May 24, 2011 / 4:04 PM / 8 years ago

Russia's Alrosa to keep plum mine asset - source

MOSCOW, May 24 (Reuters) - Russian diamond monopoly Alrosa may use the spoils of high diamond prices to develop an asset in northwest Russia rather than let a foreign miner such as Rio Tinto onto its territory, a source close to the company said.

The source said on Tuesday high diamond prices meant Alrosa had enough cash to finance development of the Sevalmaz project by itself.

“A loss-making project is turning into a profitable one. Financial results show that Alrosa could easily develop it by itself, so all of these discussions should reconsidered,” the source said.

Newspapers have reported that Alrosa could grant a minority stake in the Severalmaz project to Rio Tinto (RIO.AX). Russian business daily Vedomosti reported in December that it could sell a 49 percent stake to the global miner for almost $400 million.

In addition to its core Soviet-era operations in western Yakutia, Alrosa is involved in a number of other projects elsewhere, and openly sought partners to help finance and develop them.

Such a deal would mark the first time a foreign entity were allowed to mine diamonds in Russia.

The Financial Times also reported on Sunday that Rio Tinto is a final contender for the project, which has diamond reserves of 128 million carats.

“The decision is becoming more obvious — consideration of bids from potential investors in the project should stop,” the source said. (Reporting by Polina Devitt; Editing by Jon Loades-Carter)

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