On December 3, 2010 the ALROSA Executive Committee held its regular meeting in Moscow, chaired by President of ALROSA Fyodor Andreev.
The Executive Committee discussed and approved the budget of the ALROSA Group of companies for 2011.
The corporate goals for 2011 include maintaining global leadership by carat output, implementing the investment program for underground mine construction, improving the efficiency of ALROSA operations through cost reduction, introduction of energy saving measures, improved labor productivity.
Along with that, in 2011 ALROSA will be implementing a set of measures to streamline the system of corporate management, in line with the decision of its shareholders on the reorganization of ALROSA into a public corporation.
The Executive Committee discussed and resolved to submit to the Supervisory Board for approval the key figures of the consolidated budget for 2011, as follows:
The volume of rough diamond production in 2011 is projected to total 34,438 thousand carats.
The proceeds from core product sales are planned to exceed the current year’s level by 3.2 per cent and will amount to USD 3,526 million, including:
– USD 3,366 million (102.2 per cent by 2010) from rough diamond sales; and
– USD 160 million (128.1 per cent by 2010) from polished diamond sales.
The cost budget has been approved at RUB 73,260.8 million. In 2011 the Company plans to increase allocations for implementing its research and development program by 21.8%, as compared with the current year level. The total costs for the implementation of this program are planned at RUB 878.3 million.
ALROSA plans to increase spending on prospecting and exploration, including on-mine site exploration, to RUB 3,651.6 million, or by 32.3 per cent, as compared with 2010. In 2011 the Company will allocate over RUB 589 million for implementing a program of innovations in the key areas, such as introducing diamond breakage prevention technologies in ore treatment, developing mines with low mineral grade, technogenic and remote deposits, building an integrated management information system, increasing the efficiency of exploration, energy saving, etc.
Capital expenditures are planned at RUB 14,487.7 million, exceeding the 2010 target by 27.4 per cent. The above amount includes allocations of RUB 11,781.9 million for construction, and RUB 2,705.8 million for re-tooling purposes.
In line with the Company’s priority strategic development goal a bulk of investments, i.e., over 70 per cent, will be used to create new and maintain the existing core production capacities. Primarily, these are expenditures related to implementation of conversion to underground mining. An amount of RUB 6,545.4 million has been earmarked for this purpose, which is equivalent to 62.3 per cent of the total volume of investments into industrial construction.
ALROSA intends to ensure the efficiency of operations of its subsidiaries and affiliates, also by disposing in 2011 – 2012 of some non-core assets.
The overall credit portfolio, as of January 2012, is projected to amount to RUB 82,964 million, against RUB 98,560.6 million, as of January 1, 2011. Thus, the company aims to implement one of the most important tasks it set for itself for next year and bring down the overall debt to less than USD 3 billion, with almost 90 per cent of its debt portfolio converted into long-term obligations.
In 2011 ALROSA projects a profit of RUB 14,845.5 million (before taxes) that will exceed the 2010 target by RUB 4,570.6 million.
The net profit is projected at RUB 10,542.3 million, which is RUB 4,609.3 more as compared with the 2010 level. The proportion of the net profit distributed for dividend payments is to be increased from 14 to 20 per cent.