Health, safety and environment

Safety culture and health and safety training

EVRAZ strives to foster a safety culture among its employees. This is made possible through ongoing occupational safety initiatives such as the Risk Management Project and the innovative Risk Hunting application. These programmes aim to encourage employees to take an increasing level of interest in their own safety. An assessment of the Risk Management Project performed in late 2021 revealed that most business unit heads consider the project an integral component of the HSE management systems. We are pleased to see our employees perceive risk management tools as a part of standard daily operations. We view this as an example of how all EVRAZ facilities are successfully implementing dynamic risk assessment measures.

We empower all employees to suspend any operation that poses a potential risk for people’s health and safety. The Risk Management Project has helped to improve employee satisfaction by changing the management’s perception of the right to refuse unsafe work as a risk for production process disruption. In 2021, we revised the approach to motivating safe behaviour by modifying both the criteria and process for bonus payment.

During the reporting period, EVRAZ trained its production personneland line managers under the Risk Management Project. In addition, employees of contracting organisations began to undergo risk management training with the help of specially developed internal programmes.

Performance in 2021

LTIFR

EVRAZ annually assesses working conditions in its production sites. The leading indicator that reflects the effectiveness of HSE management systems is the lost-time injury frequency rate (LTIFR).

Fatalities

EVRAZ thoroughly investigates any fatal incidents that occur at its operations and makes every effort to prevent fatalities among its employees and contractors.

All accidents in the Company are subject to a mandatory investigation. Prompt identification of critical factors and root causes of incidents helps to identify systemic shortcomings and develop the necessary measures to minimise dangerous factors more accurately. The Sustainability Management Committee is responsible for the implementation of such initiatives, both within the Group and in individual divisions. Each initiative implemented by the Sustainability Management Committee is regularly monitored and assessed to determine its effectiveness.

Our approach

The Group is fully aware of the necessity of taking steps to mitigate its impact on climate change and takes continuous measures to reduce greenhouse gas emissions (GHGs). EVRAZ supports both global and national programmes and projects for combating climate change. Being a member of the World Steel Association, the Russian Steel and the UN Global Compact initiative, EVRAZ prioritises decarbonisation issues. GHG emissions management is included in the Environmental Strategy as one of the key activities and climate-related risk management is integrated into the corporate risk management system.

In its pursuit of decarbonisation, the Group focuses its efforts on maximising energy efficiency, using secondary and low carbon energy, and technical re-equipment. One crucial area is improving energy efficiency and enhancing energy management. EVRAZ has a uniform methodology for internal audits of the energy management system. Energy consumption and energy efficiency management of plants and production workshops is measured for compliance against criteria in special checklists developed according to ISO 50001.

EVRAZ follows TCFD requirements in describing risks and opportunities for the short, medium, and long term; management’s role in assessing and managing climate related risks, where the Group’s strategy may be affected by climate-related risks, GHG emissions targets and methodologies used to calculate them.

Read more in the Sustainability management section, in the Health, safety and environment section, and in the Principal risks section.

GHG emissions

In 2021, the Group accomplished the upgrade of the CDP (Carbon Disclosure Project) climate change rating to level C. EVRAZ achieved the result due to the increase in the scope of information disclosure and the improvement in the quality of reporting, identification and assessment of climate-related risks.

All emissions are calculated, however targets are set on specific processes. EVRAZ intends to reduce specific Scope 1 and 2 GHG emissions from steelmakingAll enterprises from the steelmaking segment in North America and Russia are involved in the process of achieving this goal. operations by 20% and reach 75%-utilisation of methane (CH4) emitted while degassing coal mines by 2030 compared to 2019. Our goal is to achieve the GHG intensity ratio of 1.55Base year (2019) results were recalculated due to the updated values of global warming potentials from the IPCC’s Fifth Assessment Report and Russia’s new Scope 2 emission factors. In addition, the quality of primary data gathering in the Company has improved, which resulted in the decrease of base year GHG intensity to 1.94 tCO₂e/tcs vs. previously reported 1.97 tCO₂e/tcs. The goal (-20%) was recalculated accordingly and reduced to 1.55 tCO₂e/tcs vs previously indicated 1.58 tCO₂e/tcs. tCO₂e/tcs (tonnes of carbon dioxide equivalent per tonne of crude steel), which complies with the Paris Agreement (PA) pledges and is calculated based on the Transition Pathway Initiative (TPI) methodology for steel producers “Carbon performance assessment of steel makers: note on methodology”. To meet the goal, EVRAZ is considering promising technologies.

Read more in the Decarbonisation pathway section

An important accomplishment for EVRAZ in reducing greenhouse gas emissions is evident in its efforts to utilise emitted methane to lessen its impact on the climate. The Group is implementing pilot projects on introducing installations for thermal utilisation of methane at the Raspadskaya Coal Company. It enables the transformation of methane into CO₂ thus reducing GHG effect, since methane has a greater global warming potential and a higher impact related to the increase in average global temperatures. If the pilot projects are successful, the Group will scale them up. The Group evaluates the practicability of energy generation to improve the efficiency of methane using.

EVRAZ discloses data in tCO₂e using IPCC global warming potentials for its calculations. The methodology for calculating Scope 1 and 2 GHG emissions complies with the requirements of the IPCC Guidelines for National greenhouse gas inventories and GHG Protocol Corporate Accounting and Reporting Standard. Scope 2 GHG emissions were measured using official data of Russian energy exchange. Evaluation of Scope 3 GHG emissions is in process and will be performed for all relevant categories.

In the current year, GHG emissions have decreased by 3.1%. This was a result of lower steel production at EVRAZ ZSMK, decrease of methane emissions at some coal mines, modernisation of equipment and the success of the energy efficiency policy. In 2021, the steel segment accounted for the largest part of GHG emissions (68% from EVRAZ’ total GHG emissions).

Decarbonisation pathway

To make our business strategy more resilient to the consequences of climate change and identified climate-related risks, we continuously assess how our business may improve to become more sustainable. At the end of 2021, our risk reassessment demonstrated that climate-related issues require greater attention at the Group level due to increasing regulatory changes and increased stakeholder attention. By addressing and analysing how climate change affects our Company, we can plan and design measures to mitigate the consequences of potential issues in the future. We believe that our decarbonisation pathway shall be cost-effective. Our short-term sustainability focus is based on substantial side effects yet does not compromise our ability to create long-term value.

We have started developing a decarbonisation pathway for the Group that will be integrated into our daily operations, strategic and financial planning, which will also help us to avoid climate-related risks and meet climate targets. Read more in Principal risks section. In the next 3-4 years, our priority will be to maximise energy efficiency and develop measures that will decrease the Group’s volumes of greenhouse gas emissions in order to provide the market with reduced CO₂ steel products.

Our approach

One of the Group’s strategic goals is to ensure sustainable business activities. Our approach to environmental management is defined in the EVRAZ Business Strategy and HSE Policy. All of our enterprises use an environmental management system based on the plan-do-check-act model.

The Group strives to ensure compliance with all relevant environmental requirements. We strictly comply with the rules on registration, evaluation, authorisation and restriction of chemicals (REACH) for products supplied from or manufactured in the European Economic Area by the Group’s assets.

When developing new projects and operations, we perform special environmental and social impact assessments that evaluate possible indirect and direct effects of our activities on the local environment and communities. We also develop plans to reduce these impacts and manage them through engagement with local stakeholders, including regional authorities, enterprises and host communities.

To maintain a high level of environmental awareness and competence among our employees, we provide training on waste management approaches, HSE practices and other relevant topics.

Lowering air emissions

EVRAZ uses best available technologies and regularly updates equipment to lower air emissions and reduce their potential impact on human health and the environment. The primary emissions resulting from our business activities include sulphur oxides (SOx), nitrogen oxides (NOx), volatile organic compounds (VOCs) and particulate matter (dust). In 2021, total key air emissions fell by 2,85% YoY.

Balancing water supply

The mining and steel industries require significant amounts of water. As a part of our climate risk assessment, we have recognised that circular water use within our facilities allows us to manage physical risks like water scarcity, droughts and the increasing frequency of extreme weather events.

In 2021, total water consumption at the Group’s facilities was 219.99 million m³, of which freshwater accounted for more than 90%. Total freshwater consumption for production purposes was 199.42 million m³, which is 6.77 million m³ less than in 2020.

The total volume of water discharged in 2021 was 121.49 million m³, which is 3.77 million m³ less than in 2020.

Waste stewardship

In its business activities, EVRAZ produces large volumes of general and metal production waste (not related to mineral extraction), as well as mining waste, such as overburden, tailings and barren rock. The Group uses the best available practices of waste management methods in this area to make rational use of natural resources and reduce waste generation.

The total amount of waste and by-products generated at our enterprises in 2021 equalled 195.7 million tonnes, including 8.6 million of non-mining waste.

EVRAZ strives to increase the amount of recycled and reused waste in accordance with its environmental strategy. In 2021, 66.8 million tonnes of waste (including mining waste) were recycled. Non-hazardous mining waste is used for land restoration and the construction of dams and roads. In the 2021, 57.8 million tonnes of waste of this kind were reused, accounting for 86.6% of the total amount of waste reused.

EVRAZ considers the safety of tailings storage facilities (TSFs) a priority, as their use poses significant environmental risks. The Group owns three metallurgical TSFs located at EVRAZ ZSMK and EVRAZ KGOK. The dam safety management system ensures compliance with the relevant legislation and covers all stages of TSF service life: design, construction, operation and closure. Safety is continually monitored, and our TSFs are regularly reviewed by both internal and external specialists and regulators.

Protecting biodiversity

We assess impacts on biological diversity at all stages of our production projects and acknowledge our responsibility to conserve biodiversity in general and local species and their habitats in particular. Our assets are not located in specially protected natural areas or areas of high biodiversity value.

The Group aims to ensure a rational and prudent approach to conserving biodiversity. We are also actively engaging with local communities on biodiversity issues.

In 2022, we plan to implement several measures, in accordance with the Biodiversity Roadmap:

• Introduce biodiversity screening and risk assessment procedures, as well as develop and monitor biodiversity-related indicators.
• Identify the main directions of biodiversity conservation and measures to reduce risks to biodiversity.
• Develop and adopt a policy/standards on biodiversity conservation.

Through implementing the roadmap, we expect to obtain an assessment of the current impact on biodiversity, determine the goals on biodiversity conservation, and find ways and actions to achieve them.

Rehabilitating disturbed land and landscaping

The Group takes its obligations to restore disturbed land during mining operations seriously. To achieve this, we undertake environmental activities and rehabilitation projects. In 2022, the plan is to assess disturbed land, update the financial model and evaluate the economic feasibility of reclaiming land.

Restoring aquatic biodiversity

EVRAZ regularly releases various species of fish into water bodies to compensate for its potential impact on bioresources. Our approach to conserving biodiversity involves a commitment to the maintaining the quality of aquatic ecosystems and existing biodiversity. In 2021, the Group took part in a programme to research taimen fish in the Khabarovsk region.