OREANDA-NEWS. August 15, 2008.
UC RUSAL
Mr. Bulygin A.S., CEO
Dear Alexander Stanislavovich,

On behalf of OJSC MMC Norilsk Nickel I would like to express our appreciation of the consideration you have given to the issues of improving the environment in the regions where the Company operates. I deem it necessary that your letter should generate a response in the public domain that would state the facts and figures that truly reflect the actual state of affairs and the serious attitude MMC Norilsk Nickel takes in addressing environmental issues.

It is worth mentioning that presently MMC Norilsk Nickel is implementing a comprehensive environmental program that involves retrofitting of production facilities, incremental shutdowns of outdated operations, reduction of pollutants emissions into the atmosphere and efficient management of water resources. The Company intends to spend about 36 billion rubles in the period from 2007 to 2015 to support its environmental initiatives.

In view of the above the feasibility study that you kindly proposed to administer seems unnecessary. Your confidence regarding the success of the feasibility study proposed for implementation by UK RUSAL experts is based on your assumption that aluminium and nickel production processes are identical; however, the only similarity between them is that both processes belong to nonferrous metals industry. This means that, according to experts, the successful experience of addressing environmental issues in aluminium production will not be just as successful when applied to the environmental component of nickel production.

Unfortunately, UK RUSAL as major shareholder of MMC Norilsk Nickel has access to a significant amount of data about the Company, and deliberately or otherwise, used inaccurate data in an attempt of expressing a “catastrophic” outlook on the situation. Public criticism of the Company and accusations of negligence based on inauthentic data seems to be misleading for those unaware of the state of affairs.

As you may know, the environmental issues experienced in Norilsk today are dating back to the Soviet times where environmental management aspects were disregarded in construction of industrial operations. Any fast-track solution to these issues would be inefficient unless existing production operations were suspended; the consequences of this would strongly affect the society and jeopardize the existence of the city of Norilsk.

Nevertheless, today we see environmental improvements in Norilsk driven by activities implemented by the Company. Both Norilsk residents and visitors take note of the changes on the regular basis.  These facts are also reflected in MMC Norilsk Nickel’s 2007 Annual Report approved by the Board of Directors. For instance, in 2007 the total period, during which the atmosphere of Norilsk was being polluted, reduced by 12% generally while the period, during which the pollution rate exceeded 5 MAC, reduced by 20%.

The open letter you signed includes incorrect data supporting the letter’s conclusions and I would like to provide comments on these data.

1. You provided incorrect data on the number of days, on which industrial pollution of the atmosphere in Norilsk was above regular values. The true statistics are broadly available and published every month in the Environmental Bulletin, an application to Zapolyarny Vestnik newspaper published in Norilsk.  The data you provided on the duration of air pollution periods are overestimated by three times over those published in the Environmental Bulletin.

2. Your statement of the high rate of oncological diseases in Norilsk contradicts the data reflected in the state report On Sanitary and Epidemiological Conditions in the Russian Federation in 2006 prepared by Rospotrebnadzor. According to the report, the rate of cancer occurrences among Norilsk population in 2000-2006 did not exceed the figures for Krasnoyarsk Territory and the Russian Federation in general.

3. The comparative figures of sulfur dioxide contents in the air in Norilsk against background figures for the region you provided are inappropriate because the background figures beyond the Norilsk Industrial Region are nearing zero.

4. You provided references to data on the content of pollutants in the waste waters. However, the average content of pollutants in waste waters of MMC Norilsk Nickel facilities are within the standard values set forth by state regulators. I believe it is necessary to emphasize that the set of measures taken in 2003-2007 to preserve water resources resulted in reduction of the amount of pollutants in waste waters by 92.4 thousand tons (48.4%).

Based on the recent statements made by UC RUSAL concerning MMC Norilsk Nickel I have to acknowledge that RUSAL deliberately disregards information about large-scale plans and projects developed and implemented by MMC Norilsk Nickel. I would like to remind you that during the visit you and O. Deripaska made to Norilsk on August 6, 2008 you had the opportunity to review not only the production development projects but the Company’s environmental program as well.

I deem it advisable that in the future the issues of this nature should be discussed in accordance with best international practices at internal meetings or at meetings of MMC Norilsk Nickel Board of Directors, of which you are a member.
 
Respectfully Yours,
Vladimir Strzhalkovsky,
General Director – Chairman of the Management Board
OJSC MMC Norilsk Nickel