Alrosa, which produces about a quarter of the world's diamonds, plans to sell Eurobonds in the first half of next year, paying interest of less than 11 percent, and use the money to invest in mining projects.

Alrosa mines almost all the rough diamonds in Russia, which has the world's biggest reserves of the stones, Alrosa Vice President Semyon Zelberg said in an interview. The company plans to boost gems sales 18 percent to $2 billion a year as of 2005, from $1.7 billion expected next year.

The Russian gems monopoly also plans to borrow $500 million from a group of banks next year. The funds will be used to increase investments in projects 42 percent to 17 billion rubles ($536 million) next year, as demand for diamonds increases.

"We want to borrow to fund about 50 percent of our investments," he said. "We also reinvest part of the 9 billion to 10 billion rubles of net income we receive each year."

The miner plans to secure either a three- or five-year loan of $500 million in the first quarter of 2003 and pay about 6.5 percent interest, company Vice President Dmitry Novikov said yesterday at a briefing. Alrosa was given a B- long-term credit rating by Standard & Poor's last year.

Alrosa's plans for Eurobonds sales contradict a report yesterday by AK&M news wire that the company plans to sell a total of $800 million of Eurobonds before July 2003.

Alrosa had cut its investment plans for the five years to the end of 2005 by 22 percent to 78 billion rubles after sales fell the past two years and the company was forced to spend 3 billion rubles to restore the Siberian city of Lensk after flooding in 2001.

Lensk is the main port through which Alrosa, based in the Siberian region of Yakutia, ships in construction materials and other supplies.

On Oct. 24 the company plans to sell 3 billion rubles of three-year bonds, which will pay 18.5 percent on semi-annual coupons.

The funds will be used to refinance part of Alrosa's promissory notes, which totaled 5.9 billion rubles as of Oct. 1. The company also will refinance some short-term loans, which were worth $486 million as of this month.

Alrosa had $942 million of outstanding debts as of Oct. 1 excluding promissory notes, according to the company report.