February 20, 2017 / 4:42 PM / 6 months ago

Russia's Alrosa CEO could step down - sources

MOSCOW, Feb 20 (Reuters) - Andrey Zharkov, head of Russian diamond giant Alrosa, could step down soon, two sources familiar with the situation told Reuters on Monday.

Alrosa is the world's largest producer of rough diamonds in carat terms. Together with Anglo American's unit De Beers, they produce about half the world's rough diamonds.

The Russian government is considering Sergey Ivanov, ex-head of insurer SOGAZ and son of the former head of the Kremlin administration, for Zharkov's replacement, both sources added.

They did not give a reason for the potential management change.

Zharkov, who has been Alrosa's CEO since spring 2015, has been in dispute over its 2017 budget with the Finance Ministry, Kommersant newspaper said earlier on Monday, citing sources.

Alrosa and the Finance ministry declined to comment. Russia's largest lender Sberbank, where the younger Ivanov currently serves as a senior vice-president, declined to comment.

The Russian government sold a 10.9 percent stake in Alrosa last year raising $813 million to plug holes in the budget as part of a privatisation programme.

The state plans to cut its stake in Alrosa further to 25 percent plus one share by 2019, but the Finance Ministry has already said that no sale was planned in 2017.

The share sale in Alrosa in 2016 raised its official free float to 34 percent. However, the federal government and the government of the Yakutia region and its districts, where Alrosa's main producing assets are based in Russia's far east, have kept their influence via the company's board of directors.

The federal government and the government of the Yakutia, together with its districts, currently each hold 33 percent of Alrosa's shares.

Alrosa's 2016 diamond production totalled 37.4 million carats, down 2 percent year-on-year, with revenue from rough diamond sales of at least $4.3 billion.

Its share price in Moscow was up 0.4 percent on Monday, slightly outperforming the MICEX index. (Reporting by Polina Devitt and Darya Korsunskaya; additional reporting by Kira Zavyalova; Editing by Ruth Pitchford)

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