Alrosa Diamonds, the world’s biggest producer of diamonds for the second consecutive year--surpassing De Beers Diamonds--plans to raise $3 billion in an initial public offering in 2012, according to Chief Executive Officer Fyodor Andreev. 

The money will be used to repay debts and fund expansion, including the development of an iron ore field near China. Representative of major banks will act as advisors. The state-owned Siberian based company reigns over 1.28 billion carats of diamond reserves and plans to sell about 25 percent of its offerings—Russia is proported to have the largest diamond reserves in the world.

Alrosa Diamonds disclosed information about its reserves for the first time recently, in an effort to improve transparency and public relations. “At current extraction rates, the company’s reserves will last more than 40 years,” said a representative.

The company produced 34.3 million carats of diamonds in 2010, putting it ahead of De Beers diamonds by a slight margin. The firm’s 2010 revenues were approximately $4 billion, with exports accounting for the majority of its sales. According to capital market statistics, global prices of polished-stone rose 7% in the first quarter of 2011 and rough-diamond prices rose 10%. Because there has not been any major mine development during the past ten years, prices are expected to continue to rise.
 “My personal target is to prepare the company so we’ll be ready to do an IPO in the middle of next year,” said Andreev an interview with Bloomberg Television.

Alrosa’s executive board has also approved a program for geological diamond exploration, which will be carried out in Western regions of Siberia and northwestern Russia.

Alrosa’s announcement comes at a time when demand for diamonds has surged in China and India as a result of emerging middle classes markets. China has risen to the status of the second biggest buyer of diamonds in the world, behind the U.S. The majority of the global diamond market is currently controlled by a handful of privately held companies.

The focus of the 2011 Antwerp Diamond Conference which took place in May, was future development. “We will be looking closely at that oncoming train, so that we may jump safely aboard and ride it on its journey over the horizon,” said Ari Epstein, chief executive of the Antwerp World Diamond centre (AWDC). At the conference, Leonid Tolpezhinikov, who represented Alrosa diamonds, reiterated the company’s recent public announcements of public listing of shares, and greater accountability.

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