New Alrosa CEO does not rule out diversification into other minerals, sectors

MOSCOW. June 5 (Interfax) - Diversifying Alrosa into other mineral resources and sectors is one possible way to ensure the Russian diamond miner's long-term growth, the company's new CEO, Pavel Marinychev said.

"Possible diversification into other types of mineral resources, possibly into other sectors," Marinychev said in an interview with channel Almazny Krai, listing the company's objectives and plans.

He said diversification is one of the things that Alrosa "can and needs to do to look calmly and confidently into the fairly distant future."

"There are promising sectors in which the company is already engages. For example, the energy component of our company is developing fairly actively and dynamically," Marinychev said.

Speaking about Alrosa's current condition, he said the company has a negative net debt thanks to the rapid reduction of its debt burden in recent years.

"Now we're seeing a negative net debt. If you balance our own money and funds that we will pay, we have more money than debt. We have a safety cushion to look around and understand what to do next in any circumstances, without making any sudden moves," Marinychev said.

The key objective is to maintain the stable operation of the company in the new geopolitical environment, he said. Alrosa's rough diamond sales are under pressure, so the company is working on preserving current and establishing new sales channels, he said.

Alrosa "will look at new emerging markets that did not seem like a priority to us, but are now becoming fast growing," Marinychev said.

There are also plans to develop new forms and channels for transfer of funds for the company's products. "Receiving settlements for delivered product is becoming more difficult with each passing day," Marinychev said.

"There have also been certain negative market trends in the past month," he said.

The company will also work on a new technical policy that will enable it to move away from lines of western machinery and equipment that is now impossible to import into Russia, he said. Alrosa has sufficient equipment and spare parts for the next few years as it managed to accumulate some inventory and some equipment is still on its way, but different technology chains will be in place in future, including on the domestic market, Marinychev said.

Diversifying Alrosa's business has not been considered practically since the company bought gas assets and the Timir iron ore project after the 2008-2009. The gas assets were sold to Novatek in 2018 and Alrosa is still looking for a buyer for its stake in the joint venture with steel and mining group Evraz to develop Timir.

Deputy Prime Minister Yury Trutnev, who is also the presidential envoy to Russia's Far East Federal District, proposed in 2020 that Alrosa diversify into mining gold and lithium due to the difficult situation on the diamond market, but this issue did not go any further.

However, in 2016 Almazy Anabara, the Alrosa subsidiary that mines diamonds at alluvial deposits, secured a license to mine associated gold and other precious metals in conjunction with diamond mining. The company, which Marinychev headed from June 2016 until his appointment as Alrosa CEO, has produced about 150 kg of gold per year since 2017.