rates and amount of interim dividend Interim dividend To be announced in August and payable in October 2018 Market to remain fairly balanced, as risk of labour-related supply disruptions is fading away, but demand disruptions concerns emerged Market deficit to widen due to robust demand growth from automotive sector and lower primary supply Market to remain in small surplus , further reduction of primary supply and potential industry rationalization feasible  Neutral  Positive 2018 Metal Production Guidance(1) Ni (kt) Cu (kt) Pd (koz) Pt (koz) 20-25 (Chita) 600-650 2,630-2,725 210-215 400-420 (ex.Chita)

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Market deficit to remain as production growth in Indonesia and Philippines is balanced out by strong demand, inventories drawdown to continue

Q&A Session