In the first six months of 2010, ALROSA (RTS: ALRS) produced $1.174 billion worth of rough diamonds, according to the company’s eurobond issue prospectus.
The major part of the output was generated by the company’s Udachny division including the Udachny Mine to be transferred to underground operations and the Zarnitsa diamond pipe where operations were suspended during the crisis. In the first six months this division produced $411.5 million worth of diamonds followed by the Mirny division running the Mir and Internatsionalny Mines, as well as alluvial diamond fields (their output reached $333.2 million by value in 1H 2010).
The company notes that the cost of its rough varies depending on the diamond field. The most expensive rough diamonds are mined at the Internatsionalny Mine - $100-$120 per carat. Almazy Anabara operating on alluvial diamond fields produces rough worth up to $84 per carat.
As reported in the first half of 2010, ALROSA produced about 16.6 million carats of diamonds. Russia’s total output amounted to 17.334 million carats during the same period. ALROSA’s sales in the first six months reached about $2 billion.
ALROSA plans to move to underground mining. As it was previously reported by the company’s president Fyodor Andreev, the share of underground output in the long term could reach up to 40% of the total production. However, the company notes in its prospectus that underground output will be lower than in open pits.
ALROSA intends to continue open-pit mining at Udachny until 2013, despite the fact that this mine will decrease its performance before this date. The first phase of the underground mine able to produce 1.5 million tons of ore will be commissioned in 2014, while its second phase to be launched in 2016 will increase the mine’s output capacity to 4 million tons. ALROSA says that overall production generated by underground mining at Udachny will be lower than at open-pit mines.
The first phase of underground mining at Mir was started in 2009 and the mine will reach its design capacity of 1 million tons of ore in 2012. As an open-pit mine Mir was producing up to 4.5 million tons of ore per year.
Underground mining at Internatsionalny was launched in 2002, while construction of the second underground stage was started in 2005 and it is scheduled to be completed by 2015.
ALROSA is also continuing construction of an underground mine at Aikhal, which is expected to be completed in 2013. The Yubileiny and Komsomolskaya mines which belong to the Aikhal division are operating as open pits.
The Nyurba division includes the diamond pipe bearing the same name (its development started in 2003) and a number of alluvial deposits. As it is said in the prospectus, in 2013-2015 this division plans to begin construction of an open mine on the Verkhne-Botuobinsky mine field, which after commissioning will make it possible to offset the declining output at Nyurbinskaya.
Severalmaz, considered one of the most problematic enterprises of ALROSA in terms of efficiency, produced 1.08 million tons of ore in 2009, but will decreased this amount to 0.73 million tons in 2010, rising again to 1.05 million tons in 2011.
ALROSA is also continuing exploration on the Verkhne-Munskoye diamond field, discovered in 2007. Mining operations there may begin in 2015.
Besides Russia, ALROSA is mining diamonds in Angola within the Catoca joint venture. In the first half of 2010 the company’s output reached $267.6 million in terms of value; in 2009 it was $438.7 million. ALROSA’s stake in Catoca is 32.8%.
Interfax
