Alrosa: A Mining Diamond Giant

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

The diamond explorations in Russia would be interrupted during the Second World War, then resumed in earnest in the late 1940s. In 1949, geological expeditions uncovered the first rough diamond in the country. Other discoveries include the kimberlite pipe Maritsa, the Mir kimberlite pipe, and the Udachnaya pipe. More findings would follow on account of which fact that Russia eventually became a renowned diamond mining country.

Official mining activities began in 1957 in Yakutia. After a short period, the Yakutalmaz group of companies was founded in Miry, with the primary objective of consolidating all mining operations in the region. Russia continued to gain worldwide recognition as a diamond mining hub, and hence a need to establish a more effective company to foster the diamond trade was felt.

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

Let us now uncover some of the critical milestones in the history of Alrosa.

1993 – The CatocaLtda Mining Co. was 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. This leads to the opening up of operational offices in Angola, 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 enlisted on the Moscow Exchange.

2015 – Udachny open-pit mines are brought to a halt while underground mines are 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 was 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.

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, comprising 16 alluvial and 11 primary deposits. In Yakutia, Alrosa operates four mining divisions: Miry, Udachny, Aikhal, and Nyurba. It develops the remaining deposits through subsidiaries, such as JSC Diamonds Anabara, JSC Severalmaz, and OJSC Alrosa-Nyurba. As of 1st January 2018, the ALROSA Group-owned reserves totaled 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 from its mining ventures, it is also keen to explore new diamond mines across Russia, Botswana, and Angola. In Angola, Alrosa has mined 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. By 2017, the division had an 18% production stake in ALROSA Group. Miry MPD develops mines in Mir, Irelyakh, and VodorazdelnyeGalechniki, to mention a few.

The Aikhal Mining & Processing Division (MPD)

Aikhal was founded in 1986 and is responsible for developing diamonds in the Komsomolsky, Jubilee open-pits, and 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. Although this division is located in Western Yakutia, it develops various mining sites, such as 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 and is charged with the exploration of Botuobinsky and Nyurbinsky deposits. It had a production share of 19% in ALROSA Group as of 2017.

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 mentioned, Alrosa controls several other companies, either wholly or as affiliates.

The following are some of these companies.

OJSC AlmazyAnabara

Initially established as LLC AlmazyAnabara, the OJSC was founded in January 1998.

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. It 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

Despite being one of the youngest subsidiary mining companies of Alrosa, the 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 the 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 whom is a supervisory board. A Chairman heads the supervisory board, assisted by the First Deputy Chairman and the Deputy Chairman. Furthermore, there are twelve board members, each of whom brings a distinct experience and expertise to the board.

Beneath the supervisory board is the president, the company’s CEO. The executive committee, comprising six members, falls right beneath the CEO.

To ensure the smooth and efficient operation of the corporation, Alrosa Group operates under smaller units. Examples 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 firmly believes in the ideals of the Kimberley Process, an initiative that was started to eliminate the infiltration of blood diamonds into the mainstream diamond industry. Alrosa plays an active role in making this happen.

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

To that end, Alrosa does not supply diamonds to such merchants who;

1. Originate from a country that is not a member of the Kimberly Process,
2. Do not subscribe to the Kimberley Process Diamond Certification Scheme (KPCS),
3. Sell natural, treated, and synthetic diamonds without drawing clear distinctions on these three categories,
4. Are not tax- and customs-compliant,
5. Are facing insolvency or presently undergoing restructuring, and
6. Have provided misleading information about their respective companies' products and services

Besides supporting the Kimberley Process, Alrosa is keen on giving back to society. In 2017 alone, the company had over 500 ongoing social projects, many executed in Yakutia.

Like any other socially-mindful company, Alrosa identifies the needs of the local communities where it conducts 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 does not only care for the interests of the general public; its employees are also great beneficiaries of the company’s corporate social responsibility. Besides, it has a career section that one can check out for any ongoing recruitment.

Alrosa is one of Europe’s trailblazing diamond mining corporations. Though it does not boast as long a history as compared to giants like De Beers, it has achieved immensely in its slightly less than three decades of existence.