20 December 2004- ALROSA Company Limited has offered to the European Commission a number of commitments regarding supplies of rough diamonds by ALROSA to De Beers.    ALROSA expects that the proposed commitments will be accepted by the Commissionin early 2005. In the meantime, ALROSA continues to supply De Beers on a 'willing buyer, willing seller' basis.

ALROSA has been supplying De Beers with rough diamonds for nearly 50 years. In 2002, after a Trade Agreement with De Beers was signed, ALROSA notified the Agreement to the Commission.  The Commission raised concerns and the parties started discussions with the Commission regarding the impact of the EU competition law in order to reach a settlement. 

As a result of these discussions, it was clear that the settlement should involve a phase-down of supplies over 6 years to an acceptable level given De Beers' world diamond market share.  After the expiration of this 6-year term, supplies will be permitted to continue at a fixed level indefinitely thereafter.

The proposed settlement will protect ALROSA's commercial interests while it continues to implement its new strategy to develop its own distribution network and to increase sales to the world market, in accordance with the declared policy of liberalising Russian legislation governing the Russian diamond industry. It is expected that the proposed  settlement will represent a 'win-win' result for everyone concerned.