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ALROSA CEO: "Our company is in excellent financial shape today"

16 march 2018

In an interview with the ЯСИА.RU news agency, Sergey Ivanov, CEO of ALROSA said that the Russian diamond mining company is in excellent financial shape. Speaking about the company’s management of non-core assets, he noted that this implies an emphasis on its underlying business and ALROSA is moving towards this in a planned way and in accordance with the position of its investors, the Republic of Sakha (Yakutia), the Federal Property Management Agency and the Russian government. At the same time, ALROSA has so far no plans to sell large assets in the near future, he said.
ALROSA does not see any need to reduce the current level of social spending, continued Sergey Ivanov adding that this year more than 2 billion rubles are to be allocated to implement regional development programs in Yakutia; more than 4.5 billion rubles will be spent on maintaining social infrastructure, housing and communal services; and about 1.2 billion rubles will be used on health programs for the company’s employees and their families.
The average salary in ALROSA is several times higher than the average salary in Russia, and it is increasing along with the growth in labor productivity, Sergey Ivanov disclosed adding that the indexation of the company's management salaries relative to inflation in the country has been suspended, while ALROSA employees are provided with a much wider range of benefits in comparison with other peer companies.
Talking about the company’s efforts to overcome the consequences of the accident at the Mir mine, the CEO said that currently about 720 employees of the Mir mine found jobs at various divisions of the company and there is a hope to provide jobs for the remaining 50 people. According to Sergey Ivanov, the Mir mine will resume production not earlier than in 5 to 7 years. "We are not in a hurry: we must comply with all the security requirements, so that this kind of disaster that occurred in August 2017 is not repeated. Therefore, we will scrutinize all options very carefully," he said, noting that in the next 2 or 3 years ALROSA is unlikely to approach the record production level of 2017, but the company has plans confirmed by geological exploration and investment decisions, according to which its production will amount to 37-38 million carats in 2019-2020. According to him, ALROSA pins hopes on its exploration complex in terms of discovering new deposits and on the Verkhne-Munskoye diamond field, where the first batch of ore has already been dressed and the results are encouraging. "We have already invested several tens of billions in its development, we will soon receive a federal subsidy and we are now continuing to build infrastructure facilities. The gala launch of the mine is planned for early autumn. I am sure that all these multi-billion investments will pay off. Let's not forget that this will bring about both new jobs and additional revenues to the budget of Yakutia," the head of ALROSA stressed.
As follows from the interview, the deal for the acquisition of a 10-percent stake in ALROSA-Nyurba by ALROSA is estimated at approximately 12 billion rubles; it seems fair to the seller and buyer and may be closed in late April or early May this year.
Having agreed that synthetic diamonds are a market challenge, Sergey Ivanov said that the interest towards synthetics was largely due to the lack of proper attention to popularizing natural diamonds and that the industry for the past 10 years simply did not invest in their promotion. He called "absolutely correct" the decision to establish the Diamond Producers Association, which includes such large diamond mining companies as ALROSA, De Beers, Rio Tinto, Dominion Diamond and others. "Last year, we allocated a marketing budget for promoting natural diamonds. There are already certain results from the advertising campaigns in the US and India. The next in line is China. The markets of China, India and the Asia-Pacific countries are still smaller than the US market, but they are developing very dynamically, and we are closely watching them – we will offer enough diamonds for all of them," Sergey Ivanov said noting that Yakutia’s diamonds are highly valued in the international market and as consumers pay more and more attention to the origin of diamonds, ALROSA will tell them where the Republic of Sakha is located, how people live there, and what social, infrastructure and environmental programs are being implemented there by ALROSA. According to him, on this path ALROSA acts hand in hand with the leaders of Yakutia, with whom the company has established constructive relations. "Sometimes there are attempts to put us at odds with each other, as there are forces interested in this. I consider these attempts as useless," said Sergey Ivanov.
In conclusion, he once again underlined ALROSA's intention to steadily move towards improving the culture of industrial safety, without any relaxation in terms of labor protection.
ALROSA is the flagship of the world diamond mining, Sergey Ivanov said, and for me personally, as its CEO, this is a huge responsibility before the residents of Yakutia for the activities of all our structural units, responsibility for the correct choice of the development strategy for the entire ALROSA Group.

Theodor Lisovoy, Rough&Polished, Moscow