Russia's Alrosa to keep plum mine asset - source

MOSCOW, May 24 (Reuters) - Russian diamond monopoly Alrosa may use the spoils of high diamond prices to develop an asset in northwest Russia rather than let a foreign miner such as Rio Tinto onto its territory, a source close to the company said.

The source said on Tuesday high diamond prices meant Alrosa had enough cash to finance development of the Sevalmaz project by itself.

'A loss-making project is turning into a profitable one. Financial results show that Alrosa could easily develop it by itself, so all of these discussions should reconsidered,' the source said.

Newspapers have reported that Alrosa could grant a minority stake in the Severalmaz project to Rio Tinto. Russian business daily Vedomosti reported in December that it could sell a 49 percent stake to the global miner for almost $400 million.

In addition to its core Soviet-era operations in western Yakutia, Alrosa is involved in a number of other projects elsewhere, and openly sought partners to help finance and develop them.

Such a deal would mark the first time a foreign entity were allowed to mine diamonds in Russia.

The Financial Times also reported on Sunday that Rio Tinto is a final contender for the project, which has diamond reserves of 128 million carats.

'The decision is becoming more obvious -- consideration of bids from potential investors in the project should stop,' the source said.

(Reporting by Polina Devitt; Editing by Jon Loades-Carter) Keywords: ALROSA/RIOTINTO ([e-mail]; [phone]) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.