EVRAZ’ steel and mining operations have significant energy and water requirements and can potentially impact the environment through waste generation, wastewater discharge, air emissions and land contamination.

Environmental legislation strictly regulates these operations and requires the Group to obtain environmental permits and licences. EVRAZ must maintain compliance with their terms for them to remain valid and be extended. This generally requires implementing certain environmental commitments, recruiting qualified personnel, maintaining necessary equipment and environmental monitoring systems, and periodically submitting information to environmental regulators. Noncompliance on any of these fronts carries the potential for the environmental permits and licences to be suspended, amended, terminated or not renewed, or could entail significant costs for the Group to eliminate or remedy any such violations.

EVRAZ strives to continuously improve its environmental management systems, including via its ongoing ISO 14001 audit programme. While international certification is not a legal requirement, nine of the Group’s sites are currently certified to the ISO 14001 standard, including such key operations as EVRAZ NTMK, EVRAZ ZSMK and EVRAZ DMZ.

EVRAZ conducts an Environmental and Social Impact Assessment (ESIA) of all new operations and projects, during which it consults with local and regional governments, businesses and community members in the affected area. The ESIAs evaluate any potential direct and indirect impacts that the new operation may have on the local community and surrounding environment. The ESIA process entails creating mitigation plans to minimise and manage any potential impact, as well as consulting with local communities regarding any decisions that may be made throughout the project’s life.

EVRAZ supports the European Union’s health and environmental goals as established in Regulation (EC) No. 1907/2006 of the European Parliament and of the Council, which governs the registration, evaluation, authorisation and restriction of chemicals ( “REACH” REACH – Regulation (EC) № 1907/2006 of the European Parliament and of the Council, according to which as of 1 June 2007, all chemical substances, mixtures and substances in articles (in some cases) produced in or imported to European Economic Area (EEA) territory above 1 tonne per year are subject to mandatory procedures such as registration, evaluation, authorisation and restriction of chemicals. If chemicals are not registered in accordance with REACH, the products are not allowed to be manufactured in or imported into the EEA. ). The Group strives to maintain REACH compliance.

The Group’s environmental strategy aims to minimise any negative impacts caused by its operations, as well as to make efficient use of natural resources and find optimal industrial waste management solutions. Environmental compliance is a top long-term priority.

In 2012, after determining the key challenges and focus areas, EVRAZ voluntarily adopted five-year environmental targets (over 2012-17) aimed at:

• reducing air emissions Including nitrogen oxides (NOx), sulphur oxides (SOx), dust and volatile organic compounds only. by 5%;
• decreasing fresh water consumption by 15%;
• recycling 100% of non-mining waste The rate of the amount of waste recycled or used versus annual waste generation, not including mining waste. It can exceed 100% due to recycling of waste from prior periods. .

The Group’s non-compliance-related environmental levies and fines increased by 7 % to US$2.1 million in 2016 from US$2.0 million as it was in 2015. No significant environmental permits or licences were missing or revoked in 2016, although the Russian government has tightened the requirements for obtaining environmental permits and licences. This was the reason for the delay in issuing some of the new permits, which led to non-compliance levies of US$ 0.5 million. EVRAZ’ assets had no significant environmental incidents or material environmental claims during the reporting period.

EVRAZ’ top environmental priorities include decreasing air emissions. The primary air emissions comprise nitrogen oxides (NOx), sulphur oxides (SOx), dust and volatile organic compounds.

In 2011, before adopting its five-year environmental targets , the Group had already substantially reduced its air emissions. The current strategy for reducing air emissions envisages upgrading gas treatment systems, introducing modern technologies and eliminating obsolete equipment.

In 2016, key air emissions were down by 3.5 thousand tonnes (or 2.6%) compared with 2015.

The management has also decided to conduct a like-for-like analysis that re-bases the target by excluding data related to divested assets (EVRAZ VGOK, EVRAZ Vitkovice Steel, Evrazruda’s Krasnoyarsk mines, EVRAZ ZSMK’s central power plant, EVRAZ Highveld and EVRAZ NTMK’s Nizhnesaldinsky metal mill), which shows that key air emissions at current assets have risen by 18.8% since 2011. This has been driven primarily by an increase in sulphur content in the coal and ore used at EVRAZ ZSMK’s power and sinter plants, which has resulted in higher SOx emissions, and higher NOx emissions at EVRAZ KGOK.

However, EVRAZ’ emission reduction initiatives are expected to decrease key air emissions over the coming years.

EVRAZ pays special attention to environmental protection

The Group strives to minimise its impact on the air and water by implementing modern technology, upgrading equipment, reusing and recycling production by-products, monitoring buffer zones, refurbishing slag storage facilities, and constantly monitoring air and water quality.

EVRAZ employees in Russia and Ukraine regularly take part in environmental campaigns, including: joining nationwide volunteer drives to clean up waterways, public squares and parks; and planting trees, hanging birdhouses, releasing young fish into rivers to restore their biodiversity, and recycling paper and batteries.

In 2016, EVRAZ employees participated in the following environmental campaigns: “Big Green Games – Make 2016!”, “Kuzbass Forest”, “Russian Water”, and “Country of My Dreams”, while employees of Ukrainian subsidiaries joined the “Clean Ukraine Up Together” campaign.

Staff at Evrazruda in Siberia planted more than 100 trees as part of the “Kuzbass Forest” campaign. They also released more than 170,000 tonnes of young fish. Raspadskaya employees cleaned up the shore of the Olzheras river in Mezhdurechensk, recycled 300 tonnes of batteries and 200 tonnes of paper, hung birdhouses, and planted 50 saplings in Mezhdurechensk. EVRAZ ZSMK staff cleaned up the shore of the Aba river and planted more than 100 pine trees.

In the Urals, EVRAZ NTMK employees created a new pedestrian avenue and planted several dozen trees; cleaned up an industrial architectural monument, the Kuibyshev Factory Museum, and planted a grove of more than 200 birches. EVRAZ KGOK staff cleaned up the city pond and decorated the city’s central pedestrian avenue with flowering bushes.

In Ukraine, employees regularly take part in volunteer campaigns. As part of the “Clean Ukraine Up Together” campaign, EVRAZ DMZ staff planted 50 maples and cleaned up the Dievsky forest park. Evraz Sukha Balka and Evraz Yuzhkoks cleaned up city streets, parks and waterways. EVRAZ DMZ also launched a separate waste collection and recycling programme in 2016.

EVRAZ’ operations also generate carbon dioxide and other greenhouse gas (GHG) emissions.

The Group understands the urgency of climate change prevention and supports the global effort to reduce the emission of GHGs into the atmosphere. In compliance with the Companies Act 2006 (Strategic and Directors’ Report) Regulations 2013, EVRAZ measures the full GHG emissions its facilities and has taken part in the CDP Climate Change Programme since 2011.

The Group measures direct (Scope 1) emissions of all seven “Kyoto” GHGs Carbon dioxide — C O ₂ , methane — C H ₄ nitrous oxide — N ₂ O, hydrofluorocarbons and perfluorocarbons — HFC+PFC, sulphur hexafluoride — S F ₆ and nitrogen trifluoride — N F ₃ and indirect (Scope 2) emissions from the use of electricity and heat. The inventory approachThe inventory of emissions includes all entities the Group controls. Entities that were disposed of during the year were included for the period they were part of the Group. Only entities that were deemed immaterial for consolidated emissions based on their operational indicators were omitted. ₂ emissions from operations were calculated using the carbon balance method for carbon flows within production facilities, including fuel use. Emissions of other GHGs were calculated based on measured volumes, inventory changes or IPCC 2006 factors and models (including that for post-mining coal methane emissions) where direct measurement data were not available. Indirect emissions were estimated using emission factors specifically developed for the country or region. was based on the 2006 IPCC Guidelines for National Greenhouse Gas Inventories (IPCC 2006) and the WRI/WBCSD GHG Protocol Corporate Accounting and Reporting Standard. EVRAZ reports data in tonnes of carbon dioxide (CO₂) equivalent (tCO₂e), calculated using the IPCC Fourth assessment report (2007) global warming potentials.

Data on GHG emissions were collected for 2016 and compared with 2013-2015 levels. The Steel segment continues to generate more than half of gross GHG emissions from Group operations. Nearly 92% of the Coal segment’s full emissions come from fugitive methane (CH₄) leakage, which is caused by methane ventilation from underground mines and post-mining emissions from coal.

Overall GHG emissions from EVRAZ’ operations fell by about 5% year-on-year in 2016. Emissions of CO₂ remain at the 2015 level due to the cumulative effect of a minor increase at the Steel segment (up around 0.4 million tCO₂e) and the cease in operations at EVRAZ Highveld Steel and Vanadium in 2016. In the Coal segment, CH₄ emissions dropped by 10% due to a lower methane content in the coal mined as well as lower coal extraction at some mines.

All told, EVRAZ brought down its Scope 1 emissions by 2% and its Scope 2 emissions by roughly 19%, due to the cease in operations at EVRAZ Highveld Steel and Vanadium in 2016 (which accounted for some 6%) and lower volumes of energy purchased by EVRAZ NTMK and EVRAZ ZSMK in 2016.

EVRAZ reports an intensity ratio relating its annual GHG emissions to its activities: total Scope 1 and 2 emissions per consolidated revenue for the Group overall and each operating segment (see graphs). In addition, specific emissions in the Steel segment per tonne of steel cast for 2013-16 are compared with average specific emissions of World Steel Association members for 2015. Higher specific GHG emissions in the Steel segment may be due to the key role played by integrated iron and steel works (which inherently emit more GHGs than rolling mills) in EVRAZ’ steel production.

EVRAZ strives to make efficient use of water resources and prevent any negative water quality impacts through environmental incidents.

In 2016, almost 84% of EVRAZ total water intake for production needs was from surface sources, including rivers, lakes and reservoirs – the same result as in 2015.

In 2016, the ongoing water management performance improvement programmes at EVRAZ’ operations began to show their first environmental benefits, evidenced by the 3.3% year-on-year reduction in fresh water consumption (down by 11.3 million cubic metres compared to 2015). Given the HSE Committee’s decision to re-base the target by excluding data related to disposed assets, fresh water consumption was down by 78.2 million cubic metres (17.3%) compared with the 2011 adjusted baseline. Water discharge was reduced by 45.15 million cubic metres over 2012-2016.

Water pumped from mines (dewatering) is not included in the fresh water consumption target, although pumped water is partly used for technological needs. In 2016, 20.3 million cubic metres of mine water were pumped out and used, compared with 20.5 million cubic metres in 2015.

Portland Riverbank Cap

EVRAZ Portland (Oregon Steel) operates a steel mill that has been situated on the eastern bank of Portland Harbor since 1968. Prior to and during the early years of the mill’s operation, the riverbank was filled with dredge fill/soil and slag that were identified as a potential source of contamination to the river. The mill is part of the 10-mile-long Portland Harbor Superfund site and has entered a voluntary agreement with the Oregon Department of Environmental Quality (DEQ) to address potential sources of contamination from its property.

During 2015-2016, EVRAZ Portland implemented the “Riverbank Cap” project. The EVRAZ project team successfully met regulatory agreements, design objectives, and steel mill needs to achieve a common goal, and constructed the project under a strict time frame due to fish migration. This project provides environmental benefits by removing, capping, and stabilising the riverbank to prevent releases of contaminants into the Willamette River, and by enhancing shoreline riparian habitat. The shoreline was capped, stabilised, and enhanced with native vegetation. More than 18,000 cubic yards of contaminated soil was removed and replaced with clean material, and 10,000 native trees and shrubs were planted and are now thriving.

Mining and steelmaking operations produce significant amounts of waste, including waste rock, spent ore and tailings (waste from processing ore and concentrates). EVRAZ aims to reduce the amount of waste that it produces, re-use natural resources where possible and dispose of waste in a manner that minimises the environmental impact while maximising operational and financial efficiency.

In line with the Group’s strategy to reduce waste storage volumes and enhance waste disposal, EVRAZ enterprises regularly review opportunities for waste recycling and reuse.

In 2016, EVRAZ steel mills generated 9.65 million tonnes of metallurgical waste (slag, sludge, scale etc) and recycled or reused 11.59 million tonnes. Overall, the Group recycled or reused 120.1% of non-mining waste and by-products in 2016, compared with 126% in 2015.

The main reason for the lower waste recycling rate is that EVRAZ ZSMK sold its slag processing plant and slag disposal facility to an external recycling company.

EVRAZ’ strategy for dealing with non-hazardous mining wastes, such as depleted rock, tailings and overburden, is to use them where possible for land rehabilitation and the construction of dams or roads. In 2016, 18.2% or 28.7 million tonnes of such waste material were reused, compared with 17% or 24.6 million tonnes in 2015.

All non-recyclable waste is stored in facilities that are designed to prevent any harmful substances contained in the waste from escaping into the environment. Safety at such facilities is monitored extremely closely, and steps have been taken to mitigate as far as possible any danger to third parties in an emergency.

Environmental awards in 2016

Awarding organisation: Vernadsky Nongovernmental Ecological Fund

Awarding organisation: Russian Ministry of Industry and Trade

Awarding organisation: Associated Oregon Industries and Northwest Environmental Business Council