On October 3, 2011, President of ALROSA Fyodor Andreev held a working meeting with the Company’s management. The agenda included issues relating to ALROSA’s marketing activities and its current financial situation.

The Company has noted that the key factor determining the world diamond market development is the imbalance between demand and supply. When it is objectively impossible to increase the world rough diamond production volume, the major markets of diamond jewelry consumption — the USA, the PRC, and India, are displaying a steadily high demand. This fact is particularly confirmed by the results of Hong-Kong Jewelry and Gem Fair held on September 19–23, 2011.

In the meantime, the Company anticipates a slight decrease in diamond purchase volume in the world market. Such assumption is explained by two factors. Firstly, by traditional slowdown in business activity on the market in August-October. Secondly, the world stock market indices fall and, as a result, the shortage of liquidity, led to a significant reduction of speculative component in the diamond market.

ALROSA will react to the diamond price stabilization in accordance with the current trade policy aimed at maintaining market stability and avoiding negative influence of speculative factors.

In particular, ALROSA is planning to sell rough diamonds under long-term contracts in October, having considerably reduced rough diamond supplies to the market. Overall supplies in November and December will be conditioned by the market demand.

By the end of the year, ALROSA expects the world’s diamond jewelry sales to hit very high rates as compared to 2010 and 2009, and due regard being had to the current global diamond production, the Company also expects rough diamond price to revive growth as early as in the beginning of 2012.