Tsagelnik Ksenia, 14 years old, Mirny Sustainability Report OJSC ALROSA for 2011 Contents 3 21 42 74 Statement of the President Path of Sustainable Development Environmental Responsibility Appendix of OJSC ALROSA 22 Sustainable Development Strategy 43 Our Environmental Policy 75 Independent Auditors’ Opinion 24 Dialogues with Stakeholders 47 Managing Environmental Impact in 2011 76 Appendix 1. Table of Standard 5 Disclosures of Sustainability Reporting 27 System of Corporate Management in the About the Report Guidelines (Global Reporting Initiative) Field of Sustainable Development 52 86 Appendix 2. Main Performance Indicators 29 Risk Factors Social Responsibility 8 90 Appendix 3. Environmental Performance 33 Innovation Development 53 Our Policy in the Area of Corporate Results About our Company 34 Ethics and Stability of Global Diamond Social Responsibility 9 Basic Facts Market 56 HR-strategy 97 Glossary of Terms and Abbreviations 10 Our Products 67 Occupational Health and Safety 100 Feedback: Your oppinion counts! 12 Our Companies 36 71 Charity. Support to Local Communities 101 Contacts 19 2011 Results. 2012 Targets Economic Stability 37 Company’s Economic Targets and Results 41 Contribution in the Economic Development of the Region Angahaev Yura, 14 years old, Mirny 2 Sustainability Report OJSC ALROSA for 2011 | WWW.ALROSA.RU CONTENTS polished diamonds totalling USD 4.5 billion have become record breaking for the entire Company’s history. We continue to steer a course of sus- tainable development of business through expansion of our production capacities, while implementing underground mine construction programs, developing sales systems based on long-terms trade rela- tions, implementing innovative technolo- gies, technical upgrade of the Company’s production assets, selling non-core assets and efficient debt management. Environmental responsibility issues have Statement of the President been and still are the focus of ALROSA’s management. We are aware of the scale of OJSC ALROSA of the environmental impact of the mining industry and set targets to minimize it. In the reporting year, we have developed the Comprehensive Action Plan for Environ- mental Protection by OJSC ALROSA for 2011 to 2018. Throughout the year, actions Dear readers, have been taken in all areas of the Com- In 2011 our Company, pursuant to business principles of pany’s environmental policy. openness and transparency made a decision to publish Our strategy of long-term sustainable ALROSA’s Sustainability Report prepared in accordance development provides for a continuous with GRI international standard and confirmed by improvement of results within the occu- It needs to be noted that preparing non- independent auditor. pational health and safety system. Unfor- financial reports has been practised by us tunately, in 2011 we did not manage to since 2007, however until today those were minimize the number of occupational inju- aimed at internal corporate use only. This ries. I am deeply saddened by the loss of report has become for us a new stage in our three employees who suffered fatal in- establishing sustainable business philoso- in accordance with the backbone principles quirements of environmental legislation juries. Despite the reduction in the general phy. We want our strategic principles and of sustainable development and responsi- and international standards; occupational injury rates within the report- approaches in the area of sustainable de- bility remained unchanged. • in the field of corporate social responsi- ing period, it needs to be acknowledged, velopment to be known to and understood We still consider ourselves to be respon- bility, for safety, health and professional that in our desire to bring fatal and severe by all stakeholders. sible: skills of our employees, for continuous accidents to zero the most drastic mea- Reporting year 2011 has become an • in the field of economics, for the efficien- open dialogue with local communities sures should be taken, including those af- important milestone for us. For the purpos- cy of business and our participation in and other stakeholders. fecting the degree of responsibility of every es of further development, ALROSA has maintaining sustainable global diamond The balanced results of 2011, both posi- employee. changed its organizational and legal struc- market, national and regional economic tive and negative, allow me to state that the Changes in ALROSA’s business pattern ture and has become an open joint stock systems; Company has fulfilled its obligations. did not affect the operation of our corpo- company (OJSC). It resulted in transforma- • in the field of environment, for the en- We have maintained leadership in rough rate social responsibility system, the devel- tions in the Company’s various areas of ac- vironmental impact of our operations, diamond mining, with the output being opment level and achievements of which tivity, whereby our vision of the prospects compliance of our projects to the re- 34.6 million carat, and sales of rough and we are justly proud of. 3 Sustainability Report OJSC ALROSA for 2011 | WWW.ALROSA.RU StatemeNT OF THE PRESIDENT OF OJSC ALROSA Throughout 2011, we continued to in- Within the framework of ALROSA’s vol- primarily in the underground mining opera- pany as a legal successor of Yakutalmaz vest in the Company’s human capital untary obligations for financing the con- tions. The tasks involving prompt provision production and scientific association and through implementing both the HR pro- struction of educational, health, culture and of personnel for innovative technologies in the 20th anniversary of ALROSA. More than grams for personnel organization and de- sports facilities in the territory of the Repub- manufacturing and management, reduc- for half a century, the Company proves the velopment and the corporate social pro- lic of Sakha (Yakutia), in 2011 the Company tion of occupational injuries through the invariability of its strategic priorities and its grams in the field of health protection and transferred the total of RUB 521 million to improvement of training and motivation of ability to take any challenges not by words rehabilitation, culture and sports, additional non-profit association Target Fund for Fu- operating personnel, are still essential for but by its actions. For more than half a pension benefits, housing, including under ture Generations. We estimated our total us. In the field of social and environmental century, the Company pursues its mission the new corporate mortgaging program, 2011 social investments in the community responsibility, we have the task of consis- of a diamond producer responsible for eco- relocation of the Company’s retired veter- to be USD 94.4 million. tent implementation of international corpo- nomic stability, environmental safety and ans outside the Republic. Financial results We have many tasks to resolve in the rate management standards and their cer- people welfare, for all that is more valuable of the Company’s operations allowed us to future. First of all, these are the tasks relat- tification. than diamonds. increase the employee salary level by 37 % ed to the existing technological problems, This year we are celebrating two anni- President of ALROSA against the previous year. upgrade of the core production assets, versaries, the 55th anniversary of our Com- Fyodor Andreev Oleksyuk Eugene, 15 years old, Mirny 4 Sustainability Report OJSC ALROSA for 2011 | WWW.ALROSA.RU StatemeNT OF THE PRESIDENT OF OJSC ALROSA About the Report Slavko Alex, 14 years old, Mirny ALROSA continues its practice of pre- ALROSA’s sustainability report for 2011 ALROSA’s Sustainability Report for 2010, Co. Ltd. to OJSC ALROSA. The change in paring and issuing annual non-financial re- reflects the operational results from Janu- was published in September 2011. the name of the report from social report ports. This report, ALROSA’s Sustainability ary 1 to December 31 of the reporting year. There have been no material changes to sustainability report was based on the Report for 2011 (hereinafter, the Report), In the cases when a wider reporting time- in measurement methods against the pre- resolution of the ALROSA’s Executive Com- is the Company’s fifth non-financial report frame is required in order to understand vious year. The information and the Com- mittee passed in November 2011. and is published in order to inform general the Company’s sustainability results, mainly pany’s operational parameters have been stakeholders of the principles, objectives, 2009 to 2011 data was used. The report gathered by a task force team in accor- Principles for Preparing the Report results and prospects of the Company’s also contains references to the events that dance with corporate management proce- In preparing the Sustainability Report, actions in the field of sustainable develop- occurred before or later than this period but dures and reporting requirements. the Company was governed by interna- ment. may be of importance so that the readers The major change in the wordings of the tional principles for reporting in the field The report has been prepared with due could understand the information present- information in the report is related to chang- of sustainable development set out in GRI consideration of the Management’s recom- ed in the report. es in the Company’s business and legal Guidelines. mendations for sustainable development The Company’s non-financial reports status, which was changed from a closed reporting, Global Reporting Initiative (GRI) in are published annually in the third quarter joint stock company to an open joint stock Report Boundary the field of sustainable development, ver- of the year following the reporting one. The company in 2011, and subsequent chang- ALROSA’s Sustainability Report for sion 3.0. Company’s previous non-financial report, es in the abbreviated name from ALROSA 2011 covers all (unless specifically pro- 5 Sustainability Report OJSC ALROSA for 2011 | WWW.ALROSA.RU ABOUT THE Report Principles Principle Incorporation of non-financial reporting principles of the GRI standard in ALROSA’s Sustainability Report The Report presents the most important results of the Company’s operations.