Alrosa Raises Rough Prices Again

Alrosa Rough Diamonds

Alrosa has increased prices for the third consecutive contract sale, fueling concerns about unsustainable growth and tight manufacturing profits.

The adjustments were 4% to 5% on average, with a focus on 1-carat rough and larger, insiders told Rapaport News this week. Prices of that category are now higher than pre-pandemic levels, a customer noted.

Alrosa declined to comment on its “commercial strategy,” but a spokesperson said the Russian miner “assures that prices for its goods follow the real, confirmed demand from the midstream sector.”

The sale, which took place this week, came amid strong rough demand following positive holiday seasons in the US and China. But there were warnings of a slowdown as the quiet season approaches.

“Since the rough market is so strong, everyone accepts the [prices], but it’s becoming a bubble that might explode,” a source cautioned.

Industry members highlighted possible challenges for manufacturers. Rough prices have outpaced polished, they claimed, with the upcoming slow months raising concerns about end demand.

“[The miners have] taken away all the profit margin from the manufacturing pipeline, because…when the polished is ready, the polished market will be slightly weaker than today,” an Alrosa customer explained. “Probably, we will all lose some money, and not even make the costs.”

Alrosa maintained its policy of allowing customers to refuse any unwanted goods — a concession that has been in place since the start of the pandemic.

However, some clients felt compelled to buy to ensure they retain their allocations in the new contract period, which begins April 1, one customer pointed out. Even so, rough sales at the trading session will likely be lower than the $421 million it reported for January and the $361 million it garnered in February, reflecting a drop in the miner’s supply, he added.

De Beers: Less availability

De Beers will also offer limited supply at its sight next week as its reduced production plan for 2021 has affected availability. Sources expect sales of around $400 million, compared with $663 million in January and $550 million in February. The company lowered its full-year production forecast in January because of operational issues at some of its mines.

“We continue to take a prudent approach with our mine plans given the ongoing pandemic and associated uncertainty,” a De Beers spokesperson said Wednesday.

With fewer goods on the table, further price increases by De Beers are unlikely at next week’s sale, a sightholder predicted. The miner already increased prices in December, January and February, reversing a sharp price cut it implemented in August.

“There was a major pushback on the goods last month,” the sightholder commented. “In anything that [produces] pointers and large [polished goods], they went way too far, and everybody said so. There were also refusals. If [prices] go up now, everyone will just leave the goods.”


Alrosa mulls acquisition of diamond factory


Russian diamond miner Alrosa is considering the acquisition of Russia’s largest producer and exporter of polished diamonds, Kristall, which is valued at 1.89 billion ruble.

Kristall processes more than 200 000 ct/y of rough diamonds, with 90% of diamond feedstock supplied by Alrosa.

Krystall Diamonds
Krystall Diamonds

“On the back of the increasingly complex economic environment, Kristall has been going through some financial challenges in recent years. However, the business maintains its output volumes boasting rich heritage, state of the art equipment, and extensive expertise in rough diamonds cutting,” said Alrosa CEO Sergey Ivanov on Tuesday.

He noted that Alrosa was not new cutting and polishing and that its Diamonds Alrosa branch was responsible for about 20% of polished diamonds in Russia. After consolidating Kristall, the group’s share in the Russian market would reach as much as 70%.

“We are quite optimistic about the integration prospects and have already embarked on preparatory work to start joint operations in cutting and sales.

We will focus our efforts on developing new sales channels, including those in the US and Chinese markets, while also improving production efficiency by leveraging the latest diamond processing technologies, automating routine operations, and creating competence hubs to bring together high tech equipment and industry professionals.

We expect that our efforts to merge our cutting facilities will help reduce production costs and, subject to a favourable market environment, take up a considerable share of the market for best in class polished diamonds.”

If approved by the Alrosa supervisory board, the sale and purchase agreement is expected to be signed by the end of this month.

The Kristall diamond factory was founded in Smolensk in 1963. Last year, Kristall production and sales were 105 700 ct and 111 700 ct of polished diamonds, respectively. Its total revenue amounted to 12.8 billion ruble, and net profit reached 40.7 million ruble.

In 2002, Kristall launched its own jewellery production, and the retail chain of Smolensk Diamonds, its jewellery entity, now has over 50 sales points in 30 Russian cities. Kristall’s another entity, Almaz Servis, produces tooling and equipment for the diamond industry.

Source: miningweekly

ALROSA Uncovers Largest Yellow Diamond Find So Far This Year

Alrosa Yellow Diamond

ALROSA subsidiary JSC Almazy Anabara has recovered a 28.59 carat rough diamond of deep greenish yellow hue the biggest yellow found so far this year.

ALROSA said that following an appraisal, the color of the stone has been determined as fancy intense yellow.

The diamond, discovered at Ebelyakh placer deposit in July, has dimensions of 11.40 x 19.00 x 17.50 mm, and has “insignificant colorless inclusions on the surface,” the miner said.

“This stone is unique because nature seemed to have prepared it for cutting in advance and gave it a pear-like shape,” said Evgeny Agureev, a Member of the Executive committee, and Director of the United Selling Organization of ALROSA.

The United Selling Organization and the company’s cutting division, DIAMONDS ALROSA, have yet to study the diamond and decide whether to auction it as a rough stone or to cut and polished it.

The Almazy Anabara is a leader in producing fancy colored stones. In 2017, it produced a 27.85 carat pure pink diamond the largest pink stone in ALROSA’s history, and a large 34.17 carat vivid yellow diamond.

ALROSA plans to focus its cutting division on the processing of large and colored diamonds and the subsequent sales. Starting this year, ALROSA has been sorting colored diamonds according to a new technology, that includes almost all hues and color grades. Most of these diamonds are processed by DIAMONDS ALROSA the company’s polished diamond unit.

ALROSA produces at least 7,000 carats of colored diamonds per year. In September, it held a True Colors auction in Hong Kong, where it showcased a collection of 250 diamonds of different shapes and hues. The company said it plans to run such auctions regularly.

Source: IDEX