ALROSA to Diversity
October 09, 2006
Alrosa, the giant Russian diamond company, is trying to diversify its business away from its core diamond mining business in Russia. Alrosa controls 97% of the diamonds extracted in Russia and has diamond mines in Angola. The company now supplies 25% of the world’s rough diamonds.
A February agreement between De Beers and the European Commission resulted in a phase out by 2009 of De Beers diamond purchases from Alrosa. Prior to that agreement, Alrosa had planned to sell $800 million worth of diamonds a year to De Beers. Now Alrosa must find other buyers for the diamonds they would have sold De Beers.
Due to the appreciation of the ruble compared to the dollar, Alrosa faces a continuing financial battle because it is such an export-based company. In addition to its diamond mining in Angola, the company recently announced it is negotiating to develop diamond deposits in Guinea and the Democratic Republic of Congo. By looking at investing in operations in other countries, Alrosa hopes to hedge its currency risks.
It is also looking to diversify into oil and other natural resources to help diversify itself from its dependence on diamond mining. Alrosa as also announced plans to partner-up with Russian oil firm Zarubezhneft to develop oil fields in Angola.
Alrosa has already acknowledged that it does not want to get involved with diamond cutting and retailing because the company’s expertise is mining. So do not be surprised to see this mining giant looking for other resources to extract and in countries far away from its Russian homeland.
See other Alrosa related articles....
De Beers and Alrosa in the News Again
Alrosa Auctions Large Diamonds
De Beers to stop buying diamonds from Alrosa
Alrosa and De Beers Agree to Joint Exploration of Diamonds in Russia and Africa
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