Norilsk Nickel plans to produce up to 235kt of nickel and 358kt of copper in 2011

MMC Norilsk Nickel informs about preliminary results of the Board of Directors. The Board of Directors has approved key parameters of the Company’s budget for 2011.

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

Primary task and targets budgeted for 2011 are as follows:
- implementation of a large-scale investment program encompassing core production assets and infrastructure: in 2011 the Company will invest in these activities up to USD2.8B;
- higher ore output to allow continuation of primary metal production at the level of 2010 despite the different ore structure: Russian operations of the Company are expected to produce up to 235kt of nickel, 358kt of copper, 21t of platinum and 84t of palladium;
- revenues in 2011 are expected to be at the same level as in 2010;
- launch of the program envisaging restoration, overhaul and modernization of key production facilities and infrastructure (power generation, gas extraction and pumping, transport) in order to reduce operational risks, ensure stable running of machinery and equipment, and to optimize costs;
- raise wages and salaries of personnel engaged in the production;
- development of social programs;
- continuation and acceleration of work under the program of sulphur pollution reduction;
- to replenish and expand its mineral reserve base, the Company will invest over USD45M in a number of exploration programs;
- optimization of current business processes and introduction of internal IT system to create a united information network of MMC Norilsk Nickel; in 2011 the Company will invest in these activities more than USD30M;
- apart from addressing its production objectives, the Company jointly with federal and regional authorities implements a number of social programs to resettle retirees and develop Norilsk infrastructure;
- measures to increase consumer capacity in Norilsk and hold back inflation-driven growth of prices for products and services; among other, such measures will include operation of the regional airline company and creation of a service company that will be engaged in the maintenance of housing and utility infrastructure.

The attainment of production volumes and specific levels of profitability is dependent on market conditions and other factors, many of which are outside of Norilsk Nickel's control.

Key macroeconomic assumptions, internal and external budgeting factors:
- metal prices are based on the consensus forecast by leading banks;
- production program: modification of ROM ore structure and processing of earlier stockpiled raw material to compensate metal output;
- growing tax burden: increase of Uniform Social Tax rate to 34%, increase of custom duties for nickel and copper to 10%;
- fulfillment of social obligations in the region of presence: total financing of social programs will exceed RUB 13.4M.