Russian diamond miner to invest $8bn in infrastructure
October 9, 2013, 2:38 pm

ALROSA accounts for 99 percent of uncut diamond production in Russia and 27 per cent of global diamond output [Getty Images]

According to Morgan Stanley, one of the co-organisers of the diamond company’s IPO (initial public offering), the development of underground infrastructure can aid the company’s value on the market.

Russia’s Vedomosti daily cites a source at Morgan Stanley saying that the maximum value of ALROSA totals $9.8 billion.

The Morgan Stanley report says infrastructure development costs will peak next year, with ALROSA investing 38.5 billion rubles ($1.2 billion) into such projects.

Alrosa overtook Anglo American-owned De Beers in 2009 as the world’s biggest diamond producer by volume.

The large-scale investment programme to develop underground exploration was adopted in 2011.

It is expected to allow ALROSA to increase production by almost 17 per cent by 2018.

At the same time the cost of manufacturing will also rise.

On October 1, ALROSA announced it was going to float on the Moscow Stock Exchange.

The initial public offering will sell 16 per cent of the company’s shares.

Fourteen per cent will be sold by the Russian government and the Republic of Sakha, where the company’s primary operations are located.

Another two per cent of treasury stock will be sold by ALROSA itself to reduce the company’s debt which amounts to 72 billion rubles ($2.25 billion).

By 2016 the debt is expected to go down to 25 billion rubles ($0.7 billion).

ALROSA accounts for 99 percent of uncut diamond production in Russia and 27 per cent of global diamond output.

The Russian government owns 50.9256 per cent of ALROSA shares, while the Republic of Sakha wields 32.0002 per cent of shares.

Daria Chernyshova with inputs from Agencies