According to RIA Novosti, the Federal Property Management Agency and the Government of Yakutia will solve the question of ALROSA property in the court. Such an announcement was made by the Minister of Finance Alexey Kudrin.

A few days ago Yakut President Vyacheslav Shtyrov signed the protocol on the protection of public property in the diamond industry of the republic of Sakha (Yakutia)." On December 15, Russian Prime Minster Mikhail Fradkov will report to President Vladimir Putin on the fulfillment of instructions he gave four years ago to federalize the ALROSA diamond mining company. The document, whose existence the Yakut authorities have denied until now, describes how Russia will increase its share in the diamond monopoly's capital.

Judging by the protocol, Russia and Yakutia have agreed to divide the property of the Yakutalmaz diamond mining company on whose basis ALROSA was created in the early 1990s. A part of this property "may be transferred to the Russian Federation to be contributed to the authorized capital of JSC ALROSA as the Russian Federation's contribution to payment for additional shares". The other part will be contributed to ALROSA's capital by the republic. Apart from that, the list of the Yakutalmaz property that is "not subject to privatization" will be drawn up.

Russia has agreed to this compromise because the full inclusion of the Yakutalmaz property would deprive Yakutalmaz of the right to raise ALROSA's rent (about 10 billion rubles ($348.43 million) a year, or over 60% of the republic's budget revenues). Russia is prepared to compensate Yakutia for "all the budget revenues it may lose".

The document provides an answer to another ticklish question - one about the mechanism of returning the Yakutalmaz property to federal ownership. "The issue of restoring the property rights of the Russian Federation to the property of the former production and research association Yakutalmaz can only be settled in court." This means that Yakutia is prepared for Russia filing suit against it. "It is presumed that such a suit against Yakutia will be filed in a court of arbitration and then a consent judgment will be signed," a source in the Economic Development and Trade Ministry said.

Yakutalmaz was founded in 1957. In 1992 on its basis JSC ALROSA was launched.

ALROSA is one of the world's biggest diamond-mining companies. It accounts for about 23 percent of the world's diamond extraction. It annual turnover is estimated at $1.6-2 billion. At the end of 2002, the Russian government became the main shareholder in ALROSA, when it increased its holding package from 32 to 37 percent. Another 32 percent belongs to the government of Yakutia, 21.71 percent to the workers, 8 percent to eight Yakutian uluses (districts) and the remaining 1.29 percent to the company's managers.