2002 Annual Report of Alrosa Table of Contents
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2002 ANNUAL REPORT OF ALROSA TABLE OF CONTENTS: Members of Supervisory Council Members of the Board Members of Auditing Committee Structure of ALROSA Group President’s Statement Activities of Supervisory Council Report by the Board on the Company’s Activities in the Main Fields of Operations Mining Operations Marketing Policy. Sales of Rough Diamonds. Polished Diamond Manufacture and Sales Geological Exploration Capital Construction Supplies and Logistics Research and Development Diversification of the Company’s Activities. Subsidiaries and Affiliated Companies Personnel Management External Relations Environmental Safety Accounting and Financial Results Accounting Policy Audit Statement Consolidated Financial Statement of ALROSA Co. Ltd. Basic Performance Indicators of ALROSA Co. Ltd. Information for Shareholders Historic Highlights of ALROSA Addresses of ALROSA Offices 2 Supervisory Council Co-Chairmen of Supervisory Council: Alexey Leonidovich KUDRIN Deputy Chairman of RF Government, Minister of Finance of the Russian Federation, Chairman of ALROSA Supervisory Council Vyacheslav Anataloyevich SHTYROV President of Republic of Sakha (Yakutia), First Deputy Chairman of ALROSA Supervisory Council Andrei Dmitrievich KIRILLIN Chairman of ALROSA Supervisory Council Members of Supervisory Council: Gennady Fedorovich ALEXEYEV Minister of Property Relations of Republic of Sakha (Yakutia) Alexandr Vasilyevich ANOSHKIN Assistant of Head of RF President’s Administration Ernst Borisovich BEREZKIN Minister of Finance of Republic of Sakha (Yakutia) Yegor Afanasyevich BORISOV First Deputy Chairman of Government of Republic of Sakha (Yakutia) Vladimir Tikhonovich KALITIN ALROSA President Ivan Sergeyevich MATEROV First Deputy Minister of Economic Development and Trade of the Russian Federation Yuri Mitrofanovich MEDVEDEV First Deputy Minister for Property Relations of the Russian Federation Alexandr Pavlovich MOROZKIN First Vice President, Executive Director of ALROSA Alexandr Anatolyevich OGLY Minister of Industry of Republic of Sakha (Yakutia) Varvara Andreyevna PETROVA Head of Administration of Nyurba Ulus, Republic of Sakha (Yakutia) Alexandr Vasilyevich TIKHONOV Head of Department of Property of Fuel and Energy Complex, Ministry of Property Relations of Russia Leonid Fedorovich TOLPEZHNIKOV Head of Department of Precious Metals and Gem Stones, RF Ministry of Finance 3 Board of Directors: Vladimir Tikhonovich KALITIN ALROSA President, Chairman of the Board Alexandr Safronovich MATVEYEV First Vice President, Chief Managing Director Alexandr Pavlovich MOROZKIN First Vice President, Executive Managing Director German Serapionovich KUZNETSOV First Vice President Gennady Anatolyevich MELNIK Chief Engineer Fedor Borisovich ANDREYEV First Vice President Vassily Mikhailovich VLASOV Vice President Ivan Kirillovich DEMYANOV Vice President Yuri Alexandrovich DUDENKOV Vice President Semyon Ilyich ZELBERG Vice President Olga Alexeyevna LYASHENKO Chief Accountant Dmitry Konstantinovich NOVIKOV Vice President Victor Yegorovich SOFRONOV Vice President Sergey Aramovich OULIN Vice President Gustav Afanasievich YAKOVLEV Vice President Petr Andreyevich GALAYEV Vice President Sergey Georgiyevich ALYABYEV Director of Nyurba GOK Petr Mikhailovich GLAGOLEV Director of AlmazDorTrans Department Yuri Andreyevich DOINIKOV Director of Aikhal GOK Valery Nikolayevich LEONENKO Director of Mirny GOK Alexandr Vladimirovich KOZUPEYEV Director of Anabar GOK Yuri Anatolyevich PETROV Director of Udachny GOK Yuri Ivanovich POPOV Head of Capital Construction Department Gamlet Vaginakovich AKOPYAN Head of Legal Department 4 Auditing Committee: Galina Innokentyevna DANCHIKOVA Deputy Chairwomen of the Government of Republic of Sakha (Yakutia), First Deputy of Permanent Representative of Republic of Sakha (Yakutia) at RF President’s Office Lyudmila Afanasyevna NIKOLAYEVA Deputy Head – Head of Department for Strategic Planning, Analysis and Forecasts, Administration of President of Republic of Sakha (Yakutia) Anna Ivanovna YEZHOVA Chief Accountant of United Selling Organisation of ALROSA Valery Vladimirovich YELISEYEV Deputy Head of Department of Precious Metals and Gem Stones, RF Ministry of Finance Kirill Borisovich NIKOLAYEV Consultant of Department for Property of Fuel and Energy Complex, RF Ministry of Property Relations 5 Structure of ALROSA Group ОБЩЕЕ СОБРАНИЕ АКЦИОНЕРОВ НАБЛЮДАТЕЛЬНЫЙ СОВЕТ ПРАВЛЕНИЕ УПРАВЛЕНИЕ КОМПАНИИ Удачнинский Мирнинский Айхальский Нюрбинский Анабарский ЦЕНТР Единая сбытовая Предприятие ГОК ГОК ГОК ГОК ГОК сортировки организация "Бриллианты алмазов АЛРОСА" г. Удачный г.Мирный п. Айхал п. Накын п. Эбелях г.Мирный г. Москва г. Москва Управление Управление Управление Мирнинское Предприятие Удачнинское Управление СТ "Алмаз- Институт капитального материально- "Алмаздор- авиа- АЛРОСА- РССУ "Алмазэнерго- автоматика" "Якутнипроалмаз" строительства технического транс" предприятие Трансснаб ремонт" снабжения г. Удачный г. Удачный г. Мирный г. Мирный г. Мирный г. Мирный г. Ленск г. Мирный г. Москва Культурно- ТРК Оздоровит. Амакин- Ботуобин- ГРЭ ЯНИГП Центр спортив- "Алмазный Совхоз Управление комплекс ПЭТСи ЖХ, ская ГРЭ ская ГРЭ "АЛРОСА - ЦНИГРИ подготовки ный край" "Новый" охраны "Прометей" Поморье" кадров комплекс п. Айхал г. Мирный г.Архангельск г. Мирный г. Мирный г. Мирный г. Мирный г. Мирный г. Мирный п. Небуг г. Мирный Представи- Представи- Представи- Представи- Представи- Представи- Представи- тельство в Представи- Представи- тельство в тельство в тельство в тельство в тельство в тельство в г. Санкт- тельство в тельство в Бельгии Анголе Израиле г. Москва г. Якутске г. Краснодаре Петербурге г.Архангельске г. Орле (г.Антверпен) (г. Луанда) (г. Рамат-Ган) ДОЧЕРНИЕ И ЗАВИСИМЫЕ ОБЩЕСТВА Промышленные и Кредитно- Снабжение и Торговля, гостиничные Некоммерческие геологоразведочные Строительство - 3 финансовые - 4 транспорт - 4 и санаторно-курортные организации - 1 общества - 18 услуги - 12 6 President’s statement Dear Shareholders, The year 2002 has completed the first 10-year cycle in the history of ALROSA. This was an extremely important phase of transformation of the Company from an industrial and research entity to a multi- profile vertically integrated enterprise, diversification of its activities, strengthening of the interrelations between the Company’s management, the local authorities, the leaders of the Republic of Sakha (Yakutia) and the Government of the Russian Federation. The ALROSA management continued to consistently pursue its policy. Our practical steps were aimed at implementing the five-year programme for 2001-2005 approved by the Supervisory Council and the main goals set for the period until 2015. Currently, the future prospects of the Company are associated with the change-over to more labour-intensive and more expensive underground diamond mining, which sets new requirements with respect to higher labour productivity, lower production costs, improvement of the commercial mechanisms at all levels down to the level of individual divisions and crews. The decisions taken by the Company’s management are coordinated with our main shareholders – the Government of the Russian Federation and the Government of the Republic of Sakha (Yakutia). They are aimed at comprehensive development of the ALROSA Company – one of the leaders in the world’s diamond industry and the main pillar of the economy of the Republic of Sakha (Yakutia). The most important events of 2002 were: Decree of President of the Russian Federation No.1373 of November “On Approval of the Procedure for Import and Export of Rough and Polished Diamonds in the Russian Federation”; Adoption of the new version of the ALROSA Statute; Election of the Chairman, First Deputy Chairman and Deputy Chairman of the Supervisory Council of ALROSA – Mr. A.L. Kudrin, Minister of Finance of the Russian Federation, Mr. V.A. Shtyrov, President of the Republic of Sakha (Yakutia), and Mr. A.D. Kirillin, respectively. Approval by the Supervisory Council of supplements to the five-year plan (2001-2005) for development of ALROSA Group; Commencement of active construction of the Mir underground mine; Commissioning of the second phase and reaching of the design capacity of the International underground mine; Signing of economic terms and conditions for the lease agreement between ALROSA and the Government of the Republic of Sakha (Yakutia) for 2002-2003 with a fixed amount of payments relating to investment objectives; Preparation and signing on January 5th, 2003 of a Collective Agreement between ALROSA and the Profalmaz trade union for the period of 2003-2004. The consistent implementation of the adopted strategy of technical, economic and social development of the Company facilitated that despite some unfavourable changes in the world’s diamond market and growing competition between the main diamond mining companies, ALROSA was able to attain its main goals and maintain its positions in the world market. An important indication of the growing authority of the Company are the results of the elections of the deputies of the State Assembly of the Republic of Sakha (Yakutia) (Il Tumen) held last December and the local administrations: a significant number of elected deputies are representatives of ALROSA. 7 Main Results of ALROSA Plan Fulfilment in 2002 Despite the more complicated mining and geological conditions for mine operation at the main diamond mines, the Company managed to attain the goals set for 2002. In 2002 the Company produced US $1,384 million worth of diamonds or US $1,466 million worth