Aikhal. Chernishevsky. Svetly
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- Morkokinsky diamondiferous area
- Prilensky diamondiferous area
- Zimneberezhny diamondiferous area
- Onega diamondiferous area.
- Karelian diamondiferous area
- Treskoberezhny diamondiferous area
- • Internatsionalniy Underground Mine
- • Aikhal Underground Mine
- • Udachny Underground Mine
- Basic Capital Construction Indicators Million of Rubles, incl. VAT Description 2006 2007 2008
- Construction 10 243,6 13 870,8 13 332,0 13 389,3 100,4 96,5 130,7
- Changes in the inventories of equipment (storage, en route, advanced payments) during the reporting period -121,8
- TOTAL CAPITAL CONSTRUCTION 12 965,3 17 716,7 17 434,5 17 789,4 102,0 100,4 By 1.4 times
- Basic Performance Values of ALROSA’s Subsidiaries and Affiliated Companies RUB million Description 2006
iferous area. The results of the core samples recovery indicated low content of diamonds in the kimberlite pipe. Additional appraisal of Zarya pipe and core samples re- covery showed diamond presence in the amounts close to economic cut-off. Company’s specialist processed the 1 st
whole rock (150.1 tons) collected from Krasnopresnens- kaya kimberlite pipe. Collected diamonds were sent to the Diamond Sorting Centre for lab tests and valuation. The report containing estimation of reserves, based on the results of deep-hole prospecting (up to + 200 m level) of “Komsomolskaya” pipe was discussed and approved in Yakutsk branch of the State Reserves Committee. Explo- ration crews completed surveys and prepared reports on Podtrappovy and Ozerny sites. Exploration activities con- ducted in 2008 gave increment P3 reserves within Alakit- Marhinsky site. Geological survey conducted in the Morkokinsky diamondiferous area showed that, according to struc- tural, tectonic and mineralogical features, some sectors of Seikta zone in Sredne-Morkokinsky are possibly con- taining kimberlite bodies. Obtained results were found satisfactory to proceed with the exploration program and subsequent mid-scale exploration. AMS-10 helped ALROSA geologist to locate 34 new aeromagnetic anomalies in Prilensky diamondiferous area; 29 of them are already planned for surface magne- tometry.
Company’s specialist proceeded with aerogeophysi- cal survey and surface magnetometer survey in the Ana- bar diamondiferous area and continued desk study of the materials obtained at Tsentralno-Anabar site. Final Minisampling at exploration site 22
geological report on collection of evidences confirm- ing the status of magnetic anomalies was prepared for Verkhne-Kuonamsky-2 site. The Zimneberezhny diamondiferous area. The status of 41 local anomalies discovered within the Ke- pin zone was confirmed. Exploration hole was drilled to confirm the status of 3 local magnetic anomalies in the Verkhnekepin zone. ALROSA geologist located prospective halos of indicator minerals discovered in different sectors of the Lomonosov field. Company’s specialists entered new data into the register of prospective magnetic anomalies occurred in Tovsky-2 site, revised boundaries of prospective sectors and structures, favorable to locate kimberlite bodies, selected primary geophysical anomaly of po- tential interest, occurred in the local sectors. The Onega diamondiferous area. Final report on the Regional site was prepared based on the analysis of drill logs. Exploration hole was drilled to confirm the status of magnetic anomalies in Laisky site, two anom- alies showed changes in kimberlite-hosting basement and, therefore, requires additional appraisal. The grains of the following indicator minerals were found in the heavy concentrate washed in 2007 at the Letnezoloticky site: chromediopsides, picroilmenites, pyropes and chrome spinels. Geographical zoning by areas of interest and com- plexity of exploration was completed for the Obokshin- skiy site. The Karelian diamondiferous area. The compa- ny obtained requested permit from the Federal Agency on Subsoil Usage on exploration of Severo-Zapadny I, Severo-Zapadny II, Severo-Zapadny III areas (the Re- public of Karelia, RF). In the reporting year company’s specialists conducted desk study of the field data, performed laboratory test and filed works within the boundaries of the selected sectors. The Treskoberezhny diamondiferous area. The following activities were performed: collection and processing of data on the Ondomozersky site, con- version of topographic sheets and geologic maps into digital images, processing of data and implementation of geological data bank, selection of the areas for the further exploration. Exploration team completed field works and prepared the report. Using the results of remote appraisal of the poten- tial of the Ondomozero and Ust-Ponoy zones, ALROSA geologists prepared integral maps for the Ust-Point site, and selected the prospective areas for further ex- ploration. Exploration crew completed field works and prepared the report.
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Capital construction In 2008 the actual capital investments amounted to RUB 17,008.1 million, including investments in the con- struction of mining facilities, vital to maintain and replenish company’s resources (RUB 8,974.3 million).
eral surface facilities were completed and commissioned in 2008. The volume of mining works performed for major opening of the horizons amounted to 90.3 thousand m 3 . At
the same time the company accomplished the intermedi- ate task – uncovered mineral body and built up slope mine with diagonally sloping access shaft.
980.0 million. Reported mining activities were focused on the uncovering of those horizons that were present be- low – 690 m). All the previously set mining and construc- tion tasks were fully accomplished (27.4 thousand m 3 of broken rock). • Aikhal Underground Mine – RUB 2,692.3 million. The first stage of start-up facilities with production rate 200 thousand tons a year was put into production in the reporting year. Another accomplished task – construction of the vertical cage shaft, which helped the company to keep to the mining schedule. Yearly penetration amounted to 901 linear meters, which equals to 16.2 thousand m 3 of overburden. • Udachny Underground Mine – RUB 1,874.3 mil- lion. The following activities were conducted in the mine: air shaft construction, reconstruction of the main shaft, equipping of the shaft (in progress). Mining teams pro- ceeded with skip shaft sinking. Access ramp was run to the horizon top at 380 m. An amount of RUB 4,188.7 million was spent on other
• The capital expenditure on construction of the facili- ties, pursuant to the provisions of Construction and Mod- ernization Program for Treatment Plant (Mirny, Aikhal, Udachny, Lensk) amounted to RUB 773.6 million. Mod- ernization of the second stage of the biological treatment unit was completed in Mirny. Off-site utilities of the sew- age treatment system were brought into use in Aikhal. • The amount of RUB 570.1 million was spent on con- struction and modernization of existing industrial facilities, used to support the operations of those divisions involved in the main company’s activities. • The amount of RUB 1,502.4 million was spent on so- cial facilities and non-industrial construction projects, in- cluding purchase of housing. In 2008, the following hous- ing facilities were commissioned: a 40-apartment house Mir Underground Mine construction site 24
in the city of Mirny, and a 40-apartment house in the city of Orel. The total area of commissioned newly built homes reached 4412.9 m 2 . Yakutsk movie house was rebuilt into the Theater and Concert Centre. Recon- struction of medical treatment center was completed at the Gornyak resort, as well as the extension of the dining facility at the Prometey resort. The total capital expenditures on re-equipping, in- cluding equipment beyond cost estimates, amounted to RUB 3,618.8 million. This sum includes RUB 2,911.5 million spent on new equipment supplied to the com- pany’s divisions, and RUB 707.3 million spent on new equipment not listed in construction cost estimates. Out of the total capital expenditures, the funds spent on construction and installation work amounted to RUB 7,643.0 million, including construction works accomplished by company’s Capital Projects Depart- ment (RUB 6,970.9 million). In 2008 new non current assets for a value of 11,649.1 million were commissioned.
Technical modernization 2 354,4 3 003,9
3 022,7 2 911,5
96,3 96,9
123,7 Equipment beyond construction cost estimates 489,1
565,8 638,2
707,3 110,8
125,0 By 1.4
times Construction 10 243,6 13 870,8 13 332,0 13 389,3 100,4 96,5 130,7 Cost breakdown
Construction and installation - total 6 476,2 8 645,0 7 603,7 7 643,7 100,5 88,4 118,0 including:
General contracts of ALROSA’s Capital project department 5 852,9
7 905,9 6 887,5
6 970,9 101,2
88,2 119,1
Other general contracts 279,8
299,3 549,0
560,1 102,0
187,1 By 2
times VAT for construction and installation works 343,5
439,8 167,2
112,7 67,4
25,6 32,8
Equipment included in the project designs
1 303,3 2 813,4
2 338,9 2 442,9
104,4 86,8
By 1.8 times
R & D 448,4
611,6 807,9
784,1 97,1
128,2 By 1.7
times Company’s enterprises, other expenses, direct contracts, acquisition of homes for employees 2 015,7 1 800,8
2 581,5 2 518,6
97,6 139,9
124,9 Changes in the inventories of equipment (storage, en route, advanced payments) during the reporting period -121,8 276,2 441,6 781,3 176,9 By 2.8 times - including
Equipment beyond cost estimates - Total -20,9 117,4
-231,9 -115,1
- - - Construction (purchase of equipment included in the projects) -100,9 158,8
673,5 896,4
133,1 By 5.6
times. -
12 965,3 17 716,7 17 434,5 17 789,4 102,0 100,4 By 1.4 times Gornyak (Miner) Health Centre 25
26 27 Transport, Procurement and Logistics Technical Development Diversification. Subsidiaries and Affiliated Companies
Transport, procurement and logistics Existing conditions, i.e. large distances between com- pany structural divisions and main transport routes, live no other alternatives but to use river transport during the shipping season for delivery of the required materials and technical resources for the Company’s operations. This scheme requires a well-adjusted procurement and logis- tics mechanism. Transport, procurement and logistics issues are suc- cessfully handled by the Company’s transport and logis- tics complex, comprising a special truck depot, an avia- tion division with the Company’s own fleet of passenger and cargo planes and helicopters, a river port and storage facilities with terminals both in and outside of the Republic of Sakha (Yakutia). A total of RUB 19,744.4 million was spent in 2007 for purchase of materials and technical resources. This amount exceeded the 2007 level by 16.4%. In physical terms the volume of the freights carried amounted to 473 thousand tons. The costs related to the maintenance of storage facili- ties and transportation from the incoming terminals in the towns of Lensk, Mirny and Udachny to on-site warehouses of Company’s divisions amounted to RUB 2,839.6 million. The transit transportation in all directions was 483.1 thousand tons of cargos, including 466.0 thousand tons in main direction and 17.1 thousand tons as an additional cargo.
The air transportation was 21,440 tons of cargo, in- cluding 14,718 tons for branches of ALROSA Co. Ltd.
tecHnical denelopment In order to accomplish Company’s objectives and pro- duction plans, maintain and improve the Company’s fa- cilities, advance applied technologies and raise overall ef- ficiency of the operations, in 2008 the company replaced a considerable amount of outdated worn-down machinery and equipment. The capital expenditure on technical modernization of ALROSA’s operations amounted to RUB 2,911.5 million. Primary areas of modernization are: mining and concen- trating departments – (RUB 1,466.0 million or 50.4%), transport departments (RUB 656.0 million or 22.5%), and geologic departments (RUB 361.2 million or 12.4%). The following major equipment was purchased for company’s divisions: One heading machine AM-105, two loaders, 10 tramcars, one winder control system, one modular concentrating unit, X-ray luminescent separa- tors (46 units), magnetic separators (6 units), 8 screening machines GIST, 1 vacuum dust removal system, 19 BELAZ trucks, 2 Volvo dump trucks, one drilling rig Tamrock, one frontal loader Dressta, one frontal loader K-702, one bull- dozer D-9R, 2 bulldozers T3501, 8 bulldozers B10, 2 bull- dozers Chetra, one mine excavator EKG-10, one motor grader DZ-298, 2 tractors K-703M, 6 tractors TLT-100A- 06, 3 swamp buggies, 3 GAZ-based tractor crawlers, one crawler transporter MT-LBU, 4 crane trucks KATO, one crawler crane DEK-631, one crane truck KS-5576, one crane truck KS-45717, one bridge crane Aist, one float- ing crane SK-2028, 4 buses IKARUS, 4 crew buses URAL, seven buses PAZ, one passenger low-floor MAZ-based bus, five tractive units VOLVO, nine fuel trucks, seven- teen mobile shacks Ermak, one mobile concentrating unit POU, drilling rigs PBU-650, one drilling rig ZIF-1200, one drilling rig NKR-100, two rigs ZIF-680, two helicopters Mi- 171, eleven plane engines and other vehicles. In 2008, ALROSA continued modernization of applied technologies and conducted R&D, scientific, engineer- ing and technical studies and activities for a total of RUB 719.6 million. The economic efficiency of 29 newly developed cut- ting-edge methods and technologies is expected to be about RUB 651.0 million. The volume of engineering and exploration amounted to RUB 900.1 million, including RUB 384.3 million worth surveys carried out by the Yakutniproalmaz Institute. 587 company’s employees, including 24 inventors contributed to technological development of the com- pany, 512 proposals were acknowledged as innovative. Economic benefit of 480 implemented new technical proposals and solutions amounted to RUB 218.3 million.
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Diversification. subsidiaries and affiliated companies ALROSA’s subsidiaries and affiliated companies operate in the following main fields: – diamond recovery from primary kimberlite and al- luvial deposits, diamond cutting and polishing; – trading of rough and polished diamonds on ex- ternal markets; – civil works, construction of industrial facilities, electricity generating plants, etc.; – production and transportation of natural gas and oil;
– procurement, trading, recreational and hotel ser- vices;
– transport services; – credits and finances. In 2008 revenues from sales of products, execu- tion of work and provision of services by the subsid- iaries and affiliated companies of the ALROSA Group amounted to RUB 41,638.0 and exceeded 2007 level by 2.9 %. The net profit reached RUB 4,343.4 million. The long-term financial investments of the Compa- ny in the form of increased participation stakes in the authorized capitals of the subsidiaries and affiliated companies and additional contributions to authorized capitals amounted to RUB 600.2 million. The dividends distributed to ALROSA from its af- filiated companies in 2008 amounted to RUB 2,528.8 million and the actual amount obtained was RUB 946.9 million.
Basic Performance Values of ALROSA’s Subsidiaries and Affiliated Companies RUB million Description 2006 report 2007 report 2008 report % of 2007 % of 2006 Revenues from sales of products (work, services) 45430,3 40239,5
41638,0 103,5
91,7 Net profit (loss) for the reporting period 10281,5 6222,2
4343,4 69,8
42,2 Dividends payable to ALROSA Co. Ltd. 738,3 2873,5
2528,8 88,0
By 3,4 times
Pension contributions to meet the pension obligations of ALROSA Co. Ltd. 899,0 983,0
888,3 90,4
98,8 Mining at Morgogor 29
30 31 HR Policy. Personnel Management Social Development Foreign Relations Regional Policy Environmental Safety
HR Policy. Personnel management Historically, HR policy has always been one of ALROSA’s strongest points. The target of this policy is efficient and ratio- nal use of human resources. As of the end of 2008, the Com- pany’s roster included 34,966 people – 486 employees less than in the previous year. During the reporting year the com- pany recruited 250 graduates, including 223 university gradu- ates and 27 graduates from vocational and technical schools. In 2008, 3,200 managers, specialists and supervisors received different types of training, of those 2,929 – at the Personnel Training Center. Training program included more than 100 professions. 5,435 workers received training and improved their pro- fessional skills and merits. The company suggested rotational scheme to those skilled workers and involved local manpower who were re- cruited for on-going construction projects. As of 31.12.2008, 625 residents of the local districts – Anabar, Vilyuisk, Verkh- nevilyuisk, Nyurba, Olenyok, Suntar Uluses – work for the Company under indefinite term employment agreements. Social development
The Company’s social strategy is to implement social corporate programs for the benefit of the employees and resolve any issues related to provision of favorable work- ing conditions, recreation opportunities for employees and their families, medical care in the best hospitals and medial centers of the Republic of Sakha (Yakutia) and the Russian Federation, organization of cultural and sports events, housing and community amenities, adequate liv- ing conditions for the Company’s retirees. Pursuant to New Homes program in 2088 the following houses were commissioned: a 40-apartment house in the city of Mirny, and a 40-apartment house in the city of Orel. An amount of RUB 232.3 million was spent on new homes. VESTA LLC completed construction of a 72 apartment- block in the city of Mirny based on a shared participation funding by ALROSA employees. The Company invested 10 % cost of 1 m 3 and compensated home-buyers for in- terest expenses. In 2008, the “Company’s Regulation on Loans to Indi- viduals – Company employees for housing mortgage pay-
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ments provided by the Commercial Bank MAK-Bank was still effective and applied to homes in Udachny, Aikhal, Lensk. In 2008, 85 families of the company employees took advantage of corporate support and moved into their new homes in Mirny. In 2008 medical expenses amounted to RUB 189.0 million, including RUB 178.0 million worth medical ser- vices provided via SK ALROSA and Sakhamedstrakh insurance companies. The Company’s employees had a choice on weather they would refer to the local medical in- stitutions or medical centers in the other regions – 2223 persons underwent examination and treat- ment during the year. The time-loss sickness level was reduced by 2.0%. In accordance with the healthcare program the Company allocated RUB 491.2 million including RUB 273.9 million for resort and recreational tours for chil- dren. 696 children traveled to outbound camps, 3167 children visited local camps. In 2008 the Company spent RUB 207.7 million for the events organized within the framework of the Com- pany’s Culture and Sports Program. The Company supports community centres, clubs and sports facilities with 393 permanent sports groups providing services to over 13,000 persons. The main cultural and sports events in 2008 were: IV International games “Children of Asia”, opening of the Cultural center in Yakutsk, International Free-Style Wrestling Tournament, and cruise “Saint-Petersburg- Valaam-Svirstroy-Kizhi-Goritsy-Moscow” on the Lenin motor vessel organized for ALROSA veterans. In 2008 the Company provided sponsor aid and support to individuals, miscellaneous public and mu- nicipal organizations, state agencies and communities for a total of RUB 640.7 million. foreign relations In 2008, company’s efforts in the external activity were directed toward creating a favorable conditions required to attain the production goals and sales plan set by the Company. In this context the following is- sues appeared to be the Company’s primary tasks: development of relations with the major customers, foundation of new foreign-based trading venues, for- mation of relations with new potential customers. In order to develop the Company’s external rela- tions and strengthen its positions as a leader in the world’s diamond industry the President of ALROSA Co. Ltd. invited chief executives of several major diamond companies to attend a meeting in Saint Petersburg in June 2008 and discuss acute issues of diamond in- dustry and among them – measures of diamond mar- ket recovery. Further to achieved agreements, in the end of 2008 diamond majors decided to join efforts on recovery of pieces and demand for diamonds and, therefore, launched new ambitious marketing pro- gram.
As for company’s own sale strategy, in 2008 ALROSA Co. Ltd. took few steps to amend organiza- tional chart of overseas trading network and acceler- ate its sales in Antwerp, Hong Kong, Dubai, London, New York and Tel Aviv. The company adheres to its diamond auction strat- egy which proved to be efficient. Diamond auctions are usually held at the jewelry expositions and exhibi- tions. In 2008 ALROSA arranged the second auction of rough and polished diamonds at Hong Kong Jewelry Show and sold 5-10 carat rough diamonds for a total of USD 2.37 million and polished diamonds of fancy colors and shapes for a total USD 1.8 million.
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The company extended its partnership with the Re- public of Armenia, which was recognized successful by Russian government. One of the top priority areas continues to be expansion of the Company’s mineral resources. In this connection, ALROSA continues to develop its cooperation with African countries. ALROSA Co. Ltd. continues to run its joint proj- ects in Angola – Catoca and LUO-Camatchia-CamagiCo. mining companies. In 2008 in Angola ALROSA Co. Ltd. completed and commissioned Chicapa-1 hydropower plant. The HPP was planned with two objectives in mind: the power supply of Catoca facilities and its better operat- ing efficiency, and the supply of the city of Saurimo, which open up new horizons for the further development of this province. Partnership with some other African countries, pri- marily the Democratic Republic of Congo is still in the company’s agenda. The top level two-way meeting held in 2008 brought the decision on additional exploration and prospective works that would be performed by ALROSA Co. Ltd. In March 2008, the President of ALROSA during his working visit to the Republic of Namibia met with Presi- dent of Namibia H. Pokhamba, Prime Minister N. Angula and Minister of Foreign Affairs M. Hausiku and discussed different aspects of mutual cooperation in the area of dia- mond production, power production and construction. The Company’s management attended all the major public events held by international diamond community – the World Diamond Congress in Shanghai, China and the International conference on rough diamonds in Tel Aviv, Israel. In 2008, the company was among the exhibitors of The Russian National Exposition 2008 in Delhi. ALROSA Co. Ltd. was actively engaged in the Kimber- ley Process (KP), and stayed in close contact with gov- ernments, NGOs and businessmen involved into interna- tional diamond business to prevent “conflict” diamonds from legal trade. In its routine operations ALROSA Co. Ltd. adheres to the KP Certification Scheme and undertakes measures to boost customers’ confidence in the compa- ny’s products. To promote its economic interests on the external market the Company organized a trip to Yakutia for RF am- bassadors assigned to the countries of particular impor- tance to ALROSA Co. Ltd. international operations: the RF ambassadors to Angola, Botswana, DCR, Namibia, South Africa, Japan and the officials from the Central office of the RF Ministry of Foreign Affairs. regional policy The regional policy of ALROSA aims to contribute to social and economic development of Sakha (Yakutia) dis- tricts (Alaihov, Anabar, Bulun, Viluysk, Verhneviluysk, Zhi- ALROSA booth at international trade fair (India, Delhi) 34
gansk, Kobyai, Mirny, Olenek, Suntar, Nyurba uluses). In 2008, the Company allocated for its regional de- velopment program RUB 108.4 million and spent them on the following areas of focus: • recreation program for children; ALROSA sum- mer camps visited 245 children, the residents of dia- mond province; • construction and repair of agricultural facilities, purchase of construction materials; • transportation of agricultural products from the remote areas; • purchase of machinery and equipment, fuel and lubricants; • technical support to farmers and agricultural producers; • financial and material assistance to socially vul- nerable groups. • professional training and education. Environmental safety In 2008, the ALROSA proceeded with improve- ments of environmental management to comply with the up-to-date requirements of the federal and region- al legislation and the legal and regulatory framework. In 2008, the Company’s expenditures on environmen- tal protection purposes reached RUB 3,208.0 million: • current environmental protection expenses – RUB 1,807.7 million, including: – water conservancy - RUB 1,151.9 million; – air pollution prevention - RUB 264.0 million; Wastes management - RUB 261.6 million; – land recultivation - RUB 130.2 million. • payments for excessive air and water emissions - RUB 98.0 million • major repairs of environmental protection tools and equipment - RUB 50.2 million; • Scientific research - RUB 31.5 million; • Planning and project development - RUB 74.3 million;
• Capital expenditure on construction of environ- mental facilities - RUB 1,146.3 million. The Company completed modernization of sewage treatment plants in Mirny, Udachny and Aikhal, sewage treatment plant near industrial facilities at Jubilee pipe, completed con- struction of rainwater treatment plant at Aikhal mine and water intake facility in Lensk. The Company built biolog- ical treatment Plant in Lensk, re-injection unit at Interna- tional mine and waste polygon for disposal of mineral- ized waters recovered from Mir underground mine. 35
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