Russia’s sporadic drive to raise money from state-owned assets took a step forward on Wednesday, when the government said it would cut its stake in diamond miner Alrosa as part of a $1.6 billion share sale by the company.

Alrosa is the world’s biggest diamond producer by output and competes with Anglo American’s De Beers. Under the offering, which has been planned for more than a decade, Russia’s federal and regional governments plan to sell 14 per cent of the company’s shares. An additional two per cent of shares will be sold by Alrosa’s subsidiary, Wargan Holdings Ltd, the company said. The deal is expected in about two weeks, with Alrosa targeting a valuation of between $10 billion and $11 billion for the whole company, a banking source said.

Alrosa, which has a market value of about $8.2 billion in Moscow, declined to comment.

The company, which already has a small float on the exchange, sees its valuation between $9 billion and $15 billion, CEO Fyodor Andreev said in May.

Following the share sale, Russia’s federal and regional governments will own 43.9 per cent and 25 per cent of Alrosa respectively.

Alrosa overtook De Beers in production terms in 2009. It produced 34.4 million carats of rough diamonds in 2012, accounting for 27 per cent of the world’s output.

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