Alrosa has said there are no major shareholder obstacles now to the reorganization of Alrosa's corporate structure. However, according to company spokesman Andrei Polyakov conversion to the open shareholding company format will take another six months.

It had been intended that Alrosa's government board, known as the Supervisory Council, would have voted its approval of the conversion on October 1. But that decision, dominated by the federal government's board members, was postponed, so that the Yakut regional parliament, known as Il Tumen, would debate the issues and vote first.

The Yakuts had been insistent that if they agreed to the reorganization, the federal government should agree that in the subsequent privatization and initial public offering (IPO) of Alrosa shares on public markets, the regional interests would be protected. This apparently forced the board chairman, Finance Minister Alexei Kudrin, and chief executive Fyodor Andreyev, to cut their planned sell-off of 40% of Alrosa's shares to about 20%.

On November 10, Il Tumen voted approval of the third and final reading of the bill to allow the Alrosa conversion. Inserted into the enactment was the condition that the republic's share in Alrosa could not be diluted to less than 25% plus one share.

The current stake is 32% for the regional government, plus 8% held by district administrations (uluses) in Yakutia. The federal government stake is 51%. Another 9% is held by Alrosa management, retirees, Russian and foreign investment funds and trustees.

Andreyev has told a Moscow newspaper that the IPO would be capped at a sale of no more than 20% of the diamond company's shares.

He has also hinted that if the republican government, headed by President Yegor Borisov, did not give him the free hand he wants to raise unsecured finance by selling Alrosa shares, the result would be diminishing output and "more labor redundancies", as the release from Andreyev's last management meeting on November 15 announced.

Polyakov told PolishedPrices that the next move in transforming Alrosa into the open format (known in Russian as OAO) is a corresponding “decision of the Supervisory Council, and then the voting of the extraordinary meeting of shareholders which will adopt the new Alrosa’s articles. This process will take about half a year, I believe.”

He also confirmed “there will be no further change in the Yakuts’ share capital. Their (the regional government's) stake will remain at 25% +1 share. No changes in the share capital have been discussed, neither are such discussions planned.”

The timing of the IPO will follow, but may take another six months. According to Polyakov, the timing, stock exchange, and valuation targets are all premature for discussion now.

The company announced earlier this month that its production goal for next year will be "maintaining global leadership by carat output". That means 34.438 million carats of diamonds, roughly equal to this year's level, but ahead of De Beers by about 1 million carats.

The sales target for 2011 for rough diamonds has been fixed at $3.4 billion, up by 2% on this years expected revenue total. Sales of polished is projected to be up 8% on this year.