Key Operating Units

Today, ALROSA has a vertically integrated production platform and infrastructure that ensures the company’s successful operation at all stages from designing mining works to sales of rough and polished diamonds.

The functional structure of the ALROSA Group combines the parent company, ALROSA, consisting of 30 divisions, with 38 subsidiaries and affiliated companies.  

Long-term strategic documents, which ALROSA adopted in 2012, define its core business activities as the priority areas of the company's development, i.e., production and sales of diamond products and the planned divesture of non-core assets.

Changes in organizational structure  

Throughout 2012, the company continued the implementation of its long-term programme aimed at optimizing the structure of subsidiaries and affiliated companies of the ALROSA Group in accordance with its strategic performance targets. Key changes affected non-core assets.

For instance, having completed necessary preparations, ALROSA Aviation, a subsidiary company of ALROSA, was created on the basis of the Mirny Airline. The company became a separate legal entity in January 2013; it performs air transportation services in Western Yakutia and remains the transportation backbone of the diamond mining industry, meeting ALROSA's demand for freight and passenger services and its special needs (i.e., transportation of rotation shift workers, aerial photographic surveys, etc.).

These reforms have also affected social and community services. The reporting period saw the completion of preparatory works for the incorporation of Almazik, an autonomous non-profit organization for preschool education on the basis of 27 kindergartens that were previously part of the company.

In 2012, the number of ALROSA subsidiaries and affiliated companies engaged in non-core business activities dropped from 20 to 17.

Organization Structure of ALROSA GROUP in 2012 (as of December 31, 2012)  

Mining and Processing

Four mining and processing divisions, i.e. Mirny, Udachny, Aikhal, and Nyurba, which mine, process, produce and recover natural diamonds, form the core of ALROSA’s production capacity.

ALROSA has been working toward the deployment of underground diamond mining methods and technologies, which require the introduction of a specific risk management system.

Key Mining Units of ALROSA

Udachny Mining and Processing Division

Aikhal Mining and Processing Division

Mirny Mining and Processing Division

Nyurba Mining and Processing Division

This division develops two kimberlite pipes – Udachnaya and Zarnitsa – and processes ore at Processing Plant No. 12. The Udachny mine is the world’s deepest mine (610 m). The division’s mining operations account for 9.0% in the Company’s total output.

With the aim of achieving planned deliverables in the reporting period, the Udachny's miners began preparatory first-mining operations at the Udachny underground mine currently under construction. This work is being performed on a newly created site of first-mining operations in the first stope at a depth of 320-365 metres. 

One of the main tasks facing the Udachny Mining and Processing Division in 2012 was the formation of a team of workers employed at the underground mine and the beginning of preparatory deep mining operations. As a result of this work, the mining site was fully staffed and necessary mining equipment was deployed. A shaft lift and maintenance site was organized. Phase One of the first start-up complex at Udachny mine was put into operation. 

The team of the Aikhal Mining and Processing Division (MPD) carries out mining operations at three primary deposits, i.e. an open pit mining at the Komsomolskaya and Yubilaynaya pipes and underground mining at the Aikhal pipe. The mined ore is processed at two processing plants, No. 8 and No. 14. The output of the Aikhal MPD accounts for 12.8% of the marketable product, with its mining operations accounting for 51.3% of the total volume. The Yubileynaya mine is the largest in the world. Its area totals 59 ha. The construction of the Aikhal mine of Aikhal MPD is nearing the completion. In the reporting period, the Aikhal underground mine reached the rated capacity of 500,000 tonnes of ore. To reach the rated production capacity, start-up work was done in a vertical shaft with cage winding and pilot testing of ore breaking with the use of a chambered system at the south-eastern ore body.

In 2012, the Aikhal MPD produced some 26% of the overall production of the ALROSA Group, thus exceeding its production performance indicators by 70% against the previous year. 

As the company’s oldest mining and processing division, the Mirny Mining and Processing Division (MPD) operates the Mir and International underground mines, develops the Irelyakh, Vodorazdelnye Galechniki, Gornoye and Levoberezhnaya alluvial mines, carries out mining operations at industrial deposit Tailings of Plant No. 5 and dredging processing of bench gravel at the Irelyakh deposit. The Mirny MPD accounts for 43.8% of the company’s extracted diamonds and 6.5% of mining operations.

Like all the other ALROSA mining and processing units, the employees of the Mirny MPD are focused on the deployment of underground diamond mining processes and technologies. In 2012, difficult hydrogeological conditions at the Mirny underground mine led to underproduction of planned ore volumes. To solve the problem, the company tasked its research and design experts with mapping out a set of measures to improve the situation. In the course of 2012 the following technologies and processes were introduced, i.e. a pilot automated system for hydromechanical monitoring of the safety pillar conditions and a clinkering unit of the surface stowing complex as a result of the deployment of fine-grain clinker technology for preparing stowing mixtures.

The 2012 performance results show that the Mirny MPD remains ALROSA’s leading diamond producer: its share of diamonds production is worth USD 1,154.4 million, or more than 43% of the total value of rough diamonds that the company mined.

The youngest ALROSA’s mining and processing divisions, the Nyurba MPD carries out its operations at the Nakyn ore fields while producing diamonds from ore and sands of the Nyurba pipe. Rough diamonds are extracted from the mined substance at Seasonal Processing Plant No. 15 and Plant 16, one of the world’s best plants in terms of process and process automation. In the reporting year, the Nyurba MPD accounted for 16.7% of the rough diamond production of the ALROSA Group in value terms.

In 2012, stripping operations began at a placer adjacent to the Nyurba pit. One of the main developments of the year was the beginning of stripping operations at the Botuobinskaya pipe.

 

Key Subsidiary and Affiliated Mining Companies of ALROSA

Subsidiary and affiliated companies, core business operations

Basic facts

Social and environmental responsibility activity

OJSC ALROSA NYURBA

In 2012 the company produced 7,955.6 thousand carats of rough diamonds amounting to USD 444.2 million or 10.2% more than in 2011. 

As an ALROSA subsidiary, ALROSA NYURBA is responsible for the development of diamond deposits of the Nakyn diamond field in the northern part of the Nakyn ulus of the Republic of Sakha (Yakutia). The deposits were discovered in 1997. The company carries out mining and geological prospecting of unique world-class deposits, i.e. the Nyurba and Botuobinskaya pipes, and genetically related alluvial deposits of the same name.

ALROSA NYURBA is a modern diamond mining enterprise with a complete cycle of mining and processing operations and rough diamond production. The company is involved in proactive geological prospecting and exploration of the subsoil within its licence areas, spending more than RUB 400 million per annum. Geological prospecting and mining operations are performed by workers and specialists from the Nyurba Mining and Processing Complex, and the Botuobinskya and Mirny exploration expeditions, who are brought in to work in shifts. 

To evaluate its footprint on the environment, the company has initiated large-scale environmental impact assessment studies, which are regularly performed by the Institute of the Applied Ecology of the North at the Academy of Sciences of the Republic of Sakha (Yakutia). The studies allow taking timely measures to eliminate the consequences of the man-made environmental impact and restore disturbed ecosystems in the area of the Nakyn diamond mine.

In accordance with the principle of environmental, social and economic responsibility, ALROSA NYURBA has helped support the local community's standard of living for many years. The company allocates funds to buy equipment for the production and processing of agricultural products, and drinking water; it also assists educational institutions, NGOs and public health services. ALROSA NYURBA provides significant financial support to regional cultural and sports events: the International "Children of Asia" Sports Games, the "Igry Manchaary" National Sports Games, regional conferences and festivals, and other events.

OJSC Almazy Anabara

In 2012 the company produced 2,408 thousand carats of rough diamonds worth USD 161.8 million, or 7.8% less than in the previous year. 

Open joint stock company Almazy Anabra is responsible for diamond mining at alluvial deposits in the Anabar and Olenek uluses of the Republic of Sakha (Yakutia). The Mayat alluvial diamond deposit is located in the basis of the Mayat Stream of right confluence  of the Anabar River. Geological prospecting and open-pit mining operations there began in 1998. As of 2004, the company has been pursuing geological prospecting and diamond mining operations at the Morgogor alluvial deposit on the Ebelyakh River’s right-hand confluence. 

Throughout its operations in the Anabar national ulus, Almazy Anabara has been focused on protecting the fragile Arctic environment. Considering the peculiarities of the tundra ecosystem, it takes a long time for the reindeer moss cover to be restored. Therefore, the company uses cross-country vehicles on pneumatic tires for trips in the tundra and for geological prospecting.

Almazy Anabara has initiated regular monitoring of natural sites and environmental impact assessment studies, and of the expected and actual footprint of industrial operations. For more than eight years, Almazy Anabara has been using a new environmentally friendly technology that provides for waste-free utilization of spent motor oils, thus minimizing environmental pollution. Throughout its operations, Almazy Anabara has been a sponsor of the national (Dolgano-Evenki) Anabar ulus, assisting the community with housing and road construction, social infrastructure facilities, helping schools and kindergartens, and contributing to the annual festival of reindeer herders.

OJSC Severalmaz

In 2012 the company produced 558,6 thousand carats of rough diamonds worth USD 27.5 million, or 11.8% more than in the previous year. 

Open joint stock company Severalmaz is the licence holder for the Lomonosov diamond deposit, which has six kimberlite pipes, five of which are commercially viable for development. The Lomonosov Mining and Processing Division operates the Arkhangelskaya and Kapinsky-1 diamond pipes and is engaged in investment activities. In 2011 the Pomorskaya exploration and prospecting expedition began operations. 

Severalmaz pays much attention to environmental safety issues. The company carries out continuous environmental and industrial monitoring of water streams, ambient air, soil and vegetative cover as well as the biodiversity of the ecosystems within the district. Participation in the comprehensive social and economic development of the Primorsky Municipal District, where Severalmaz operates, is one of the priorities of the company’s social policy. Severalmaz supports children’s homes, boarding schools, kindergartens, general educational schools, children's clinics, retired geologists, WWII veterans, and disabled persons.  

Catoca Ltd. Mining Co.

In 2012 the company produced 6,706 thousand carats of rough diamonds, and revenues were USD 579 million, or 5.2% less than in the previous year.

Catoca Ltd. Mining Co. is one of the most efficient industrial companies in Angola and the absolute leader of the country’s diamond mining industry. It is Angola’s first mining company to commence the large-scale development of a major primary deposit of diamonds, i.e., the Catoca kimberlite pipe, the world’s fourth-largest in size. The deposit is located in Lunda Sul Province.

The shareholders in the company are:

  • Endiama E.P., a national state-run diamond mining company - 32.8%;
  • OJSC ALROSA (Russia) – 32.8%;
  • LL International Holding B.V. (China-SONAGOL International Holding Ltd.) –  18.0%;
  • Odebrecht Mining Services Inc. (Brazil) – 16.4%.

This impressive production complex is based on advanced Russian technologies and was designed by Yakutniproalmaz, a design branch of ALROSA, which provides technical support and maintenance work to ensure its technical development. 

ALROSA representatives provide technical and engineering guidance for the core production work. 

It is difficult to overestimate the economic, industrial and social importance of Catoca Ltd. Mining Co. for Angola in general and Lunda Sul Province in particular. The company imports state-of-the-art technologies and know-how. Endiama, Angola’s national state-run diamond mining company, receives significant dividends pro rata to its share in the chartered capital. Production and social taxes and fees contribute to the budgets of different levels of government. The company creates many jobs for Angolans, thus reducing unemployment in the region. The company has a vocational training centre that helps local residents learn new skills. Catoca Ltd. Mining Co. runs various social programmes for the local community, including the construction of housing projects, schools, kindergartens, hospitals and first-aid clinics, as well as roads and public water supply systems. The company supports public health programmes to fight malaria, HIV/AIDS and other diseases, as well as hunger and malnutrition. High on the agenda is support for adult and child education, sports, culture, and the development of agriculture in the region.

To date, Catoca Ltd. Mining Co. is the only ALROSA Group company which has created within its corporate governance structure a department of sustainable development. One of the key tasks of the department is corporate non-financial reporting.  

Geological Exploration

ALROSA’s geological exploration and prospecting division has a Geoscience Research Enterprise (NIGP) and four exploration and prospecting expeditions, i.e. the Amakinskaya Exploration Expedition, the Botuobinskaya Exploration Expedition, the Mirny Exploration Expedition and the Arctic Exploration Expedition, the latter having been established to improve the efficiency of geological exploration and prospecting in the northern part of Yakutia’s diamond-mining areas.  

The Amakinskaya and Botuobinskaya exploration expeditions are among the oldest and biggest teams in Russia’s geological industry. In many respects, they have been pioneers in creating the mineral and resource base of Russia's diamond mining industry, and developing new areas for geological research related to the specifics of kimberlite-pipe occurrence, diamond pipe internal structures, types of diamond content, and the material composition of the Earth’s crust and upper mantle, and other topics.

The Mirny Exploration Expedition began its work in 1978 and has two exploration and prospecting teams, a West Yakut Team, which carries out exploration, prospecting and hydrogeological work for the Mirny and Nyurba Mining and Processing Divisions, and a Polar Team, which works on the Zarnitsa and Udachnaya kimberlite pipes, and other prospects operated by the Udachny MPD.  

The Arctic Exploration Expedition was set up in 2007, and operates from the town of Zhigansk as of 2009. The expedition has geological and drilling units, and a logistics and procurement base.  

Diamond Marketing and Sales Divisions

The Diamond Marketing and Sales Divisions of our company are represented by the Yakutsk Diamond Trading Enterprise (YAPTA) and the United Selling Organization (USO) as well as the Diamond Sorting Center, and ALROSA’s Cutting and Polishing Division Brillianty ALROSA, which is one of the biggest polished diamond producers in Russia.

All rough diamonds, which are mined and processed by the mining and processing complexes, are shipped to Mirny. The Diamond Sorting Center (DSC) does preliminary sorting and valuation of diamonds and sends them to the United Selling Organization in Moscow and the Yakutsk Diamond Trading Enterprise in Yakutsk. The Diamond Sorting Center is also responsible for monitoring rough diamonds from different mines and deposits, and the results of monitoring are used for planning the operations of  ALROSA's mining and processing complexes. The DSC plays an important role in studying rough diamonds from new mines and deposits and forecasting the quality of rough diamonds from newly discovered pipes.  The DSC keeps a complete collection of diamonds that were mined in Yakutia's diamond-mining area over the years of geological exploration and prospecting there.

The United Selling Organization was created in 1996 following the merger of the trade association Diamond Center and Almazexport, a diamond exporter. Today this branch of ALROSA is responsible for the sorting, primary valuation, presale preparation, and selling of almost all diamonds mined in Russia. In 1996, the Yakutsk Diamond Trading Enterprise, which had been created in 1993, became part of the United Selling Organization.   

The sorters and experts of the United Selling Organization and the Yakutsk Diamond Trading Enterprise are pre-eminent in their profession. The United Selling Organization maintains extensive business and partnership relations in Russia and abroad.

As of the 2000, ALROSA operates a diamond cutting and polishing company, a branch of Brillianty ALROSA, that produces fine diamonds of the highest quality, of different size and shape, and of various types of cut and sells the final products on the domestic and export markets.

ALROSA’s Kommeral Co sells industrial diamonds and produces diamond powder.

Industrial Infrastructure

ALROSA has a vast and well-developed industrial infrastructure that includes several clusters following core business activities. The company has its own Yakutniproalmaz Research and Design Institute.  Studies and research are closely linked with performance tasks, the priority area being the maintenance of the raw material base and assurance of efficient diamond mining. Yakutniproalmaz is responsible for the development of three key areas: scientific research, design and engineering, and feasibility studies. It also acts as a general designer, project originator and coordinator.  

The operation of automated process management systems, manufacturing of management systems, and support of local and computer networks in ALROSA is the responsibility of the Almazavtomatika specialized enterprise. In addition, it designs, deploys and supports the operation of IT and telecommunications facilities and equipment. Almazavomatika operates equipment installation and commissioning units at all of the company's northern facilities, their main tasks being automation of operating processes at plants, pits and underground mines. 

In view of the remoteness of the diamond mining region and its severe climatic conditions, the company, in addition to its core business activities, carries out large-scale housing programmes and contributes to the development of industrial and infrastructure projects in the region. The Capital Construction Division acts as a contractor for new capital projects and the reconstruction of existing facilities of ALROSA in Western Yakutia, covering a significant area of the Republic of Sakha (Yakutia) and other regions. Construction and installation work is carried out by the Mirny and Aikhal construction and installation groups. The Mirny Specialized Mine Construction Unit performs construction of our underground mines, and the Almaztechmontazh Specialized Group is responsible for installation and startup operations at the company’s industrial facilities.

Most of ALROSA facilities are located in remote areas away from major transportation routes. Therefore, most goods and supplies are shipped by water during the navigation season.  

Supplies are delivered by the transportation and logistics complex represented by the Material Supplies and Logistics Division and its subdivisions, i.e. Almazdortrans Production Division and Mirny Automobile Roads Division.

The Almazdortrans Production Division includes Lensk Auto-Transport Enterprises 1 and 2, the Lensk River Port with warehouses and entry terminals, and auto repair shops. The fleets of these units operate modern Volvo and Man trucks and ensure safe and uninterrupted deliveries of goods and supplies to company facilities. 

The auto repair shops perform major and on-giong repairs of motor vehicles, as well as manufacture a wide-range of spare parts and nonstandard equipment for the needs of ALROSA facilities, and operate Volvo and Toyota service stations.