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30 september 2013

Vladimir Dyukarev, who served as First Vice President - General Director of ALROSA from 1995 to 2002, gave this interview to Rough&Polished, where he shared his views on the company’s work.

ALROSA announced its reserves and resources under the JORC Code and disclosed long-term development targets. Obviously, the impressive production forecasts are primarily stemming from the operation of its underground mines. At the same time, there is an ongoing debate among experts about the design concepts and their implementation in the diamond "underground" – it is enough to recall the recent conference at the Research Institute of Comprehensive Exploitation of Mineral Resources of the Russian Academy of Sciences. How would you assess the situation in this regard?

ALROSA had some problems related to the design and construction of underground mines, especially the Mir Mine. It's no secret that the geological structure of diamond fields is not simple, here you may come across cryogenic factors (permafrost and thawing), high saturation of rocks with methane, oil and bitumen occurrences, as well as aggressive salt and water brines in case of water intrusion. Errors were committed during the selection of design concepts, and no attempts were made to offset them for a long time. As a result, the construction was too expensive. Besides, the selected technological solutions for mining systems (goaf stowing) were not exactly cheap at operation, which could not but affect the cost of production. Plus the high risks of accidents present at that time – to reduce the probability of emergency situations to an acceptable level additional funds were needed as well. This picture was clear to many experts as far back as the "zero" years, but now I think that most of them will agree with me.

If the situation was clear long ago, why wrong decisions were taken?

When the underground mine started to be designed, the company was headed by Vyacheslav Shtyrov. He was not a mining engineer (he was a civil hydraulic engineer), and was extremely weak in understanding these issues. And his style of managing the Company was as follows: people were moved up the career ladder due to their personal loyalty to him rather than due to their professional skills. Those specialists that had their own opinion and were prepared to defend it fell "out of place" and were pointed to the door. As a result of aggressive personnel policies aimed at building an authoritarian power structure, the Company was left by a lot of competent people, and these personnel losses could not but affect its operations negatively. Many senior positions in ALROSA and its subsidiaries were taken by people who were ready to agree with any, even the most ignorant decisions for the sake of their personal careers and pockets. Intelligent, professional contractors were dispersed and replaced by those chosen at random and so we got what we got - dangerous and ineffective projects. After his election as President of Yakutia Vyacheslav Shtyrov lobbied the appointment of Vladimir Kalitin (the Company’s former chief engineer) - a weak-willed person obedient to him - as president of ALROSA. No wonder that he did not only made any attempt to somehow fix the situation, but, on the contrary, continued to aggravate it lacking engineering expertise. During those years the Company lost a lot – both in terms of personnel and industrial prospects. I was forced to resign as well, because Shtyrov pointed me to the door. I started my service record with ALROSA as the chief of the Company’s drilling and blasting site later turning to be its general director and I never debased myself, so I wrote an application to be dismissed. As it seems, I'm the only one in the history of the Company, who left the position of general director with the wording "voluntary resignation."

What were the promising initiatives which were interrupted at that time?

Their (production programs) number was not small (automotive transport, ore concentration, exploration, construction); take for instance the idea of dry concentration - this is an extremely promising technique. After I left in 2002, all the work in this direction was stopped. Now, as I heard, it is once again given consideration, but it’s a pity that so many years were lost.

When personal devotion is placed above professionalism, corruption is inevitable...

Probably so. When I was in charge, people were afraid to steal and I valued the Company’s employees not for bootlicking, but for their professionalism. I used to lay it on the line - if you steal, you have nothing to do with this Company. However, later this whole thing blossomed – out and out. Here's an example - we wanted to build a refinery. The Irelyakh oil field is close to Mirny and the Company could be provided with its own oil products, which could dramatically reduce procurement costs. The payback period was only 4-5 years. The equipment was purchased, but as soon as I resigned this idea dissolved. The remaining budget to complete the construction reached only $50-60 million. Who needed the hugely expensive delivery of gasoline from the mainland and why? Who were the suppliers? Who brought those suppliers? These questions are not difficult to answer... And there are dozens of similar examples to recite. Alas, in those years leadership positions were taken by the people who were not suitable for this neither from the business point of view nor in moral terms.

Do you mean the sensational story about "golden parachutes" for Doynikov and Potrubeyko?

I’ve read about it... It's just a shame. For me it’s difficult to imagine how they can now look in the eyes of their colleagues. I am ashamed myself for them, because I gave them a start in their life (and to many members of the Board and executives in the Company). But perhaps this is a consistent pattern: as a rule, those people who are not too competent and obsequious to their superiors are subject to one of the worst mortal sins – the sin of greed. The fact that ALROSA is getting rid of such employees - although not yet completely, unfortunately - is good. It’s just a pity that a lot of time is lost.

What is your opinion as a production devotee of the idea to diversify ALROSA?

Extremely negative. When Vyacheslav Shtyrov left the company rising to head the republic, and then, using his position as one of the controlling shareholders, he started to promote the idea of ​​ four main business lines to diversify the Company - oil and gas, coal, iron, diamonds and gold. Diversification of ALROSA is Vyacheslav Shtyrov’s favourite avocation. For some reason, Aldanzoloto was sold to Polyus. Okay, the Company plunged into the iron business, then into the oil and gas business and nearly got into the coal business, but God saved it. Back in the early 1980s, I visited the Yakutugol Company on behalf of Mr. Chiryaev and, having seen what was going on there, was quietly horrified and quickly left. Coal business in Neryungri was anything but easy mining work. As a result, all these Shtyrov’s formidable plans went to naught, but it just couldn’t be otherwise. When there is a lot of ambition and not so much professionalism, the result is easy to predict. To burden the Company with iron, gas, coal without knowing the markets and having such a super-team to top it all... I bet the Company would have gone flat broke. Currently, the Company’s management is getting rid of this legacy, and rightly so. The company should do what it can, what it was created for - mine diamonds. It is necessary to invest in exploration, to seek new diamond fields, it is necessary to invest in new technologies for production and ore concentration, so that low grade diamond pipes turned profitable, it is necessary to invest in personnel, in young people, to find and promote talented young guys and girls living there. ALROSA has always been strong relying on its own employees, who were raised starting from schools and colleges. I do not know if there are traditional approaches to personnel policy nowadays, it is better to ask about it the chief ideologist and the personnel manager of the Company...

There have really been quite a few not very shrewd decisions regarding personnel and production in the history of ALROSA. But there was also a bright side, isn’t it? What can be a benchmark today?

There were two CEOs of the Company, whom I personally considered to be an example for me - Lev Soldatov and Valery Rudakov. This was the case when the highest level of professionalism was combined with impeccable honesty and sincere humanity. These qualities are always in demand, at all times. That is the benchmark to follow.

Sergei Goryainov, Rough&Polished