Our Vision of Sustainable Development 

ALROSA and its subsidiaries and affiliates form a group of companies known as ALROSA Group. ALROSA Group is not an independent subject of law and its constituent companies have a common goal, mission and development strategy.

A key principle of the sustainable development strategy, which is based on the fundamental provisions of the Rio Declaration on Environment and Development adopted by the UN Conference in Rio de Janeiro on June 3-14, 1992, is the evaluation of any solutions from the point of view of possible consequences for the environment, and the well-being of living and future generations.

Although ALROSA to date has not formally announced its accession to the relevant international initiatives declaring the principles of sustainable development, in practice most of their provisions are already deeply rooted in the company’s operations. As a member of the international community, characterized by its growing self-awareness, we understand that the assessment of overall performance depends on the extent of our responsibility to both society and the environment. 

Under this approach, we implement our activities:

  • through continuous engagement and dialogue with stakeholders;
  • by improving our corporate governance on the basis of international standards;
  • by developing and introducing innovative technologies; and
  • by respecting business ethics.

The year 2012 was a landmark for the company in terms of development and approval of its strategic goals. During the year, the Supervisory Board approved ALROSA’s long-term development plan for 2012-2021. The document is a comprehensive set of programmes aimed at strengthening and developing the company's leading position in the global diamond business. These programmes cover innovative development projects, modernization, and energy efficiency, as well as other areas of industrial, economic and financial activity.

The main document regulating the business activities of the company since 1996 has been the Internal Business Code of ALROSA (the "Code"), drafted according to best international and Russian practices. The Code regulates relations between the constituent companies and units of ALROSA, the general rules governing labour relations in the company, management accounting, reporting and control, and relations with subsidiaries of the company. Updates, changes and amendments to the Code are made as necessary in case of conflicts of the Code with applicable laws, or with the Charter of the company or new conditions of its operations. Today, the third revised and amended version of the Code is in force.

Along with the Code, ALROSA had introduced integrated document management systems in accordance with the requirements of international standards ISO 14001, OHSAS 18001. The company continues the deployment of modern approaches to quality assurance based on the international standard ISO 9001:2000. The Yakutniproalmaz R&D Institute of ALROSA, which specializes in research and design documents on the core business activity of the company,  available scientific and design documentation for the core activities of the company, has developed, implemented and certified a quality management system that meets the requirements of ISO 9001:2008.

Corporate Governance

The company’s ultimate management body is the Annual General Meeting (AGM) of shareholders. More information about the powers of the AGM, as well as the agenda of the AGM held on June 29, 2012 is contained in the ALROSA 2012 Annual Report. ALROSA did not hold any extraordinary general meetings of shareholders in 2012. 

The AGM held on June 29, 2013 voted to pay out RUB 8,175 million in dividends for 2012.

The dividend policy of ALROSA is based on the following principles:

  • maintain a balance between the interests of the company and its shareholders when determining dividends and short-term balance (income generation) and the long-term (development and growth of the company's market capitalization) interests of the shareholders;
  • maintain the required level of financial condition, prospects for the company’s development;
  • increase the investment attractiveness of the company and its capitalization;
  • comply with the rights of shareholders stipulated by current Russian Federation law, the Charter of the company and its internal documents;
  • ensure transparent mechanisms for determining the amount of dividends and payments, which are followed by the Supervisory Board and the company's general meeting of shareholders in the preparation of recommendations on the amount of dividends and making decisions on the payment of dividends.

General management of the company's activities and control over the activities of the Executive Committee of the company, except for those matters that are assigned by law and the Charter to the annual general meeting of shareholders, shall be the responsibility of the ALROSA Supervisory Board. The Chairman of the Supervisory Board is not an executive officer of the company. In 2011, Ilya Yuzhanov was elected to this position.

The Supervisory Board shall be elected by the general meeting of shareholders in the manner provided for by the Charter of ALROSA. This body consists of 15 members, including representatives of seven government agencies and authorities of the Russian Federation, five representing the Republic of Sakha (Yakutia), two representing the company’s employees, and one representative of the company’s founding uluses.

The Supervisory Board has specialized committees. In 2012, the number of independent members of the Supervisory Board increased from three to five; three of the independent members of the Supervisory Board are members of the Audit Committee and the HR and Remuneration Committee1.

In 2012, the Supervisory Board held five sessions and ten absentee votes. During the reporting period, the Supervisory Board considered in total 210 issues listed in the ALROSA 2012 Annual Report.

ALROSA Corporate Governance Organization Chart 

The current activities of the company are managed by its executive bodies, the President (CEO, sole executive body of the company) and the Executive Committee (collegial executive body of the company), consisting of 19 people2. The President is the Chairman of the Executive Committee. Since 2009, Fyodor Andreev has served as the President of ALROSA, and since 2012 Igor Sobolev has served as the company’s First Vice President–Executive Director.

To ensure its effective operations in accordance with the internal Business Code of ALROSA, the company has collegial management bodies.

ALROSA has an Audit Committee, an independent body that exercises internal control over the company’s financial and economic activities and makes independent assessments of financial and legal information.

A member of the Audit Committee may be a shareholder or any person nominated by a shareholder. Members of the Audit Committee cannot simultaneously sit on the Supervisory Board, the Liquidation Committee or the Accounting Commission, or hold any other positions in the management bodies of the company.

Auditing of the financial and economic activities of the company is carried out at the year-end, or initiated by the Audit Committee or by decision of the Annual General Meeting of Shareholders or the Supervisory Board, or at the request of shareholder (s) holding in aggregate at least 10% of the voting shares in the company.

Remuneration of Members of the Supreme Governing Bodies

The qualifications and expertise of members of the supreme governing body in guiding the company’s strategy on economic, environmental and social issues must satisfy the requirements identified in the Regulations on interviews with (performance reviews of) individuals holding positions of leadership and experts of ALROSA. These Regulations are part of ALROSA’s internal Business Code.

Remuneration of the Chairman of the Executive Committee – the President (CEO) of the company is paid on the basis on the Regulation on the Remuneration of the President of ALROSA approved by the Supervisory Board on May 18, 2012 (Protocol No. 181) for the delivery of targets set forth by the company and the key performance indicators of production and economic activity of the company during the reporting period (quarter) on an accrual basis.

Remuneration of the members of the Executive Committee of the company shall be paid in accordance with the Regulations on the Remuneration of the Members of ALROSA Executive Committee, approved by the Supervisory Board on May 18, 2012 (Protocol No. 181), and is paid for the delivery in the reporting period of the Executive Committee members’ individual performance targets and key performance indicators of production and economic activity.

Information on remuneration of the Supervisory Board and the Executive Committee of the company in 2012 is disclosed on the corporate website as part of the ALROSA Q4 Report for 2012.

Risk Management

The ALROSA Risk Management Policy provides for monitoring risks associated with current operations and implementation of investment projects on an on-going basis. The company makes every effort to prevent and mitigate adverse effects of risks if they occur.

The functions of registering, recording and monitoring major risks in the system of corporate governance of our company are vested in the Strategic Planning and Budgeting Directorate.

Formation of a risk management system in ALROSA began only recently, commencing with analytical work in order to accurately identify, classify, assess and evaluate risks, as well as identify risk owners, and rank them. In 2012, as a result of its analytical work, ALROSA developed a series of documents on the identification and evaluation of key corporate risks.

The table below summarizes our assessment of major risks for sustainable development. These include those risks that have a direct impact on the economic performance of the company, and environmental, safety and social responsibility.

Key Sustainability Risks and ALROSA Risk Management System

Risk groups

Major risk factors

Possible effect

Key risk management mechanisms



Scarcity of diamond reserves in the world. Macroeconomic changes affecting the well-being of customers and demand fluctuations.  

Lower production volumes and resulting economic losses.

Slumping demand and a slowdown of diamond jewellery sales.  Production value tends to increase at slower rates than projected. Loss of profit. 

  • Implementation of a broad range of measures:
    • geological exploration and prospecting;
    • development of diamond deposits with a low diamond content;
    • construction, commissioning and reaching a planned production capacity at the Udachny, Aikhal and Mir underground mines to compensate for declining production.
  • Price regulation based on analysis and monitoring.
  • Building a sales system based on long-term contracts.
  • Control over delivery of key performance indicators that the Market Conjuncture Analysis Panel decides.
  • Engagement with state bodies of the Russian Federation. 


Mining and geological characteristics of deposits.

Open-pit and underground mining.

Significant wear-and-tear of equipment.

Hazardous production facilities of the company.

Failure to fulfil production programmes in the current period and in the long term; underperformance in delivering diamond mining targets; loss of profit. 

  • Replacement of obsolete equipment and technical renewal.
  • Planned maintenance, repair and overhauling of equipment and machinery; quality assurance.
  • In accordance with the Law on Industrial Safety of Hazardous Industrial Facilities, the Unified Register of Hazardous Industrial Facilities of the Russian Federation lists 225 ALROSA facilities including underground structures, open pits, vehicles, gas supply systems, and sites of blasting operations. All of them have civil liability insurance.

Country and regional

ALROSA operations in the territory of the Russian Federation.

Most of assets are concentrated in the Republic of Sakha (Yakutia), a remote region with severe climatic conditions.

Diamond selling organizations and Catoca Ltd. Mining Co. operate in foreign jurisdictions 

Decline of foreign investments, resulting in deterioration of the overall economic situation in Russia.

Complex logistics, transportation and energy supply system to ensure operations of key production units in the Republic of Sakha (Yakutia). 

Lower efficiency of investments in foreign assets. Restrictions on operations on foreign markets. 

  • ALROSA is one of 295 systemically important companies that have guarantees of state loans in case of need. Therefore, the state has assumed the crediting of some risks in the current risky and uncertain environment.
  • The Republic of Sakha (Yakutia) is categorized as a politically, economically and socially stable region of the Russian Federation. The reliability of the transportation, logistics and supply scheme is ensured in summer by uninterrupted freight deliveries from Lena Railway Station (Ust-Kut), by water (Lena River) to the town of Lensk and then by year-round motor road Lensk – Mirny – Aikhal – Udachny. In addition to the above, in wintertime, a winter snow road from Ust-Kut to Mirny is used and then goods are transported by road to Udachny. Aviation operates throughout the year from Mirny to Udachny, where airports are open year round. Mines and other facilities are powered by the Vilyui cascade of power projects (Vilyui Hydroelectric Power Stations 1, 2 and 3) that supply electricity through a dual-circuit high-voltage VL-220 transmission line.   Gas-turbine power stations are available as reserve sources of power supply.   Reserve electric boilers provide heating (electric heating); there are also boilers that run on gas fuel and liquid fuel (oil, residual fuel oil). The availability of reserve sources of power and heating minimizes risks related to possible man-made and natural calamities.
  • Monitoring of changes in legislation and political regimes in foreign states.   

Corporate governance

Privatization plans, changed structure of the equity capital. 

Scale and areas of company operations.

Complex, capital intensive projects. 

Materialization of these risks may cause a broad range of negative consequences ranging from failure to deliver individual performance programmes to complete inefficiency of the business. 

  • Implementation of mechanisms of corporate governance aimed at avoiding conflicts of interest:
    • assured equal access of the shareholders to information about company operations;
    • preliminary analysis, review and preparation of agenda items for General Shareholders and Supervisory Board meetings:
    • engagement with state bodies.
  • Systemic improvement of the organizational structure.
  • Advancement and improvement of business processes (including financial and sustainability reporting under IFRS), and internal regulatory base. 


ALROSA revenues are in US Dollars.

USD/RUB exchange rate fluctuations. 

Lower revenues in RUB equivalent due to possible losses in the total cash flow. 

  • Designing mechanisms to hedge currency risks, using financial instruments. 



Commitment to abide by the law. 

ALROSA's monopoly position on Russia’s diamond market. 

Lower profit. Political and economic downside. 

  • Monitoring of legislation in all areas of company operations. Development of public procedures for customer engagement, receiving approvals from the Federal Antimonopoly Service (FAS).   



Open-pit and underground mining.

Hazardous production facilities of the company. 

Damage to life and health of people (employees and residents) resulting from environmental accidents, deficit of resources (fresh water, energy, etc.).

Reparable and/or irreparable damage to the environment, local ecosystems. 

  • Implementation of environmental policies aimed at minimization of negative impacts on the environment, rational and economic use of natural resources.
  • Corporate system of environmental monitoring.
  • Preparation of environmental impact assessment studies and planning of environmental measures at the blue-print stage.
  • Integrated industrial health and safety management system, including civil liability insurance against environmental damage resulting from accidents at hazardous industrial facilities. 



Open-pit and underground mining.

Hazardous production facilities of the company. 

Damage to life and health of employees as a result of accidents, increased rates of industrial injuries.

Damage to life and health of local residents in the areas of company operations as a result of infrastructure accidents. 

  • Implementation of an industrial health and safety action plan.
  • In addition to mandatory insurance of employees against industrial accidents and occupational diseases as provided for by federal laws, the company has assumed voluntary obligations to insure its employees, said commitments being inscribed in the provisions of the collective bargaining agreement between ALROSA and the Profalmaz Interregional Trade Union for 2011-2013. A fixed amount at risk corresponds to each and every type of insured accident. 

Corporate governance

Labour conditions including climate, remoteness of the region where key production units operate

Specifics of mining operations. 

Shortage of staff and skilled personnel.

  • Implementation of an HR policy aimed at attracting and securing employees from among local residents, timely, high-quality education, training, development and adaptation and a skill pool capacity building.
  • Observance of the principles of social partnership on the basis of the collective bargaining agreement between ALROSA and the Profalmaz Interregional Trade Union.
  • Management meetings with employees.
  • Implementation of a broad plan of action in the field of HR and social policy that would help to attract and secure skilled personnel.  


Legal obligations to personnel, voluntary initiatives fixed in provision of the collective bargaining agreement.  

Corporate conflicts between employees and management. 

  • Strict observance of Russian labour laws and the provisions of the collective bargaining agreement of ALROSA with the Profalmaz Interregional Trade Union.
  • Activities of the commission regulating social and labour relations, said commission being staffed with authorized representatives of the parties on a parity basis. 


ALROSA facilities employ most of the able-bodied population of the Mirny District of the Republic of Sakha (Yakutia) and, accordingly, the company determines employment, local infrastructure development and solution of social problems. 

If the company is insufficiently involved in regional affairs, this may result in lower living standards and quality of life of local communities, deterioration of the socio-psychological climate, poor social and economic development indicators, e.g., migration, employment, demographic pressure, and increased antisocial destabilizing developments.    

  • Skill pool development from among local residents.
  • Implementation of goal-oriented social programmes for local communities, corporate assistance, charity and sponsorship. 
  • Implementation of the corporate Sports and Culture programme that provides funds for practically all cultural and sporting events in the towns and villages of the region and contributes to the promotion of a healthy lifestyle, and leisure activities of local residents. 

Detailed information about the members of the Supervisory Board and its committees is given in the ALROSA 2012 Annual Report.
In April 2013, the ALROSA Supervisory Board decided to reduce the number of Executive Committee members to 13.