ALROSA: The Group of Diamond Mining Companies

ALROSA: The Group of Diamond Mining Companies

ALROSA: The Group of Diamond Mining Companies

Posted by Rebecca B. on 7th Jan 2020

ALROSA: The Diamond Mining Company

Alrosa is a group of diamond-mining companies based in Russia. Alrosa specializes in the exploration, mining, as well as the manufacture and trade of diamonds. The corporation is a global leader in the production of diamonds by volume.

In Russia, Alrosa accounts for over 95% of the total diamond production. Globally, the company produces up to 27% of the total diamonds sold worldwide. Though Alrosa is headquartered in Miry, Russia, it operates in several regions around the world.

James Allen

The History of Alrosa

Alrosa boasts a history that dates back to the 1950s. However, diamond mining activities in Russia are way older than that. The mining of rough diamonds in the country can be traced back to the 18 th century. But it was not until the late 1930s that serious explorations began. At this time, Vladimir Sobolev, a renowned gemologist, published a research paper on the geological similarities between Siberia and South Africa. The publication gave diamond prospectors more impetus to explore Russia’s diamond potential.

The diamond explorations in Russia would be interrupted during the Second World War. However, the activities resumed in the late 1940s, in earnest. In 1949, geological expeditions uncovered the first rough diamond in the country. Some of these discoveries were the kimberlitic pipe Maritsa, the Mir kimberlitic pipe, as well as the Udachnaya pipe. More findings would follow, and Russia eventually became a renowned diamond mining country.

Official mining activities began in 1957, in Yakutia. Soon after, the Yakutalmaz group of companies was founded in Miry. The company’s primary objective was to consolidate all mining operations in the region. Russia continued to gain worldwide recognition as a diamond mining hub. Therefore, there was a need to establish a more effective company to foster the diamond trade.

On February 19, 1992, Alrosa was established through the Presidential Decree №158C of the Russian president.

Let’s uncover some of the critical milestones in the history of Alrosa.

1993 – The CatocaLtda Mining Co. is established in Angola.

1994 – The Botuobinskaya pipe is discovered.

1996 – The Nyurba pipe is discovered. The year also saw the establishment of the United Selling Organization.

1997 – Alrosa recovers its first diamonds at the CatocaLtda processing facility. That leads to the opening up of operational offices in Angola, as well as London and Antwerp.

2000 – Brilliantly Alrosa, the cutting and polishing division of the company, is established.

2001 – The Mir pipe open-pit operations come to an end.

2003 – Alrosa holds its first international auction for rough diamonds.

2009 – The commissioning of the Mir underground mines.

2012 - Alrosa begins the exploitation of the Botuobinskaya pipe.

2013 - Nizhne-Lenskoe now becomes part of the  Alrosa Group. The same year, Alrosa enlists on the Moscow Exchange.

2015 – Udachny open-pit mines are brought to a halt, and underground mines put into operation.

Alrosa has surmounted numerous financial and logistical challenges to emerge as one of the best diamond mining companies in the world. And there are plenty of awards to show for it. In 2017, Alrosa ranked by the United Nations Development Programme among the top three companies in environmental stewardship among all Russian mining corporations. The same year, the Polar Index ranked Alrosa among the top 5 companies with immense sustainability.

Whtieflash

Alrosa Operations

Most of Alrosa’s mining activities are concentrated in the Western Yakutia and Arkhangelsk regions. The company boasts up to 27 minefields across these regions. The fields comprise of 16 alluvial and 11 primary deposits. In Yakutia, Alrosa operates four mining divisions, namely, Miry, Udachny, Aikhal, and Nyurba. Alrosa develops the remaining deposits through subsidiaries. Examples of such subsidiaries are, JSC Diamonds Anabara, JSC Severalmaz, and OJSC Alrosa-Nyurba. As of 1 st January 2018, the ALROSA Group-owned reserves totaling 1,171,951.7 thousand carats, spread across the C1+C2 categories. According to the National Reserves Committee, this potential made up over 95% of Russia’s total stocks of raw diamonds.

One thing that keeps Alrosa going is their strong desire to explore new fields. As the company rakes billions in profit out of its mining ventures, it’s also keen on exploring new diamond mines across Russia, Botswana, and Angola. In Angola, Alrosa has mines on the Catocakimberlite pipe. The company works in a joint partnership with the SociedadeMineira de Catoca (Catoca Ltd.). Under this arrangement, Alrosa claims a 32.8% stake.

The following is a breakdown of some of Alrosa’s mining divisions.

Miry Mining & Processing Division (MPD)

Miry MPD was established in 1957. As of 2017, the division had an 18% production stake in ALROSA Group. Miry MPD develops mines in Mir, Irelyakh, VodorazdelnyeGalechniki, to mention but a few.

The Aikhal Mining & Processing Division (MPD)

Aikhal was founded in 1986. The division is responsible for developing diamonds in the Komsomolsky and Jubilee open-pits, as well as the Aikhal underground pits. As of 2017, it had a production share in the ALROSA Group exceeding 30%.

Udachny Mining & Processing Division (MPD)

Contrary to the other divisions that mostly deal with diamond exploration, Udachny is primarily a business unit of the ALROSA Group. Udachny located in Western Yakutia. However, it also develops various mining sites.

Examples include the Maritsa and Udachnayakimberlite pipes. Udachny is also responsible for the exploration of the RucheyPiropovy and Dellyuvialnaya placer deposits. The division had a share of 11% in the ALROSA Group’s production, as of 2016.

The Nyurba Mining &Processing Division (MPD)

Nyurba is based around the Nakyn ore field. The division is charged with the exploration of Botuobinsky and Nyurbinsky deposits. It had a production share of 19% in ALROSA Group, as of 2017.

The Company’s Capital, Management and Organization Structure

Alrosa has a public float of 34%, and the Russian Federation owns 33%. In 2017, the company had a market capitalization of RUB 553 billion. As we mentioned previously, Alrosa controls several other companies, either wholly or as affiliates.

The following are some of these companies.

OJSC AlmazyAnabara

OJSC was founded in January 1998. The company was initially established as LLC AlmazyAnabara.

The main objective of OJSC was to mine alluvial deposits in the Anabarulus region. It was later reorganized into OJSC AlmazyAnabara, in August 2004. In 2007, Alrosa assumed complete ownership of OJSC AlmazyAnabara.

SociedadeMineira de-Catoca (Catoca Ltd.)

SociedadeMineira de-Catoca is one of the most successful diamond mining companies in Central Africa. The company is based in the Republic of Angola and is the country’s first diamond mining corporation.

SociedadeMineira is associated with the exploration of diamonds in the Catocakimberlite pipe. Located in Luanda Sul Province, the Catocakimberlite pipe is one of the biggest mines in the world. Alrosa owns 32.8% of SociedadeMineira’s total shares.

Public Joint-Stock Company Severalmaz

It may be one of the youngest subsidiary mining companies of Alrosa. However, Public Joint-Stock Company Severalmaz has seen tremendous growth since its inception in 1992.

The company was founded to explore the Lomonosov field, Europe’s most extensive primary deposit. Alrosa owns over 99% stake in this company.

Public Joint-Stock Company ALROSA-Nyurba

The Public Joint-Stock Company ALROSA-Nyurba was established in 1997. The firm holds the mining licenses of Botuobinskoye and Nyurbinskoye mines.

Most of its operations are centered around the Nyurba District in Yakutia. Alrosa owns over a 97% stake in this company.

At the apex of Alrosa Group’s corporate structure lie the shareholders. Beneath the shareholders is a supervisory board. A Chairman heads the supervisory board. The chairman is assisted by the First Deputy Chairman and the Deputy Chairman. Then, there are twelve board members, each of whom brings a distinct experience and expertise to the board.

Beneath the supervisory board is the president, who also happens to be the company’s CEO. The executive committee falls right beneath the CEO. The committee comprises of six members.

To ensure the smooth and efficient operation of the corporation, Alrosa Group operates under smaller units. Examples of these units include;

  1. The Mining and Processing divisions,
  2. The Exploration division,
  3. The Production Infrastructure unit,
  4. Social Facilities unit,
  5. The Sales division and
  6. The Representative Offices and Branches division.

Alrosa’s Corporate Social Responsibility

Alrosa firmly believes in the ideals of the  Kimberley Process. The Kimberley Process is an initiative that was started to eliminate the infiltration of  blood diamonds into the mainstream diamond industry. And Alrosa plays an active role in making that happen.

The corporation actively supports the Russian government agencies in achieving the goals of the Kimberley Process.

To that end, Alrosa doesn’t supply diamonds to any merchant or individual that falls under any of the following categories;

  1. Originates from a country that isn’t a member of the Kimberly Process,
  2. Doesn’t subscribe to the Kimberley Process Diamond Certification Scheme (KPCS),
  3. Sells natural, treated, and synthetic diamonds without drawing clear distinctions on these three categories,
  4. Isn’t tax- and customs-compliant,
  5. Is facing insolvency or presently undergoing restructuring and
  6. Has provided misleading information about their company’s products and services

Besides supporting the Kimberley Process, Alrosa is also keen on giving back to society. In 2017 alone, the company had over 500 ongoing social projects. Many of these initiatives were in Yakutia.

Like any other socially-mindful company, Alrosa identifies the needs within the local communities where it carries out its activities. It then sets aside the required financial and human capital to initiate and implement those projects. In Yakutia, Alrosa implements most of its charity initiatives partially through the Target Fund for Future Generations of the Republic of Sakha (Yakutia).

But Alrosa doesn’t only care for the interests of the general public. Its employees are also great beneficiaries of the company’s corporate social responsibility. Besides, the company has a career section that you can check out for any ongoing recruitment.

Alrosa is one of Europe’s trailblazing diamond mining corporations. It doesn’t boast a long history compared to giants like De Beers. However, the firm has achieved so much in it’s slightly less than three decades of existence.