Annual
Report 2015

key investment projects ru

Production: mining, concentration, smelting

Production activities of the Norilsk Nickel Group include:

Mining
Concentration
Smelting
Ore mining by the Company’s Russian businesses
Ore mining by the Company’s Russian businesses

Polar Division

The increase in ore output y-o-y was in line with the annual production plan and resulted from:

  • growth in production of disseminated ores by 308 kt, or 7% (including +168 kt (+58%) from Oktyabrsky Mine and +398 kt (+20%) from Komsomolsky Mine);
  • reduced production at Zapolyarny Mine (by 258 kt, or —9%).

The production of rich and cuprous ores remained broadly flat compared to 2014.

Output and metal content in ore, mt
Ore type 2015 2014 2013
Oktyabrskoye Field
Oktyabrsky Mine Rich 1.7 1.9 2.1
Cuprous 3.0 2.9 2.8
Disseminated 0.5 0.3 0.08
Total 5.1 5.1 5.0
Taimyrsky Mine Rich 3.7 3.6 3.4
Talnakhskoye and Oktyabrskoye Fields
Komsomolsky Mine Rich 1.1 1.0 1.0
Cuprous 2.4 2.5 2.6
Disseminated 1.5 2.0 2.0
Total 5.1 5.6 5.6
Talnakhskoye Field
Mayak MineIn 2013–2014 part of Komsomolsky Mine Rich 0.03 0 0
Disseminated 0.9 0 0
Total 0.9 0 0
Norilsk-1 Field
Zapolyarny Mine Disseminated 2.5 2.7 2.7
Total for Polar Division
Rich 6.5 6.5 6.5
Cuprous 5.4 5.4 5.4
Disseminated 5.4 5.1 4.8
Total 17.3 17.0 16.7
Average metal content
Nickel, % 1.27 1.29 1.30
Copper, % 2.06 2.08 2.10
PGM, g/t 6.85 6.77 7.13
2015 ore production breakdown by metal content, %
Mines Ore output Metal content in ore
Nickel Copper PGM
Oktyabrsky 30 28 43 38
Taimyrsky 21 42 28 19
Komsomolsky 29 25 23 28
Komsomolskaya mine 23 11 15 21
Skalistaya mine 6 14 8 7
Mayak 6 2 3 4
Zapolyarny 14 3 3 11
Total 100 100 100 100

Kola MMC

The decrease in total production volumes resulted from reduced production at Zapolyarny Mine and Kaula-Kotselvaara mine, both in accordance with the mining plan for 2015:

  • production increase by 181 kt, or 5%, at Zhdanovskoye Field by Severny Mine (82 kt by open pit and 100 kt by underground mining);
  • production decrease by 206 kt (—30%) at Zapolyarny Field by Severny Mine due to additional development of balance reserves at the field;
  • production decrease by 54 kt (7%) at Kaula-Kotselvaara mine.
Output and metal content in ore, mt
Ore type 2015 2014 2013
Zhdanovskoye Field
Severny Mine’s open pit section Disseminated 0.6 0.7 0.5
Severny Mine’s underground section Disseminated 6.1 6.1 6.1
Total 6.7 6.9 6.6
Zapolyarnoye Field
Severny Mine’s underground section Disseminated 0.5 0.6 0.7
Kotselvaara and Semiletka Fields
Kaula-Kotselvaara mine Disseminated 0.7 0.7 0.8
Total for Kola MMC 8.0 8.1 8.0
Average metal content
Nickel, % 0.62 0.65 0.67
Copper, % 0.25 0.27 0.28
PGM, г/т 0.07 0.08 0.09
2015 ore production breakdown by metal content, %
Mines Ore output Metal content in ore
Nickel Copper PGM
Severny Mine
Severny Mine’s open pit section 7 4 4 4
Severny Mine’s underground section (Zhdanovskoye Field) 78 68 64 55
Severny Mine’s underground section (Zapolyarnoye Field) 6 19 20 33
Kaula-Kotselvaara mine (part of Severny Mine since December 2013) 9 9 12 8
Total 100 100 100 100

Polar Division

In 2015, the Polar Division concentrators processed 16.9 mt of all types of ore (rich, cuprous and disseminated).

Norilsk Concentrator

In Q4 2015, the disseminated ores branch of Norilsk Concentrator processed the Copper Plant’s low-grade ores as part of a pilot project.

Talnakh Concentrator

In January 2015, Stage 1 of Talnakh Concentrator upgrade project was launched.

Kola MMC

In 2015, the Kola MMC concentrators processed 7.8 mt.

Kola MMC Concentrator

In 2015, the plant reported a decrease in the output of nickel and copper in the plant’s concentrate compared to 2014, which resulted from the overall deterioration in the processed ore quality due to deeper mining levels. In the second half of the year, the second line of the briquetting section was launched.

Metals production by the Company’s Russian businesses
2015 2014 2013
Nickel, kt 222 228 232
Copper, kt 356 355 359
Platinum, ’000 oz t 622 627 628
Palladium , ’000 oz t 2,606 2,660 2,580
Polar Division
Metals production
2015 2014 2013
Nickel, kt 97 122 123
Copper, kt 293 298 297
Platinum, ’000 oz t 488 500 504
Palladium, ’000 oz t 1,935 2,065 2,006
Metals recovery, %
2015 2014 2013
Metals recovery in concentration
Nickel 81.32 82.01 81.97
Copper 95.49 95.83 95.97
Metals recovery in smelting
Nickel 93.06 92.38 91.55
Copper 94.17 94.74 94.10

In 2015, the electrolytic nickel output exceeded the target, but decreased by 26 kt y-o-y (—20%) due to reconfiguration of production facilities.

Copper cathode production was below the target as metal content in ore was lower than planned, causing the output to decline by 5 kt (—2%) y-o-y due to reconfiguration of production facilities.

The output of platinum and palladium was at the target level, but below the 2014 level by 142 thousand oz t due to the increase of work-in-process inventories at Krasnoyarsk Gulidov Non-Ferrous Metals Plant.

Kola MMC
Metals production
2015 2014 2013
Nickel, kt 125 106 109
from Russian feed 123 101 97
from 3d parties feed 2 5 12
Copper, kt 63 57 62
from Russian feed 60 48 49
from 3d parties feed 3 9 13
Platinum, ’000 oz t 134 127 124
from Russian feed 122 95 100
from 3d parties feed 12 32 23
Palladium, ’000 oz t 671 595 574
from Russian feed 640 517 523
from 3d parties feed 31 78 51
Metals recovery, %
2015 2014 2013
Concentration cycle (ore to concentrate)
Nickel 72.69 72.42 72.51
Copper 76.04 75.22 74.88
Refining
Nickel 97.80 97.79 97.73
Copper 97.28 97.16 97.29

In 2015, the output of nickel metal exceeded the target, increasing by 19 kt y-o-y (+15%) due to reconfiguration of production facilities, while the output from own feedstock shrank by 4% y-o-y.

Copper cathode production was not as high as planned due to the decrease in low-margin tolling operations and copper content in Polar Division’s matte below the target. In 2015, copper output grew by 6 kt y-o-y (+9%) due to reconfiguration of production facilities, while the output from own feedstock remained at the last year’s level.

The output of platinum and palladium was at the target level, growing by 84 thousand oz t y-o-y due to reconfiguration of production facilities.

Norilsk Nickel Harjavalta
Metals production by Norilsk Nickel Harjavalta
2015 2014 2013
Commercial nickel, kt 43 43 44
Copper in copper cake, kt 13 11 7
PGM in copper cake, kt 3.5 3.2 4.1

In 2015, feedstock supply mainly included nickel concentrate from Nkomati (South Africa, internal supply), nickel concentrate from Mirabela (Brazil), nickel concentrate from Titania (Norway), nickel concentrate from CRI (Canada), nickel sulphide concentrate from Talvivaara (Finland), converter matte from ВНР (Australia) and BCL (Botswana), and nickel matte from Kola MMC.

Concentrates processed at the facilities of Boliden Harjavalta Smelter (BOHA) totalled 140 kt. Concentrates were processed under a tolling agreement until its termination on 1 July 2015. Harjavalta processes nickel-containing semi-products from third-party suppliers and is in the process of transition to feedstock of Polar Division.

Under the agreement, concentrates undergo preliminary processing at Boliden AB’s Harjavalta Smelting Plant, which shares the grounds of the Finnish Suurteollisuuspuisto Industrial Park with Norilsk Nickel Harjavalta Oy. Other semi-products with high nickel content are delivered directly to Norilsk Nickel Harjavalta Oy.

Starting 2H 2015, NNH processes BOHA’s nickel matte produced from the plant’s own feedstock.

Higher y-o-y recovery rates in 2015 are due to better quality of copper and ferrous cake.

In 2015, Norilsk Nickel Harjavalta produced 44 kt of commercial nickel, including 15 kt of cathodes, 22 kt of briquettes, 236 t of nickel powder, 7 kt of nickel salts, and 129 kt of nickel solution. The sales of copper cake to third parties totalled 13 kt.

The main driver behind the nickel production growth is the increased feedstock supply from third parties.

In 2015, copper and PGM sales grew y-o-y as a result of improved sales to third parties.

Capacity utilisation
2015 2014 2013
Concentrates and pyrite smelting, kt 140 241 255
Refining capacity utilisation, % of max 67 66 70
Recovery, %
2015 2014 2013
BOHA-NNH
Nickel 97.7 97.1 9 6.4
Copper 97.4 95.4 96.4
Platinum
Palladium
HarjavaltaRecovery (loss) rates of NNH refining capacities.
Nickel 97.8 97.1 97.5
Copper 99.6 99.3 99.3
Platinum 99.6 99.3 99.3
Palladium 99.6 99.3 99.3
Nkomati

Nkomati is a 50/50 joint venture of the Norilsk Nickel Group and African Rainbow Minerals. In October 2014, the Group signed an agreement with BCL Limited to sell its African assets — Tati Nickel Mining Company and Nkomati. The sale of Tati Nickel Mining Company was completed on 2 April 2015. The sale of Nkomati is yet to be closed.

In 2015, total ore mined by Nkomati reached 4.2 kt (attributable to the Group’s 50% shareholding) with the average nickel content of 0.34%. The Group accounts for 11.4 kt of nickel concentrate produced, flat against the previous year.

Average metal content, %
2015 2014
Nickel 0.34 0.36
Copper 0.14 0.13
Enrichment recovery, %
2015 2014
Nickel 74.1 75.9
Copper 86.1 90.8
Metals production for internal processing
2015 2014
Nickel, kt 11 11
Copper, kt 5 5
Platinum, ’000 oz t 54 49
Palladium, ’000 oz t 21 19