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Russia
By Svetlana Shelest
ALROSA’s Executive Committee recently summarized the 2015 results of the miner’s subsurface geological exploration program. The findings indicate an increase in the total known reserves of rough in the deposits operated by ALROSA. According to the Russian State Classification Standards, they now amount cumulatively to 1.108 billion carats. The company also reported an adjustment to the estimate of its possible future diamond reserves. Based on the recent discovery, they now appear to have gone up by 4.1 percent, reaching 43.57 million carats. In 2015, ALROSA invested a total of $90 million, at the current exchange rate, in the subsurface geological exploration, which, as the backbone of production, is considered to be one of its primary operating activities. The main scope of geological exploration was carried out in Yakutia, ALROSA’s primary mining ground. Geological exploration was also performed for two diamond pipes in the Arkhangelsk region, ALROSA’s only mining site located outside of Yakutia. ALROSA President Andrey Zharkov noted in his address to the Committee that in 2016 and 2017, the company will continue increasing investments into geological exploration of diamond deposits in Yakutia.
The Russian government is considering boosting the state budget by making shares of some of the state-owned prime assets available to public investors. The list of these businesses has not been finalized, but Russian Finance Minister Anton Siluanov told the nation’s news agencies TASS and RIA at the end of February that the plan includes privatizing a 10.9 percent stake in ALROSA, the world’s leading diamond miner. According to Siluanov, the state plans to keep control of the company. Currently, the state owns 43.93 percent of ALROSA, while 25 percent plus one share are held by the government of Yakutia, and another 8 percent is held by Yakutia’s districts. If the plan is implemented, the amount of the mining giant’s shares in free float will grow from the current 23.07 percent to 33.97 percent. The Russian Finance Ministry is also considering making amendments to the rules regulating the State Treasury’s auctions for extra-large diamonds weighing 10.8 carats and above. Traditionally, the circle of buyers for these auctions has been limited to Russian companies only. But due to the dramatic fall of both demand and prices for rough and polished in 2015, the ministry saw a way to increase sales by expanding the circle of bidders to include overseas clients. However, the new rules stipulate that in order to qualify for participation, they need to pay taxes in Russia. The Russian State Treasury, also known as Gokhran, held two extra-large diamond auctions in 2014 and two in 2015. The first auction in 2016 is scheduled to take place on April 14. In 2016, Gokhran is planning to sell a total of $101 million worth of gems and precious metals, at the current exchange rate, increasing the plan by $13.5 million year-on-year.
On March 5 through 8, Moscow hosted its first JUNWEX gem and jewelry show of the year, the Best Adornments of Russia. This show is traditionally timed to one of the nation’s most beloved spring holidays, Women’s Day, celebrated every year on March 8. Compared to 147 participants in 2015, this year’s show featured just over 100 merchants, and the preliminary count of visitors showed a turnout of about 10,000 less than last year’s. However, many companies were happy to report that the customers seemed to have overcome the “fear to spend” caused by a prolonged economic crisis that effectively decimated overall jewelry sales in 2015 in Russia. The reported progress in sales appears to be the result of both the end customers eventually adjusting to the crisis and the jewelers finding solutions that work best under crisis conditions. In addition to expanding their assortment of silver jewelry and gold jewelry with more affordable semiprecious stones, as well as amber and farmed pearls, more companies than ever before at the show offered gold jewelry with lab-grown gems — such as synthetic rubies, emeralds and sapphires — which considerably reduced the price tags. For example, a 40-carat pair of synthetic ruby earrings was available for only $500 from the Kostroma-based jewelry company Corona. A company representative said that these large, bright-colored gems were quite popular, as “spring, being a blooming season, set customers in the mood for eye-catching reds, blues and greens.” Sorokin, another Kostroma-based enterprise, came up with a different anticrisis solution: it offered similar jewelry pieces in two different types of settings, one pavéd with diamond melee, and another in plain gold, simultaneously targeting two different groups of buyers. Two sets of almost identically looking pairs of 20-carat London blue topaz earrings were available for $1,900 and $350 respectively. Overall, for the first time since the start of the prolonged economic crisis in December 2014, jewelers are being cautiously optimistic. They are expressing a more positive viewpoint, saying that it does look like the market has already hit the bottom and can be said to begin stabilizing.Article from the Rapaport Magazine - April 2016. To subscribe click here.
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