Alrosa aims to cut over $1 bln in debt by end-2009

MOSCOW Oct 22 (Reuters) - Alrosa, the Russian state diamond miner with a 25 percent global market share, plans to cut its debt to $3.86 billion by the end of this year by selling energy assets and taking advantage of renewed demand for its gems. Alrosa, whose debt exceeded $5 billion as of June 1, said in a statement on Thursday that diamond sales in the third quarter of 2009 totalled nearly $1 billion. For the first nine months of the year, sales totalled $1.73 billion, the company said.

"The reduction in debt is foreseen through the revival of demand for diamonds and the sale of non-core assets," Alrosa said in the statement.

VTB (VTBR.MM), Russia's second-largest bank, on Wednesday completed the purchase of gas assets from Alrosa for a total consideration of $620 million, a source close to the deal told Reuters. Alrosa declined to comment.

Alrosa bought the companies -- Geotransgaz and Urengoi Gas Company -- as well as oil firm Irelyakhneft when it was attempting to diversify its business between 2005 and 2007.

The source said that VTB had bought the companies in order to sell them on to a third party.

Alrosa also said diamond sales in October so far totalled $351 million, of which $255 million was earned on the free market at what the company said were "fair prices". (Reporting by Polina Devitt, writing by Robin Paxton; Editing by Rupert Winchester)