ALROSA Group continues to be the undisputed leader of the world diamond mining industry. In 2014, the Company produced 36.2 mn carats of rough diamonds. Today ALROSA has the largest resource base and one of the longest estimated mining reserve periods among the major players in this market. The organized sales system enabled the Company to earn a record revenue of over $5 bn from sales of its products in 2014.
Maintaining the leading position, focusing on the exploration and mining of rough diamonds and consolidating the Company’s status on the world market form the basis of the longterm development strategy at ALROSA. The Company’s current operating and financial figures confirm the economic efficiency of this model. The Company’s activities are highly rated on the market, which is confirmed by the fact that since its IPO in October 2013, the Company’s capitalization has more than doubled.
In 2014, ALROSA took important steps to further develop this strategy. Udachny, the last of the four underground mines under construction, was put into operation. Construction of new enrichment facilities was completed and a new diamond pipe was put into operation in the Arkhangelsk Region. Stripping operations were completed and diamond mining commenced at the Botuobinskaya pipe in the western part of Yakutia.
The Company’s investments in the construction of new facilities made over the past years are beginning to produce returns. In 2015, ALROSA’s production volume will rise to 38 mn carats and in the near future it will exceed 41 mn carats.
In order to maintain and expand its resource base, the Company is continuing active geological exploration operations, focusing not only on Russia but also on Africa, a region with a high potential for discovery of new major diamond deposits.
The record sales figures achieved by the Company are the direct result of a sales policy based on long-term contracts. Sales under such contracts provide the Company and its customers with stable supplies of rough diamonds, protect against price volatility on the rough diamond market and make it possible to plan business processes. This sustainable model is also integrated in the Company’s development strategy and will remain unchanged. ALROSA has already established a pool of clients to work with under long-term contracts for the next 3 years.
The Company ensures full transparency of its activities and has high requirements for its clients. Since 2015, long-term clients of OJSC ALROSA have to accept the Principles of responsible business conduct, declaring compliance with the requirements of the Kimberley Process in selling rough diamonds, financial transparency and openness of information, combating corruption, fair competition, respect for human rights and labour rights.
A clear plan of production development and a balanced sales system make it possible for the Company to maximize the price of diamonds sold and ensure stability and predictability of cash flows from operating activities. Given the actual growth of financial indicators, ALROSA intends to pay dividends for 2014 at the level of 2013 despite receiving a nominal net loss as a result of the devaluation of the ruble.
ALROSA implements corporate social responsibility measures in accordance with the best international practices. In 2014, the ALROSA Policy in the field of sustainable development and corporate social responsibility was developed and approved. It is aimed at respecting the rights and interests of employees, improving the quality of life, and promoting active development of the regions where the Company operates. The prerequisites for the development of this document were the strategic goals of the Company and compliance with recommendations of international experts and auditors. Today the ALROSA Supervisory Board comprises experienced directors and managers who are well versed in the specifics of the diamond industry and understand the challenges and tasks facing the Company. In 2014 we assessed the work of the Supervisory Board for the first time with the help of independent auditors. Following the assessment, the experts spoke favorably of the speed at which complex issues were addressed, the high level of teamwork and the efficiency of decision-making.
I would like to acknowledge the tremendous contribution made to the development of the Company by Fyodor Borisovich Andreev, who passed away prematurely. Mr Andreev joined ALROSA in the difficult period of crisis and in just 5 years he managed to build a truly world-class company. Today ALROSA is one of the most successful mining companies in Russia and a major player on the world rough diamond market. The achievements that make the Company and its shareholders proud today are, in many respects, his achievements.
I would like to praise the actions taken by the President and the Management Board of the Company and thank all the employees of ALROSA Group for their hard work in 2014. I am confident that the successful implementation of the development strategy carried out by many thousands of professionals employed by the Company will enable ALROSA Group to strengthen its leading position on the rough diamond market, and ensure sustainable long-term production, revenue growth, and an increase in shareholder value.
Chairman of the Supervisory Board of OJSC ALROSA