ALROSA hosted a Capital Markets Day on 18th March 2019. The agenda of the event features Company presented its key strategic priorities for its next strategic cycle till 2024.
Enhance sustainable development and safety at workplace. Focus on responsible mining
- Safety: is ALROSA’s key priority. LTIFR is well below the industry average level, the Company will continue to strive for further decrease of this indicator and target to achieve zero fatality rates.
- Environment: The environmental programme targets to further decrease the amount of CO2 emissions. Renewables account for a significant part of the Company’s energy consumption.
- Social responsibility: The Company will continue to support local communities through charitable and infrastructure development initiatives, which account for almost 90% of ALROSA’s social expenditure.
Focus on operational efficiency program
- Operational efficiency program launched in 2017. The main goal is to create environment and promote operational efficiency culture among Company’s employees. The program covers all Company’s divisions. Key streamlines improving efficiency of equipment and energy use, business processes optimization from digitalization, improving efficiency of procurement procedures, sales, logistics, working capital management and finance- and economy-related divisions.
- Labor productivity1 has already surged by 17% in 2018 vs 2014, and is expected to grow further by 12% over the next 5 years.
- Per unit operating costs declined by 5% y-o-y in real terms in 2018 and should further go down by 2% per annum over 5-year horizon.
- G&A expenses also decreased by 10% and 2% in real terms in 2017 and 2018, respectively.
Maintain best-in-class resource base
- ALROSA’s recourse base is ~2x the resources of the nearest peer.
- Superior exploration capabilities backed by modern technologies (e.g. georadar footage, radio wave geointroscopy and high-resolution seismic survey in 3D/2D) allow it to replenish resources at a low finding cost and provide a sustainable production outlook of ~38 m ct/year for up to 2030.
- Generic marketing: initiatives implemented under the auspices of the DPA (Diamond Manufacturers Association) and aimed at generating long-term demand for natural diamond jewelry while also drawing a distinction between the natural and synthetic diamond markets.
- Marketing of certain product categories: Promote of fluorescent rough and polished diamonds on B2B and B2C markets; promote polished diamonds, including unique, large and colored gemstones; digital marketing initiatives, including tracing systems, digitalization, online sales, etc.
Prudent capital allocation strategy focused on maximization of shareholders’ returns
Company’s priority is creating long-term business value.
- M&A: Focus on core business – rough diamond mining.
- Investment projects: Organic growth under conditions of economic feasibility (IRR 18%) and safety for employees and the environment.
- Financial policy: Maintain balance between equity and debt capital with a target Net debt/EBITDA ration between 0.5x and 1.0x, and in line with the criteria of a company with investment grade credit ratings.
Dividends: Semiannual free cash flow distribution – depending on the Net debt/EBITDA ratio pay-out ratio reaches 100% of the FCF.
1 Labor productivity stands for thousands of m3 of run-of-mine ore per employee.
Date: 18 March 2019
Senior Independent Director
Chief Executive Officer
Chief Financial Officer
- Goldman Sachs
Rosewood Hotel London, 252 High Holborn, London WC1V 7EN, United Kingdom
- Sergey Takhiev
+7 (495) 620 92 50 (ext. 1178)
+7 (985) 760 55 74
- Dmitry Byaloshitskiy
+7 (495) 620 92 50 (ext. 1182)
+7 (915) 113 32 04
- Jane Kozenko
+7 (495) 620 92 50 (ext. 1321)
- Pavel Prytkov
+7 (495) 620 92 50 (ext. 1426)
18 March 2019 ALROSA (MICEX-RTS: ALRS), the world’s leading diamond mining company, hosted its Capital Markets Day in London today. The Company’s management has shared market insights and provided an update on ALROSA’s strategic development