Interaction with suppliers
Nornickel purchases over 40 procurement categories ranging from construction and installation to equipment and food.
The procurement procedures are set out in the Regulations on the Product Procurement Procedure for Nornickel Group entities and local procurement provisions of the Group’s entities.
“The Company believes that procurement is key to effective and sustainable business development. Timely procurement of resources and equipment, coupled with operational management decisions, helps us meet the production targets and ensure smooth delivery of products to customers".Stanislav Murashko,
Deputy Director for Procurement at PJSC MMC Norilsk Nickel’s Polar Division
Procurement automation
Nornickel uses a single automated SAP SRMSAP SRM means System Analysis Programme for Supplier Relationship Management. electronic platform for supplier relationship management.
Procurement information is posted on Nornickel’s website. For potential suppliers and partners, the SRM platform provides the possibility of online procurement informing for all product categories. The system also enables users to generate and download procurement reports and other necessary documents, which greatly facilitates the document flow with suppliers.
SRM access is free and requires no electronic signature to sign up and use the system. The Group relies on electronic workflow to streamline mutual settlements.
Cooperation with local manufacturers
One of the priorities in interaction with suppliers is procurement from local manufacturers. For these purposes, the Company entered into a cooperation agreement with the Krasnoyarsk Territory Government. As a result, the procurement from the Krasnoyarsk Territory companies in 2023 amounted to 122% compared to the previous year.
Nornickel also supports the Group’s cooperation with indigenous peoples of the North purchasing products from indigenous communities of Taimyr and reindeer herding farms in the Murmansk Region.
Supply agreements to include the responsible supply chain requirements
Nornickel expects its counterparties to comply with the sustainable development requirements which the Group itself adheres to. Standard forms of agreements and the General Contracting Terms and Conditions were amended to include a clause with a requirement to comply with the Company’s sustainability requirements listed in the Code. This clause also informs suppliers on the opportunity to report to Nornickel’s Corporate Trust Line, which is the Company’s principal grievance mechanismThe Corporate Trust Line is described in more detail in the Corporate Trust Line. In 2023, over 12,000 agreementsAgreements with suppliers of the Group’s Russian assets. were concluded using standard forms.
To prevent corruption, supply agreements also include an anti‑corruption clause to ensure that parties are on the same page as regards zero tolerance to corruption. Such clause obliges parties to inform the other party in a timely manner about possible corruption risks identified and relevant checks carried out, as well as provides grounds for termination or other liability if the counterparty violates the anti‑corruption clause or is involved in unlawful activities.
Supplier risk identification
Supplier risk identification includes a number of proceduresIdentification and assessment of risks associated with the mineral supply chain is described in more detail in the Assessment of Mineral Supply Chain Risks:
- responsible supply chain management procedures
- mechanism (separate from the responsible supply chain management) to check all counterparties for reliability, solvency and financial resilience (“reliability check”).
The reliability check is an essential part of the contracting procedure (beyond the System) applicable to all of the Group’s prospective suppliers. Thus, supply chain risk identification is preliminary to the contracting procedure.
This check seeks to assure that the counterparty is reliable in terms of compliance with applicable laws and contractual obligations and is not exposed to any corruption risks. In addition to suppliers’ registration, operational and financial data, Nornickel analyses publicly available information about their management and business environment.
Based on the reliability check, the Company decides whether to cooperate with the respective counterparty going forward. The existing suppliers are also subject to a reliability check if more than 12 months have passed since their most recent check.
Training in building a responsible supply chain
Training for suppliers
Nornickel focuses on raising its suppliers’ awareness of sustainable development and the responsible supply chain, and holds training sessions in this area. The training sessions aim to foster knowledge of Nornickel’s internal policies and processes, and also of updates in the requirements of Russian regulators and international standards.
As part of supplier relationship management, the Company pays special attention to working meetings with suppliers’ managers and employees to build awareness of Nornickel’s responsible supply chain standards and requirements, and to provide more details on mineral supply chain due diligence and on sustainability survey of suppliers of goods, works and services.
Personnel training
Nornickel’s employees in charge of ensuring compliance with the responsible supply chain procedures regularly attend in‑depth trainings on responsible sourcing. In 2023, Nornickel conducted a total of 13 trainings on responsible supply chain for managers and employees of the Head Office, Polar Division, Medvezhy Ruchey LLC, Kola MMC and Bystrinsky GOKThe trainings also covered internal mineral suppliers which are part of the Group..
In 2023, Nornickel’s employees involved in due diligence of mineral suppliers and sustainability surveys of suppliers of goods, works and services underwent offline trainings “ISO 19011:2018. Improving the Performance of Internal Auditors” and “Auditing of Suppliers according to International Standards and ESG Principles”.
Training in the reporting period
In 2023, responsible supply chain trainings were attended by both the Group’s employees and its suppliers.
Training development plans
To increase employee and supplier awareness of responsible supply chain management practices, the Company plans to enhance its sustainable development training system and to launch a training course on responsible sourcing. The course attendees will be informed of Nornickel’s internal responsible supply chain regulations and processes, and develop a better understanding of approaches and best practices in building responsible supply chains.
Corporate Trust Line
In 2010, Nornickel set up its Corporate Trust Line (the “CTL”) to provide the Group’s managers with objective and reliable information about the identified cases of abuse, theft, corruption, fraud and other violations in a timely manner to ensure effective decision‑making.
Stakeholders may also report any violations of law and corporate policies to the CTL. This enables Nornickel’s management to get timely alerts of the issues revealed and promptly address them, among other things, to prevent repeated occurrences.
Issues may be reported anonymously and must be treated in such a way as to assure confidentiality, objectivity and impartiality, and to prevent retaliation against whistle‑blowers.
In addition, issues may be reported to the CTL using virtual assistants on the NIKA and Supernika platformsNIKA and Supernika are platforms aimed at creating a shared digital environment for the Company’s employees, including the feedback function.. This service is available to the employees of the Group’s entities.
The reports are handled in accordance with the Company’s approved CTL Procedure. Report statistics are reviewed by the Board’s Audit Committee and published as part of sustainability reports. CTL reports are sent to the Group’s entities.
In 2023, the CTL received 113 reports related to responsible sourcing from contractor and subcontractor employees. For all the reports containing confirmed violations, corrective actions were carried out to remedy the situation and eliminate negative consequences.
