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Russia
By Svetlana Shelest
Russia’s largest diamond miner, ALROSA, reported a 13 percent year-on-year increase in production in the first half of 2015, having mined 18 million carats of rough. The company has estimated its first-half sales at 18 million carats and reported expected revenue of at least $ 2.1 billion. In the second quarter of 2015, ALROSA’s sales totaled 9 million carats, including 5.6 million carats of gem-quality diamonds traded at an average price of $176 per carat and 3.4 million carats of industrial-grade diamonds sold at an average price of $11 per carat. In the second quarter of 2015, ALROSA reduced its prices by 3 percent, which was the miner’s second price cut since the beginning of the year. Overall, the company’s rough prices have gone down 6 percent this year due to the slowdown in the diamond market. At the beginning of 2015, ALROSA set its goals for the year at 38 million carats in production and 40 million carats in sales.
Among the projects that ensured growth was the Karpinskogo-1 open-pit mine, which was launched in October 2014 and stepped up its production to 600,000 carats in the first six months of 2015. Located in the Arkhangelsk region of Russia, it is operated by ALROSA’s Severalmaz division. The Mir underground mine also continues building up its performance after a successful implementation of the solution to the flooding problem. In the first half of 2015 alone, it produced 1.047 million carats against the 1.463 million carats mined in the entire year 2014. The company reported that Mir has doubled its diamond output to date and is on track to reach its design capacity tentatively by 2016. The Botuobinskaya open-pit mine, which began operation in March 2015, has contributed its first 481,000 carats to the overall total output. Udachny is currently processing ore previously mined in the open pit that officially went offline in July. (See Udachny Update in Industry section.) In the first half of 2015, Udachny produced 2.6 million carats.
Deputy Prime Minister of Russia and ex-Minister of Natural Resources Yury Trutnev made a public announcement at the end of July suggesting that Russia’s first diamond bourse might be established in Vladivostok, the major city in the Russian Far East, an area located in proximity to China and Japan. Trutnev had previously requested that ALROSA explore this possibility and produce recommendations. In his interview with TASS, Russia’s major news agency, Trutnev said, “At this stage, we are discussing the idea. We will talk about launching the project once we work out the economics involved and contact the key experts and players in this business.” He also called on ALROSA to consider measures to support and promote Russia’s diamond polishing business jointly with the state authorities. “I am merely making suggestions now, but I call on you to consider the possibilities such as, for instance, giving the country’s polishers easier terms of payment against the state guarantees. Let’s think what we can do to set up a diamond bourse in Vladivostok,” said Trutnev.
July also brought the news of the publication of ISO International Standard 18323, which specifies permitted terms to be used by the diamond industry in the sale of diamonds. The new standard provides clear definitions of natural, treated and synthetic diamonds and prescribes the appropriate terminology to be used for each of these categories in making sales, with the aim of removing any possible confusion and enhancing transparency. Maxim Shkadov, head of Russia’s largest polisher Kristall Smolensk and president of the International Diamond Manufacturers Association (IDMA), said: “Russia was one of the first countries in the world to introduce a standard for diamonds, and we have been wondering for quite a while why the global community was taking so long to do the same. IDMA has been raising this question time and again. As the president of this organization, I keep analyzing the risks that our market segment is facing and voicing our concerns for the future of the diamond industry, and in view of all this, I can only say that we welcome that this finally happened!” ALROSA also applauded the new standard. According to a comment from the company’s press center, “Standards are a positive factor for the diamond industry on the whole, i.e., not only for the primary producers, but also for the consumers of the end product, the diamond jewelry. The markets for natural diamonds and for synthetic diamonds are two different markets. They are both perfectly legitimate, but it is crucial to inform the consumer about the origins of the products they are buying in order to build and maintain the customers’ trust. Appropriate and understandable terminology is one of the ways to facilitate that trust by helping customers safely and efficiently navigate the diamond marketplace.”Article from the Rapaport Magazine - September 2015. To subscribe click here.
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