Board of Directors of MMC Norilsk Nickel approved Company’s budget’2010

The Board of Directors of OJSC MMC Norilsk Nickel (hereinafter -MMC Norilsk Nickel or the Company) approved draft 2010 budget of the Company presented by the management.

The budget covers all Russian operations of the Company and it does not include its international assets and Stillwater Mining Company.

Budget planning was carried out taking into consideration the necessity to maintain stable metal output, secure reliable energy supply and transport independence, and ensure fulfillment of debt obligations of the Company. One of the basic requirements set for the Company in order to meet budget objectives is to be able to generate positive free cash flow with an allowance for the investment program implementation necessary for maintaining strategic and production potential of the Company. With that in mind, the management has set up a number of top priority tasks for the Company, including:

• sustained metal output by production plants in Russia;
• 100% sale of metals produced;
• expansion of cooperation among international production assets of the Company;
• implementation of major projects related to the development of transport infrastructure and reliable energy supply for core production operations;
• ensuring social stability in the regions of the Company’s presence given its strategic role;
• expansion and modernization of existing mining, concentration and smelting capacities and further reduction of harmful emissions to achieve environmental improvements;
• fulfilling the Company’s debt commitments.

Taking the above objectives and the global and Russian economy outlook into account, the framework of 2010 budget is as follows:

• 2010 production program is focused on maintaining stability in output and sales of all types of products from Russian operations of the Company. Nickel output from operations of the Company’s Polar Division (PD) and Kola Mining and Metallurgical Company (KMMC) is expected at not less than 234 thousand tons, which is slightly above 2009 plan (232 thousand tons). Platinum production is expected to grow against 2009 plan (19 tons) by approximately 7%. Palladium output is expected to exceed the plan for 2009 (80.8 tons) by 4-5%. Production of copper will be 4.6% lower compared to 2009 plan (381 thousand tons), which is explained by changes in mineralogy of processed ore. In 2009, Russian operations of the Company fulfilled production plans for all metals. Actual production results will be published in late January 2010.

• The budget is based on average market metal price outlook for 2010 with provisions made for potentially high price volatility.

• In 2010 metal sales revenues of the Company’s Russian operations is expected at USD 8 bln.

2010 budget execution will include implementation of the investment program focused on both mining projects and an intensive development of a number of industrial business units, including geology, fuel and energy and logistics.

• The investment plan for the Company’s Russian operations, not including WGC-3, amounts to approximately RUB 54 bln. RUB 21 bln. will be invested in 2010 in retrofitting of operations of the Company’s Polar Division. Investments into Kola MMC will amount to RUB 3.4 bln. Investments into fuel and energy complex will reach RUB 11.4 bln., investments into logistics will total RUB 6.7 bln. Key projects will include:

- Continued construction of Skalisty mine (PD) and Severny-Gluboky Mine (Kola MMC);
- Introduction of briquetting process at Kola MMC;
- Further development of Pelyatka gas condensate field in the Norilsk Industrial Region;
- Construction of Arctic tanker and cargo terminal in Murmansk;
- Development of polymetallic mineral deposits in Zabaykalsky Territory in cooperation with the Investment Fund of the Russian Federation, etc.

To succeed in the implementation of corporate projects, the management will focus on the following targets in 2010:

• Need to optimize the Company’s current credit portfolio. In 2010 the existing debt of close to $3 bln will be financed using both own funds and possible refinancing.
• Supporting social stability in the regions of Company’s operations. The Company will retain its social commitments in full volume for both its employees and operation areas.
• Solving ecological problem with the participation of all production and scientific units of the Company.

Commenting on the approved document, General Director – Chairman of the Management Board Vladimir Strzhalkovsky said:

“While the 2009 budget was mainly oriented on surviving the crisis, the budget of the coming year could be described as moderately conservative and directed on further development of the Company. In particular I am referring to projects which were delayed or suspended due to the economic slowdown and the need of sharp cost-cutting. The 2010 budget will enable to increase investments into both raising the efficiency of current production and the development of capital intensive attractive projects. Apart from that the Company will retain all social programs in full volume and most likely will start a number of new ones. I hope that the year 2010 will open doors for new prospects for the Company. The management is ready for this challenge”.

Source: Norilsk Nickel press-service