Novolipetsk Steel : Environment 2023

Environment

18	30
Climate change	Energy efficiency

39

Driving energy transition

Environmental Protection

Climate change

Material topics	Principles of the UN
	Global Compact

• Climate change

գ Air emissions	Principle 7. Businesses should support
	a precautionary approach to environmental
	challenges.

NLMK Group is fully committed to climate change action and takes meaningful steps towards decreasing greenhouse gas emissions, progressively reducing the carbon footprint of its products. Moreover,

the Company's products (such as steel for wind energy and energy-efficient electrical steels) enable a broad range of consumer industries to substantially reduce their climate impact.

In 2023, the percentage of recycled content in the steel produced by NLMK Group almost reached 20%; apart from ferrous scrap, sources of recycled materials included recyclable iron-containing sludge, dust and scale4. Specific CO2 emissions from scrap steelmaking are approximately four times lower than when using primary raw materials.

Key events in 2023

գ Strategic target for specific emissions per tonne

of steel (1.91 t) was achieved

գ A climate strategy was developed and approved

for NLMK Europe; an action plan to reduce

emissions was approved with targets (Scope

1+2) to reduce specific emissions by 30% by 2030

compared to the baseline year of 2021

գ Low-carbon electric energy purchases made

it possible to bring Scope 2 emissions (market-

based method) to zero at NLMK Group's Russian

sites

Principle 8. Businesses should undertake initiatives to promote greater environmental responsibility.

Principle 9. Businesses should encourage

the development and diffusion of environmentally friendly technologies.

Contribution to the achievement

of national sustainable development goals and national projects

Emissions avoided with NLMK's products are comparable to emission volumes from the entire steelmaking operations of the Group

In 2024, NLMK Group published its fourth report in line with the recommendations of the Task Force on Climate- Related Financial Disclosures (TCFD)5 updated in 2021.

գ	Independent verification of slab and GO steel
	cradle-to-gate footprint was carried out
գ	Reports were prepared in accordance with

The Climate Doctrine of the Russian Federation was adopted pursuant to Decree of the President

Managing climate change-related issues

the EU's Carbon Border Adjustment Mechanism

(СВАМ) for the first time

Global sustainable development goals

of the Russian Federation No.812 dated 26 October 2023. The Doctrine is a set of views on the purpose, principles, content, and ways of implementing the unified state policy of the Russian Federation on issues related to climate change and

its consequences. The key goal of the new climate policy is to achieve a balance between emissions and their absorption by 2060. NLMK activities comply with the approved doctrine.

[TCFD Governance] [GRI 3-3]

The Company's leadership devotes continued attention to climate-related issues, which are embedded into its corporate governance system.

The agenda of the Board of Directors meetings includes such issues as the decarbonization strategy, climate projects, climate risks, methodology, benchmarking, and progress towards achieving the goals. The Board of Directors Strategic Planning Committee determines climate impact reduction goals.

[TCFD Governance a)] [GRI 2-12]

Goals related to climate impact reduction

divisions, as well as heads of production units

at NLMK Group companies. The Company evaluates progress towards achieving the goals annually.

[TCFD Governance b)] [GRI 2-13]

NLMK Group's management devotes particular attention to climate aspects when considering the Company's strategy, risk management, annual budget, and business plans, as well as when setting its business goals and monitoring the implementation and efficiency of major investments.

㈭ For more information on climate-related issues, please

Key figures for 2023

are assigned by the CEO (Chair of the Management Board) to managers of the Group's functions and

visit theCompany website.

1.74 t of CO2

per tonne of steel (Scope 1 + 2)1

-2.9 m t of CO2

in 2023 through projects implemented since 2018 (Scope 1 + 2) and purchase of low-carbon energy2

-77kg

of solid fuel/t of pig iron through activities undertaken since 20103

-511 m t of CO2

in avoided emissions for the entire lifecycle of NLMK products sold in 2018-2023

1. Market-basedmethod including NLMK Long Products companies.
2. Including NLMK Long Products companies.
3. End-to-endconsumption of coal and petroleum coke, including coke, sinter, and pig iron production.
4. Internal scrap of steel furnaces and screenings of sinter and pellets are not taken into account in accordance with ISO 14021:2016 and EN 45557:2020.
5. The Task Force on Climate-Related Financial Disclosures (TCFD) was established in December 2015 by the Financial Stability Board (FSB), an international body created by the G20 states. In October 2021, the TCFD published its revised recommendations, which set out the basic principles of climate-related disclosures for companies and organizations. In 2023, the Financial Stability Board announced that the work of the Task Force For Climate-Related Financial Disclosures had fulfilled its remit and disbanded. It was expected to be replaced by another body: the IFRS Foundation. The TCFD website is no longer updated, but its resources will remain available. NLMK Group has decided to publish the report for 2023 in the same format.

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Adaptation to climate change

Russia was ranked 30th among 185 countries by the Notre Dame Global Adaptation Initiative

(ND-GAIN) Index Country Rankings. The country's profile says "Adaptation challenges still exist, but the Russian Federation is well positioned to adapt."

Earlier assessments of climate change-related physical risks have determined that NLMK Group sites' exposure to such risks is low. In general, the level of adaptation risks faced by the Group is low. An in-depth analysis of physical risks for Stoilensky has been translated into the following recommendations for adapting the site to adverse weather and climate conditions:

Employee adaptation:

• Develop a special schedule for hot weather conditions
• Provide shade
• Provide drinking water and electrolyte beverages
• Encourage the use of personal protection from heat

Equipment adaptation:

• Increase research spending to improve engine and equipment performance in hot weather conditions
• Develop a special schedule for hot weather conditions

Adaptation to more frequent extreme weather events:

Climate impact reduction strategy

The CO2 reduction potential for BF-BOF steelmaking

is limited to 5-15% of the current levels (excluding carbon capture, utilization, and storage1). More significant reductions can be achieved through transition from coal to "green" hydrogen and switching to the HBI+EAF process (hot-briquetted iron + electric arc furnace).

In 2021, NLMK Group adopted its Climate Programme that envisages a phased transition to the electric arc method of steel production based on DRI/HBI

as feedstock (coke-free iron ore with a high iron content). Even with the current energy consumption structure (that includes natural gas), the above route allows

for a twofold reduction of CO2 emissions compared to the BF-BOF route. Going forward, when sufficient volumes of "green" hydrogen and industrialized technologies of hydrogen-based reduction become available, the decarbonization potential of the process should exceed 90% (vs. the current levels). In light

of the current restrictions on access to HBI technologies, the timeline of the programme will be determined

at a later date. In 2023, the Company continued

to pursue research in carbon capture, utilization, and storage, as well as in use of biofuel and electric power generation based on renewable energy sources.

In 2023, projects to increase the iron content

in concentrate implemented earlier at Stoilensky produced tangible results, enabling an annual reduction of CO2 emissions of up to 800,000 tonnes. Other investment projects and operational improvements implemented within the current strategic cycle

are contributing to the reduction of specific CO2 emissions as well.

In 2023, NLMK Lipetsk carried out the following projects: separate flux dosing2, improvement of the steam-supply cycle in coke and chemical operations by switching

to secondary energy resources, and energy-saving lining of lime kilns. In addition, the boiler room of the Parus health resort switched from fuel oil to natural gas. These measures will help reduce direct CO2 emissions by 100,000 tonnes per year. Furthermore, the Company pursues other projects, including the construction

of a new power plant for recovery of by-product fuel gases. Commissioning of the recovery cogeneration plant will reduce CO2 emissions by 650,000 tonnes per year (or by 35 kg of CO2 per tonne of steel).

1 Though CO2 capturing technologies are available,

none of them is commercially viable for large volumes

of greenhouse gases. Such projects require significant CAPEX

In March 2023, NLMK Pennsylvania launched a new reheating furnace for slabs. The new furnace will deliver natural gas savings of up to 30%.

In 2023, NLMK Europe developed and approved

a climate strategy along with an action plan (operational and investment actions) to reduce specific emissions with a focus on improving energy efficiency (optimizing equipment operation, reducing electric power and natural gas consumption, transition to induction heating, and increasing the share of renewable energy sources in the division's consumption). Mid-term targets for reduction of specific emissions of the division were set (the target level for 2030 is 0.15 t of СО2/t of rolled products or -30% to the baseline year of 2021).

Long-term CO2 reduction goals

NLMK Group's long-term decarbonization strategy assumes the replacement of the Blast Furnace- Basic Oxygen Furnace steel production process with low-carbon technologies. A phase-in process will

be timed to blast furnace overhaul schedules and other technology constraints.

NLMK Group has set long-term goals to reduce specific emissions (Scope 1+2) to 1.2 t of CO2/t of steel (-40%

of the current intensity) by 2050 with a full transition to HBI+EAF using the Group's captive iron ore,

as well as procurement of natural gas and electricity at current levels of carbon intensity.

1.2t CO2 / t steel

NLMK Group's long-term goal to reduce specific emissions (Scope 1 + 2) by 2050.

When the industrialized hydrogen-based iron reduction technologies come along and sufficient amounts

of low-carbon electricity become available, the new process chain will reduce the Group's carbon intensity to 0.2 t of CO2/t of steel (a 90% reduction vs. the current level). The remaining emissions can be reduced to zero through CO2 capture projects or offset by absorption projects.

Thus, NLMK Group aims to achieve carbon neutrality when the necessary external conditions allow it.

NLMK Group continues

to advance its low-carbon energy consumption

[GRI 2-25]

Increasing the share of low-carbon energy sources is one of the Company's priority initiatives aimed at reducing its carbon footprint.

Nuclear energy is one of the main decarbonization tools, currently accounting for a third of global low-carbon electricity production. In 2023, the Russian sites' external electricity needs were almost fully met

by nuclear energy.

The Company is also interested in renewable energy sources. In 2023, more than half of NLMK DanSteel's energy needs were satisfied

by purchased wind power. The Company

is planning to develop captive electric power generation based on solar energy.

In 2023, a total of 5.84 billion kWh of low- carbon electricity was supplied to NLMK Group, which enabled the Company to reduce Scope 2 emissions by 1.87 million tonnes of СО21.

• Improve the leakproofness of shop roofs

and OPEX.

2 Sintering process optimization through separate feeding

of lime and dolomite (fluxes) with accurate dosing.

1 Of the 5.84 billion kWh of procured low-carbon energy, NLMK Long sites accounted for 1.29 billion kWh. The reduction of Scope 2 emission without NLMK Long sites stands at 1.45 m t of CO2.

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Sustainability Report 2023

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Metrics and targets

[TCFD Metrics and targets]

In 2023, the Company reported its greenhouse gas emissions in compliance with Russia's new legislative requirements and in line with СВАМ for the first time.

Direct and indirect energy emissions of NLMK Group, '000 t of CO2 equivalent

[GRI 305-1] [GRI 305-2] [TCFD Metrics and targets b)]

Indicator	20181	2019	2020	2021	2022	2023
Direct GHG emissions (Scope 1)	30,772	28,145	29,558	29,932	28,818	29,969
Carbon dioxide (СО2)	30,701	28,078	29,489	29,863	28,752	29,902

Mandatory reporting has its limitations and differs from the voluntary disclosures on greenhouse gases provided in this Report. The Company's sites in Europe and the USA have been submitting mandatory annual GHG reports for many years.

In 2023, the organizational boundaries of the Company changed significantly in view of the sale of NLMK Russia Long Products assets. In accordance with the GHG Protocol Corporate Accounting and Reporting Standard, the 2018 baseline emissions and the emissions of the following years were recalculated without

the emissions of the divested companies1.

including from stationary sources	30,526	27,893	29,310	29,675	28,573	29,730
Methane (CH4)	46	42	44	43	41	43
Nitrogen oxide (N2O)	25	25	25	26	24	24
Indirect energy emissions (Scope 2)2, location-based	2,155	1,930	1,866	2,051	1,861	1,785
Indirect energy emissions (Scope 2)3, market-based	2,193	1,969	1,909	1,359	743	384
Total (Scope 1 + Scope 2), location-based	32,927	30,074	31,424	31,983	30,679	31,754
including СО2 for stationary sources	32,681	29,822	31,176	31,726	30,434	31,515
(location-based)
Total (Scope 1 + Scope 2), market-based	32,965	30,113	31,466	31,292	29,561	30,353
including СО2 for stationary sources	32 719	29 861	31 218	31 034	29 315	30 114
(market-based)
СО2 emission from biomass combustion	17	25	25	26	29	33
(Scope 1, for reference)

The methodological approaches and sources of data used to determine emissions are described on the website of the Company. In 2023, there

was a noticeable change in the approach to determining the electric power emission factors in the Russia. Now, they are determined based on the data of Trading System Administrator of Wholesale Electricity Market Transactions (TSA)

for the 1st pricing zone of Russia2, where all Russian assets of the Group consuming electric power from external grids operate.

1. However, the achievement of previously set target indicators for NLMK Group for 2023 is monitored within the former organizational boundaries (see further).
2. https://www.atsenergo.ru/results/co2all.
3. According to Eurofer data.

CO2 emission per tonne of pig iron under the EU ETS methodology

CO2 emission per tonne of pig iron at NLMK Lipetsk in 2023, calculated in accordance with the EU methodology for emission allowance allocation, was 1.38 tonnes of CO2 per tonne of steel. This

is significantly better than the average level

of emission by European steelmakers at 1.49 tonnes of CO2 per tonne (as a comparison, 10% of European steelmaking companies with the lowest emissions emit 1.36 t of CO2/t)3.

NLMK Group's CO2 emission in line with EU ETS (Scope 1), t of CO2/t of pig iron

1.49

1.381.36

NLMK	EU	EU
2023	average	TOP 10

GHG emission trends (Scope 1 + Scope 2, location-based),m t of CO2 equivalent

[GRI 305-1] [GRI 305-2]

2.2	2.2	2.0	1.9	1.9	2.1	1.4	1.9		1.8	0.4
	1.9	0.7
	30.8	28.1		29.6		29.9		28.8		30.0

2018

2019

2020

2021

2022

2023

Indirect energy emission of GHG (Scope 2), location-based

Indirect energy emission of GHG (Scope 2), market-based

Direct GHG emission (Scope 1)

1. The baseline year for all Scopes is the year when Strategy 2022 was launched.
2. Emission of СО2 from fuel combustion in the production of electricity received from the external grid for the needs of the Group's sites. The calculation was made using
   the location-based method, i.e. by the average weighted rates of greenhouse gas emissions produced in a certain territory (country, region, state).
3. Emission of СО2 related to supplies of external electricity, including targeted procurement of all or a portion of external electricity based on free sales and purchase contracts and certificates.
4. Location-basedfor Scope 2.

Increased steel production (+7.9%) was a key driver

of absolute emissions' growth compared to 2022 (+3.5%4)

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23

Blast furnace operations (51%), energy production (14%), and iron ore production (11%) are the largest contributors to direct greenhouse gas emissions (Scope 1). The overall contribution of emissions from mobile units and emission of CH4 and N2O into NLMK Group's total direct GHG emissions is less than 1% in CO2 equivalent.

NLMK Group regularly estimates CO2 emissions from the combustion of biomass (wood chips and charcoal) used at NLMK Lipetsk for ferroalloy production. These emissions are climate-neutral, provided for reference only, and not included in the total emission volume. In 2023, the use of biomass, including wood chips and charcoal, has increased to 10,400 tonnes. The Company is considering the feasibility of using sustainable biomass in its key steelmaking processes. The charcoal supplied to the Company is FSC certified1, while wood chips are produced from in-house production waste. The Company has engaged an external contractor

to leverage the opportunities for the manufacturing of biocoal from waste wood.

Total direct and indirect energy emissions of GHG by country in 2023 (Scope 1 + Scope 2, market-based), '000 t of CO2 equivalent

[GRI 305-1] [GRI 305-2]

1.38	1.49		15	30,353
1.36
			20
	146	111
	193

472

29,395

Russia USA Belgium Italy Denmark France India Total

Upstream GHG emissions (Scope 3), m t of CO2 equivalent [GRI 305-3]

	8.3	1.36		7.7
7.1		7.2
	7.0	6.2

2018

2019

2020

2021

2022

2023

Purchased ferrous metals accounted for 32% of the calculated other indirect emissions, thus exceeding the share of emissions associated with coal (30%) for the first time.

In the market-based calculation, in 2023, Scope 2

Other indirect GHG emissions (Scope 3) in the upstream value chain by category, 2023, % [GRI 305-3]

	0.9
	0.8
	0.6
	0.5
	0.5
	0.3
	0.2
	0.1
Ferrous metals2	.
Hard coal	.
Ferroalloys	.

		The Company continues to assess indirect greenhouse
Direct GHG emissions (Scope 1)		gas emissions associated with the production of the main
	types of external resources used by NLMK Group
by source2, % [GRI 305-1]		companies (upstream emissions) and their delivery
		to the companies' gates, as well as the transportation
		of raw materials and semi-finished products between
		the companies of the Group3. Estimated coverage
		is at least 95%. For purchased electricity, Scope 3 includes
0.3		emissions associated with fuel production, processing
		and delivery, as well as electricity transmission losses.
0.2		Scope 3 includes emissions of methane, nitrous oxide, and
	carbon dioxide.
0.2		The Company works with suppliers to obtain
		information about the carbon footprint associated with
		the purchased products. The calculations rely on specific
		CO2 emission data for rail cargo transportation
		within Russia provided by the largest rail operator.
Blast furnace operations	.	The assessment of specific emissions from natural gas
production and transportation within Russia is based
Energy production	.
on data provided by the largest gas market players.

specific emissions went down by 2% vs. 2022 and

by 8% vs. the baseline of 2018. The reduction was driven by completed projects (see p. 36) and procurement

of carbon-free energy by Russian sites.

• NLMK Group continues to develop and implement projects aimed at GHG emission reduction (see p. 28)

Natural gas	.
Non-ferrous metals	.
Railway transportation	.
Petroleum coke	.
Pellets and HBI	.
Electric energy	.
Marine transportation	.
Fluxes and minerals	.
Oil fuel	.
Motor transportation	.
Process gases	.
Coal coke	.
Carbon materials	.
Ore and concentrate	.

Iron ore feedstock production	.
BOF operations	.	Other indirect emissions in the preceding years were
Coke production	.	recalculated in view of the fact that the organizational
Lime production	.	boundaries of the Company had changed. Emission
Steel rolling and finishing	.	factors related to electric power, technical gases, metals
Mobile units	.	and ferroalloys were also adjusted.
EAF operations	.
Other stationary sources	.	1	Forest Stewardship Council.
Ferroalloy production	.	2	СО2 emissions from the combustion of process gases (blast
	furnace and coke oven gas) outside the gas sources but
			within the Group's sites are assumed equal to emissions from
			the combustion of an energy-equivalent amount of natural
			gas adjusted for combustion efficiency. The corresponding
			CO2 deduction is made for process gas sources.
			The "Production of energy resources" category includes
			emissions generated by production of heat, electricity, and
			technical gases.
		3	This category does not include emissions associated with
			the semi-finished products manufactured within the Group,
			as they are already accounted for in Scopes 1 and 2. Also, this
			category excludes emissions associated with the delivery
			of products to customers.

Specific CO emissions from stationary sources1, t of CO	equivalent / t of steel [GRI 305-4]
2	2
Indicator	2018	2019	2020	2021	2022	2023
Specific direct emissions (Scope 1)	2.15	2.17	2.24	2.08	2.09	2.02
Specific indirect energy emissions (Scope 2, location-based)	0.15	0.15	0.14	0.14	0.14	0.12
Specific indirect energy emissions (Scope 2, market-based)	0.15	0.15	0.15	0.10	0.05	0.03
Specific total emissions (Scope 1 + Scope 2, location-based)	2.30	2.32	2.39	2.22	2.23	2.14
Specific total emissions (Scope 1 + Scope 2, market-based)	2.31	2.32	2.39	2.17	2.15	2.04

1. In line with the corporate approach to determining CO2 emission targets: CO2 only, stationary sources only.
2. This category mainly includes third-partysemi-finished steel products used by NLMK companies for processing into finished steel.

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25

Specific CO2 emissions (Scope 1 + Scope 2, location and market-based) from stationary sources, t/t of steel [GRI 305-4]

2.31	2.32	2.39
	2.22	2.23
2.30	2.32	2.39	2.14
		2.17

Consistent efforts are made to reduce the Company's environmental footprint.

From 2010 to 2023, emissions of СО2 per tonne of steel went down by 17% across the Group and by 16% at NLMK's flagship production site in Lipetsk.

Total reduction of СО2 emissions by projects contributing to NLMK Group's strategic target through 2023 [GRI 305-5]

Reduction of GHG emissions:	Scope 1	Scope 2	Scope 3	Scope 1+2	Scope 1+2+3
In absolute terms, '000 t of CO2	-817	-90	-375	-908	-1,283
equivalent
Specific, kg of CO2 equivalent / t	-46.3	-5.1	-21.3	-51.4	-72.7
of steel

				2.15
					2.04
2018	2019	2020	2021	2022	2023

Scope 1+2, market-based

Scope 1+2, location-based

NLMK Group reduces climate footprint by using hydrogen-containing secondary resources

[GRI 2-25]

NLMK Group uses by-product gases from steelmaking operations as fuel for power generation or as a direct energy source for core process equipment. This approach helped reduce the consumption of fossil fuels and GHG emissions by 5 million tonnes of СО2 per year.

Some of the blast furnace gas is fed into top pressure recovery turbines that generate additional power without any fuel combustion. The total captive power generation covers two- thirds of NLMK Lipetsk's electricity needs.

By-product fuel gases also contain pure hydrogen - from 7% in the blast furnace gas to 60% in the coke oven gas. Hydrogen utilization further reduces the consumption of carbon-based fossil fuels. In 2023, NLMK Group consumed 19.5 billion m3 of blast furnace and coke oven gas, which contained approximately 2.6 billion m3 of hydrogen.

This was driven by improvements in operational efficiency and implementation of a series of investment projects. End-to-end consumption of solid fuels (coal and petroleum coke) per tonne of pig iron went down by 77 kg, natural gas consumption went down by 22 m3, and external power consumption decreased by 31 kWh.

In 2023, target specific СО2 emission per tonne of steel (Scope 1 + Scope 2) calculated within the previous organizational boundaries (i.e. including NLMK Russia Long companies) and not adjusted for the change

of the external emission factor for electric energy was 1.91 t/t vs. 2.00 t/t of the 2018 baseline (a 4.5% decrease).

Actual specific СО2 emission in 2023 calculated

on the same basis amounted to 1.91 t of СО2/t of steel or 1.74 t of CO2/t of steel, if the procured low-carbon power is factored in. Therefore, the 2023 target per tonne of steel was achieved.

NLMK Group's specific CO2 emissions (Scope 1+2), including NLMK Russia Long Products sites, t of СО2 /t of steel

1.381.36

2.10

2.00	2.03		1.95	1.98
		2.10	1.91

Target 2023 - 1.91 т СО₂ / t
of steel			1.86	1.84
					1.74
2018	2019	2020	2021	2022	2023

Excluding low-carbon energy supplies

Including low-carbon energy supplies

NLMK Group continues to develop and implement projects aimed at reducing the emission of greenhouse gases. These rely on proven measures to improve energy efficiency and reduce fuel consumption by process equipment, as well as on some innovative solutions, including the use of carbon resources and biofuels

in blast furnace operations and innovative carbon capture, utilisation and storage technologies.

Key achievements in reducing СО2 emissions in 2023 came through the projects implemented in 2019−2022. In 2023, the Company implemented a number

of additional projects to ensure a significant reduction of СО2 emissions (Scope 1 and Scope 2), such as energy efficiency improvement projects.

The impact of the projects was evaluated on the basis of technical effects achieved over the time period

in question compared to a business-as-usual scenario (baseline). A custom model was applied to projects that affect sintering and ironmaking operations.

The model used an end-to-end calculation of resources consumed per tonne of pig iron across the entire value chain and accounted for the interdependencies among the projects. Separate calculations were made for projects in steelmaking and rolling operations and power generation. In the previous year, the Company began to include Scope 3 emissions in the evaluation process. In addition to СО2 emissions, Scope 3 takes into account CH4 emissions from coal and natural gas.

Specific direct emissions of CO2 per tonne of steel at NLMK Lipetsk in 2023, calculated in line with

the guidance1 for the European Union Emissions Trading System (EU ETS) was 1.70 t of СО2 /t of steel. The gap with the EU ETS benchmark2 - as stricter requirements were imposed in 2021 for the period of 2021-2025 - currently stands at 7%.

NLMK Lipetsk CO2 emissions according to the EU ETS (Scope 1), t of CO2/t of steel

1.70

1.59

NLMK	EU ETS
Lipetsk 2023	benchmark³

1. Commission Delegated Regulation (EU) 2019/331
   of 19 December 2018 determining transitional Union- wide rules for harmonised free allocation of emission allowances pursuant to Article 10a of Directive 2003/87/EC of the European Parliament and of the Council.
2. The EU ETS does not regulate BOF steel, but it includes benchmarks for coke, sinter, pig iron, lime, and dolomite. The provided data per tonne of steel are calculated based on specified consumption coefficients.
3. Assuming that the rates of coke and iron ore consumption are equal to those of NLMK in 2023.

~RUB 34bn

or $0.4 bn, total investment in СО2 emission reduction projects completed

by the end of 2023

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27

Climate cooperation

NLMK Group participates in discussions of carbon regulation legislation.

Assessment and verification of the product carbon footprint

In 2023, NLMK Group carried out an independent

Assessment of climate risks and their impact on strategy

In 2023, NLMK experts took part in the formulation

of the indicative rates of specific GHG emission factors for the following Russian best available techniques reference documents: ITS 27-2023 "Downstream processing of ferrous metal products" and ITS 25-2023 "Iron ore mining and dressing". NLMK experts were engaged to develop a reference method for determining CO2 emission indicators for the iron and steel industry. This method was incorporated into ITS 26-2022 "Production of pig iron, steel, and ferroalloys".

verification of the earlier estimates of the carbon footprint of slab and GO steel production at NLMK Lipetsk.

The verification was based on the cradle-to-gate concept, that is, all the production processes from mining of the raw materials and fuel to final products leaving the factory gate were included.

Moreover, in 2023 an estimation of the carbon footprint of the core types of NLMK Europe products was prepared to be verified by a third party.

[TCFD Risk management] [GRI 201-2]

Risk management

Climate risk management is an integral part

of NLMK Group's risk management system. Climate risks are identified and assessed based on qualitative and quantitative methods, including scenario analysis and modelling of risk materiality, probability, and velocity. Aggregate information about the climate risk profile and the related changes is disclosed in the NLMK Group Risk

Internal carbon pricing

The Company uses internal carbon pricing to support the assessment and prioritization of climate projects, estimate costs associated with the introduction of the Carbon Border Adjustment Mechanism (CBAM), and manage climate risks. The internal carbon price is based

NLMK Group products facilitate

the transition to a low-carbon economy

In 2022, NLMK Group updated the output volumes for products that contributed to the consumer- side СО2 emission reduction as well as the estimate

of the emission reduction effects. The estimate showed that supplying to consumers the target volumes of such products in 2018−2023 would allow them to avoid over 20 million tonnes of CO2 emissions per year (which

is comparable to the Group's total annual CO2 emissions) and about 500 million tonnes for the entire product lifecycle (20-50 years).

Supply of heat and electric power by the Altai-Koks coke plant also drives down the СО2 emissions from coal burning in the town of Zarinsk. The avoided emissions are estimated at 0.6 million tonnes of СО2 per year.

Plans for 2024 and the medium term

In 2024, the Company plans to continue developing and implementing projects that help reduce СО2 emissions from the current processes as well as to take operations-level measures to reduce СО2 emissions. NLMK Group will continue working on the development of its decarbonization strategy.

2024 will also see the launch of the second wave of NLMK Europe's climate programme projects designed to improve the energy efficiency of NLMK Europe operations (20% of the emission reduction target envisaged by the strategy) as well as a number

of investment projects aimed at utilization of renewable energy sources and heat recovery (40% of the emission reduction target envisaged by the strategy).

The Group intends to engage with suppliers and clients to share information on the products' carbon footprint and decarbonisation targets, to continue the assessment and verification of its products' carbon footprint, and

to participate in the CDP programme.

Radar.

• see the Operational Control and Risk Management section for more detail

Every external factor is assessed in terms of the time horizon of its potential materialization. Three time horizons were identified: short-term (up to 2025), mid-term (2025−2030) and long-term (beyond 2030). It is expected that the technological transition risks will be relevant at all time horizons, and most risks will materialize in the long term, since the technology change in steelmaking will become substantial

by the late 2020s. In addition, chronic and acute physical risks will develop in the long term. The same can be said for the most significant long-term opportunities since

1. more substantial increase in the low-carbon steel production will occur at that time frame.

Global climate change is associated not only with risks but with certain opportunities. In the context

of the Company's operations, this means greater returns on investment in low-carbon iron making technologies (HBI), expansion and commercialization of carbon capture, utilisation and storage (CCUS) technologies, and opportunities to use carbon credits to finance low- carbon initiatives.

on the projected allowance price under

the EU ETS adjusted for the Company's share of exports to Europe.

Scenario analysis overview

The Company uses a variety of sources to assess the climate risks and opportunities1. The following scenarios were selected for in-depth analysis: the Middle of the Road scenario (business-as-usual), the Sustainable Development scenario of the Paris Agreement (limiting global warming to well below 2°С), and the worst-

case scenario (for physical risks only) - Fossil-fueledDevelopment.

The first two scenarios were used to analyse

the following transition risks at the 2022-2030 horizon:

• Introduction of a carbon tariff on product imports into the EU
• Introduction of a carbon tariff on product imports into the USA
• Introduction of a tax on greenhouse gas emissions in Russia
• Global decline in steel demand
• Increased EAF competitiveness vs. the BF-BOF route
• Stricter "green" legislation in the EU
• For more information on major risks and opportunities associated with climate change, please visit theCompany website.

Consumer-side CO2 emissions avoided due to NLMK Group products sold within the strategic cycle of 2018-2023

Product	Sales, m t	Avoided CO2 emissions, m t of CO2
		Annual	Throughout the product
			lifecycle
Thick plate for wind power installations	0.9	16.0	320
Non-grain oriented steel	1.4	6.0	181
Grain oriented steel	1.7	0.2	5
Flat steel	1.2	0.04	1
Wear-resistant and high-strength steel (Q&T & Q&P)	0.8	0.4	4
TOTAL	6.0	22.7	511

1 Including the International Energy Agency (IEA), the International Institute for Applied Systems Analysis (IIASA), Shared Socioeconomic Pathways (SSP), the World Economic Forum, the World Resources Institute (WRI), and the Climate Impact Atlas of the Royal Netherlands Meteorological Institute (jointly with the CMIP5 project).

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Energy efficiency

Material topics

• Energy

Key events in 2023

• The hourly consumption rate of blast furnace gas by NLMK Lipetsk power plants reached historical peaks
• NLMK Lipetsk oxygen losses are at their historical lows following the launch of a new recipient group
• NLMK completed the construction of the new RCGP power distribution system. The installation of the core and auxiliary process equipment (boilers, turbo generators, gas holders) continues
• The medium-term programme for reliability improvement of the core equipment at Altai- Koks' thermal power plant continued
• The Company continued with the project of revamping its BF-4 air stoves. The project is aimed in particular at improving the energy efficiency and reducing CO emissions from the air stove operations. The phased equipment modernization project will be completed by 2026
• The phased lighting upgrade programme at Group sites was continued. In 2023, ca. 18,000 light fixtures were replaced with energy- efficient LED alternatives

Key figures for 2023

367.8 PJ	-3.4% yoy
NLMK Group's total energy
consumption in 2023
5.351 Gcal/t	-1.8% yoy

Specific energy intensity of steel production at NLMK Lipetsk

Approach to energy management

[GRI 3-3]

Metallurgy is an energy-intensive industry. NLMK Group continues its systematic efforts to increase the energy efficiency of its production activities, seeking and introducing comprehensive solutions to improve its energy efficiency and sales reliability

in order to reduce costs and minimize its environmental footprint.

The Company has adopted a group-wide Integrated Management System Policy (IMS Policy). This policy in particular sets forth the vision, goals, principles, and management commitments related to the improvement of the energy efficiency.

NLMK Group aims to be a leader in adopting best practices to increase the energy efficiency

of the Company's operations and to bring the specific energy consumption and production costs as far down as is technologically and economically feasible. The main principles of the IMS Policy require reduction of the resource-intensity of the Company's operations using the following approaches:

• Reducing specific consumption of natural raw materials, water, fuel and energy
• Increasing production efficiency
• Re-usingresources and adopting the best available techniques (BAT)

The Group's commitments under the IMS Policy go beyond introducing advanced energy-efficient technologies and solutions in order to reduce

the consumption of energy resources. Major further commitments involve the development of captive power generation capabilities that utilize metallurgical gases and other captive recyclable energy resources as well as support of the use of renewable energy sources where applicable and viable. The purchased equipment and services are evaluated in terms

of compliance with the corporate energy efficiency requirements.

Since 2014, NLMK Group's Russian companies use a unified enterprise-leveltechnical energy management policy. Its objectives are to implement the most advanced technical solutions, equipment, and technologies to bolster the reliability, efficiency, and safety of the Group's energy sector. The policy sets out the priorities and rules for the use of technical solutions related to operations of energy facilities, implementation of investment programmes for new construction, upgrade of the core steel-making equipment, complex modernization of the NLMK Group companies' energy assets.

A key performance indicator for improving

the production energy efficiency is the specific energy intensity of the products (Gcal/t of output). The targets for these key performance indicators are set taking into account the best results achieved earlier, assessment of the potential of upgrading the process to the best technologically achievable level, as well as the results of benchmarking of similar equipment against the best global practices.

Certification

The Company's energy management system

is in compliance with the international ISO 50001 standard, as confirmed by an international certificate. One of the main requirements under this international standard is continuous improvement of the energy performance.

The system encompasses all core production sites of the Group:1:

• NLMK
• VIZ-Steel
• Altai-Koks
• Dolomit
• Stagdok
• Stoilensky
• NLMK Kaluga
• NLMK Metalware
• NLMK Ural

NLMK DanSteel has also been certified to ISO 50001.

In 2023, the Russian companies of the Group successfully completed an energy management compliance audit carried out by the new certification authority.

1 NLMK Kaluga, NLMK Metalware and NLMK Ural were covered by the "umbrella" certificate of compliance with the international standard up to Q4 2023.

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Energy resource consumption in 2023

[GRI 302-1] [GRI 302-3]

In 2023, the total energy consumption within the Company stood at 367.8 PJ, which is 14.4 PJ lower year-on-year. The reduction was driven

Breakdown of non-renewable fuel consumption by NLMK Group in 2023, %

[GRI 302-1]

In addition to that, renewable energy resources are also used, in particular electrical power from renewable sources, woodchips and charcoal for the production of ferroalloys.

Increasing the share of low-carbon energy is one of the priority areas of NLMK Group's efforts aimed at reducing the production carbon intensity. Nuclear energy is one of the main decarbonization tools,

by the divestment of NLMK Russia Long Products from the Company in Q4 2023.

NLMK Group uses a variety of non-renewable fuels

in its production activities: natural gas accounts for 26.6% of the total balance, coal and coke account for 59.8%, and pulverized coal accounts for 12.8%.

366.6PJ

1.38

1.49

0.1

0.8

In 2023, the share of renewable electric power decreased to 3.89% of the total electricity consumption. The reduction was driven by the switch of the Russian production sites to almost 100% low-carbon electric power supplied by nuclear power plants. The share

of renewable energy in the total volume of electricity consumption is shown without transit flows. NLMK Group did not make any direct purchases from renewable energy suppliers.

The share of renewable electric energy in the total NLMK Group energy consumption is 0.34%.

currently accounting for a third of global low-carbon electricity production. In 2023, the share of power supplied to Group sites by nuclear power plants (NPPs) grew to 6.1 bn kWh. The total share of energy from renewable sources and energy from low-carbon sources (NPPs) in 2023 stood at 6.56% of the total amount

of energy consumed by the Company. The share

of energy purchased from NPPs by Russian companies is determined in accordance with the terms of direct sale and purchase agreements.

Non-renewable energy consumption	Coal and coke products	.
	Natural gas	.
	Pulverized coal	.
	Other types of fuel incl. motor fuel	.
	Fuel oil	.

Total energy consumption by NLMK Group1, PJ	Consumption of non-renewable energy
[GRI 302-1]						by NLMK Group2, PJ [GRI 302-1]
413.6	382.7	396.4	403.6	382.2		412.1		394.8	401.9
	367.8	381.3	380.5
406.2		396.3		366.6
	390.2
374.3	374.6
	362.8

2018	2019	2020	2021	2022	2023	2018	2019	2020	2021	2022	2023

Общее потребление энергии в Группе НЛМК Общее потребление без дивизиона НЛМК Сорт

Consumption of non-renewable fuel by NLMK Group, PJ [GRI 302-1]

Type of fuel	2018	2019	2020	2021	2022	2023
Coal and coke products	208.64	185.24	197.64	195.70	178.40	199.30
Natural gas	87.75	91.26	85.86	91.01	81.79	88.71
Pulverized coal	43.30	36.15	43.36	44.13	47.05	42.51
Motor fuel (petrol, diesel, liquefied gas)	2.79	2.91	2.90	3.10	2.73	2.55
Fuel oil	0.04	0.21	0.29	0.25	0.36	0.27
Total	342.53	315.77	330.05	334.19	310.33	333.34

1. The methodology for calculating the energy consumption by Group companies: purchased energy minus sold energy (sales, shipment, transfer) at each production site. In Q4 2023, some of its assets (NLMK Russia Long Products companies and partially NLMK Vtorchermet) were removed from the Company. From 2023, this report includes the assets of NLMK India.
2. Methodology for calculating non-renewable types of energy includes total energy consumption minus renewable energy.

Renewable electric energy consumption across NLMK Group1 [GRI 302-1]

Year	2018	2019	2020	2021	2022	2023
Share of renewable electric energy in total energy	4.86	5.10	5.14	5.14	5.39	3.89
purchased, %
Total share of renewable electric energy in total	0.37	0.37	0.42	0.44	0.43	0.34
energy consumed, %
Total renewable electric energy consumed, PJ	1.51	1.43	1.68	1.79	1.64	1.23

Share of renewable electric energy in total electricity purchased by region, without transit flows, %

Country	Share of renewable energy2	Source	Companies
Russia	~0.0	Hydro, wind, solar	NLMK, Stoilensky, NLMK Kaluga, NLMK Ural, NLMK
			Metalware, VIZ-Steel
USA	21.29	Hydro, wind, solar,	NLMK Indiana, NLMK Pennsylvania & Sharon Coating
		biofuel
Belgium	23.21	Wind, solar, biofuel	NLMK La Louvière, NLMK Clabecq
France	21.06	Hydro, wind, solar,	NLMK Strasbourg
		biofuel
Italy	37.05	Hydro, wind, solar,	NLMK Verona
		biofuel
Denmark	99.39	Wind, solar, biofuel	NLMK DanSteel
India3	21.72	Hydro, wind, solar,	NLMK India Coating
		biofuel

1. The calculation assumes a conversion factor of 1 MWh = 3.6 GJ.
2. The share of generation from renewable energy sources in the Russian Federation in 2023 is represented in accordance with the Association "NP Market council" reports:https://ais.np-sr.ru/ru/iasen/information/IASE_0V_R11_GENERATION_tipy_gen#0/11/GENERATION;https://ais.np-sr.ru/ru/iasen/information/IASE_0V_R16_GENERATION_tipy_gen#0/16/GENERATION;https://ais.np-sr.ru/ru/iasen/information/IASE_0V_R19_GENERATION_tipy_gen#0/19/GENERATION;https://ais.np-sr.ru/ru/iasen/information/IASE_0V_R41_GENERATION_tipy_gen#0/41/GENERATION.
   The data for Europe are presented according to BP Statistical Review of World Energy 2023 https://www.bp.com/en/global/corporate/energy-economics.html?ysclid=lt2karte62637382987[page 8, 44, 45].
   The data for the USA are presented according to Monthly Energy Review US Energy Information Administration https://www.eia. gov/totalenergy/data/monthly/pdf/mer.pdf[page 133].
   The data for India are according to All India Electricity Statistics. General Review 2023 https://cea.nic.in/general-review-report/?lang=en[page 15].
3. Starting from 2023, the report includes the data on NLMK assets in India.

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Specific energy1 intensity of NLMK Lipetsk, Gcal/t [GRI 302-3]

5.469	5.641	5.546	5.402	5.452	5.351

2018

2019

2020

2021

2022

2023

The year-on-year decrease of NLMK Lipetsk specific energy intensity in 2023 was driven mainly

by the implementation of energy efficiency projects and an increase in the steel output by 8.3%.

Captive electricity generation

One of the methods used by NLMK Group to achieve energy cost reduction is to implement investment projects and optimization initiatives aimed at increasing captive generation of electricity and thermal energy.

The electricity is generated at the Company's captive power plants, which are chiefly powered by by-product fuel gases. More than 80% of the electricity generated at NLMK Lipetsk (and used for its production needs only) and 100% of the electricity generated at Altai-Koks is produced using NLMK Group's captive recyclable resources (steelmaking gases).

The maximum possible utilization of the available recyclable energy is one of the main challenges faced by NLMK Group; overcoming this challenge will make it possible to not only minimize expenditure but also to reduce our environmental impact by cutting emissions of greenhouse gases and other substances.

Before the sale of NLMK Group's long steel products business, the Company's total installed in-house generation capacity stood at 733 MW, including

• 522 MW at the Lipetsk site
• 200 MW at Altai-Koks
• 11 MW at NLMK Ural

722MW

the installed in-house generation capacity of NLMK Group as at the end of 2023

Captive electricity generation at NLMK Group sites2

Captive electricity generation at NLMK Group sites

NLMK Lipetsk

522 MW

Co-generation plant: fuel - coke oven gas, blast furnace gas, natural gas

Recovery co-generation plant:

fuel - blast furnace gas, natural gas

Top pressure recovery turbine station: no fuel is used; instead, electricity is generated from excess blast furnace gas pressure

Altai-Koks	200 MW
Co-generation plant: fuel - coke
oven gas
NLMK Ural	11 MW

Mini gas-pistonco-generation plant: fuel - natural gas

Share of captive electricity in total electricity consumption at NLMK Lipetsk, %

65.0

63.7

63.4

66.4

65.5

58.0

2018

2019

2020

2021

2022

2023

In 2023, the share of captive electricity generation decreased year-on-year due to higher consumption at the Lipetsk site with the generation equipment still operating at its maximum capacity.

Captive electricity generation1 at NLMK Lipetsk

84.0	82.0		80.6	82.0
	77.2

72.2

489.2 486.8 488.3

478.3 480.2

450.2

2018

2019

2020

2021

2022

2023

Captive power generation, MW

Share of captive generation from secondary fuel gas, %

The increase in power generation capacity was driven by phased implementation of optimization initiatives aimed at higher utilization of cogeneration and recovery cogeneration equipment.

The project to build a new recovery cogeneration plant (RCGP-2) fuelled by captive recyclable resources continues. Once launched, the plant will improve NLMK Lipetsk's self- sufficiency in electricity

up to 94%

The new plant will be fuelled by the waste gases from steel production: BOF and BF. This is going to become the first project

in Russia to use BOF gas for power generation. The installed capacity of the new recovery cogeneration plant will be 300 MW.

In 2023, the Company completed the construction of the plant's power distribution system. Installation of core and auxiliary equipment continues. Commissioning procedures are expected to start in 2024.

The launch of a power station fuelled by waste gases from steelmaking and blast furnace operations will enable an annual reduction in CO2 emissions of 650,000 tonnes (36 kg per tonne of steel).

1. Specific energy intensity = (energy consumption of steel production / energy consumption of extraction and processing of raw materials, Gcal) / (the volume of steel production / extraction and processing of raw materials, t). The following types of energy resources were used in the calculation: purchased: coking coal and additives, pitch coke, lump coke, coke breeze, pulverized coal, natural gas, fuel oil, thermal energy as hot water, steam, electricity, oxygen (NLMK Lipetsk and NLMK Kaluga), nitrogen and hydrogen (NLMK Lipetsk), and heat from chemically treated water (VIZ-Steel); sold: coke breeze, coke nut, chemical products, blast furnace gas, steam, thermal energy as hot water, oxygen, nitrogen, compressed air, industrial water, and commercial pig iron.
2. Prior to Q4 2023.

1 Captive power generation includes the energy generated by the top pressure recovery turbine station (in blast-furnace shop No.2).

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