Alrosa Sales Decline at Slower Rate

Alrosa Rough Diamonds

Alrosa’s sales fell 24% year on year to $258.7 million in September, amid continued market weakness.

However, the total was the highest in four months, and reflected a noticeable recovery in the small-stone sector, the Russian miner said last week.

“It is partly due to the traditional autumn market revival after the holiday period, and a slight increase in demand from Indian cutters and polishers ahead of the Diwali festival,” said Alrosa deputy CEO Evgeny Agureev. “The most noticeable increase [was] sales of small-sized rough diamonds.”

Rough-diamond sales decreased 23% to $256.5 million for the month, while polished revenue plunged 69% to $2.2 million.

Alrosa’s sales fell 34% to $2.42 billion in the first nine months of the year. Revenue from rough stones dropped 34% to $2.39 billion for the period, while polished-diamond sales slid 50% to $36.8 million.

However, while sales have seen a slight boost, Alrosa thinks a full recovery will take longer.

“The market is still facing low demand for rough diamonds, though there has been a gradual recovery for some categories of diamonds,” Agureev added. “We still believe it will take some time to get a balance between supply and demand.”

Agureev, who has been the director of Alrosa’s United Selling Organization (USO) since 2017, was promoted to deputy CEO of the group last week.

“Given the difficult conditions in the global diamond market today, Evgeny will continue to improve the efficiency of the entire supply chain of the company and look for new approaches to stimulate rough-diamond sales, as well as to increase the level of interaction with the company’s customers and expand the customer base,” noted Alrosa CEO Sergey Ivanov.

Source: Diamonds.net

Alrosa Partners with Zimbabwe Mining Company

Alrosa diamonds rough

Alrosa has agreed to a joint venture with national miner Zimbabwe Consolidated Diamond Company (ZCDC) for exploring new diamond projects in the country.

The deal, which provides Alrosa with a 70% stake in any new greenfield deposits, encompasses geological exploration, diamond mining and independent sales of rough stones to external markets, the Russian miner said Tuesday.

“We are committed to productive work in the exploration of new, promising areas and subsequent diamond mining,” explained Alrosa deputy CEO Vladimir Marchenko. “Our specialists have been working in Zimbabwe for more than three months now, and the national authorities have been of great support to them. We have chosen various projects for the joint venture, and part of [those] will be launched this autumn.”

The company is primarily considering areas located in the Chimanimani region of Zimbabwe, Marchenko noted, stressing that Alrosa did not plan any operations in Marange, despite recent reports indicating it was considering the move. Zimbabwe’s Marange fields were a source of contention, after state security forces killed nearly 200 citizens in 2008 in an effort to clamp down on informal mining, resulting in the country’s removal from the Kimberley Process (KP). The KP reinstated Zimbabwe in 2011, but US sanctions against Marange diamonds remain in place.

“Alrosa only explores and considers the feasibility [in] other parts of the country,” it said. “[The company] has never, and under no circumstances, considered, and won’t consider, the possibility of entering the Marange region.”

In December, the miner established Alrosa Zimbabwe Limited, an affiliate company that will oversee all projects in the country.

Source: Diamonds.net

New Alrosa Client List Excludes Leviev Firm

Nyurbinskaya

Alrosa has stopped supplying rough diamonds to Lev Leviev’s LLD Diamonds through its contract-sales arrangement, as part of a reshuffle of the miner’s long-term client list.

The tycoon’s Israel-based firm is one of “several” former customers that have dropped off the 2019 supply roster, known as the Alrosa Alliance program, the Russian company said.

“Last year, there was a decision to exclude LLD from the long-term client list due to noncompliance with Alrosa Alliance principles,” a spokesperson for the Russian producer explained in an email to Rapaport News this week. The Russian company has guidelines that state various possible reasons for suspending a client.

Alrosa has not confirmed the identity of the other companies it removed from the list.

LLD has been under the spotlight since Israeli police arrested several of its employees in November on suspicion of smuggling diamonds worth hundreds of millions of shekels into the country. Alrosa declined to say whether the move was directly related to the probe, while LLD did not respond to a request for comment.

The Alrosa Alliance accounts for about 70% of the miner’s rough sales by volume. It operates a similar arrangement to De Beers’ sightholder system, offering stable supply to companies that can demonstrate demand and comply with its rules on business practices.

Alrosa has expanded its list to 59 long-term buyers of gem-quality rough for 2019, from 56 last year. The six new members were Hong Kong-based jewelry retailer Chow Sang Sang, Indian diamond firms Kapu Gems, Mohit Diamonds, VD Global and M. Suresh Company, and Switzerland-based manufacturer Richold.

“We confirm the inviolability of Alrosa Alliance principles, and are interested in diversifying our client base, which has grown compared to last year,” said Evgeny Agureev, director of Alrosa’s United Selling Organization. While the new customers showed sufficient “trading activity” to warrant gaining long-term supply, “several companies dropped out from the list,” he added.

The miner also accepted two Belgian companies, H.D. Diam and IGC Group, as candidates for potential future long-term contracts. Both firms have previously bought from Alrosa in ad-hoc deals, known as spot transactions.

Last year, Alrosa switched to annual assessments of clients’ rough-diamond allocations, bringing its policy more in line with that of De Beers. Under the old system, Alrosa’s supply deals with clients held for three years.

Source: Diamonds.net