Udachny Update (Rapaport Magazine)

In the most recent progression of its plan, Udachny — ALROSA’S largest operation — moves underground.

By Svetlana Shelest

July marked a major milestone for the Russian diamond miner ALROSA as the company officially closed production at Udachny, its largest open-pit mine. Located in Western Yakutia, it is one of the company’s oldest mines, developed in 1967 prior to commencing open-pit mining in 1971. Over the 48 years of operation and development, the mine’s entrance has grown to measure one mile by 1.2 miles and the pit has become the deepest diamond mine in the world, extending 2,100 feet into the ground. It takes a mining truck over half an hour to reach the pit’s bottom, traveling down a spiral ramp that exceeds six miles in length.

The pit reached its maximum design depth in 2011 and since then the miner has been developing the ore on its slopes. In some places, the pit’s walls are so steep that they pose a serious risk for miners. To address these safety concerns, Udachny became ALROSA’s first open-pit mine to operate unmanned mining machinery.

PRODUCTION LEADER

A leader of ALROSA’s rough diamond production, Udachny consistently accounted for approximately 80 percent of the company’s annual output in the 1980s and 1990s. It remained the miner’s top contributor in total production until 2012, when it was outperformed by ALROSA’s Jubilee pipe and the Nyurbinskaya pipe, also in Yakutia. In total, since 1971, Udachny has produced over 350 million tons of ore, which yielded about $80 billion worth of diamonds, based on the price of $99.1 dollars per carat. Udachny is also where the second-largest diamond ever recovered in Russia — the 320.65-carat Alexander Pushkin diamond — was discovered in 1989.

ALROSA’s further plans call for Udachny to re-emerge as its largest underground operation. Construction of its underground facilities began in 2004, and the first stage launched operations in 2014, in preparation for production that began in 2015. This year, Udachny’s underground operation is expected to deliver its first 480,000 tons of ore. ALROSA plans for the Udachny underground mine to gradually step up its performance over 50 years. The plan’s key milestones are set at 1.5 million tons of ore in 2016 and 3 million tons of ore in 2018 until the production reaches the design capacity of 4 million tons of ore and over 5 million carats in 2019.

The launch of the Udachny underground operation completed ALROSA’s strategic underground development plan that spanned more than 20 years. The company’s first underground mine, the International, began operation in 1999, followed by Aikhal and Mir in 2009. Currently, underground mines account for 25 percent of ALROSA’s annual production of rough, a figure that is expected to grow to 35 percent once all of the mines reach their design capacity. As of now, ALROSA is not planning any further underground projects.

SIGNIFICANT INVESTMENT

To date, ALROSA has invested $500 million into the Udachny’s underground development. Director of the Udachny Mining and Processing Division Alexander Makhrachev says the investment will reach 55 billion rubles* — $823 million at the current dollar rate — by 2019. Overall, the company invested one-fifth of its total capital development budget for 2004 to 2015 in the mine and over 30 percent of its total budget for the strategic underground development plan.

To date, construction in Udachny has reached 850 feet below the pit’s bottom. The first stage, to be completed 23 years from now, is planned to reach a depth of 1,900 feet. The second stage, to be completed over the following 32 years, is scheduled to reach 3,600 feet underground. The maximum design depth of the mine is set at 4,600 feet. To compensate for the region’s extreme Arctic winter temperatures, the inside will be kept at a minimum of 38 degrees Fahrenheit.

Despite the switch to underground mining, Udachny will remain among ALROSA’s — and the world’s — leaders in terms of the quality of its rough. According to Makhrachev, 67 percent of the diamonds mined here are of gem and near-gem quality, which is quite high compared to the global average, and the findings of ALROSA’s geological exploration confirm that the quality does not deteriorate throughout the kimberlite pipe. Udachny ranks among the top ten largest diamond deposits in the world, with an estimated 108 million carats of underground reserves based on the Joint Ore Reserves Code (JORC), the Australasian code that sets minimum standards for the public reporting of ore reserves.

Udachny is expected to produce the first 780,000 carats in 2015. “The Udachny Mining and Processing Division operating the Udachny underground project and the Zarnitsa and Verkhne-Munskoye deposits will play a significant role in the implementation of the company’s long-term plan to increase production to 41 million carats,” concluded ALROSA President Andrey Zharkov at the closing ceremony for the Udachny open-pit operation on July 25.

* Editor’s note: Given the instability of the ruble-to-dollar conversion rate, the projection is quoted in rubles for accuracy.

The article at the Rapaport's website

This page was last updated on 01 September 2015 at 13.39