New Broom Sweeping Through ALROSA
July 06, 17
A new broom sweeps clean is the immediate saying that comes to mind in light of the changes taking place at Russian diamond mining giant ALROSA, following the takeover at the top by new company president Sergey Ivanov.
Changes and announcements have been coming through regularly since the well-connected Ivanov, aged just 36, was appointed in March. Being the son of the former head of the Kremlin administration doubtless gives him a great deal of confidence in taking on the challenges posed in running the world's largest diamond producer by value.
Just last week, ALROSA announced that veteran senior official and vice-president Andrey Polyakov would be leaving the mining firm. The company only announced it officially after an odd press release from the World Diamond Council (WDC) that Polyakov would be stepping down as WDC president rather suddenly. The reason for him leaving the WDC was that he would be leaving ALROSA, I was told upon asking the WDC's public relations people.
Polyakov had served little more than a year of his two-year term as WDC president, having taking over in May 2016. As a result, vice-president Stephane Fischler became acting president as of July 1, and will serve in this capacity until the end of the term of this Board, at which time he will start his two year term as WDC president.
Ivanov commented in the press release announcing Polyakov's departure: "During 13 years at ALROSA, Andrey has done much not only for the company, but also for the development of cooperation between the major players of the international diamond market. I accepted Polyakov's request to continue his career outside the company, since all of the most important tasks and projects he was working on in recent years have been successfully accomplished and implemented. ALROSA is grateful to Andrey Polyakov for his contribution to the development of the company. I am confident that his knowledge and experience will be in demand in other major projects, which he plans to deal with."
Ivanov has also been busy holding meetings with members of the global diamond trade since taking over. He met with the Dubai Multi Commodities Centre (DMCC) Executive Chairman, Ahmed Bin Sulayem to discuss greater cooperation. And he met with Israel Diamond Exchange President Yoram Dvash and Israel Diamond Institute Chairman Shmuel Schnitzer in Moscow for a meeting on industry conditions and cooperation, and is set to visit the Ramat Gan bourse in September.
Then, ALROSA announced that Alexey Ivanov had been appointed as the new head of the ALROSA branch in Vladivostok. He will be in charge of the branch business development, search for new clients and the company's expansion of the Eurasian Diamond Center (EDC) platform.
Is the job something of a poisoned chalice? It is undoubtedly a springboard to greater things if the head succeeds. In similar vein, it can also put a nail in your coffin if you fail, or are seen to fail. In the past 10 years alone, there have been a number of CEOs. Former CEO Andrey Zharkov left the post ahead of schedule due to a dispute over the miner's 2017 budget with the finance ministry, according to local sources.
Ivanov had served as a senior vice-president of Russia's largest lender Sberbank since April 2016, and headed insurer SOGAZ before that. His term will last for three years. "On the one hand, Ivanov lacks industry experience, but on the other hand he joins from Sberbank's management team, which is well perceived by the market," VTB Capital said in a note.
Despite all the activity, Ivanov was careful to announce that although the company is planning to adjust its development strategy, no fundamental changes are expected. It will still be focused on strengthening its leadership in diamond mining and building market strength.
"We see a lot of potential in our infrastructure projects, including those in Angola," Ivanov said. "We have already signed documents on the establishment of a joint venture company for the development of Luele pipe - the largest discovered over the past 60 years. ALROSA also plans to increase its share in Catoca Ltd Mining Co to up to 41 percent. Needless to say, the company will continue its work on the implementation of our investment projects in Yakutia, including those related to the establishment of a diamond mining facility at Verkhne-Munskoe deposit."
In the meantime, ALROSA will gradually reduce its costs and improve efficiency, making structural and staff changes in the company if the situation so requires. "The company needs to be reformed inside to have greater manageability and transparency. I can give an upbeat assessment of the operation of our production facilities in Yakutia. We are also facing changes in the administrative staff with a view to improving the company's internal efficiency. We will modify business processes, improve the quality of managerial decisions and performance discipline, and, of course, optimize costs. Quality of management in ALROSA must comply with best world practices," Ivanov concluded in a precise summary of what he has seen at the company – and where he apparently wants it to go.