October 31, 2018 / 1:44 PM / 21 days ago

Russia's Putin hails Alrosa as begins output at new diamond field

MOSCOW, Oct 31 (Reuters) - Russia’s Alrosa said on Wednesday it had begun production at its new Verkhne-Munskoye diamond field in eastern Siberia, which President Vladimir Putin said would reinforce the state-controlled firm’s position as a world leader.

Alrosa, which is already the largest producer of rough diamonds in carat terms, competes with Anglo American’s De Beers, the biggest seller of rough diamonds by value. Together, they produce a half of the world’s rough diamonds.

“The launch of this field will certainly reinforce the positions of Alrosa... as an international leader. It currently accounts for 27 percent of global diamond production,” President Vladimir Putin, who took part in the start-up ceremony via video link, was quoted as saying in the Kremlin statement.

The new deposit will partially replace suspended output at Alrosa’s underground Mir mine, which was flooded when water seeped in from an open-pit mine above it in 2017.

“Thanks in no small part to this project, Alrosa will be able to increase its production next year,” Sergey Ivanov, Alrosa chief executive, said in a statement.

Alrosa has previously said that its 2019 production would be around 37.5-38 million carats, compared to 36.6 million carats in 2018.

With reserves enough to continue mining operations until 2042, the new field will be mining about 1.8 million carats of diamonds a year for one of Alrosa’s existing processing plants located 170 km (106 miles) away from the field.

Mir was producing 3.2 million carats of diamonds a year, about 9 percent of Alrosa’s total output, until the accident.

Alrosa added that it had spent 16 billion roubles ($244 million) to prepare the field for the mining operations in the last three years.

The new field will add around $50 million to Alrosa’s earnings before interest, taxation, depreciation and amortisation (EBITDA) in 2019, analysts at BCS Global Markets said in a note. ($1 = 65.6755 roubles) (Reporting by Polina Devitt and Diana Asonova; writing by Polina Devitt; editing by Alexander Smith)

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