News

Jul 03, 2017

ALROSA to “Adjust” Development Strategy; Ivanov Says No “Fundamental” Changes Expected

ALROSA President Sergey Ivanov while outlining the key decision of the Company’s Annual General Meeting of Shareholders, “to adjust the (Company’s) development strategy”, reassured stakeholders that “no fundamental changes are expected”. A press release from ALROSA emphasised that “The Company will still be focused on strengthening its leadership in diamond mining and building market strength.”

Explaining the adjustments in the offing, Ivanov elaborated: “We see a lot of potential in our infrastructure projects, including those in Angola. We have already signed documents on the establishment of a joint venture company for the development of Luele pipe – the largest discovered over the past 60 years. ALROSA also plans to increase its share in Catoca Ltd Mining Co up to 41%. Needless to say that the Company will continue its work on the implementation of our investment projects in Yakutia, including those related to the establishment of a diamond mining facility at Verkhne-Munskoe deposit.”

On the other hand, ALROSA is also planning to streamline operations by reducing costs and improving efficiency, which might necessitate “making structural and staff changes in the Company if the situation so requires”, the Company said.

 Ivanov added: “The Company needs to be reformed inside to have greater manageability and transparency. I can give an upbeat assessment of the operation of our production facilities in Yakutia. We are also facing changes in the administrative staff with a view to improve the Company’s internal efficiency. We will modify business processes, improve quality of managerial decisions and performance discipline, and, of course, optimise costs. Quality of management in ALROSA must comply with the best world practices.” 

In another press release issued on the same day, touching upon other aspects discussed at the Company’s AGM, Ivanov declared that 60% of ALROSA’s investments are used for diamond mining development. 

In 2016, RUB 16.5 billion – or 60% of the Company’s total capital investments – were expended upon underground mines and other core production facilities.   Of this, over RUB 7 billion was spent on technical upgradation and replacement of worn-out equipment;  and RUB 2.7 billion was invested in ancillary facilities. 

Further, almost RUB 5.5 billion was invested in the construction of the Udachny underground mine. “Persistent efforts were also taken to support existing facilities at Mir, Internatsionalny, and Aikhal underground mines,” the Company added.

Apart from the existing operations, ALROSA has also commenced the development of a new primary diamond deposit – Zarya. “It is one of ALROSA’s largest investment projects and its development guarantees loading of existing capacities of Aikhal Mining and Processing Division for at least two decades ahead,” the Company elaborated.

The Mir underground mine has reached its design capacity of 1 million tons of ore per year, and its proved reserves will be sufficient until 2057, the Company indicated.

“ALROSA is still actively working to establish a diamond mining facility on the deposit of Verkhne-Munskoe kimberlite field,” ALROSA said. “In accordance with the Investment Agreement signed with the Ministry for the Development of the Russian Far East in 2016, the total investment in the development of the deposit will be RUB 63 billion.”

 Sergey Ivanov opined that the government support for the project “emphasises its utmost importance and potential for the development of the Russian Far East”.