Untitled - PRIME Gold

16NORILSK NICKEL • ANNUAL REPORT •2005172005 RESULTS AND MAIN TASKSFOR 2006–20076Results of 2005 Main tasks for 2006–2007••• Effective use of unique mineral resources and managementof operating costs• Implementation of a targeted operating cost reduction programled to a material decrease of costs in 2005, especiallywith regards to the cost of consumables and maintenance.Polar Division entities started to implement a continuousimprovement program aimed at operational efficiencyimprovement at the level of production sections using theinternal resources of the entities.• Cost of metal sales increased by 2% in 2005; below the inflationrate in the Russian Federation.• Reconstruction of the Komsomolsky mine started, which isaimed to increase mine output to 4 million tonnes of oreper year.• The flash smelters modernization program at the NadezhdaMetallurgical Plant started, which will help to increase theiroverall production capacity and decrease overall cost ofnickel concentrate smelting.• Implementation of the Group's production strategy aimedat streamlining the configuration and modernizing the productionfacilities. Plans for 2006–2007 include:• continue construction of the Skalisty mine, preparing forthe mining of new sources of rich ore;• improve utilization of production facilities in the Taimyrskyand Komsomolsky mines after the completion of themines' hoisting facilities reconstruction;• start the modernization of the Talnakh enrichment factoryto improve concentrates quality;• expand smelting facilities at the Nadezhda Metallurgicalplant in the Polar Division, to enable closure of sinteringand smelting facilities at the Nickel Plant;• finish construction of the Severny-Gluboky mine, andmodernize the smelting facilities in the Kola Peninsula.• Further rollout of the operating cost reduction program inorder to ensure sustainable competitive advantage for theGroup. Implementation of energy saving and non-operatingcost reduction programs.• Continued research and testing in the area of ore enrichmentand concentrate quality improvement. Based on results,an optimum ore concentration scheme will be developedwith the goal of significant improvement in concentratequality and reduction of the cost of nickel and copper concentratesmelting.• Improvement in maintenance planning and performance inorder to reduce overall repairs and maintenance costs.• Restructuring of repair and construction complexes operatingon the basis of contractual relations with other industryunits; optimization of the fixed and current assets of therepair and construction complexes.• Improvement of the entities' supply and procurement planning,delivery control and use of resources.2005 RESULTS ANDMAIN TASKS FOR 2006–20076