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29 November 2019
ALROSA
Investor Presentation
Disclaimer
For notes:The below applies to the presentation (the “Presentation”) following this important notice, and you are therefore advised to read this
important notice carefully before reading, accessing or making any other use of this Presentation.
This Presentation contains statements about future events and expectations that are forward-looking statements. Any statement
herein (including, without limitation, a statement regarding our financial position, strategy, management plans and future objectives)
that is not a statement of historical fact is a forward-looking statement that involves known and unknown risks, uncertainties and
other factors which may cause ALROSA’s actual results, performance or achievements to be materially different from any future
results, performance or achievements expressed or implied by such forward-looking statements. Past performance should not be
taken as an indication or guarantee of future results, and no representation or warranty, express or implied, is made regarding future
performance. The information and opinions contained in this document are provided as at the date hereof (unless indicated
otherwise) and are subject to change without notice. ALROSA assumes no obligation to update, supplement or revise the forward-
looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting these statements.
This Presentation does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an
offer to buy or acquire any securities in any jurisdiction or an inducement to enter into any investment activity. The contents hereof
should not be construed as investment, legal, tax, accounting or other advice, and investors and prospective investors in securities of
any issuer mentioned herein are required to make their own independent investigation and appraisal of the business and financial
condition of such issuer and the nature of the securities and consult their own advisers as to legal, financial, tax and other related
matters.
This Presentation has not been independently verified. No representation or warranty or undertaking, express or implied, is made as
to the accuracy, completeness or fairness of the information or opinions contained in this Presentation. None of ALROSA nor any of
its shareholders, directors, officers or employees, affiliates, advisors, representatives nor any other person accepts any liability
whatsoever for any loss howsoever arising from any use of this Presentation or its contents or otherwise arising in connection
therewith. No reliance may be placed for any purpose whatsoever on the information contained in this Presentation or on its
completeness, accuracy or fairness.
This Presentation is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident or
located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to
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Presentation and/or such information may come are required to inform themselves thereof and to observe such restrictions.
Some figures included in this Presentation have been subject to rounding adjustments.
By reviewing and/or attending this Presentation you acknowledge and agree to be bound by the foregoing.
Table of Content
01. About ALROSA – strategic priorities
02. Market fundamentals
03. Executing to strengthen our business
04. Q3 2019 results
05. Corporate governance
06. Appendix
p.4
p.11
p.28
p.44
p.52
ABOUT ALROSA –STRATEGIC PRIORITIES
01
5
Sources: Source: Companies data, AWDC Bain report “The Global Diamond Industry 2018”.
ALROSA’s assets geography
High Quality Assets
1,064 m ct Total resources,
including reserves
628 m ct Total reservesAngola
ALROSA owns 41% of
Catoca Ltd (Angola)
Open-pit mining
from 8 mines in 2018
Underground mining
from 3 mines in 2018
Alluvial mining from
alluvial deposits in 2018
53%
23%
24%
Republic of Sakha
(Yakutia)
Arkhangelsk
RegionRussian Federation
90%
10%
53%
21%
42% 39%
ALROSA Peer 1 Peer 2 Peer 3
2014 2015 2016 2017 2018
• ALROSA develops world’s largest reserves with strong cost/quality
balance allowing to achieve the highest EBITDA margin in the
industry
• Strong diamond yields delivery of 0.91 ct/t in 2018
• Profitability of assets is one of the highest among peers on a sustainable
level
ALROSA sustainably tops the ranks
as one of the most profitable miners
EBITDA margin, %
1
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
54%30%
4%1%
11%
Focus on Responsible Mining
6
• Improving industrial safety with focus on prevention
• Structural reform promoting a culture of safety
• Diagnostic and treatment services aimed to promote disclosure and
reduce illnesses
RUB 6 bn1: Support to Local Communities
• Corporate pension fund
• Indigenous people traditions
• Culture & sports
RUB 5.2 bn1: Capex on Environmental Activities
• Reduce CO2 emissions
• Maintain high share – at least 86% - of clean (incl.
renewables) electricity and heat consumption
Charity expenses
Local infrastructure
Healthcare
Education
Other expenses
Health
& Safety
SocialEnvironment
People of
ALROSA
Source: Company data and analysis.1. Based on 2018 figures, excl. sponsorship and social infrastructure maintenance.
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
86%
14%
Creating a Clearer and Sustainable Environment
7
Source: Company data and analysis.
1. Include PJSC ALROSA’s diamond production assets and the Heat and power supply company, which was removed from PJSC “ALROSA” structure starting from 01.01.2017 and became its subsidiary PTWS LLC.
CO2 emissions down by c.20% from 2016
Already impressive share of clean electricity and heat
consumption of 86%
ESG Ratings:
MSCI ESG: BB (August 2019)
Sustainalytics: 59 (September 2018)
Bloomberg ESG Disclosure: 56.6/100
ISS Quality Score: 3/10 (1 is the best)
ALROSA is a constituent of the FTSE4Good Index Series created
by the global index and data provider FTSE Russell
ALROSA is a certified member of the Responsible Jewellery
Council (RJC) by achieving certification against its Code of
Practices.
In 2019, ALROSA received the Diamond Empowerment Fund
(DEF) award for implementing social projects in the regions
where it operates (Community Stewardship).
ALROSA has the National Corporate Governance Rating at 8
“Advanced Corporate Governance Practices”
Share of clean electricity and heat consumption Other
1,067 1,064858
2016 2017 2018
2018
Latest developments Reduction of CO2 emissions1
ths tonnes
Share of clean (incl. renewable) electricity and heat consumption
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
0.22 0.5
1.6 1.9
6.3
8.7
DPA Power Metals &
Mining
Transportation Utilities /
Construction
Employee Safety is Our Top PriorityStrong Commitment to Promote a Culture of Safety and Reduce the Number of Accidents
8
Source: Company data and analysis.1. Based on S&P Global: “The Diamond Producers Association Final Results Workshop”.2. ALROSA’s LTIFR as of 2018, peers’ LTIFR as of 2016.
HSE committees at all
management levels
Tailored reporting system
to ensure prompt detection
and response to incidents
HSE supervision at each
stage of production chain
Revised HSE Policy
New approach to control
the flow of production
Regular HSE education
and training sessions
Lost Time Injury Frequency Rate per 200,000 hours
One of the lowest LTIFRcompared to the diamond industry and other sectors1
Structural changes Procedures
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
Superior TSR Compared to Global Peers
9
Source: Bloomberg.Note: Luxury Goods Producers index includes LVMH, Hermes, Richemont, Kering, Swatch, Prada, Tiffany, Tapestry, Burberry, Ralph Lauren, Capri, Moncler and Tod‘s; Diversified Miners, incl. other diamond producers, index includes Anglo American, Rio Tinto, BHP, Glencore, Vale, Gem Diamonds, Petra Diamonds, Lucara Diamond Corp., Firestone Diamonds, Mountain Province Diamonds and Stornoway Diamond Corp. All indices are weighted by market cap on a daily basis.
0%
50%
100%
150%
200%
Oct-13 Apr-14 Nov-14 May-15 Dec-15 Jun-16 Jan-17 Aug-17 Feb-18 Sep-18 Mar-19 Oct-19
Diversified miners, incl.
other diamond producers
+57.1%
-7.0%
Luxury goods producers
ALROSA+41.9%
Cumulative total USD TSR since ALROSA IPO in October 2013, %
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
Developing Efficient Organisation...
Journey Ahead
10
…to Maximise Free Cash
Flow and Shareholder
Returns
…and Taking Advantage of
Strong Market Fundamentals…
Focus on Core Business and
Efficiency
Prudent Capital Allocation
Conservative Financial Policy
Unique Product
Growing Demand
Declining Supply
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
MARKET FUNDAMENTALS
02
• Exploration of diamond
resources
• Rough diamond
production and sorting
• Sale of rough diamonds
from producers
• Rough diamond trading
•Cutting and polishing
rough diamonds to
produce polished
diamonds
• Polished diamond
wholesale
• Polished diamond
trading
• Jewelry design and
manufacturing
• Jewelry
Number of players Top-5 = 70% of market ~100 ~10,000 (90% are in India) >10,000Large retailers control
~35% of the market
Entry barriers High Low Medium
Profitability
(average) 22-24% 1-3% 2-4%
3-5% small retailers
9-11% large retailers
Value chain size
in 2018
Diamond Value Chain
12
Source: AWDC Bain report “The Global Diamond Industry 2018” (December 2018).
Rough diamonds Polished diamonds Diamond jewelry
Rough diamonds Polished diamonds Diamond jewelry
$15bn $26bn
~$80bn
Cash payment Sell on credit
Banks provide funding to polishers
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
SalesJewelry
manufacturingSales
Cutting &
polishingSalesProduction
13
Rough diamond outputRough diamond salesDiamond jewellery sales
m ct$ bn$ bn
(5%) (3%)
(26%)
7%
(4%)
4% 1%
(4%)
2%
(1%)
19%
(2%) (5%)
176
120126
151
141
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019E
(0%)(2%)
(36%)
52%
25%
(5%)
3%9%
(28%)
20%
1% 5%
(25%)
13 13
8
12
1517
12
1415
11-12
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019E
5%
(7%)(5%)
11%13%7% 3% 4%
(3%)
0% 5% 4%
(3%)
61
57
81 ~80
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019E
Source: Company data and analysis.
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
“Whip Effect” on Demand Suppliers Illustrated
Historical Statistics
“Perfect Storm” Ingredients in 2019
14
Source: Bloomberg, IDEX, Edahn Golan Diamond Research & Data, Company’s estimates.
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
Retailers: over-optimism in 2018
• Strong 2017/2018 Christmas and growth
rates 2x higher than historical
• Led to excessive inventory buildup when
market turned down from Dec’18
5.3%
10.2%
5.9%
2014 2015 2016 2017 2018 Q1-Q3’19
• Indian banks beefed-up lending,
scarifying borrowers’ “quality”
5
10.513
16.513.5
11 9.7
1999 2005 2010 2014 2015-17 2018 2019E
Financial bubble burst hitting mid-stream
$ bn
• Financial scandals in 2018, interest rates
аfluctuations, weaker currency lead
financial tightening in 2018/19
Retail: Rise of online
• Shopping around online to buy jewelry
becomes a new normal with 25% share
by 2025
~10%
~25%
2013-2016 2018-19 2025
• This trend, along with market
consolidation, is leading to lower
working capital requirements, improved
planning, and new approaches to
marketing
YoY change
Key factors impacting diamond markets
-28%
10.512.3
14.110.6
4.4
13.1
6.4
16.9
5.1
13.09.5 9.4
12.8
7.7
2.32.7 2.6
1.9
2.4
1.6
2.6
1.9 1.7
2.3
J-18 A-18 J-18 O-18 J-19 A-19 J-19 O-19
Net imports (LHS) Net exports (RHS)
Indian Trade Statistics
Lower demand from retailers (demand + on-line factors)
Level of stocks is approaching low levels (uptick in purchasing
of rough registered `prompting a sequential sales growth)
Gross margin (net exports minus net imports) increased by
$0.2 bn, partially compensating for lower credit availability
Source: GJEPC, Company’s analysis.
Indian midstream destocking in 2019Drivers of destocking
15
$ bn
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
13.1
20.2
7.19.8
17.1
7.3
Net imports
(rough diamonds)
Net exports
(polished diamonds)
Gross margin
10M'18 10M'19
-25% YoY
-$3.3bn
-15% YoY
-$3.1 bn
+3% YoY
+$0.2 bn
127 126102
177
8968
147
93 87
10687 91
849856
780819
883
912
746
878
845
949
818
737769
J-18 A-18 J-18 O-18 J-19 A-19 J-19 O-19
Rough imported (LHS) Polished exported (RHS)
Monthly prices of imported and exported diamonds
$/ct
Monthly volumes of imported and exported diamonds
m ct
Financial Crisis in India
Source: GJEPC, Edahn Golan Diamond Research & Data, CEIC Data* NBFC – non-bank financial corporation.
1601. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
% of non-performing assets
2% 2% 2% 3% 3%4% 4%
7%
9%
11%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Financial bubble burst hitting mid-streamBad loans problem in banking sector
6,510,5
16.513.5
9.7
2000 2005 2014 2015-17 2019E
$ bn
• Indian banks and NBFCs* beefed-up
lending, scarifying borrowers’ “quality”
• Financial scandals in 2018, interest rates
аfluctuations, weaker currency lead
financial tightening in 2018/19
• Share of non-performing assets at Indian
commercial banks increased to the
highest levels for the last 10 years
-$4 bn75%
61%53%
2002 2008 2013 2017 2019Е
% of revenue
Midstream leverage
• Financing conditions remain tight for
Indian polishers (90% of global polishing)
after fraud in 2018 and stricter financing
from banks (as Indian baking sector is
preparing for Basel III regulations)
(14%)
23%9%
(15%) (17%) (16%) (23%)
7%
42%
2%
282 346 377
319 266
222 171 182
259 264
Jan Feb Mar Apr May Jun Jul Aug Sep Oct
MoM change
Diamond Miners Decreased Supply by ~25%
Source: Company data and analysis.1. Data based on results of ALROSA and De Beers. Industry experts, investment banks.
Rough diamonds sales – 2019 factors analysis
$ bn
ALROSA 2019 total sales
$ m
7.45.6
Av. 9M 2017/18 9M 2019
17
2019 ALROSA and De Beers supply – decreased by 1/4
$ bn
16
12
15 15 15
11-12
2014 2015 2016 2017 2018 2019E
Volume Price/mix
-25%
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
-25%
+9% YoY
-24%
(2%) (1%) (12%) (9%)
21%
(22%)
175 172 170149 136
164128
2013 2014 2015 2016 2017 2018 9M'19
Price change
6%22%
(23%) (19%)
5% 5%
154 164 199
153 123 130 135
Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19
Price Dynamics for Gem-quality Diamonds
Q3’19 like-for-like price index (LFL PI) was -3.1% QoQ
9M LFL PI was down ~7.5% due to lower demand from
mid-stream and limited access to affordable financing
for mid-stream in India
Q3’19 ARP for gem-quality diamonds rose 5% QoQ to
$135/ct due to a lower share of small-size diamonds
Q3’19 ARP for GEMs was 32% YoY down due to:
o LFL PI decrease of 9.2% YoY (9M’19: -7.5%)
o Mix effect as in Q3’19 share of small-size stones in
sales dropped from 83% to 76%
Highlights ALROSA price index for like-for-like gem-quality diamonds mix
$/ct
Source: Company data and analysis.1. ARP (Average Realized Prices) are also impacted by changes in the product mix throughout the reported period.2. Average index change of like-for-like diamonds prices (excl. +10.8 carats)
ALROSA ARP1 for gem-quality diamonds
3%
(5%) (8%)
3% 3%
(7.5%)
1.00 1.03 0.970.90 0.93 0.95 0.88
2013 2014 2015 2016 2017 2018 9M'19
Average index change 2
2% 2%
(2%) (3%) (2%) (3%)
1.00 1.02 1.04 1.02 0.99 0.98 0.94
Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19
Average price index
1801. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
Angola
Australia
Botswana
Canada
Arkhangelsk Region
Republic of Sakha (Yakutia)
Namibia
South Africa
Russian Federation
19
Consolidated Diamond Supply
The global diamond reserves base is highly concentrated
with the top 10 countries by reserves volume accounting
for over 95% of total reserves.
Core diamond mines of the BIG-3 market leaders
Countries with the largest diamond reserves
41%
43%
14% 2% Russia
Africa
Canada
Other
About 60% of global rough diamond output is
attributable to BIG-3
25% ALROSA
24% De Beers
12% Rio Tinto
6% Catoca1
3% Petra Diamonds30% Other
148
m ct
Sources: Company’s analysis, Kimberley Process statistics, De Beers and Rio Tinto company data, AWDC Bain report “The Global Diamond Industry 2018”.1. ALROSA owns 41% stake.
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
Supply Continues to Tighten Due to depletion of deposits and lack of exploration capex over the last 10-15Y
2018 to 2023 supply forecast – 9 m ct down
20
2019 to 2023 major project capacity changes2
Source: Company data and analysis, brokers’ reports., Kimberley Process statistics.1. Other includes Zimbabwe and Namibia. 2. Not including ALROSA assets. 3. Stands for De Beers Consolidated Mines, includes Venetia and Voorspoed mines.
1.1
1.2
1.8
1.8
2.3
4.6
(0.9)
(2.9)
(3.5)
(14.0)
Ekati (Dominion Diamond)
Luaxe (Catoca)
Chidliak (De Beers)
Star Orion South (Star Diamond)
Debswana (De Beers)
Argyle (Rio Tinto)
Diavik (Rio Tinto)
Gahcho Kue (De Beers)
DBCM3 (De Beers)
Depletion Expansion
Victor (De Beers)
151 148141 144
136 140 139
2017 2018 2019E 2020E 2021E 2022E 2023E
Russia
Botswana
South Africa
Canada
Other1
Congo
AustraliaAngola
m ctm ct
12.8
(21.3)
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
156
139
120
130
140
150
160
170
180
2018 2019E 2020E 2021E 2022E 2023E
Favorable Supply/Demand Fundamentals… will drive the market into a deficit and support positive diamond price pressure
21
Global Supply / Demand balance outlook
m ct
~30
~100
Base case scenario Optimistic scenario
Accumulated diamond deficit in 2019-2023
20% % of annual
production’1870%
m ct
Source: Company data and analysis, AWDC Bain report “The Global Diamond Industry 2018” (December 2018).
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
31% 29% 15% 11% 9% 5%
281
1,268
550206 76 53 42 34 26
Personal
luxury
Lux
cars
Hospitality Fine
wines
Fine food Designer
furniture
Fine art Jets &
yachts
Total
2018E
Demand Drivers
22
2019E luxury market valued at c. €1.3 trillion
(+8% YoY) is steadily growing
Most dynamic growth is concentrated in Asia incl.
Japan and China
Diamond jewelry consumption is correlated with
USA GDP and disposable income
Highlights
2%5%
9%
30%
11%
0%
Europe Americas Rest of Asia China Japan RoW
Global luxury market breakdown in 2019E
€ bn
Source: Bain-Altagamma 2019 Worldwide Luxury Market Monitor.1. Trends at current exchange rates.
Personal luxury market growth1 by region 2019E
Incl. ~1/3
of diamond jewelry
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
Market size
Personal luxury market forecast
€ bn
262 281335-375
2018 2019E 2025F
+3-5%
CAGR
+7%
Strong Long Term Demand Outlook ...driven by disposable income growth and middle class expansion
23
CAGR 2016-2030F m people over 2016-2030F By region, CAGR range 2016-2030F
Source: Company data and analysis, Euromonitor, AWDC Bain report “The Global Diamond Industry 2018” (December 2018).
7%
6%
2%
1%
3%
Indi
Chin
US
Eur
RoW
3-7%
2-4%
1-4%
1-4%
1-4%52.1
3.5
2.4
24.6
13.7
Lower point refers to base case scenario;
upper point to optimistic scenario
Middle class growth Diamond jewellery demand growth forecastReal disposable income growth
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
~320
~80
All jewellery Diamond jewellery
… As Jewelry Demand “Quality” Improves in EMs
24
Source: Euromonitor.
106
64 568.2 6.2
China India USA Japan HK
Total jewelry market (from cheaper items – e.g.
Pandora, Swarowski to luxury e.g. Tiffany) has over
$320 bn capacity
China and India are 2 largest jewelry markets,
though dominated by cheaper goods sales
… Diamond jewelry comprises ¼ of it,
As middle class is expanding in EM – there is a
qualitative change in jewelry spending
… as globally unit price per luxury jewelry item
increased from $2,402 in 2007 to $2,636 in 2012
… but regional breakdown of unit price inflation
indicates to the structural change in Emerging
Markets
Highlights Total jewellery market vs diamond jewellery
$ bn
Average unit price growth 2007 vs. 2012
90%
58%45% 37%
25% 24%
-5%Asia Pacific E.Europe M.East & Africa LatAm Australia N.America W.Europe
TOP-5 all jewelry consumers$ bn
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
Diamonds are Different from Commodities Mature demand and supply discipline result in low price volatility
25
Mature and stable consumer-driven demand
concentrated in developed markets
Consolidated production,
supporting supply discipline
63%
40%
31%
27%
22%
20%
15%
11%
Diamonds
Iron Ore
Aluminium
Coking coal
Nickel
Copper
Silver
Gold
Low price volatility
compared to commodities
11%
33%
14%
36%
22%
18%
34%
16%
Low Price volatility 1 High
Developed markets
67%
Top-3 producers market share, 2018Diamond jewellery retail sales, $, 2017
USA
53%
EU
9%
Japan
5%
China
20%
India
6% RoW
7%
Source: Company data and analysis, AME Research, GFMS, Thomson Reuters, Wood Mackenzie, Bloomberg.1. Calculated as ratio of standard deviation of daily prices to 10 year average price.
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
Demystifying LGDs
26
Source: Company data and analysis, DPA, Trucost (S&P Global) report “The Socioeconomic and Environmental Impact of Large-Sacle Diamond Mining” (May 2019)
Case study: LGD positioning
by a major player
Fixed price
At ~20% of diamond price
for 1 ct stone
Linear pricing
¼ ct stone price is ¼ of 1 ct
stone price
Standard, commodity-like
colour, size and quality
No specifications other than
size and colour
No grading reports or
certification
Myth: Launch of LGD brand by a major natural
diamond producer endorses LGD as a valid
substitute to natural diamonds
Truth: Differentiated market positioning clearly
illustrates the differences between diamonds and
LGD and will serve as a baseline for LGD
perception by customers and industry players
Myth: LGD and diamonds are identical
Truth: LGD has the same physical and chemical
characteristics as diamonds, but they are not
identical, and they are easily detected using
widely available identification equipment
Myth: FTC ruling stated that LGDs and diamonds
are the same
Truth: For LGDs, FTC guides require businesses to
“disclose clearly and conspicuously that the
product is not a mined diamond”. In fact, in all key
markets LGDs have to be identified as manmade
Myth: LGDs is an eco-friendly and ethical alternative to
diamonds
Truth: Most LGDs are produced in China and India with
fossil-fueled energy, estimated CO2 emissions associated
with production of 1 ct of LGD are 3.0x greater vs natural
diamond. In 2019 U.S. FTC warned LGD companies about
deceptive marketing. Over 99% of supplied natural
diamonds are conflict free; proceeds from sales support
local communities and employment.
LGD myth #1:
LGD myth #2:LGD myth #4:
LGD myth #3:
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
(16)% (18)%
(42)%
~(60)%
(81)%
LGD price discount to natural Lightbox discount to natural
2016 2017 Now2018
Expanding LGD Discount Illustrates DifferentMarket Perception of LGD vs. Diamonds
27
LGD discount to natural diamonds
Price of 1 carat polished diamond: Round, VS clarity, F-H color
5x
Source: Company data and analysis, Paul Zimnisky report “2018: The Year of the Lab-created Diamond”.
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
EXECUTING TO STRENGTHEN
OUR BUSINESS
03
52%
20%
32%
37%
43%
ALROSA: the Story of the Industry Leader in 4 ChartsThe largest and most profitable player in the industry
29
Reserves1 Production ‘18 EBITDA ‘18 EBITDA margin ‘18%m ct m ct $ bn
37
35
8
4
18
2.4
1.2
0.2
0.2
0.3
Source: Company data and analysis, Diamond producers’ data.Note: Diamond producers include De Beers, Rio Tinto, Dominion Diamonds, Petra Diamonds. 1. Reserves are as per latest available data.
628
212
105
43
40
ALROSA
Peer 1
Peer 2
Peer 3
Peer 4
436Inferred
resources
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
Key Challenges for the Industry
… and how we address them from a value creation perspective
30
• Increasing our marketing efforts to promote
the unique appeal of our product
• Operational efficiency program and culture
• Focus on core business
• Prudent investment program
• Focus on shareholder returns
• Investment in exploration and production development to
maintain reserves base and production
Lack of new deposits, limited
exploration success1
Grade deterioration, cost inflation2Ever increasing competition from
other luxury goods3Rising scrutiny over capital
allocation discipline4
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
500
750
1 000
1 250
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Superior Exploration Capabilities
Unique full-cycle exploration operations…
31
Field geological exploration
Technological center
(incl. drilling) Scientific research
and analytics
… Backed up by advanced technologies
Complex AerogeophysicalFootage-5
Georadar footage
Radio WaveGeointroscopy
High resolution seismic survey in 3D / 2D
Track record of resource replacement2
Source: Company data and analysis.1. For the period from 2009 to 2018. 2. Based on resources in accordance with the Russian classification.
• Discovered resources: 395 m ct
• Average finding costs of $3.1 per ct1
+395 m ct
With exploration works
m ct
… result in solid track record of resource replenishment at low finding costs
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
2.5 3.7 4.9 5.6 5.5 5.53.4 2.9 1.9
2.8 2.6 3.3
9.0 6.5 7.2 5.2 4.8 4.5
6.2
4.96.0
3.7 3.8 3.6
1.54.1 1.7
4.1 3.8 4.1
3,6 3.9 4.2 4.8 5.1 5.0
0.2 1.8 1.9 1.9 1.8 1.8
5.45.1
3.35.0 5.0 5.0
4.85.1
3.1
4.7 5.0 4.8
2018 2019E 2020E 2021E 2022E 2023E 2024-30E
Production Outlook Supported by New Projects
32
Production outlook m ct
Source: Company data and analysis.
• Development of new projects/debottlenecking:
- V. Munskoye deposit: +c.2.0 m ct – full ramp-up by ‘20
- Udachny underground mine: +c.3.0 m ct – full ramp-
up by ‘21
- Severalmaz: +c.1.4 m ct (debottlenecking) from ‘21-22
- Nyurba division: +c.2 m ct (debottlenecking) in ‘19-20
• Decline in diamond output:
- Jubilee: -1.5 m ct from ’19 (due to production at
kimberlites with a lower grade)
- International underground mine: decrease in ’18-’22
due to mining and geological conditions
Key drivers
2020 output revised downward in response to the current market situation
36.738.0
34.3
37.7 37.4 37.6 37-38
Average Grade,
carats per tonne
Almazy Anabara
Verkhne-Munskoye
Severalmaz
Nyurbinskaya
Jubilee
International
Udachny
Other
0.9 0.9 1.1 0.9 0.9 0.9 0.9
Botuobinskaya
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
33
Focus on Value Accretive CapexCapital-intensive phase is over
Source: Company data and analysis.1. For investments in new mining capacity and operational efficiency projects.
Capex dynamics Key projects
Infrastructure: total 2019-24 capex – RUB 35 bn
Reconstruction of Mirny Airport: total Capex for 2019-’23 ~RUB 10 bn
Gasification of production facilities in Udachny: total Capex for 2019-’23 – RUB 5.4 bn
Sales Division Facilities: total Capex for 2019-’21 – RUB 5.3 bn
Gas processing facility by ALROSA-Gaz: total Capex for 2019-’21 – RUB 2.7 bn
Mining capacity: total 2019-24 capex – RUB 38 bn
Completion of Udachny underground mine construction
Completion of Verkhne-Munskoye diamond deposit development
Construction of Maiskaya pipe
Construction of Zaria pipe
Equipment maintenance: total 2019-24 capex – RUB 55 bn
Investment program with targeted IRR1 of 20%+
RUB bn
9 8 8 8 810 10 9 10
17
1417
10 11 65
2
5
6
5
2
58 11
8
5
3
32
27 28
23
2628
22
1618
2016 2017 2018 2019E 2020E 2021E 2022E 2023E 2024E
Infrastructure
Mining capacity
Equipment
maintenance
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
2020 capex expected
to be revised down
Focus on Efficiency Dedicated operating efficiency program launched in 2017
34
Source: Company data and analysis.1. Include payroll and other employee payments, fuel and energy, materials, external services and transportation, other production costs.
2. Labour costs, services and transportation are adjusted based on CPI. Material costs, fuel and energy are adjusted based on respective price indexes.
3. Calculated based on CPI, excl. impairment of receivables.
1.161.12 1.15
1.10
2016 2017 2018 9M '19
143
187
105
53
42
8
2017 2018 2019E
Scaling up initiatives
Number of Initiatives
Delivering tangible results
General and administrative expenses, RUB bn
Key initiatives
Optimisation of ore beneficiation and
separation processes
Restructuring of construction and
geological exploration units
Implementation of centralised
management and usage-based
approach for transportation
Labour productivity increase
G&A optimisation
Other
Operating improvements
G&A
Energy efficiency
208
Nominal Unit Costs 1, k RUB/m3
Real terms2
YoY change, %(8%) (5%)
Real terms3
YoY change, %(10%) (2%)
11.6 11.712.4
2016 2017 2018
As % of
revenue4% 4% 4%
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
Case Study: Operational Turnaround Program at NyurbaNyurba’s success can be replicated and scaled up across other divisions
35
7.7
9.7
2018 2019E
Key streams and initiatives
Improving mine fleet dispatching
processes by SIC1 procedures
implementation
Optimizing OEE2 by reducing
non-value added operations
Optimizing maintenance and repairs
operations will lead to improved
equipment availability and
… improved plant availability
Increasing hourly throughput by
optimizing ore blending processes
Run of mine Diamond production growth
17 19
Overall equipment efficiency
+12%
47%63%
+16 p.p.
Processing
2018 2019E
2.1 2.5
+18%
m ct
Source: Company data and analysis.1. Short interval control. 2. OEE – overall equipment efficiency.
+26%
m m3
%
mt
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
Case Study: Automotive Transport OptimizationCentralization and usage-based approach provide long-term cost cutting effect
36
Key streams and initiatives
Number of vehicles went down
following implementation of new
processes and tools: usage-based
approach to vehicles request and
utilization, route optimization and
reduction of fleet renewal
program
Revision of organizational
structure and headcount
optimization
Shift to natural gas from gasoline
and diesel leads to decreased fuel
cost decline and reduced
emissions
Cumulative effect in cost cutting
3,923
3,280
RUB mn, expenses related to transportation
Cost saving:
RUB 643mn
2018 2019E
Units
1,240791
(36%)
m tn
FTE
%
3859
+55%
1,719 1,388
(19%)
2018 2019E
8,093 5,7691,376
684
9,4696,453
(32%)
Gasoline
Diesel
Number of vehicles
Vehicles utilization factor
Headcount
Fuel
(16%)
Source: Company data and analysis.
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
14
516
29
7
11
7
8
34
99
2018 Now
78
61
2017
Now
(17)
8.8
7.1
(1.7)
902
804
(98)
Case Study: Working Capital ManagementReduction in rough diamond WIP inventory days
Optimization levers
37
Reduction of diamonds WIP1 cycle
Production Chain of Rough Diamonds
Final sorting
and box
assembly
Preliminary
sorting
Final
RecoveryMine
WIP Cycle
Inventory
Decrease in average
WIP Cycle
Number of days $ mnm ct
… leading to lower rough diamond
WIP inventory by Volume
… and by Value2
Key enablers
Team and capability development
Productivity monitoring and benchmarking
New productivity based motivation system
IT systems upgrade
Downtime reduction
Workflow optimisation
New analyticsand modelling
Process automation
Source: Company data and analysis.1. Rough diamonds before sorting is completed. Does not include +10.8 ct and industrial grade diamonds.2. Based on prices of diamonds set by reference to price lists approved by the Ministry of Finance of the Russian Federation.
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
38
1.8
2.1
2.4
2014 2018 Target
2024E
Employee Training and Development System
Source: Company data and analysis.
k m3 of run-of-mine ore per employee
Key initiatives and programmes Labour productivity growth
… to further improve long term competitiveness and productivity
+17%
+12%
Revision and simplification of remuneration system
to increase transparency and link it to performance
Launch of share-based incentive program to retain
top management and align their interests with
shareholders
Implementation of a multi-stage competency
assessment system for the selection and
professional development of the talent pool
members
Development of in-house corporate educational
system covering various grades and business
divisions
Implementation of internal coaching and mentoring
programmes
Development
of talent pool
Improvement
of remuneration
system
Establishment
of Corporate
University
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
39
Source: Company data.
Marketing Strategic Initiatives and Ongoing Digitalization
Industry initiative
• Participation in pilot projects involving M2M
and Tracr tracing platforms
• Implementation of digital twin technology
providing detailed information about each
stone
• Development of digital platform for online
sales
Ongoing digitalization in ALROSA
Generic
(category)
marketing
• Participation in DPA to promote the integrity
and reputation of natural diamonds
• Differentiation of natural diamonds and
LGDs markets driven by rarity, uniqueness
and inherent value of natural diamonds
Promotion of
different
assortment
categories
• Active promotion of fluorescent diamonds to
stimulate demand in B2C segment
• Marketing initiatives to improve broader
sentiment towards fluorescent diamonds
Marketing of
diamond
collections
• Promotion of large, exceptional quality
diamonds
• Promotion of fancy coloured diamonds
Introduction
of digital
marketing
Adoption of
best practices
in operational
digitalization
Digital
Mine
Virtual
Reality
Unmanned
Technologies
Drill-and-blast
Automation
Big Data Driven
Predictive Maintenance
Company initiatives
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
40
Source: Company data.
Diamond Producers Association
Key initiatives DPA marketing campaigns by regions
6%
20%
21%
53%
N. America (USA from 2016)
India (from 2017)
Asia Pacific ex. Japan (China from 2018)
RoW
% represents share of a region in global jewelry consumption
Marketing budget of the industry association growth
$ m
1060 60
70
2016 2017 2018 2019E
Diamond Producers Association (DPA) formed by 7 major diamond
producers in 2015 supports the development of the diamond sector
through promotion of reputation of diamonds
Marketing campaigns with a tagline “Real is Rare. Real is a Diamond”
launched in the US (2016) and in India (2017)
DPA’s activities include:
paid advertisement on TV, internet, cinema, social networks
promotion in social media by social influencers
participation in industry events
work with industry and non-industry organizations
market surveys and research
In 2018 DPA’s activities expanded into China (while continued in the US
and India)
New marketing campaign addressed to women who purchase
diamonds for themselves is called “From Me, To Me”, launched in mid-
September 2018
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
41
Capital Allocation – Key Principles and Policy Overview
Operating
Efficiency
Organic Growth
Focus on Core
Business
Conservative
Financial Policy
Strong Liquidity Position
Commitment to
Balanced Debt Profile
Maximising Shareholder Returns
Prudent Capital
Allocation
Investment Program
with 20%+ IRR1
FCF-linked
Dividend Policy
Divestiture of
Non-core Assets
1. For investments in new mining capacity and operational efficiency projects.
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
28
496 510
13 8
501
Q4'19 2020E 2021E 2022E 2023E 2024E
Eurobonds Bank Loans
653
3,635
4,288
Q3'19
42
Source: Company data and analysis.1. Including operating lease obligation (RUB 5.0 bn) starting from 2019Y 2. Excluding operating lease obligation (RUB 5.0 bn) and amortization of discount
• Total debt is $1.6bn with the weighted average cost of debt of
5.2%
• In April 2019 ALROSA issued 5-years $500 m Eurobond with a
coupon rate of 4.65% pa
• Investment grade credit rating
• S&P – BBB- (Stable)
• Fitch – BBB- (Stable)
• Moody’s – Baa2 (Stable)
• Conservative long-term financial targets in line with investment
grade criteria
• Target Net Debt / EBITDA range: 0.5-1.0х
• Minimum liquidity reserves of over RUB 35 bn of cash and
committed lines
• Natural FX hedge – financial liabilities are matched with
income streams
• Solid public debt track record with fixed-income investors
$ m
$ m $ m, as of 1 October 2019
Highlights Net Debt evolution to investment grade credit ratings
Liquidity position Debt2 repayment schedule
Cash and
equivalents
(incl. deposits)
Credit Lines
Strong Balance Sheet… with leverage at historic-lows
3,9513,119 2,781
1,374 1,494971 978
1.9x 1.9x 1.7x
0.5x 0.7x0.4x 0.6x
2013 2014 2015 2016 2017 2018 Q3'19
Net Debt Net Debt / Adjusted EBITDA (RUB denominated)
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
1
43
Dividend Policy Focused on Maximisation of Shareholder Returns
Historical dividend payments1
Dividend payout ratio
$ m
Source: Company data and analysis.1. Dividends paid. Amounts are based on FX rates as of the dividend record dates (2014-H2’18) or as of the end of the period (H1’2019).2. Based on first and second half year ND/EBITDA and FCF.
12M’13 12M’14 12M’15
12M’16619
12M’17480
H2’18
662
H1’18448
H1’19311
190 244
1,1101,281
929
2014 2015 2016 2017 2018 2019
35%
50%
50% 50%
76%
95%
76%
70%
26%
37%
59% 52%
70%
100% 100%
2013 2014 2015 2016 2017 H1'18 H2'18 H1'19
Payment ratio based on IFRS net income
Payment ratio based on FCF
Dividend
Base
0.0x to 0.5x >0.5x to 1.0x 1.0x to 1.5xCondition of
Net Debt/EBITDA2
Payout Ratio
Subject to minimum dividend payout of 50% of IFRS net income
100% 70-100% 50–70%
Frequency Semi-annual
Free Cash Flow
Below 0.0x
> 100%
Dividend policy overview
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
Q3 2019RESULTS
04
1,556
1,034 933 802 969 780 585
26
2316
2218
1616
1,582
1,057949
824988
796601
Q1'18 Q2'18 Q3'18 Q4'18 Q1'18 Q2'19 Q3'19
Industrial quality diamonds Gem-quality diamonds
Sales
45
Q3’19 Sales
Diamond sales decreased 23% QoQ (down 5%
YoY) to 6.4 m carats against the backdrop of
declining demand due to excessive stocking of
rough and polished diamonds by cutters and
retailers, and continued difficulties faced by India’s
cutting business in securing affordable financing.
Ongoing consolidation in the jewellery sector and
growth in jewellery sales through on-line channels
in the US result in a non-recurrent reduction in
polished diamond stocks across the retail sector as
businesses embrace more efficient stock
management practices, which is in turn impacts
rough diamonds purchases by mid-stream.
Sales were down 24% QoQ to USD 601 m (down
37% YoY)
Highlights Diamond sales in carats
$ m
Source: Company data and analysis.
Diamond sales in U.S. dollars
m ct
10.16.3 4.7 5.3
7.96.0 4.3
3.2
2.72.0
3.72.7
2.32.1
13.4
9.0
6.79.0
10.68.3
6.4
Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19
Industrial quality diamonds Gem-quality diamonds
Lower supply as mid-stream destocks
21.1 18.2
8.07.0
29.125.3
9M'18 9M'19
3,523
2,334
65
51
3,588
2,386
9M'18 9M'19
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
5.7 10.117.2
7.5 6.4 10.517.2
1.30 0.84 0.61 1.38 1.23 0.93 0.71
Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19
Grade, cpt
Output
46
Q3’19
Production grew 24% QoQ (up 15% YoY) primarily
due to seasonal return to production at alluvial
deposits
Av. grade seasonally decreased 24% QoQ to 0.71
cpt
9M’19
The volume of processed ore and gravels grew by
3% to 34.0 m t supported by the ramp-up of
production at the V.Munskoye deposit and
increased productivity an Nyurba Division and
Udachny’s processing plant
Production increased by 12% to 29.7 m ct
Av. diamond grade up 9% to 0.87 cpt
Highlights Ore and sands processing
m ct
Source: Company data and analysis.
Diamond production
m t
5.3 4.1 3.86.5 6.1 5.6 5.2
2.02.1
1.0
3.31.5 2.2 1.6
0.2 2.3 5.8
0.5
0.21.9 5.47.4
8.510.5 10.3
7.89.7
12.1
Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19
Open pit Underground Alluvials
33.0 34.0
0.80 0.87
9М'18 9М'19
13.116.9
5.15.3
8.27.5
26.429.7
9М'18 9М'19
Q3 2019: increase in diamond production
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
47
Source: Company data and analysis.1. Q3’19 amounts are based on average FX rates for the period – RUB 64.5936/$.
Resilient financial performance with strong margins and positive free cash flow
Key Financials
1,260
1,514
2017 2018
718
342242 215
395
37 39
Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19
Q3’19:
Revenue came at $0.7 bn (-20% QoQ) due to a
23% decline in gem-diamond sales in carats.
34% YoY decrease due to decrease in both sales
volumes and like-for-like prices
EBITDA was $0.3 bn (-16% QoQ and -47% YoY)
largely due to top line decrease
EBITDA margin was flat at 46% (-11 p.p. YoY)
Net income was up by 1% QoQ to $ 0.2 bn (-44%
YoY)
FCF amounted to $39 m
Net debt / LTM EBITDA stood at 0.6x
Highlights Superior profitability
$ m
Strong Free Cash Flow Generation
$ bn
1.71.2 1.1 0.9 1.1 0.9 0.7
0.80.7 0.6
0.4 0.5 0.4 0.3
50%57% 57%
44% 44% 44% 46%
Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19
Revenue EBITDA EBITDA margin
4.7 4.82.2
2.5
46%52%
2017 2018
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
Revenue Drivers
48
Source: Company data and analysis.
Q3 ‘19 gem-diamond sales were down by 25%
QoQ to RUB 38 bn driven by:
o (-) 28% decrease in sales volumes (in carats)
o (+) normalized product mix
o (-) softer like-for-like prices
(av. index change – -3.1%)
o (+) positive FX rate impact as RUB weakened
39% YoY decrease driven by:
o (-) 8% reduction in sales volumes (in carats)
o (-) weaker product mix
o (-) softer like-for-like prices
(av. index change – -9.2%)
o (-) FX rate impact on stronger RUB
Highlights Q3 2019 gem-quality rough diamond revenue bridge (QoQ)
RUB bn
RUB bn
Q3 2019 gem-quality rough diamond revenue bridge (YoY)
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
50
38
3 0.1(14) (2)
Q2 '19
Revenue
Sales
volume
Sales mix Pricing
like-for-like
FX Q3 '19
Revenue
61
38
(5)
(14) (4) (1)
Q3 '18
Revenue
Sales
volume
Sales mix Pricing
like-for-like
FX Q3 '19
Revenue
Profitability Drivers
49
Source: Company data and analysis.
Q3 ‘19 EBITDA was down by 16% QoQ driven by:
o (-) 23% decrease in volumes: net impact -RUB 8 bn
(revenue decline: -RUB 14 bn, COGS reduction: +RUB
6 bn)
o (+) sales mix +RUB 3 bn
o (-) like-for-like prices: -RUB 2 bn
o (+) FX rate: +RUB 0.1 bn
o (+) other factors: net impact +RUB 2 bn
9M ‘19 EBITDA was down by 40% YoY driven by:
o (-) 13% reduction in carat sales: net impact -RUB 11 bn
(revenue decline: -RUB 32 bn, COGS reduction: +RUB
20 bn)
o (-) sales mix: -RUB 35 bn
o (-) like-for-like prices: -RUB 7 bn
o (+) FX rate: +RUB 9 bn
o (+) other factors: net impact -RUB 6 bn
RUB bn
9M 2019 EBITDA – key drivers (YoY)
Q3 2019 EBITDA – key drivers (QoQ)
RUB bn
Highlights
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
25 21
3 0.12
(8)(2)
Q2 '19
EBITDA
Sales
volume
Sales mix Pricing
like-for-like
FX Other Q3 '19
EBITDA
12978
9
(11)
(35) (7) (6)
9M '18
EBITDA
Sales
volume
Sales mix Pricing
like-for-like
FX Other 9M '19
EBITDA
Free Cash Flow and Total Debt Analysis
50
Source: Company data and analysis.1. Including finance lease liabilities.2. Mainly includes income from grants, operating lease obligation change etc.
RUB bn RUB bn
0.3x
63.0
35.4
29.8
(0.1)
1.3
(0.8)
(2.5)
Q3'19 Net Debt
Other
FX
Net intetest
Dividends paid
FCF
Q2'19 Net Debt
ND / LTM EBITDA
0.6x
2
EBITDA to Free Cash Flow bridge Q3 2019 Net debt1 bridge
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
25.1
21.1
7.1
2.5
0.2
(4.1)
(11.9)
(5.7)
(4.6)
Q2 EBITDA
Change in profitability
Q3 EBITDA
Changes in NWC
Income tax
Other
Operating cash flow
Capex
Free cash flow
Outlook
51
Market outlook ALROSA performance
Diamond jewelry sales in 2019, following a several
consecutive years of growth, are expected to stabilize at
around 2017 levels (down from all-time record high of
2018)
Market started to gradually restore supply and demand
balance in H2’19 – supply of rough diamonds was quickly
adjusted, while polished stocks at mid-stream are expected
to decrease as season approaches
Long-term fundamentals for the jewelry demand growth
remain strong in both Developed and Emerging markets
2019 capex outlook revised down from RUB 28 to 23 bn with
no effect on operational performance
2019 production outlook is expected at ~38.5 m ct driven by
efficiency gains
2020 production is expected to decrease to 34.3 m ct
2019 sales are expected to come lower than planned to 32-
33 m ct due to market conditions. ALROSA’s “price over
volume” strategy offers more flexibility and accuracy when it
comes to defining sales, hence holding back pressure on the
market
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
CORPORATE GOVERNANCE
05
5301. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
Source: Company data.
Increased share of INEDs in the Board of Directors
Number of Members
2
4
13
11
2014
Now
Independent Nominees of RF and Yakutia
6 – Russian Federation
4 – Republic of Yakutia
1 – Local Communities of Yakutia
INEDs represent 100% in Audit and 75% in RemCo committees
Number of Members
Strategy with
3 INEDs
out of 13
RemCo
Committee –
3 INEDs out of 4
Audit – 3 INEDs out of 3
Chaired by INEDs
Corporate Governance and Shareholder Support
• Regular and transparent disclosure and commitment to best in class
corporate governance practices
• New initiatives are under way:
‒ Corporate Strategy till 2024
‒ HR Strategy with the overhaul of the organization structure and
motivation schemes (stock option program is one of the initiatives)
‒ Introduction of a long-term incentive plan linked to total shareholder
return (TSR) targets to align management and shareholder interests and
provide incentives for sustainable long-term development
‒ Approval of new HSE policy, aimed to promote a culture of safety
Commitment to improving standards of corporate governance
1
Current Board has Supported Initiatives to Improve Alignment of Shareholder Interests
54
HSE strategy
Approval of new HSE policy, aimed to promote a
culture of safety.
New management team
New senior management team with tenured
professionals committed to increase shareholders
return and modernise ALROSA’s corporate
structure and operations.
New clear financial and dividend policy
Financial policy to ensure an appropriate balance
between capital structure and liquidity at hand.
New clearly articulated semi-annual dividend
policy based on FCF and target leverage.
Transparency and disclosure
Commitment to regular and transparent disclosure
of operational and financial results and publishing
of social and environmental report.
Long-term incentive plan
Introduction of a long-term incentive plan linked to
a set of financial, operational and total shareholder
return (TSR) targets to align management and
shareholder interests
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
Board Agenda for 2019-2020
55
Highlight long-term strategic issues in marketing
Active engagement with all stakeholders
Emphasis on developing risk management culture within the company
Reform of HR and pay structure
Focus on continuous business transformation to ensure long-term
competitiveness and sustainable production1
2
3
4
5
01. Strategic priorities 05. Corporate governance04. Q3 2019 results03. Executing to strengthen
our business02. Market fundamentals
APPENDIX
06
ALROSA: Key Highlights
● Revenue is set to stabilize on stable sales volumes
● Company demonstrates stable – above 45% margins – well
supported by cost control / high utilization rates at the mines
● Capex to trend down as growth projects are up and running
57
37.1 38.4 30.2 40.0 41.2 38.1
174 172 170149
136164
2013 2014 2015 2016 2017 2018
Av. selling price for gem-quality diamonds, $/ct
5.3 5.43.7 4.6 4.6 4.8
2.2 2.4 1.9 2.5 2.1 2.4
42% 45%52% 53%
46% 51%
2013 2014 2015 2016 2017 2018
Revenue EBITDA
1.20.9
0.6 0.5 0.5 0.40.5
1.10.7
1.61.3
1.5
2013 2014 2015 2016 2017 2018
CAPEX FCF
Rough diamond sales
Revenue, EBITDA and EBITDA margin
$ bn
ALROSA’ capital intensity is decreasing
$ bn
m ct
Source: Company data
Information On Assets
58
Type
of mining
Cash costs, $/ct Price, $/ct Spread, $/ct Grade, ct/t Diamond production, ‘000 ct Expected
LOM
JORC reserves
(1 July 2018), ‘000 ct2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2019E 2020F
Aikhal Division 13,011 11,850 9,622 175,561
Jubilee pipe open-pit 18 191 141 137 123 118 1.33 1.14 10,160 9,063 6,520 2034 104,937
Aikhal underground mine underground 25 25 47 48 22 23 5.83 4.86 2,480 2,429 2,731 2044 66,346
Komsomolskaya pipe open-pit 174 992 239 234 65 135 0.36 0.37 370 358 371 2019 809
Zaria pipe open-pit - - - - - - - - - - 2030 3,469
Mirny Division 7,231 4,195 3,908 57,779
International underground mine underground 29 343 210 165 181 132 6.89 6.20 3,699 3,448 2,887 2045 49,566
Mir underground mine underground 38 504 130 113 92 63 3.71 2.86 2,772 30 - -
Alluvial and technogenic deposits alluvial 59 965 205 167 147 71 0.19 0.16 760 718 1,021 2035 8,213
Udachny Division 3,821 3,929 6,438 164,462
Udachnaya pipe open-pit 37 - 90 - 53 - 0.63 - 1,046 - - -
Udachny underground mine underground 73 606 103 99 30 38 1.87 1.32 1,615 2,530 3,697 2064 128,475
Zarnitsa pipe open-pit 100 937 165 154 65 62 0.28 0.26 786 952 841 2035 5,350
Verkhne-Munskoe deposit open-pit 68 1088 65 149 -3 41 1.07 0.57 80 207 1,772 2041 30,391
Alluvial deposits alluvial 92 857 90 83 -3 -2 0.26 0.26 294 240 128 246
Nyurba Division 7,713 7,719 9,059 125,510
Nyurbinskaya pipe open-pit
44 44 87 98 43 54
4.80 4.49 4,774 4,057 3,784 2035 29,447
Botuobinskaya pipe open-pit 6.12 4.54 1,211 1,379 4,126 2035 76,254
Alluvial deposits alluvial 1.97 2.53 1,728 2,283 1,150 2035 19,809
Severalmaz 2,642 3,636 3,900 73,890
Arkhangelskaya pipe open-pit31 20
947 53 16 34
0.70 1.04 1,283 1,530 1,745 2031 47,433
Karpinskogo-1,2 pipes open-pit 0.95 1.06 1,359 2,106 2,155 2028 26,458
Almazy Anabara alluvial 38 30 63 78 26 48 0.40 0.40 5,197 5,420 5,091 23,533
ALROSA 37 36 113 108 77 72 1.01 0.91 39,614 36,749 38,017 34,300 620,735
underground 37 39 134 111 97 72 4.11 2.83 10,566 8,437 9,315
open-pit 34 32 114 113 80 81 1.19 1.12 21,069 19,651 21,313
alluvials 43 41 83 91 40 50 0.42 0.43 7,979 8,661 7,389
1. Increase by 7% due to diamond production decrease by 11% driven by processing lower-grade ore (down 14%). 2. Decrease by 43% due to price factor and decrease of pipe share in Processing plant №8 costs. 3. Increase by 18% due to diamond production decrease by 7% driven by processing lower-grade ore (down 10%). 4. Increase due to the closure of the Mir underground mine. In 2018 remaining ores inventory were processed. 5. Increase by 66% due to increase of general expenses, increase of ore processing by 10% and diamond production decrease by 6% driven by processing lower-grade ore (down 14%). 6. Decrease due to a scheduled ramp-up to design capacity. 7. Decrease due to stronger USD, cash costs per carat in RUB not changed. 8. Increase by 60% due to processing lower-grade ore (down 47%). 9. Decrease by 36% due to due to diamond production increase by 38% driven by processing higher-grade ore (up 30%).
59
Key Investment Projects
Source: Company data1. Verkhne-Munskoye deposit2. Vodorazdelnye Galechniki deposit3. Diamond mineral resources in accordance with the JORC Code as at 1 July 2018
Udachny
UG mine
VM1
deposit
Zaria
pipe
Maiskaya
pipe
VG2
deposit
Type of mining Underground Open-pit Open-pit Open-pit Alluvials
Production start 2014 2018 2020 2025 2024
Ramp-up 2021 2020 2021 2027 2025
Target ore output pa, m t 4.0 3.0 1.2 0.3 1.1
Target production pa, m ct 5.6 1.8 0.4 1.2 0.4
Total CAPEX, RUB bn 63.9 22.3 8.4 5.6 2.3
Invested share 86% 82% 94% 4% 0%
Resource base3, m ct 207.6 40.4 7.1 12.7 4.7
1 2 3 4 5
YakutskMirny
Aikhal
Udachny
Nyurba
1
2
3
4
5
Yakutia
60
Projects under Consideration
Jubilee UG mine Mir UG mine
Type of mining Underground Underground
Ramp-up (preliminarily) 2032 2031-32
Target ore output pa, m t 1.8 1.3
Target production pa, m ct 2.3 3.8
Total CAPEX, RUB bn ~72 ~73
Invested, % 0% 0%
Reserve base1, m ct ~43.2 ~68.6
Project IRR Up to 20% 18.3%
Source: Company data1. Subject to further exploration
1 2
Decision on the mines construction will be taken after the feasibility studies will be completed, all numbers are indicative and based on preliminary estimate
YakutskMirniy
Aikhal1
2
Yakutia
61
1. Long-term agreements which provide stable sales and predictable prices
during volatility on diamond market (strategy generates ~70% of ALROSA's
rough diamond sales)
2. Largest jewellery chain stores:
3. Competitive sales via auction and tenders
4. Spot sales pursuant to one-off contract arrangers
5. Sales through Russian government entities – Almaziuvelirexport and Gokhran
of Russia
ALROSA’s geography of sales based on clients legal residences
number of long-term clients as of January 2019
47%
15%
10%
12%
10%
4% 2%Belgium
India
Israel
Russia
UAE
China
Other4
7
1
9
18
4
24
ALROSA’s rough diamond sales channel breakdown
18%
64% 71% ~70%
72%
17%12% 10-20%
10%19% 17% 10-20%
2006-2008 2012-2014 2015-2016 Long-term
Tenders
Spot sales
Long-term contracts
Sales Structure and ChannelsMultichannel distribution with growing focus on long-term contracts
Overview of sales channels
Source: Company data and analysis
88% of ALROSA’s diamond sales
accounted for exports1
98% / 70% of ALROSA’s diamond sales / volume
generated by sales of
gem-quality rough
7.3 7.5 7.87.0 7.5
6.7
2016 2017 2018E
Production Sales
62
Expansion to AfricaPromising region with high exploration potential
Production and sales, m ct
255 300
350+
2016 2017 2018E
Axis
Tit
le
Improved financial performance at Catoca Development of Luele pipe
Luale kimberlite pipe is the largest diamond discovery over the past 60
years
The project is operated by Luaxe consortium
Exploration activities
Kimang JV (Angola):
‒ 50/50% JV between ALROSA and Endiama
‒ Exploration activities in Quango area, the North of Central Angola
‒ Awaiting exploration license approval for Chisombo area
Zimbabwe:
‒ Strategic partnership with the government of Zimbabwe
‒ Selection of potential targets for exploration study
The pipe development plan to be approved by the end of 2019
Resource base: 350 m ct
Expected average grade: 0.95 ct/t
EBITDA, $ mn
Catoca in numbers:
‒ Total reserves ~ 120 m ct // 2 processing plants with 13 m t pa // 0.61 ct/t
Recent corporate governance improvements:
‒ Supervisory & Fiscal committees authorized to review and approve contracts
‒ Appointment of executive directors to be approved by Supervisory committee
‒ Rotation between ALROSA and Endiama in appointing CEO and CFO
Change in sales practices:
‒ New approach to sale channels diversification following reform in Angola’s
diamond industry has already resulted in double-digit growth of diamond prices
$84/ct $89/ct $110/ct
Source: Company data and analysis.
0
1
2
3
4
0
5
10
15
20
2015 2016 2017 2018 2019
Net imports (LHS) Net exports (RHS)
400
600
800
1000
1200
1400
0
50
100
150
200
2015 2016 2017 2018 2019
Rough imported (LHS) Polished exported (RHS)
Source: GJEPC, Company’s analysis.
Monthly volumes of rough imported and polished exported diamonds
63
m ct
Monthly prices of rough imported and polished exported diamonds
$/ct
Indian Trade Statistics Monthly volumes and prices of imported rough and exported polished diamonds
163 187 177 176 188 189 181154
187 208 232175 179 175 188 206 208 203 192 177
215 228
177131 121 139 124 124 130 128 129
186 188141 151 151 142 131
225
126 152 146 162218
1,620 1,697 1,669 1,762 1,828 1,945 1,818 1,499
1,653 1,994 2,065
1,631 1,631 1,759 1,742 1,757 2,038
1,738 1,896
1,522 1,820
2,025
USA (RHS) China (RHS) Total (LHS)
Destocking Decelerates
64
Source: Bureau of Economic Analysis, Federation of the Swiss Watch Industry FH, GJEPC
64
(43%)
(20%) (21%)
(9%)
(37%) (40%) (36%)
(5%) (3%)
(19%)(15%)
(1%) (4%)
(17%)
(16%) (19%) (19%)
(26%)(17%) (19%)
Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Net imports of rough stones
Net exports of polished diamonds
End-market consumers: luxury & jewelry demand
to returns to historical growth rates
Retailers: Inventory of unsold diamond jewelry is
winding down YTD
Mid-stream: rough inventories trend down (rise in
financing costs in India, FX volatility, tighter banking
regulation as India is joining Basel III in 2020 –
financing down from $10 bn to $8 bn);
o Polished stocks are being sold at discount to raise
cash;
o Seasonally quiet period in June-August
Miners: from Jan’19 quickly shifted to “price over
volume” sales strategy reducing supply to keep
like-for-like prices stable (-7,5% YTD decrease vs
+3% YoY in 2018)
Highlights End-demand: Swiss watch exports as a “canary in the mine”
CHF m
Net imports of rough stones and net exports of polished diamonds in/from India
YoY change, 2019/2018 (USD)
1.0x
5.0x 6.0x
c. 10.0x
1970's 1980's 2000's 2010's
Case Study: LGD – the Future is History Similar scenario has already realised on the market for lab grown sapphires
65
Indexed price per carat of natural
sapphire¹
Indexed to 1975 natural sapphire price
(in nominal terms)
Expert quotes
“Focus of lab-grown gemstones is cheaper low-end jewellery”
Head of Business Development,Gemstone trading company
“We need to convince people that lab-grown gemstones are not fake stones. We operate on market that is separate from natural gemstones”
President,Leading lab-grown gemstones company
“Rarity is a very important factor for consumers, but lab-grown gemstones completely miss it”
Head of Business Development,Leading gemstone mining company
“Lab-grown gemstones do not affect natural market. Easy to distinguish them as they are of perfect quality: too well cut, no inclusions”
President,Gemstone trading company
Source: Company data and analysis, Bain data and analysis, Preciousgemstones.com.1. Sapphire of the highest grade: clarity – LI, colour – 2.5/75 (blue), rough. 2. Price per 1 ct stones of comparable quality (fine-quality).
Gem quality lab grown sapphires first
appeared in 1970s and started commercial
production in 1990s
Market share of lab grown sapphires
stabilised in 2000’s at 15% production share
End-users clearly marked the difference
which is reflected in price-tag for 1 carat
Synthetic production development does not
adversely affect the market for natural stones Natural Lab grown
~$1,500
~$180
Price per carat discount
(2017)2
$/ct
~80-90%
Lab grown stones
production share (2017)
Natural
85%
Lab
grown
15%
Synthetic Stones: Key Marketing Messages
66
Key marketing messages of lab-grown coloured gemstones
(incl. sapphires) producers in 1960-2000s
Source: Company data and analysis.Note: Coloured gem stones messages are based on vintage ads of Chatham Created Gems and Diamonds; Lab-grown messages are based on the message mentions on the websites of Diamond foundry, Chatham Created Gems and Diamonds, Lightbox, NDT, Scio Diamonds and IIA Technologies.
Key marketing messages of LGD producers today
…of lab-grown sapphires producers are similar to the ones used now by LGD producers
Key messages are similar, though now lab-grown diamond producers additionally explore
“environmentally-” and “socially-friendly” trend
High quality
Affordable
IdenticalReal
Value Created in AmericaAvailable
Above-groundOwn design
IdenticalAffordable
Guaranteed origin
Created in America
Best of millenials Conflict-free
Eco-friendly
Value
Flexible
Pure
Good investment
Own design
Innovative
Unique
RealDynamic
Rare High quality
Unique InnovativeEthical
Price per
carat ($)
Diamonds and Their Synthetic Substitutes
67
LGD is not the first synthetic alternative to diamonds
Industrial product
Can be produced
in any volume
Highly fragmented
supply, low entry barriers
Product of nature
Rare, unique and
inherently valuable
Highly consolidated
supply, high entry barriers
Price drivers:
Cost
Price drivers:
Rarity
Symbolism
Supply discipline
Natural diamonds
VS
LGD
Moissanite
White Zircon Cubic Zirconia
LGD
Price per
carat ($)$400
$75-100 $20-40
$800
Source: Company data and analysis.
Have different price drivers and value to consumers
68
Source: Company data1. Excluding ALROSA Finance SA, Wargan Holdings Limited (finance entities) and ALROSA Overseas SA (holding company)
M&A: Focus on Organic Growth
5,341652
271
463
17
30,300
3,200
2013 2014 2015 2016 2017 2018 9M'19
47
3934 32 31 29 29
2013 2014 2015 2016 2017 2018 Q3'19
Growth is coming from organic growth of existing portfolio (see
capex slide)
Program to divest non-core assets started in 2013 includes assets in
real estate, energy (gas) farming, insurance, etc.
The program is planned to be completed by 2020
Number of non-core entities was down by ~40% from 2013
9M’ 19 proceeds from divestments were RUB 3.2 bn:
disposal of non-core assets for RUB 1.6 bn (the most significant
transaction – sale of 100% stake in JSC Golubaya Volna Resort for
RUB 1.2 bn
disposal of property by LLC Innovation Centre Bourevestnik for
RUB 1.6 bn
Total proceeds from divestments were RUB 37 bn in 2013-2018:
80% of total proceeds came from the sale of gas assets in
Q1 2018 to NOVATEK
Another significant divestment was sale by ALROSA of 51% stake
in Timir, iron ore producer, to EVRAZ in 2013 for total
consideration of RUB 4.95 bn
RUB m
Proceeds from sale of non-core assets
Number of ALROSA’s subsidiaries
1
As at the end of the period
69
Profit Curve of Existing Diamond Mines
Tier-2 performing mines (2nd quartile, 25-50%)
Tier-4 performing mines (4th quartile, 75-100%)
(Price per ct - Cash Cost per ct), $
(Price per ct - Cash Cost per ct), $ (Price per ct - Cash Cost per ct), $
Source: Company data and analysis.Note: Assessment of 2017 production.
(Price per ct - Cash Cost per ct), $
Tier-1 performing mines (1st quartile, 0-25%)
Tier-3 performing mines (3rd quartile, 50-75%)
Margin per carat by mines
FX Rate
70
Source: Company data and analysis.
Financial metrics breakdown by currency (Q3’19)
% of metric's total
91%
18% 26%
63%
96%
9%
82% 74%
37%
4%
Revenue Cost of sales Capex Cash and cash
equivalents
(incl. bank deposits)
Total
debt
RUB
USD
ALROSA is an exporter with 91% of revenue denominated
in USD
Major portion (74%) of costs and capex is denominated in
RUB, 96% of the Company’s debt portfolio is denominated
in USD to create a natural hedge against FX risks
ALROSA's financial sensitivity analysis shows that a change
in the USD exchange rate by +/- 1 RUB/USD leads to the
following change in metrics:
o revenue – +/-1.39%
o cost of sales – +/-0.28%
o EBITDA – +/-2.80%
o capex – +/-0.39%
71
Management TeamCommitted to deliver on ALROSA’s development plans
Source: Company data.
Alexey Kovalenko
Director, Mirny mining and processing division• Joined the Company in 1996• Over 20 years of industry experience
Roman Deniskin
Director, Udachny mining and processing division• Joined the Company in 2019• Over 15 years of industry experience
Evgeniy Denisov
Director, Aikhal mining and processing division• Joined the Company in 2005• Over 15 years of industry experience
Anatoliy Platonov
Director, Nyurba mining and processing division• Joined the Company in 1992• Over 25 years of industry experience
Pavel Marinychev
CEO Almazy Anabara• Joined the Company in 2016• First deputy Prime Minister of the Republic of Sakha (Yakutia) (2014‒2016)• Deputy Prime Minister of the Republic of Sakha (Yakutia) (2010‒2014)
Andrey Pismenny
CEO Severalmaz• Joined the Company in 1997• Over 20 years of industry experience• Chief engineer of ALROSA in 2010‒2015
CEO
CO
OC
FO
Sale
s
Sergey Ivanov
Chief Executive Officer
• Joined the Company in 2017• Senior Vice President at Sberbank of Russia (2016‒2017)• Chairman of the Management Board of SOGAZ (2011‒2016)• Top management positions at Gazprombank (2005‒2011)
Alexey Philippovskiy
Deputy CEO – Chief Financial Officer
• Joined the Company in 2017• CFO of Siberian Generating Company (2015–2017)• Head of Finance and Economics and then CFO of Sibur (2004–2013)• Consultant at McKinsey & Co. (2001–2004)
Mir
ny
Div
isio
n
Ud
ach
ny
Div
isio
n
Aik
hal
Div
isio
n
Nyu
rba
Div
isio
n
Alm
azy
An
ab
ara
Severa
lmaz
Executive team Operational team
Igor Sobolev
First Deputy CEO – Chief Operating Officer
• Joined the Company in 2007• Head of Capital construction division, mining & metallurgical
directorate at Norilsk Nickel (2000‒2007)
Evgeny AgureevDeputy CEO for Sales
• Joined the Company in 2017• Top management positions at Sberbank (2009-2017)
72
Anton Siluanov
First Deputy Chairman of the Government
of the Russian Federation
Aysen Nikolaev
Head of the Republic of Sakha (Yakutia)
Andrey Donets
First Deputy CEO of the Far East Investment
and Expert Agency
Vladimir Solodov
Chairman of the Government of the
Republic of Sakha (Yakutia)
Nominated by: the Russian Federation Nominated by: the Republic of Sakha (Yakutia) Nominated by: the Russian Federation Nominated by: the Republic of Sakha (Yakutia)
• Previously held positions include:
• 2005-2011 – Deputy Minister of Finance of the Russian
Federation
• Since 2011 – Minister of Finance of the Russian
Federation
• Since 2018 – First Deputy Chairman of the Government
of the Russian Federation
Previously held positions include:
• 2012-2018 – Head of the urban district ”City of
Yakutsk”
• Since 2018 – Head of the Republic of Sakha (Yakutia)
Previously held positions include:
• 2012-2013 – CEO of OJSC Amur land planning and
surveying enterprise
• 2014-2015 – Deputy Mayor of Blagoveshchensk
• 2015-2018 – Deputy Chairman of the Government of
the Amur Region
• Since 2019 – First Deputy CEO of the Far East
Investment and Export Agency
Previously held positions include:
• 2013-2015 – Head of department in Agency of
Strategic Initiatives
• 2015-2018 – Deputy Plenipotentiary Representative of
the President of the Russian Federation in the Far
Eastern Federal District
• Since 2018 – Chairman of the Government of the
Republic of Sakha (Yakutia)
Supervisory Board Overview
Source: Company data.
Andrey Karkhu
Advisor to Head of the Municipal Entity of
the Republic of Sakha (Yakutia) Anabar
National (Dolgan-Evenki) Ulus (District)
Kirill Dmitriev
CEO of Russian Direct Investment Fund
Oleg Fedorov
Independent director
of the Supervisory Board, ALROSA
Maria Gordon
Independent director
of the Supervisory Board, ALROSA
Nominated by: Municipal Districts of the Republic of Sakha
(Yakutia)
Nominated by: the Russian Federation Nominated by: minority shareholders
as an independent director
Nominated by: minority shareholders
as an independent director
Previously held positions include:
• 1994-2014 – Chief Engineer of OJSC Almazy Anabara
• 2014-2017 – Chief Engineer of OJSC Nizhne-Lenskoe
• Since 2017 – Chief Engineer of Arctic Capital LLC
• Since 2019 – Advisor to Head of the Municipal Entity
of the Republic of Sakha (Yakutia) Anabar National
(Dolgan-Evenki) Ulus (District)
Previously held positions include:
• 2007-2011 – Development Director, President of Icon
Private Equity Limited Representative Office
• Since 2011 – CEO of Russian Direct Investment Fund
Previously held positions include:
• 2009-2012 – Head, Department of Investment and
Banking, VTB Capital
• 2012-2014 – Adviser to the Head of the Federal
Agency for State Property Management
• Since 2013 – Independent director of the Supervisory
Board of ALROSA
Previously held positions include:
• 1998-2010 – Goldman Sachs, investment activity
• 2010-2014 – PIMCO, investment activity
• Since 2015 – Independent director of the Supervisory
Board of ALROSA
21
6
3
7 8
4
5
73
Supervisory Board Overview
Source: Company data.
Sergey Mestnikov
CEO of Trust Fund for Future Generations
of the Republic of Sakha (Yakutia)
Alexey Moiseev
Deputy Minister of Finance of the Russian
Federation
Sergey Donskoy
Member of the Supervisory Board, ALROSA
Nominated by: the Republic of Sakha (Yakutia) Nominated by: the Russian Federation Nominated by: the Russian Federation
Previously held positions include:
• 2010-2012 – Deputy Head, Head, Secretariat of Chairman
of the Government of the Republic of Sakha (Yakutia)
• 2012-2016 – First Deputy Minister of Property and Land
Relations of the Republic of Sakha (Yakutia)
• Since 2016 – CEO of Trust Fund for Future Generations of
the Republic of Sakha (Yakutia)
Previously held positions include:
• 2001-2010 – Senior Economist, Deputy Head of
Analytical Department of Renaissance Capital -
Financial Consultant
• 2010-2012 – Deputy Head of Department, Head of
Division at VTB Capital
• Since 2012 – Deputy Minister of Finance of the Russian
Federation
Previously held positions include:
• 2008-2011 – Deputy Minister of Natural Resources and
Environment of the Russian Federation
• 2011-2012 – CEO of JSC Rusgeology
• 2012-2018 – Minister of Natural Resources and
Environment of the Russian Federation
• Since 2018 – Advisor to CEO, Irkutsk Oil Company LLC
• Since 2018 – Member of the Board of Directors of JSC
INK Capital
Evgenia Grigorieva
Minister of Property and Land Relations of
the Republic of Sakha (Yakutia)
Sergey Ivanov
Chief Executive Officer of ALROSA
Dmitry Konov
Member of the Board of Directors,
Chairman of the Management Board
at SIBUR Holding
Galina Makarova
Independent director
of the Supervisory Board, ALROSA
Nominated by: the Republic of Sakha (Yakutia) Nominated by: the Russian Federation Nominated by: the Russian Federation
as an independent director
Nominated by: the Republic of Sakha (Yakutia)
as an independent director
Previously held positions include:
• 2007-2011 – First Deputy Minister of Property
Relations of the Republic of Sakha (Yakutia)
• Since 2011 – Minister of Property and Land Relations
of the Republic of Sakha (Yakutia)
Previously held positions include:
• 2011-2016 – Chairman of the Management Board of
AO SOGAZ
• 2016-2017 – Senior Vice President, Head of Wealth
Management at Sberbank of Russia
• Since 2017 – CEO of ALROSA
Previously held positions include:
• 2011-2016 – CEO of SIBUR
• Since 2007 – Member of the Board of Directors, Chairman
of the Management Board (since 2009) at SIBUR Holding
Previously held positions include:
• 2003-2007 – Ministry of Property Relations of the
Republic of Sakha (Yakutia)
• 2007-2015 – Permanent Representative of the
Republic of Sakha (Yakutia) in St. Petersburg
• Since 2018 – Independent director of the Supervisory
Board of ALROSA
109 11
1413
12
15
Glossary
74
Term Definition
ARP Average realized price (sales revenue divided by sales volumes in carat terms)
ct Carat : one of the four main diamond characteristics, the others being colour, cut and clarity; 1 carat=200 mg
m ct Million carats
CVD Chemical vapour deposition: a high-temperature, but normal-pressure process to grow lab-grown diamonds
DPA Diamonds Producers Association
FTC Federal Trade Commission
Gem-quality diamonds Diamonds used for jewellery manufacturing
HPHT High-pressure, high-temperature; a process using large presses to grow lab-grown diamonds
INED Independent Director
Lab-grown diamonds (LGD) Diamonds produced in laboratories using HPHT or CVD methods; also known as synthetic diamonds
m3 Cubic meter
Average price index Average index change of like-for-like diamonds prices (excl. +10.8 carats)
Reserves Resources known to be economically feasible for extraction
Resources Valuable deposits that could potentially be economically extracted at a later point
RoW Rest of the world
tn Tonnes
mmt Million tonnes
p.p. Percentage points
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