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By John Helmer in Moscow

Alrosa, Russia’s state-owned diamond miner, has reported that rough sales this year have slipped by 1.1%, and will slip by ten times that margin in 2009.

Alrosa, a wholly state owned shareholding company controlled by the federal government, does not issue production and financial results by the half-year or quarter. It also does not disclose conventional production data by diamond weight (carats). Like-for-like comparisons by carat, mine source, and year are also not available. Instead, production results are cited in ore tonnage excavated, and in US dollar value terms for diamonds recovered, making precise volume comparisons impossible. Announcements of result data are timed arbitrarily, and executives do not respond to detailed questions.

In the latest press release posted on the Alrosa website, rough sales by Alrosa, excluding its share of sales of production from the Catoca mine in Angola, are reported as totaling $2.76 billion. This was reported in a Russian news agency citation from Alrosa CEO Sergei Vybornov as a decline of 1.1% on the 2007 level. It is also down on the sales projection by the board three months ago of $2.85 billion.

The information provided in the Alrosa Annual Report for 2007 is unclear. In Vybornov’s report to shareholders at the opening of the report, and in the sales section of the report, Alrosa’s rough sales revenues were given for the year as totaling $2.79 billion; this comprised $2.13 billion for Alrosa’s wholly owned mines in Sakha; and $663.1 million in sales from the Nyurba mine, whose equity is equally divided between Alrosa and the Sakha regional government. The figure for the main mines was reported as falling 4.3% from the 2006 result, while the Nyurba figure was rising by 3.8% on 2006.

However, In the audited financial section of the same report, rough diamond sales were given in roubles — Rb58.3 billion in sales revenues for the main mines, and Rb6.18 billion for Nyurba. No exchange rate conversion is published by the Russian auditor, FBK, and the rouble numbers do not correspond with the US dollar figures given elsewhere in the report.

In the latest press release, polished diamond sales by Alrosa are reported for 2008 at $157.2 million. This marks year-on-year growth of 0.6%. However, in September Alrosa had said it was expecting polished sales for this year would reach $190 million.

The latest press release also claims that for 2009, the Alrosa board agreed at its December 30 meeting to reduce the rough sales target to $2.44 billion. This marks a projected decline of 12%. Demonstrating a level of naivety never seen in an international mining corporation of its size, Alrosa’s board, composed primarily of state officials, announced that it has “instructed the Executive Board to improve the Company’s tentative targets for 2009 in order to increase the expected net profit.”

Of the sales revenue total, it is expected that the Nyurba mine will sell $383 million in 2009. In 2008, according to a board announcement of September 22, Nyurba sales for the year had been expected to come in at $683.2 million. The apparently steeper drop in Nyurba sales in 2009, compared to Alrosa’s main mines, has not been explained.

Net profit for Alrosa, disclosed by the board for 2008, comes to Rb 1422.4 million (currently equal to $47.4 million). In 2009, this is projected to rise by 173% to Rb3875.5 million. How this can be achieved with lower sales revenues is also unexplained.

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