Russian diamond company Alrosa and other mining firms are likely to benefit from an amendment to the Russian law on state secrets which could help them attract investment and secure access to funds, according to First Deputy Finance Minister Alexei Ulyukayev.

 

The Duma, Russia's lower house of parliament, passed the amendment last October, allowing Russia's platinum and uncut diamond producers to disclose their production results, and the amendment is expected to be approved by President Putin later this year.

 

The disclosure of output figures “may prove beneficial for the companies involved in this business, as it will help them to attract more investments, provide better access to financial resources and create conditions for IPOs (Initial Public Offerings) and bond offerings,” he said.

 

Currently, Alrosa and other miners’ capitalization is based on the amount of output sold.

 

“If information about company reserves becomes known on the market, it will cause the capitalization of that company to increase,” Ulyukayev said, adding “companies also see the amendment as positive”.

 

The amendment is particularly important for Norilsk Nickel, which accounts for 99 percent of Russia's platinum production, and Alrosa, he said.

 

“After the Duma agreed on the amendment to declassify information on reserves, production and exports of platinum group metals, we prepared a set of additional documents and, first of all, the draft presidential decree which lists information which is still considered state secret. The draft decree has been agreed with all the ministries and departments involved, and is now being studied by the president's administration,” Ulyukayev said.

 

“As soon as the decree has been signed and made public, and relevant rulings of the Finance Ministry are adopted, then the information, which is supposed to become open, will be released,” he added.

 

Ulyukayev said that uncut diamond and PGM current output figures and forecasts in carats and tons will become open as well the information about supplies of platinum and uncut diamonds to the state depositary of precious metals Gokhran and the Central Bank of Russia. Sales figures will also be declassified, he said.

 

Ulyukayev noted that declassified information will be offered on an annual basis and would not be grouped by regions and companies.

 

“Only three companies in Russia are producing platinum and Norilsk Nickel accounts for 99 percent of Russia's total output. The other producers are relatively small. As for diamonds, Alrosa is a virtual diamond monopoly in Russia,” Ulyukayev said. “So we think that providing information by companies and regions does not make sense,” he said.

 

According to Ulyukayev, Russia's uncut diamond output in monetary terms amounted to U.S. $1.5 billion in 2003, up from $1.3 billion in 2002 but down from $1.6 billion in 2001.

 

He said that while the government will continue regulating the exports of the platinum group of metals and diamonds, trade in these commodities will eventually be liberalized. Russia's platinum output rose 21 percent on the year in 2003, he said.

 

He said that eventually the government will cancel the five-year export quotas to Alrosa and the firm will be able to export as much as its wants. “We are talking about a period of several years here,” he said.

 

But the government will still ensure regular supplies to the Gokhran, as its reserves are used to cover Russia's budget deficit, Ulyukayev said.

 

The Russian budget had a surplus last year and is expected to be in surplus this year as well.

 

The amount of precious reserves with the Gokhran and the Central Bank of Russia may be declassified in 2005-2006, as part of market liberalization, Ulyukayev said.