Norilsk Nickel selects contractors for modernization of power generation facilities

Norilsk Nickel (hereinafter referred to as MMC Norilsk Nickel, the Company or the Group) speeds up modernization of the Company’s electrical power generation facilities located in Norilsk Industrial Area. From the beginning of this year, the Group has posted seven tenders for selection of contractors for related works.

The first tender for construction of three gas-turbine plants (hereinafter – GTP) for the total capacity of 150 MW at thermal power plant (TPP) in Kaierkan is already over. At the moment, the parties are approving contract documents. The winners of other six tenders shall be selected until the end of 2012.

Integrated project of the Group’s power generation facilities modernization shall provide for the increase of power system efficiency, safety and power supply stability in Norilsk Industrial Area (NIA). All facilities are on the balance of Norilsk-Taimyr Energy Company (a part of the Group).

TPP-3
GTP commissioning is planned for December 2013. This project represents the first stage of TPP-3 overhaul and aims at satisfying the growing demand of Polar Division of the Company and other NIA consumers in electric power and capacity. Afterwards, the Company plans to build turbine off-gases heat treatment units in order to generate more steam, and to install internal TPP connections with steam delivered from boiler units to turbine units No. 5 and 6.

As a result GTP electrical energy production will increase, the necessary spare capacity will be ensured, and both fuel efficiency of electrical energy output and TPP turbine equipment efficiency will boost.

TPP-1
During the posted tenders the Company shall select contractors for replacement of boiler units No. 5 and 13 and turbine units No. 6 and 8 at TPP-1 (Norilsk). The commissioning of new equipment is planned for December 2014 – February 2015. Replacement of turbine units No. 6 and 8 is the final stage of intermediate-pressure section generator hall. Replacement of boiler units No. 5 and 13 is the continuation of previously initiated overhaul of TPP-1 boiler hall. Current units have been in service for over 50 years. Moreover, the boilers were initially designed for coal combustion and only later they were switched (with minimal adjustments) to combustion of natural gas.

Replacement of boiler unit No. 13 (with account for replacement of boiler units No. 11 and 15 planned for the future) is the beginning of TPP-1 overhaul stages 3 and 4.

Successful implementation of the projects is to secure current level of TPP energy output, increase efficiency and reliability of energy supply to the Company’s Polar Division and Norilsk residential zones, decrease harmful influence to the environment due to lower nitrogen and carbon emissions, lower operational costs for repairs and maintenance of boiler equipment due to, among other factors, fewer boiler units used.

TPP-2
The Company shall select contractor for overhaul of power-generating units No. 1 and 2 of TPP-2 main building (Talnakh). Commissioning of first start-up facility (two boilers and one turbine) is planned for September 2015, whereas the second start-up facility (one boiler and one turbine) is to be commissioned in July 2017.

This project represents initial stage of Norilsk TPP-2 overhaul. Power-generating unit No. 1 was decommissioned in 1999 due to poor technical condition. Power-generating unit No. 2, which was commissioned in 1970, is nearing the recommended deadline for demolition and replacement (50 years).

Once the project is over, the current level of TPP energy output shall be secured, efficiency and reliability of energy supply to the Company’s Polar Division and residential zones of Talnakh district in Norilsk shall increase. The Company will also manage to decrease harmful influence to the environment due to lower nitrogen and carbon emissions and lower operational costs for repairs and maintenance of boiler equipment due to, among other factors, usage of bigger capacity boilers and decrease of their count from four to three per 2 power-generating units.

Ust’-Khantaiskaya HPP
MMC Norilsk Nickel shall select a contractor to replace the equipment of hydro electric units of the generator hall of Ust’-Khantaiskaya HPP. The new equipment will be commissioned by seven start-up facilities (each involves the replacement of one hydro electric unit). The first start up facility is scheduled for September, 2015. The sixth and the seventh start up facilities are planned for September, 2020.

The project is aimed at maintaining HPP’s power generation output levels due to renewable hydroelectric power resources, increasing the efficiency and reliability of HPP.

Investments

All tenders held at the moment were initiated as part of implementation of the strategy of the Company’s production and technological development till 2025, approved by the Board of Directors on October, 27. The strategy envisages improved efficiency and reliability of MMC Norilsk Nickel’s power system as a result of reconstruction of power system generation facilities (TPP-1, TPP-2, TPP-3 and Ust’-Khantaiskaya HPP) and modernization of the main and auxiliary power equipment. The total amount of investments in power facilities shall be USD 2.1 billion. This amount includes investments with respect to tenders already announced, and with respect to facilities for which tender documentation is only under development.

ABOUT MMC NORILSK NICKEL

MMC Norilsk Nickel, a company incorporated under the laws of the Russian Federation, is the largest diversified mining and metals company in Russia, the world's largest producer of nickel and palladium and one of the world's largest producers of platinum, rhodium, copper and cobalt. In addition to this, MMC Norilsk Nickel produces a large number of other by-products, including gold, silver, tellurium, selenium, iridium and ruthenium.

The key production units of the Company’s group in Russia are at the Polar and Kola Peninsulas. MMC Norilsk Nickel international assets include operations in Finland, Australia, Botswana and South Africa.

MMC Norilsk Nickel’s shares are traded at MICEX-RTS. ADR’s on the Company’s shares are traded on the other the counter market in the US and at the London and Berlin stock exchanges.