Principles of ALROSA Strategy to Remain Unchanged

Sergey Ivanov

Moscow: Summarizing the results of the Annual General Meeting of Shareholders, the President of ALROSA Sergey Ivanov announced that the Company is planning to adjust the development strategy, although no fundamental changes are expected. The Company will still be focused on strengthening its leadership in diamond mining and building market strength.

“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,” emphasized ALROSA President.

In the meantime, ALROSA will gradually reduce its costs and improve efficiency, making structural and staff changes in the Company if the situation so requires. “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, optimize costs. Quality of management in ALROSA must comply with the best world practices,” said Sergey Ivanov.

In 2016, ALROSA’s investments in underground mines and other core production facilities amounted to RUB 16.5 billion or 60% of the Company’s total capital investments. Over RUB 7 billion was allocated to technical upgrade and replacement of worn-out equipment, RUB 2.7 billion was invested in ancillary facilities. Such figures were announced summarizing the results of the Annual General Meeting of Shareholders.

The Company invested a substantial amount – almost RUB 5.5 billion – into the construction of Udachny underground mine. Persistent efforts were also taken to support existing facilities at Mir, Internatsionalny, and Aikhal underground mines.

The Company started developing 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.

Mir underground mine reached its design capacity of 1 million tons of ore per year, its proved reserves will be sufficient until 2057.

ALROSA is still actively working to establish a diamond mining facility on the deposit of Verkhne-Munskoe kimberlite field. 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. According to Sergey Ivanov, government support for the project emphasizes its utmost importance and potential for the development of the Russian Far East.