Alrosa Won’t Reopen Mir Until At Least 2030

Moscow—Alrosa’s Mir diamond mine won’t reopen until at least 2030, if at all.

On Monday, the Moscow-based diamond mining company said it has to conduct deep-level exploration (down to 1,300 meters/4,265 feet) to determine the mine’s reserves; that exploration is expected to cost about 2 billion rubles ($31 million) and be completed by early 2022.

If Alrosa finds there are enough diamonds to make restoring and reopening the mine financially feasible, then it will take about two years to drill pilot holes that will be used for the creation of deposit-opening design plans.

After that, it will start construction—which will include making improvements to ensure the mine doesn’t flood again—that will take six to eight years to complete.

The timeline puts the mine’s reopening window at 2030-2032.

Mir has been closed since August 2017, when the underground mine flooded, trapping 151 workers, eight of whom couldn’t be reached and died in the mine.

Alrosa said Monday that any decision about further development at Mir “will be based solely on safety considerations and economic viability.”

The announcement about Mir came shortly after the diamond miner released its financial results for 2018, which mirrored those of rival De Beers Group.

Revenue increased—climbing 9 percent year-over-year to 300 billion rubles ($4.66 billion)—on a better sales mix and higher prices, but Alrosa sold fewer diamonds overall. Sales volume was down by 8 percent.

EBITDA grew 23 percent to 156 billion rubles ($2.42 billion). Net profit jumped 15 percent to 90 billion rubles ($1.40 billion).

Alrosa’s strong year came in spite of a weak fourth quarter, with revenue declining 12 percent compared with the third quarter and increasing only 1 percent year-over-year. The company said it sold more industrial than gem-quality diamonds at the end of 2018.

Commenting on the year, Deputy CEO Alexey Philippovskiy said increasing diamond prices and stronger demand in major markets for diamond jewelry, like the United States, as well as increasing efficiency were the key drivers behind Alrosa’s 2018 gains.

S&P and Moody’s upgraded the company’s credit rating to investment grade last year.

Also on Monday, Alrosa executives hosted its Capital Markets Day in London, outlining five strategic priorities the company will focus on through 2024: sustainable development and workplace safety; operational efficiency; maintaining a best-in-class resource base; maximizing shareholder returns; and marketing, including in the U.S., where the company has just tapped Rebecca Foerster, whose background is in marketing, to head Alrosa USA.