Russian diamond miner reports profits, new mines

In an attempt to consolidate its position in northwestern Russia’s diamond camp, Almazy Rossii-Sakha (Alrosa), the country’s largest producer, will boost output at some of its open-pit operations and explore the Arkhangel’sk region for additional deposits.

In addition, Alrosa is considering buying into Terra Northern Mining and Geology, a private firm that holds exploration and mining licences in the Tovskaya and Pinezhskaya tenements. Terra and De Beers Consolidated Mines were exploring the area jointly until the latter backed away.

Meanwhile, mining at some nearly depleted open pits will be stepped up in order to free up resources for projects soon to come on-stream, including the Internatsionalnaya and a deep mine at the Udachnaya pipe.

Internatsionalnaya was commissioned in August, and is expected to be producing 500,000 tonnes per year by 2003. Construction of another mine at the Udachnaya pipe, which produces four-fifths of the country’s diamonds, will begin in 2002. The Aikhal mine, currently under construction, is expected to be producing 500,000 tonnes per year by 2007. At the Mir pipe, a deep mine to be completed by 2010 is expected to produce 1 million tonnes of ore per year.

To finance the projects, Alrosa raised US$58 million in a bond offering underwritten by Russian banks.

In the first half of 1999, Alrosa made a profit of US$139 million, up an whopping 380% from the corresponding period last year. The dramatic increase is attributed to three factors: settlement of foreign credit liabilities; new production from at the Internatsionalnaya mine; and startup at the Alrosa-Nyruba mill.

Alrosa is owned 32% by the state, 23% by its employees and 5% by the districts in which it operates. The remainder is owned by investors.

— With files from Interfax News Agency.