State plans to augment shares in Alrosa diamond producer to controlling block

YAKUTSK, June 27 (RIA Novosti, Pyotr Vasilyev) - The federal government is planning to augment its shares in Alrosa, a leading world diamond mining company, to a controlling block by increasing the company's authorized capital.

"Today, Alrosa is the only mining company partly owned by the state that can ensure the comprehensive development of natural resources deposits that are vital for the country's economic development," Alexei Kudrin, the Finance Minister and chairman of the company's supervisory board, said in a statement to Alrosa shareholders.

"Therefore, the government of the Russian Federation is making moves to consolidate its position in the company," he said.

The cabinet will thereby make Alrosa a national mining company that will pursue the state's policy in producing other mineral resources in and outside Russia, Kudrin said.

The block held by the government of Yakutia, a Russian republic in western Siberia, would not be threatened if Yakutian authorities preserve it by bringing in new assets. Kudrin said the Russian government would only welcome such an approach.

"As I said earlier, Alrosa is designed to be the driving force behind Yakutia's economic development. The local government could promote the process by creating conditions for the comprehensive development of the republic's natural resources and thereby increase budget revenues," Kudrin said.

Alrosa accounts for about 23% of the world's diamond output.

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