For the first time ever, Alrosa published the production figures of its various mining divisions. Its 2001 Annual Report provides a treasure of information, some of which still "hidden" between the lines.

As the rough diamond selling prices of De Beers, over time (albeit with time lags), go in tandem with its rough diamond buying prices, it is of interest that during the first seven months of 2001, De Beers paid the Russians at an average 1.7% per carat more than the price list in effect before December 2000.

However, in August 2001 De Beers reduced prices for the Alrosa range of goods by 5.9% per carat. After the financial year, in January 2002, prices were reduced by a further 9.3% per carat. So effectively from August 2001 to January 2002, Alrosa's selling prices to De Beers declined by 14.7%.

In its rough sales to the domestic Russian market, the fluctuations were less pronounced: during 2001 selling prices were actually up by 2.6% per carat, an increase that could not be sustained and was consequently reduced by 2.5% in January 2002.

In 2001 Alrosa produced US $1,665.4 million worth of rough and its total company diamond sales reached US $1,737.9 million, including US $130.7 million worth of polished diamonds (So the company's sales of both rough and polished diamonds increased by US $195.3 million as compared with 2000).

However, Alrosa also sold rough diamonds from the inventories of the central Moscow government and of the Yakutia stockpile, bringing its total 2001 diamond sales to $1.9 billion. Consistently, Alrosa continues its destocking process as rough sales exceed current rough production.

In terms of profits (what De Beers would call "its Diamond Account"), Alrosa's pre-tax earnings totalled $670.45 million (or the equivalent of 38.5% of company sales), or a net profit of $310.8 million (or 17.9% of company diamond sales, excluding the sales made on behalf of Gokhran).

That's a superior performance, not dissimilar to the profit margins reported by De Beers. Though this was the first report signed by the new president V.T. Kalitin, credit for the 2001 performance is due to his predecessor V.A. Shtyrov who earlier this year assumed the presidency of the Republic of Sakha.

President Kalitin deserves to be congratulated on the tremendous detail provided in the Annual Report. What is still missing, however, are the actual carat production figures - which we estimate to be slightly over 20 million carats. This is something we hope to read in the 2002 report.

Alrosa Diamond Production

In millions of US Dollars