LSE: MOEX: AIX: GOLD: $

Environment

Our mining operations pose environmental risks to local nature and ecosystems. As temporary stewards of valuable land, we have a deep responsibility to conserve it for future generations. Our Environmental Policy is designed to overcome environment-related risks from the beginning of a project until long after its completion.

Our Environmental Management System (EMS) is the cornerstone of our approach and we are proud that all production sites are certified to ISO 14001 global standard. Environmental targets are set within our EMS, both company-wide and at each operational site. We monitor our performance and conduct internal audits and comprehensive checks. In order to address potential and emerging risks, we investigate risks and develop reports and mitigation plans of corrective measures.

We have tasked our in-house engineering company, Polymetal Engineering, with insuring that all environmental concerns are taken into account and properly addressed during the design, construction and operation of our mines and processing facilities and the effects thereof after their closure. We are engaged in multifaceted measures to both mitigate environmental risks and, when possible, to improve the environment around us.

Who is responsible

Who is responsible
Energy management and climate change

Potential climate change could have significant impacts on our assets. Market volatility related to climate risks are likely to increase and be on the agenda of investors. To this end, our Climate and Energy Management systems form the heart of our mitigation approach and include an Energy Efficiency Programme to improve how we plan our energy use through better monitoring, metering and reduction.

We have set the goal to decrease GHG emission intensity by at least 5% by 2023 compared to 2018. In order to achieve this target, we improve energy efficiency through innovation, including low carbon and renewable energy technologies. We embed energy efficiency into new project design, technology updates and in equipment procurement processes, and engaged with suppliers to estimate upstream emissions and well as with off-takers to assess downstream carbon footprint.

By 2025 our target is to achieve 7% of renewable energy of the total electricity generation.

We regularly assess and monitor climate related risks at all our sites, the last estimation did not reveal any risks with significant impact on our business.

Permafrost FAQ

What is permafrost?

As opposed to seasonal frost where the ground thaws periodically, permafrost is comprised of soil, rock or sediment that remains permanently frozen, varying from a few meters to several hundred meters in thickness. Permafrost has a top active layer that thaws seasonally during the warm season and freezes again in the winter.

Degradation of permafrost means that a portion of the active layer does not refreeze during winter.

What is the relevance of permafrost in Russia?

Most Russian territories, including the Far North and adjacent areas of Siberia, Far East and Northern European zone of Russia, which in total cover nearly 64% of the country, have sub-arctic and arctic climates with severe and long winters. Average winter temperatures range from minus 15 oC to minus 20 oC in Northern European zone of Russia and from minus 40 oC to minus 50 oC in the Northern parts of Eastern Siberia which, together with a short warm season, represent conditions conducive for permafrost to form.

Mining in such severe climates presents unique geotechnical challenges. The effect of permafrost on the rock matrix is a key engineering concern. In the cold weather, ground conditions are impacted by both permafrost and seasonal frost. Seasonal freeze-thaw cycles present unique challenges for the construction of roadways and surface infrastructure.

Does Polymetal operate in permafrost?

Yes, four of our operating assets (Mayskoye, Dukat, Omolon, Svetloye) and two development projects (Nezhda and Prognoz) are located within the permafrost zone, representing 36% of our total reserves (9.0 Moz of 25.2 Moz) — see map below.

What actions in Polymetal taking to strategically address climate change?

We fully recognise that global climate changes require us to be more vigilant, and we are on a path to eventual carbon neutrality. We now use electrified equipment in our open pits and underground mines, generate renewable energy and we are gradually taking steps towards enhancing our energy efficiency. We are involved in a power line construction project for Nezhda to replace six diesel power plants and we are building a new solar plant for Omolon. In addition, we report on our energy and GHG profile together with TCFD disclosure in our Sustainability Reports.

What are the risks related to permafrost at the operational stage?

The key risk is that thawing of permafrost soils around buildings’ foundations can lead to a deterioration in their stability. This in turn could result in bearing capacity failure and deformation of building structures, unacceptable operating conditions or complete collapse of buildings and structures, leading to economic and environmental damage as well as human casualties.

The main methods of managing and potentially mitigating this risk include implementing constant ground monitoring measures and strict adherence to buildings’ and structures’ operating conditions. Both methods are set out in the project design.

Pit walls located in permafrost quaternary soils may suffer deformations equivalent to the size of one rock step (not greater than 30 m).

These processes are predicted by using calculations that are carried out by experts with extensive experience of working with permafrost soils.

Other significant risks include:

  • Reduction of the operation time of winter roads and ice crossings.
  • Increase in the water levels during flood season.
  • Longer flooding period.
  • Decrease in mine roadways’ stability.
  • Decrease in the stability of open-pit walls.
  • Rise in groundwater level.
Have you ever had permafrost thaw and degradation at your mines?

We successfully mitigated the negative impact of permafrost ground thawing under the sorption shop at Birkachan, Omolon hub. The company managed to prevent any disruption and structural damage.
A technological solution was developed, the columns of the building frame were lifted and the steel structures were straightened using hydraulic jacks whilst the column bases were refilled.

The temperature of the soil surrounding the foundation and inside the building is regularly monitored with constant control over the building structures absorption. If required, our design vendor update the thawing basin model.

What measures do you take to prevent accidents related to permafrost thawing and fuel spills in particular?

We mitigate the risk of accidents by complying with rules and regulations at the design, construction and operation stages.

Monitoring is a key prevention method.

Monitoring includes field observations of the condition of foundation soils, the temperature regime inside the building, and the building structure movements.

We conduct unscheduled inspections of buildings and structures during periods of maximum thawing (from August to September) and after emergencies (natural disasters and accidents).

Upon detecting any signs of thawing of permafrost ground and hazardous defects in building structures, we inform all of the involved parties and take the appropriate measures to address the issue.

Special focus is on the safety of fuel storage facilities, in particular:

  • all storage facilities are designed by taking into account the peculiarities of permafrost. Raw materials for construction are selected with reference to climate conditions
  • regular external and internal monitoring of facilities are conducted
  • we have zero tolerance to any deviations from regulatory requirements and design parameters at potentially environmentally hazardous facilities
  • the logistics of fuel and lubricants supply is carefully worked out to determine the optimal minimum volume of the stored supplies to reduce any possible negative impact
  • we perform emergency drills dedicated to elimination of fuel spills at fuel storage facilities.
How do you address permafrost-related risks at the design and construction stages for your mines and processing facilities? Can you quantify the impact of this condition on capex?

At mining sites (pits, underground mines), the processed ore is represented by rock formations. Rock is affected by permafrost thawing processes but even in the thawed state, rock retains strength. As part of the design work, the impact of changes in the thermal regime on the strength of rocks and the stability of open and underground workings are evaluated.

All Polymetal facilities located in permafrost areas are designed in accordance with the applicable rules and regulations and with an assumption of operating at thawed or thawing ground conditions.

At the design stage, the Company conducts research aimed at assessing the impact of the degradation of permafrost on pits, buildings and infrastructure stability. It requires complex engineering and geological surveys:

  • Close engineering and exploration drill hole spacing
  • Increasing drilling depth
  • Thermometric drilling and permafrost rock temperature measurement
  • Assessing thermophysical properties of permafrost rock in both permafrost and thawing state
  • Modelling of thawing basin
  • Identification of potential foundation absorbing in relation to years of operation

At the construction stage in permafrost, we apply the following solutions:

  • Use of modern anti-filtration technologies with due regard for weather conditions
  • Construction of a thermal layer at building foundations
  • Introduction of a climate factor into the raw materials procurement process
  • Selection of appropriate ventilation temperatures
  • Ventilated underground space or employment of permafrost rock stabilization systems
  • 0.5-1.7 metre increase in dam’s height in order to secure permafrost rock
  • Construction of enclosing structures for hydraulic facilities towards their downstream segment
  • Installation of surface drainage systems.

Furthermore, in order to ensure safety of our fuel storage facilities we use the following construction solutions:

  • Antifiltration foundations
  • Bunding of fuel storage facilities
  • Installation of fuel spill and vapor sensors with an alarm and voice alert system.

Capital expenditures at permafrost areas are 15% higher than in regular areas on average. In certain cases (i.e. waterlogged ground), capex requirements could be up to 30% higher.

Water

Although we do not operate in regions of water stress, our mining operations rely on water and they discharge treated water. Ensuring the right water balance means monitoring, metering and auditing our water use, while also carefully managing discharge water quality. The majority of our water is consumed by our plants during ore processing. We continue to minimise our fresh water withdrawal by extracting water from runoff that has naturally seeped into our mines or drainage systems and recycling it.

When additional supplies are required, we may purchase from local utility companies. As a last resort, we utilise local or state authority permits to extract limited quantities from rivers, dams and groundwater aquifers. However, we never withdraw water from surface sources in environmentally sensitive areas, or where water is of great importance to local or indigenous communities.

We are committed to gradually increasing the share of water reused in our processing cycle, having set a goal to reduce fresh water use for processing each tonne of ore by at least 11% by 2023, compared to 2018. In 2019, we managed to decrease this indicator by 10% compared to 2018. On average, approximately 87% of our water is recycled and reused.

Waste

Waste is an inherent by-product of the entire mining industry, resulting in significant quantities of mineral waste. Therefore, waste management has become a fundamental part of our environmental program. While applying rigorous management systems to prevent environmental contamination from waste disposal, our focus is primarily on reusing it when possible, and disposing of remaining products in a way that will not pose a risk to the ecosystem.

By 2023, we aim to recycle 16% of waste generated. To achieve this target, we have developed unique strategies for the alternative usage of overburden and waste rock, such as for backfill in developed champers, for the construction and maintenance of roads, for construction sites preparation as well as for the reinforcement and construction of tailing dams.

We operate nine tailings dams in Russia and Kazakhstan and each is rigorously monitored and each is inspected daily, with checks on pipelines, pump stations, water levels and dams. Our investigations confirmed that any emergency failure at our dams would have no impact on settlements, buildings, structures or facilities where communities or employees may be present. However, in light of incidents in our wider industry, in 2019 we published our first TSF disclosure.

Air quality

As is unavoidable with all mining projects, our core activities generate air emissions, including carbon dioxide, nitrogen, sulphur oxides, and inorganic dust, which is the primary type of emissions pollutant produced throughout our activities.

Our EMS includes robust systems that continually monitor these gases and particulates, as well as enabling us to continually refine our processes to ensure high air quality standards. For instance, around our mining sites, we continually improve irrigation, dust separation and shield technologies to minimise local impact. In 2017 we set a corporate-wide goal to decrease sulphur dioxide emissions intensity by at least 1% in 2020 compared to 2016, and are glad to report that we had achieved a 14% decrease by 2019.

Biodiversity

We are committed to treading lightly in the regions where we operate and work hard to minimise our impact on local biodiversity. To this end, as a matter of policy we do not operate in or adjacent to protected or vulnerable areas. We respect, and will not encroach upon, land that has particular value — natural, historical or cultural — for Indigenous Minorities of the North (IMN). We also engage in comprehensive land rehabilitation once we have finished working in a particular area, focusing on the reparation of any environmental damage that our operations may have caused.

Measuring and managing our biodiversity impact

We determine our biodiversity impacts through our regular site-specific biodiversity management surveys. They imply regular studies and monitoring of our mining sites and adjacent areas, which we conduct in collaboration with local scientific institutions.

In addition to scientific monitoring, we have developed a framework to promptly report on any cases related to biodiversity, focusing on those that lead to any wildlife harm or mortalities. This complements annual biodiversity reports prepared at every site within the Environmental Management System. The report includes the list of rare and hunted species found at our mining site or adjacent territories during the year. According to the reports, the most common wild animals species encountered near our mining sites are brown bear, fox, hare, musk deer, duck, capercaillie, mountain sheep, lynx.

Altogether, this helps us analyse our environmental impact on fauna and flora and plan further activities, prioritizing preventive measures over compensatory ones:

  • avoiding building on migratory routes or close to environmentally-protected or indigenous peoples’ territories;
  • minimising impact to existing sites by adopting safe and clean technologies, such as dry stacking of tailings;
  • installing bird deterrents at waste polygons and tailing storage facilities;
  • surrounding our open pits with waste rock walls to prevent animals from falling in;
  • installing road signs that warn about wild animals;
  • planning proper mine closure activities and land rehabilitation;
  • planting perennial herbs and trees in adjacent territories;
  • educating and engaging employees and communities.

Stakeholder engagement in biodiversity conservation

To increase efficiency of our Environmental Management Program on biodiversity and to identify threats to biodiversity loss, at all stages of mine life, we cooperate, exchange knowledge and experience with local, national and international scientific and expert centers, local communities, state authorities in the regions where we operate. We commit to transparency and open communication while complying with applicable legal requirements.

Responsibility on biodiversity conservation lays primarily on environmental teams, operations management, relevant managers, and on the Safety and Sustainability Committee of the Board of Directors. Additionally, our communication teams are training and involving our employees and local communities in environmental and biodiversity awareness programs. See more here

Under the legal requirements of countries where Polymetal operates, we are not allowed to mine or produce metals in areas with the highest biodiversity value. Our operations are regularly monitored by state authorities responsible among others for biodiversity conservation and if they detect any negative impact on biodiversity, we will develop measures together with authorities to mitigate these impacts and achieve no net loss.

In recent years we have implemented a series of measures to both mitigate the impact of our operations local biodiversity as well as to commit to lasting environmental benefits in the regions in which we work. We have successfully initiated environmentally friendly programs to prevent wildlife such as deer and birds from coming into contact with waste and our pits and have begun to rejuvenate the flora and fauna in the areas which we work, such as through herb planting programs and the release of some 12,000 pink salmon into the Arman river as part of our Environmental Program.

Planning for mine closures

Though less the case in underground mining, mining and the effects thereof nevertheless have an impact on the environment around our mines. This is caused by infrastructure such as storage, waste, tailings and roads. It is our priority to work with state bodies, local communities and our employees to mitigate the long-lasting effects of our operations after the closure of our mines.

Our long-term remediation obligations include fulfilling decommissioning and restoration liabilities and covering suspension or abandonment costs in compliance with national regulations and legislation. The Company covers these costs. We carry out geological, surveying and repair works to ensure that once a mine is suspended or abandoned, underground operations, drilling sites and buildings are not hazardous or dangerous. Additionally, we carry out necessary environmental rehabilitation.

Polymetal aims to minimize negative impacts on the environment and stakeholders by ensuring the safety and stability of sites and facilities after closure and ensures that they are left in a condition which is compatible with subsequent land uses for local communities in regions of our operation without threat to human health. In doing this, Polymetal adheres to a list of key principles in the course of mine closure:

  • To disseminate effective and comprehensive closure planning practices for the Company
  • To encourage employees, management and partners to demonstrate leadership
  • To ensure that closure planning reflects legal and regulatory requirements
  • To apply state-of-the-art technologies for the mine closure
  • To ensure that adequate resources are available for the closure process
  • During the operation stage, to rehabilitate as much land as possible prior to closure and to decrease the level of landscape alteration (use pit for waste rock and tailings storage, backfilling and use of waste rock for construction)
  • To consider the concerns of stakeholders (local communities, governments, employees and landowners) in closure plans
  • To conduct post-closure monitoring until the responsibilities are transferred to a third party

Polymetal takes responsibility for compliance with the requirements of applicable laws and strives to meet stakeholders’ expectations when closing a mine. For these reasons, our priorities of effective mine closure include:

  • To provide timely and effective closure planning and implementation of related measures
  • To reduce financial, social and environmental risks when the operation closes and optimize social, economic and cultural opportunities for the host community
  • To ensure the safety and stability of structures and facilities during and after the closure and for further and subsequent use
  • To ensure that adequate financial resources are available to meet the full cost of closure
  • To ensure that business is conducted in a socially responsible way and that obligations towards the dismissed personnel are met

We aspire to a comprehensive approach to mine closure in cooperation with the relevant bodies, stakeholders, our employees and contractors, and local communities in order to effectively mitigate long-lasting environmental effects, while taking continued responsibility for the mine, the environment and our employees after closure.

Environmental and Social Impact Assessment

In 2016, the European Bank for Reconstruction and Development (EBRD) and Wardell-Armstrong (WAI) completed a detailed review of the social and environmental issues linked to our Kyzyl gold project in north-eastern Kazakhstan.

Based on this review, a formal Environmental and Social Impact Assessment (ESIA) has been produced by WAI for meeting environmental and social requirements of the EBRD, which is considering the opportunity to finance the project.

The ESIA is a comprehensive analysis of any risks and opportunities linked to all key areas of the Kyzyl project, including its environmental, socio-economic and cultural effects.

Polymetal has also agreed with the EBRD on the Environmental and Social Action Plan (ESAP), which includes a series of actions that Polymetal will implement in order to avoid, reduce, control, or otherwise mitigate potential environmental, occupational health and safety and social impacts during Kyzyl construction and operation.

ESIA summary

While the selected annual report is being downloaded, we want to draw your attention to the Sustainability Report. It provides detailed information on ESG indicators.

While the selected files are being downloaded, we want to draw your attention to the reports on the sustainable development of the company. They provide detailed information on ESG indicators.

You can also download historical data on sustainable development.

2019