Myths and legends

In which city are diamonds mined in Russia?

21.10 // At the beginning of the 80th century, 90% of the world diamond market belonged to the international corporation De Beers, creator of the legendary slogan “Diamonds are forever.” But the corporation could not maintain its leadership: today its place on the pedestal is occupied by the Russian company ALROSA. It accounts for about 27% of Russian and 2019% of world diamond production. In Russia, the world’s largest producer of diamonds in carats mines in two regions – the Republic of Sakha (Yakutia) and the Arkhangelsk region. In 38, ALROSA produced over 5 million carats – the lion’s share of Russian diamonds. Another 1162,5 million carats are produced by AGD Diamonds, which is developing one of the Arkhangelsk deposits. And Russia’s total resource reserves, according to JORC, amount to 22 million carats – XNUMX% of the world’s. About half of Russia’s alluvial diamonds are mined in the Yakut Arctic. In the Anabarsky ulus, which belongs to the Arctic zone of the Republic of Sakha (Yakutia), more than 64% of alluvial diamond deposits in Russia that have been explored and prepared for industrial development are concentrated. Seasonal diamond mining and geological exploration are carried out in two more Arctic regions of the republic – Bulunsky and Oleneksky uluses. To develop the northern deposits of Yakutia, a subsidiary of the ALROSA group, OJSC Almazy Anabara, was created in 1998. It is the largest alluvial mining company in the world. It accounts for about 5% of ALROSA’s diamonds. In 2018, the company set a record by producing the most diamonds in its entire history – 5,4 million carats. Mining is carried out by open-pit mining at seven placers – Morgogor, Istok, Kholomolokh, Ebelyakh, Gusinoye, Ruchei 41 and Kurung-Yuryakh. The most interesting stones are brought by Ebelyakh on the right tributary of the Anabar River. Only one out of 10 thousand diamonds mined in the world has its own color, and here such finds are made much more often. Thus, in the summer of 2017, in just one month, three unique fancy diamonds were mined at Ebelyakh – bright yellow, pink and purple-pink. The purest, rare pink diamond weighing 27,85 carats became the largest pink stone found in Russia and was recognized as the best find of the year according to The National Jeweler. After all, pink diamonds are incredibly rare, with only one percent of them weighing more than 10 carats. The Yakut find was used to create the “Ghost of the Rose” diamond, weighing 14,83 carats, one of the largest pink diamonds in the world. ALROSA expects to sell it in November 2020 at Sotheby’s auction for $60-65 million. However, experts believe that the transaction amount may be much higher, and then the diamond from Yakutia will become one of the most expensive in history. In August 2020, the largest colored diamond in the entire history of Russian diamond mining was mined at Ebelyakh. The weight of the rich yellow-brown stone was a record 236 carats. The second Russian region in which ALROSA operates is the Arkhangelsk region. The deposits off the coast of the White Sea are the only place in all of Europe where diamond mining is carried out. A century ago, no one even imagined that there could be kimberlite pipes on the European continent. Geologists were sure that there was only one diamond-bearing province on Russian territory – Yakutia. The first suspicions that this was not the case arose in the 1930s, when kimberlite, a diamond-bearing rock, was found during the construction of defense enterprises in Severodvinsk. But targeted searches began only in the 1980s, and soon diamonds were found in such quantities that it became clear that industrial development had to begin. As it turned out, in the Arctic part of Pomorie there are two largest industrial diamond deposits in Europe – named after M. Lomonosov in the Primorsky region and named after V. Grib in the Mezensky region. These two deposits, like all other known kimberlite pipes in the region – and there are about 70 of them – belong to the Arkhangelsk diamondiferous province. Its total diamond reserves account for 21,4% of the total Russian reserves. The first deposit to be discovered was named after a native of Pomerania, Mikhail Lomonosov. It consists of 6 kimberlite pipes with total resources of more than 115 million carats of rough diamonds. The pipes stretched out in a chain almost 10 km long off the coast of the White Sea, a hundred km from Arkhangelsk. In September 2003, stripping work began on the Arkhangelskaya kimberlite pipe. And industrial diamond mining began in June 2005 with the commissioning of the first stage of the Lomonosov Mining and Processing Plant. Today, the Severalmaz company, which is part of the ALROSA group, produces about 4,2 million carats of diamonds per year from the deposit. It is planned to mine diamonds at the Lomonosov deposit at least until 2043. The reserves in the Karpinsky-1 and Arkhangelsk pipes will last until 2035. Then the work will move 5-6 km to the north, where the pipes named after. Lomonosov and Pionerskaya. Mining is carried out in an open way, and the dimensions of two huge quarries are already measured in hundreds of meters. Thus, the diameter of the quarry at the Arkhangelskaya pipe exceeded a kilometer, and the depth – 200 meters. After all, to extract 1 carat of diamonds, you have to process about a ton of kimberlite. Huge excavators load ore onto dump trucks, each carrying one hundred tons at a time. And per hour, 450 tons of ore enter the processing plant. The plant annually processes more than 4 million tons of diamond-containing ore and extracts about 2 kg of diamonds per day. The share of Lomonosovsky GOK in the total diamond production of the Alrosa group is about 7%. 30 km from the Lomonosov deposit there is a deposit named after. V. Grib. It was discovered later, in 1996, and was named in honor of Vladimir Grib, the former chief geologist of Arkhangelskgeoldobycha OJSC. This field ranks fourth in terms of reserves in Russia and seventh in the world. There is only one kimberlite pipe, but its approximate reserves are estimated at 100 million carats. Of these, 58,4 million carats are expected to be mined by open pit mining, and the rest by underground mining. Mining is carried out by the company AGD Diamonds, the successor of JSC Arkhangelskgeoldobycha. Unique diamonds are also often found among Arkhangelsk diamonds. The first registered diamond was extracted on June 26, 2009 from the ore of the Arkhangelskaya pipe. The stone weighing 30,61 carats was named “425th anniversary of Arkhangelsk”, since it was mined on the eve of the anniversary of the capital of Pomorie. Since then, the number of personalized stones has grown into hundreds. In July 2019, at the field named after. V. Grib found a diamond weighing 222,09 carats. It became the largest in the history of diamond mining in the region and the largest diamond found in Europe. After the pipes are scooped to the bottom, the pumps of the water-reducing wells will be turned off and lakes 300-500 meters deep with the purest water will appear in place of the giant quarries. And the tailings ponds, which collect enrichment waste – mainly clay and sand – will be overgrown with forests. There will be no traces of the fact that the first European diamonds were once mined here. Infrastructure Let’s fly to the Arctic! Murmansk Airport will build a new terminal as a resident of the Russian Arctic Everyone, of course, remembers the famous De Beers advertising slogan “A Diamond Is Forever!” This is not to say that it has lost its relevance: a cut diamond remains a symbol of luxury. But the supply of diamond mining companies with reserves is a question: how many diamonds are left in the ground, are they really “forever”? The chief geologist of Alrosa, Konstantin Garanin, spoke about the state of affairs in the industry in Russia and the world at a round table within the framework of MineX. Perhaps everyone knows that in terms of diamond production in carats, De Beers has not been the world leader for a long time – this place has been firmly occupied by the Russian Alrosa, and about a third of the world’s production consistently comes from our country. Thus, in 2021 the company produced 32,4 million carats, which is 27% of the global volume. The results for 2022 have not yet been summed up, but in December the head of the company, Sergei Ivanov, said that Alrosa would exceed the plan, since even before the end of the year the company was “somewhere in the range of 35,5 million carats.” Alrosa is not a monopolist on the Russian market, but it is certainly the largest player.

Resources and reserves

Now let’s move on to diamond resources – Russian and global. According to Konstantin Garanin, the world’s diamond resources today amount to 5 million carats. 033% of them are concentrated in five countries: Russia, Botswana, South Africa, Angola and Canada. Russia accounts for 70 million carats, which is 1% of world reserves. And 132% is the share of Alrosa, only De Beers has more – 22%.

“It is in these countries that we expect the bulk of diamond mining in the near future, and the main geological exploration work is also concentrated here. If we talk about reserves, then an even larger part, about 90%, is concentrated in these five countries, these reserves are distributed to varying degrees,” noted Mr. Garanin.

Russia’s diamond reserves are mostly the reserves of the Alrosa Group: of the named 1 million carats, 132 million are concentrated at the company’s facilities. The main diamond region of the country remains Yakutia, which accounts for 1% of reserves (and 057% of Alrosa’s reserves). The remaining 23% belongs to the Arkhangelsk region. As for Alrosa, 18% of reserves today fall to its Arkhangelsk subsidiary, Severalmaz PJSC (holds a license for the M.V. Lomonosov deposit, the largest in Europe), another 3% to Almazy Anabara “, also a subsidiary of Alrosa in the extreme north-west of Yakutia. At the same time, Konstantin Garanin emphasized that the mining and processing plants of the Alrosa Group are guaranteed stable operation for years to come. Only Almazy Anabara is causing some concern; the company’s other enterprises are secured for 10–40 years (Table 1).

“In this regard, it would seem that we do not need to develop geological exploration work in the early stages, but focus on exploration work. But if we talk specifically about each mining and processing plant, the structure of reserves is different everywhere, so we always look ahead, analyzing the prospects for growth of SMEs,” noted Mr. Garanin.

Don’t stop exploration

Alrosa does not stop investing in geological exploration. According to the company itself, the miner invests on average 1,5–1,9% of annual revenue in the exploration stage. Maintaining this proportion allows the company to maintain its own competencies and support the development of SMEs.

“This is the average volume of our investments in geological exploration over the past 20 years. During this time, 217 kimberlite bodies were discovered, the cost of one discovery is 330 thousand dollars. On the one hand, this is not much, but the effectiveness of discovering economically viable deposits for development is low,” Mr. Garanin commented on the situation.

At the same time, Alrosa’s analytics show that there is no direct relationship between increased funding for geological exploration and the discovery of kimberlite bodies. Investments in geological exploration –
this is “long-term money”, and before obtaining results that can be considered reserves, it is necessary to carry out several stages of work. However, this statement is typical not only for the diamond mining industry. Thus, TsNIGRI specialists did a lot of work and clearly demonstrated that decades pass from the discovery of a gold ore object by geologists to its acquisition of the status of a deposit (you can read more about this in the material published No. 4, 2022 and on the portal). However, the history of both industries shows that geological exploration must be carried out continuously, for example, we are still reaping the benefits of the “lost decade” – the 1990s, when there was no investment in the industry and practically no exploration was carried out. According to Alrosa’s calculations, every year the “geological exploration” functionality brings the company’s shareholders
47 billion rubles is the difference in accordance with the forecast. According to the diamond miner’s forecasts, if the current pace and volume of exploration continues, by 2060 the balance of the Group’s reserves will be about 800 million carats. Without geological exploration, by this time the company would have already “eaten up” its reserves, having only 200 million carats. Speaking about the diamond-bearing provinces and subprovinces of Russia, Konstantin Garanin notes that the most promising mineragenic taxa remain the Karelo-Kola and Central Siberian ones. The specialist is confident that this is where the main geological exploration work will be concentrated in the coming years.

“In terms of what geologists are looking for and expecting to find today, it is clear that the large deposits mapped in the last 70 years are extremely difficult to discover. Our target diamond-bearing areas are Malo-Botuobinsky,
Sredne-Markhinsky, Daldyno-Alakitsky, where our main efforts are concentrated, as well as the Zimneberezhny district in the Arkhangelsk region. We expect that small and medium-sized deposits will be discovered, but the quality of the raw materials and their diamond content will be high enough to be involved in profitable mining,” said Konstantin Garanin.

The company notes that the most profitable deposits are now concentrated in the Republic of Sakha (Yakutia); they are characterized by unique reserves and rough diamond content. But at present, all local deposits are being mined by open-pit or underground mining. Some of the deposits have already been mined.
And now Alrosa geologists are saying that it is necessary to shift the emphasis of the search and enter new territories. The Krasnoyarsk Territory (300 million carats), the north of Yakutia (270 million carats) and the Irkutsk region (117 million carats) seem promising. Thus, last year Alrosa already signed an agreement with specialized organizations and research institutes to launch searches for deposits of indigenous Evenki diamonds in the Krasnoyarsk Territory. The company estimates that the potential of the site that the company will explore is 150 million carats of diamonds. Today the company declares that it does not intend to change its plans for the volume of geological exploration, and annually Alrosa invests about 8 billion rubles in this area.

“In general, we have not adjusted our plans. Naturally, geological exploration programs are a living organism; they adjusted some things, strengthened some things, but overall they did not significantly change their plans,” said Konstantin Garanin in an interview with Interfax.

According to the specialist, the company is provided with machinery and equipment for geological exploration. He noted that Alrosa’s drilling rigs are mostly domestic. Difficulties may arise with software and laboratory equipment, which were mainly purchased from foreign companies. Now the miner is faced with the task of replacing solutions that have become unavailable.

Inventory structure

Characterizing the “health of the mineral resource base” that the company has, Mr. Garanin proposed conditionally dividing the said 1 million carats into three groups. The first is the reserves that are already involved in development in accordance with the projects; this is half of the named volume – 057 million carats. The second group is reserves that require design and the adoption of certain investment decisions; the chief geologist of Alrosa classified 197 million carats into this category. And another 352 million carats are difficult-to-develop reserves that require additional technical and technological solutions. A similar segmentation, but now for all Russian diamond reserves, was proposed by specialists from the Federal State Budgetary Institution TsNIGRI. Speaking at the conference “Scientific and methodological foundations for forecasting, prospecting, and evaluation of deposits of diamonds, precious and non-ferrous metals” in 2019, the head of the diamond department of the institute, Yuri Golubev, also proposed dividing the diamond reserves of the Russian Federation into three categories. To the first, he included reserves involved in exploitation – 48% of the reserves of the Russian Federation. These are the reserves of all developing fields, the largest share is concentrated in the Udachnaya, Yubileinaya, Botuobinskaya and Aikhal pipes. The second category is reserves that are in the pre-investment phase and have commercial potential, that is, reserves of fields for which design is being carried out. They make up 29% of the reserves of the Russian Federation, and most of them are assets for underground mining. Well, the third category of reserves are those for which no investment decisions have been made at the moment, 23% of the total. According to Yuri Golubev, development of these reserves is unpromising. This includes the entire undistributed fund, including objects that, according to the scientist, are unlikely to ever be mined. True, the specialist proceeded from the current cost of diamonds and did not exclude that in the future, when available deposits around the world are worked out and the cost of precious stones increases, the calculation may change. One more point regarding diamond reserves. More than half of Russian diamonds mined today are the result of open-pit primary deposits. At the same time, almost half of the available reserves require underground mining, since reserves for open-pit mining are decreasing much faster. This trend leads to an increase in the cost of extracted raw materials and a deterioration in the economic indicators of the industry.

Between P1 and P3

However, what Alrosa geologists are concerned about is not the shortage of imported equipment, not the prospect of building deep mines, and not even the availability of mining and processing plants with reserves: Konstantin Garanin several times drew the attention of the round table participants to the significant gap between the volumes of resources of different categories: P3 turns out to be significantly less than P1 and P2. And this, the Alrosa specialist emphasizes, is a trend of the last decade.

“Our analytics show that the vast majority are resources of category P3, and we lack P2 and P1, and there is a shortage of objects for appraisal work. It is obvious that our common efforts are aimed at replenishing SMEs. Our company carries out geological exploration at its own expense, and also supports those initiatives that are being formed by the state to intensify regional mineragenic work. Geomapping work is also ongoing. In general, the new programs that the state is preparing will make it possible to intensify the process of reproduction of SMEs not only at the expense of subsoil users, but also through government investments,” says Mr. Garanin.

TsNIGRI specialists also spoke about this. They insist that constant exploration and new discoveries are needed to keep the industry going. And the discovery potential is determined by the assessment of forecast resources. Institute specialists also draw attention to the huge gap between P3 and P1, P2. Thus, in 2019, we were talking about almost 400 million carats of P1, approximately the same amount was in the P2 category and more than 3 million carats in the P000 category. According to Yuri Golubev, there is a shortage of P2 category resources in the industry, and P1 refers to the deep horizons of existing fields. P2, says a TsNIGRI specialist, is present in large quantities in the Far Eastern Federal District, but in reality these are alluvial deposits and areas of primary deposits, which in reality do not even need to be counted. In the Northwestern Federal District, P2 are resources that can only relate to potentially unprofitable deposits due to low content. That is, the P3 category remains, but industry experts know well what P3 is and what is the probability of turning these resources into reserves. Mr. Golubev also notes that only a small part of the areas is localized to the size of the predicted kimberlite field. Speaking about the necessary measures, the Alrosa specialist mentioned geomapping, but only at a scale not of 1:20000, but on a larger scale. The expert generally believes that what is needed is not just desk work, but a transition to the field stage using modern technologies. In addition, the specialist notes the prospects of cooperation between the company and industry scientific institutes.

“Such areas will be more attractive for both subsoil users and junior companies. We have been talking about this over the past five years, and we see that there has been a positive trend in other types of mineral resources, but in diamond geology these problems persist,” says Konstantin Garanin.

In 2022, Alrosa managed not only to maintain, but also to increase production volumes. This is despite the fact that the US Treasury introduced a ban on the import of Russian polished diamonds and rough diamonds, in addition to technical ones, and until 2022 Alrosa exported a significant part of its products. In particular, Belgium was a major consumer, purchasing about 40% of the company’s diamonds. In the current conditions, Alrosa changed its strategy in the domestic market. The company’s director for strategic development, Dmitry Amelkin, spoke about this in an interview with Kommersant.

“As you understand, sanctions have a two-way effect. On the one hand, they limit the possibility of export, but, on the other hand, they have led to difficulties in importing diamonds from abroad. Moreover, a number of large foreign jewelry brands have limited their presence on the Russian market, which in a certain sense increases our competitiveness. We feel even more comfortable in the domestic market than before. This is a strategic priority for us today,” said Mr. Amelkin.

New reserves of the World

At the end of December last year, Alrosa announced the results of geological exploration work at the Mir kimberlite pipe: according to Konstantin Garanin, it was possible to increase reserves by 62 million carats, up to 200 million carats. The company’s chief geologist spoke about this at the forum “Industry and geological exploration of Yakutia: through 100 years.”

“In total, the reserves will amount to 196 million carats; they are now in the ground. We studied engineering-geological conditions. Design is currently underway, we hope that at the beginning of 2030 the object will be involved in mining, shafts and the corresponding infrastructure will be built, which will allow diamonds to be extracted from the subsoil,” said the specialist.

The company plans to build the Mir-Gluboky mine. Alrosa announced its intention to resume production at Mir after the 2017 accident back in 2019. We are talking about 2030–31. Prepared by Kira Istratova

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