Ars2007eng.Pdf
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TABLE OF CONTENTS G Ebelyakh G St. Petersburg G G Arkhangelsk Udachny G Aikhal G G Nyurba Chernyshevsky G G Moscow Svetly G G Orel G Mirny G Yakutsk ALROSA President’s Statement 4 G Lensk Corporate Management G Gelendzhik G Krasnodar Supervisory Board 8 G Tuapse Executive Board 10 G Novosibirsk G Irkutsk Members of Internal Audit Committee 11 G Barnaul Activities of the Supervisory Board 12 Structure of ALROSA Group 13 Report on the Company’s Activities in the Main Fields of Operations Mining Operations 16 Marketing. Sales of Rough Diamonds. Manufacture and Sales of Polished Diamonds 18 Geological Prospecting and Exploration 22 Capital Construction 24 Transport, Supplies and Logistics 28 Technological Development 28 Diversification of Activities. Subsidiaries and Affiliated Companies 29 UNITED KINGDOM London G BELGIUM G Antwerp USA Human Resource Policy and Personnel Management 32 New York G Social Development for the Company’s Employees 32 External Relations 34 ISRAEL G Ramat Gan Regional Policy 35 UAE Dubai G Environmental Safety 35 CHINA Hong Kong G Accounting Policy, Economic and Financial Results Accounting Policy 38 ANGOLA Statutory Auditor's Report 40 G Luanda Consolidated Financial Statement of ALROSA 42 Basic Performance Indicators of ALROSA 44 Information for Shareholders 50 Historic Highlights of ALROSA 52 Addresses of ALROSA Main Offices 53 A stable level of dividends and timely tax deductions to Financing of medical services for ALROSA employees monds, including USD153.7 worth of polished diamonds. the state budgets of different levels are ensured due to provided under the «Healthcare» Programme reached RUB The capital expenditure will reach RUB 18,259.4 million. ALROSA’s high HR potential. In 2007, the Company’s net 175.0 million. In 2008 in order to ensure replenishment of mineral profit reached RUB 14,132.9 million, of which RUB 2,240.0 Cultural and sports activities in the Company’s divisions resources financing of geological prospecting and explo- million is planned to be paid in dividends. are carried out within the framework of the «Culture and ration will be increased up to RUB 2,941.1 million (i.e. by A key factor for the development of the world’s dia- Sports» Programme. The overall expenditure out of the 17.8% in comparison with the reporting year). mond market in mid-term perspective is the decreasing min- Company’s profit on this sector, as well as on maintenance The current strategy of development of the Company’s eral resources in combination with the growing demand for of community centres, preventive treatment centres and industrial potential, transport, research and development rough diamonds. Taking into account also a significant medical stations amounted to RUB 907.0 million. facilities, social aspects and ancillary operations, as well as increase in the production cost caused by the changeover to An integrated programme «Benefits and Sponsorship» ALROSA’s investments programmes, taking into account the underground mining, ALROSA takes measures to developed and implemented by ALROSA is an effective the overall tendency toward strengthening of the Russian expand geological prospecting operations in areas with instrument of social partnership with the communities in currency, permit the Company to plan its net profit at the good prospects for discovery of new diamond pipes. The the areas where the Company carries out its operations. end of 2008 at over RUB 10 billion. scale of the geological prospecting and exploration work ALROSA provides support to the local districts (uluses) for The Company’s most important objectives for 2008 can had been increased in the reporting year by 12.0% in com- the development of agriculture and traditional crafts within be formulated as follows: parison with 2006 and by 32.8% in comparison with 2005. the framework of the «Investment Programme for Regional - Expansion of prospecting and exploration in potential- The currently operational programme for development Development». ly diamondiferous areas with good prospects for new dia- of the production infrastructure provides the support need- The Company continues to develop successfully its cor- mond discoveries and development of the Arctic Geologi- ed to maintain the existing and create new mining produc- porate retirement benefit fund «Diamond Autumn». A cal Exploration Expedition in the Zhigansk District of the tion capacities. reviewed version of the statute has been agreed upon with Republic of Sakha (Yakutia). ALROSA’s capital investments in 2007 amounted to the «ProfAlmaz» Trade Union and adopted. As of the - Development of an efficient sales strategy that would Dear Shareholders, RUB 17,440.5 million, including RUB 9,615.1 million spent beginning of 2008, the fund had over 52,000 stakeholders provide for optimization of the current structure of its rep- on construction of mining facilities. The Company invested and managed the assets of RUB 6 billion. resentative offices and subsidiaries. ALROSA is one of the world’s largest diamond mining RUB 3,003.9 million in replacement of main production In line with the Company’s housing programme, 16- - Implementation of the programme for construction of companies involved in diamond exploration, mining, manu- apartment houses in Aikhal and Mirny, an 80-apartment underground mines at its Udachny, Mir, Aikhal and Interna- facture and sales of rough and polished diamonds. The machinery and equipment and development of advanced technologies. block in the city of Orel and an 18-apartment block in the tional operations within the framework of the Company’s ALROSA Group represented by ALROSA Co. Ltd. and town of Almazny were constructed. RUB 173.6 million was Development Guidelines for 2006-2015. ALROSA-Nyurba accounts for approximately 95% of the The wage and salary level in ALROSA is one of the high- est among Russia’s leading mining companies. Taking into spent on the purchase of housing facilities. - Introduction of a new classifier of rough diamonds and diamond production in the Russian Federation and for As it operates in one of the key sectors of the Republic corresponding samples and a price list. about 20% of the diamond world market in terms of account the current high growth rates of wages and salaries in the Russian Federation and in the Republic of Sakha of Sakha (Yakutia) economy, ALROSA pursues a long-term - Putting into operation of an automated sorting com- caratage and 25% in terms of value. In 2007, the overall policy in order to improve the living standards and ensure plex (KSA) at the Gornoye deposit. diamond production amounted to USD2,370.3 million, the (Yakutia), the Company plans an indexation of wages and salaries to compensate for inflation as well as direct increase socio-economic development of the region as a whole. - Modernization of Ore Treatment Plant No. 3 to meet sales of rough and polished diamonds reached USD2,792.6 Under the Company’s social infrastructure development the 2008-2009 production programme targets. million and USD156.2 million, respectively. in the employees’ earnings, including increased bonuses for efficient performance. The basic source of financing these programme RUB 3,475.1 million was allocated in 2007 for - Development and testing of the technology for dry The current positions of ALROSA have been secured maintenance of the housing and communal facilities. upgrading of sub-grade ore from the Sytykan pipe. measures is the growing labour productivity. due to the high scientific and technical potential of the The HR policy aimed at efficient and rational use of - Improved efficiency of the Company’s asset manage- An integrated use of the existing regulatory framework Company, its highly skilled personnel, well established part- labour resources is an essential component of the Compa- ment in Africa through modification of the organisational and introduction of an efficient system of incentives per- nership with suppliers, and high reputation of the Company ny’s development. During the reporting year 250 young structure. mitted the Company to optimize of the number of personnel in the world market. employees were recruited. About 2,823 managers and spe- - Modernization of the system of sales of rough and pol- and reduce the workforce by 892 persons. At the same An important event of the reporting year for ALROSA cialists and 5,144 workers received various types of train- ished diamonds. time, the productivity increased in 2007 by 0.4% in com- was an extraordinary meeting of the Shareholders. A deci- ing and improved their qualifications. parison with the previous year in terms of rock mass sion was taken at the meeting to increase the authorized High skills and expertise of the Company’s employees, extracted, 2.2% in terms of ore processed, by 9.0% in capital of ALROSA Co. Ltd. by RUB 982.0 million through efficient operations, sufficient mineral resources and active On behalf of the Executive Board I have the honour to terms of the value of construction and installation work per- an issue of additional registered ordinary shares to be governmental support enable ALROSA to maintain its express our gratitude to the leaders of the Russian Federa- formed and by 9.1% in terms of prospecting and explo- placed through a closed subscription among the Russian strategic advantages in the international diamond market. tion and the Republic of Sakha (Yakutia), to the members of ration drilling. Federation, Republic of Sakha (Yakutia) and 8 municipali- the Supervisory Board, and all our business partners, Based on the Company’s consistent commitment to the ties of the RS(Ya). As a result, the stake of the Russian Dear Shareholders, whose trust and assistance permitted ALROSA to become principles of social responsibility, ALROSA implements the Federation in the authorized capital of ALROSA Co. Ltd. one of the world’s leading diamond mining companies. objectives set out in the Collective Bargaining Agreement should be increased to 50% plus one share, while the In 2008 ALROSA Co.