A New Chapter after Mir Mine Tragedy
August 19, 21It's four years since the flooding tragedy that killed eight workers at Alrosa's underground Mir mine, in Siberia.
This week the company appeared to move a step closer to re-opening the mothballed deposit, with the announcement that a decision on its future would be made by early next year.
Sergey Takhiev, the company's head of corporate finance department, told the TASS news agency on Tuesday that safety would be its first priority.
A government inquiry into the causes of the disaster blamed unpredictable groundwater movements - anomalous hydrogeological complexity - in part. But it also pointed to significant human failings - engineering errors in the construction project and safety violations.
The man who ran the mine at the time, Alexey Burkser, was arrested on suspicion of violating safety rules and was later found dead in his prison cell.
A total of 24 workers were held responsible for the tragedy. Two employees were sentenced last March to two and a half years in prison in a penal colony for their failures, and two bosses, including the mine's top engineer, were banned from management positions for three years.
There were multiple allegations that managers ignored warnings of an impending disaster, and there was a water breakthrough and partial collapse at the mine just days before the tragedy on 4 August 2017.
Mir, in the Sakha Republic, was the first and biggest diamond mine in the former Soviet Union. Kimberlite was discovered there in 1955, and open pit workings began two years later. They would eventually result in one of the largest excavated holes in the world - 525 meters (1,722 ft) deep and with a diameter of 1,200 m (3,900 ft). When surface operations ran dry the mine switched entirely to underground operations in 2001.
The loss of Mir in 2017 was a huge blow to Alrosa - representing around a tenth of its output at 3.8m carats a year - and to the local economy. Mirny is a diamond town of 40,000 people that no longer has a mine. Alrosa promised in the aftermath that it would find alternative jobs for all underground workers.
There will be mixed emotions about the prospect of re-opening the mine. It claimed the lives of eight miners. It also yielded around $17bn of diamonds.
Diamond mining can be a lucrative business, but a dangerous one. Eighteen diamond miners died in a landslide in the Democratic Republic of Congo, in 2009 as they used picks, shovels and bare hands to scratch diamonds from tunnels in primitive and unregulated conditions. Three illegal miners were crushed to death the Chiadzwa diamond fields, in Zimbabwe in 2016.
Many of the losses have been in the unregulated sector, but by no means all. In 2003 a worker died at Rio Tinto's Argyle mine, famous for its pink diamonds, in Western Australia.
In 1996 a mudslide at the Rovic Diamond Mine, in South Africa, killed 20 miners working 1,000 meters deep below ground. The mine manager subsequently pleaded guilty to manslaughter.
Alrosa has lost workers in previous tragedies. A mining machine operator died in a rock fall at Mir in 2009. A blasting operator was fatally injured there by an exfoliated piece of rock in 2008. In 2018 a worker at Alrosa's Udachny mine, also in the Sakha Republic, died in an explosion 580 meters below ground.
There's a long way to go before any more diamonds are recovered from Mir. Alrosa say that even if they do decide to go ahead, it'll be 2024 before work starts and 2031-2 before the first ore is processed.
The company's profits slumped immediately after the tragedy, down 51 per cent year on year for Q3 to $219.6m, largely due to a $125m drop in the value of the Mir mine.
In January 2020, it began initial drillings of kimberlite pipe 1,200-1,600 meters below the surface to see whether it would be economically viable to re-open the mine. The results have yet to be announced, but there's been no rod to the contrary
Reserves estimated at 68.6m carats would provide an incremental growth of 20-25% to company's EBITDA, says Mr Takhiev, Alrosa's finance boss, as the company finds post-Covid demand outstripping its supply, and as it tops up historically low stocks with gems from Gokhran.
Have a fabulous weekend.