MOSCOW- Russia's Alrosa, the world's largest diamond producer, will build up its cooperation with state-controlled diamond company Bakwanga, known as MIBA, in the Democratic Republic of Congo, Alrosa said on Thursday.

Alrosa and MIBA signed a memorandum of understanding after Congo said it would seek compensation in line with the "polluter pays" principle for a leak in July from tailings dam at a diamond mine in Angola which turned a tributary of the Congo River red.

Congo has yet to complete the laboratory analysis but has said the leak polluted drinking water, causing 12 deaths and making thousands of people ill. The mine's operator Catoca, in which Angolan state diamond company Endiama and Alrosa hold 41% each, said it had fixed the leak quickly.

Alrosa and MIBA made no mention of the incident in Angola in the statement but said they intended to exchange technologies for sustainable development of the diamond mining industry.

MIBA's business has lacked investment due to domestic conflicts in Congo, management issues and financial crises over the last 20 years. It still owns a large number of licences for diamond exploration.

"The strategic partnership between Alrosa and MIBA will create significant value for the Congolese mining industry, its economy and its people," Kacy Grine, advisor to the Congo government in this partnership, said in the statement.

MIBA and Alrosa will seek opportunities to explore, mine and process diamonds together in line with the best global practices for responsible business conduct and transparency, they said.

"We express our willingness to share our practical experience as well as technical and professional resources with our colleagues at MIBA for a dynamic and efficient implementation of future projects in diamond mining," Vladimir Marchenko, Alrosa's head of African division, said.

(Reporting by Polina Devitt; additional reporting by Hereward Holland; editing by David Evans) ((