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Russia
By Svetlana Shelest
ALROSA, Russia’s largest diamond miner and the world’s leader in rough production, reported a 60 percent year-on-year increase in its rough and polished sales in January that totaled $365.4 million. Rough sales accounted for $358.2 million, with the remaining $7.3 million from polished. The company’s Vice President Yury Okoemov commented on the results in a press release, saying that “the first month of the year demonstrated effective demand for rough in almost all market segments” and that the company “still remains cautiously optimistic about the activity in the small-size, low-cost rough diamond segment.” Also in January, ALROSA’s Severalmaz division, which operates the miner’s only diamond field outside of Yakutia, reported having reached a milestone of 10 million carats of rough produced to date. The Lomonosov field, located in Russia’s Arkhangelsk region in the north of the country’s European part, counts a total of six known kimberlite pipes with estimated diamond reserves in excess of 115 million carats. Only two of the pipes have been in production since 2005, gradually building up their output. In a press statement, General Director of Severalmaz Andrey Pismenny said that now that the Lomonosov operation finally reached its design capacity of 4 million tons of ore per year, the division expects to produce 2.4 million carats in 2017 and plans to increase annual output to 5 million carats in the long term.
Just about six months ago, a round of privatization of the country’s major publicly owned and co-owned businesses was implemented, which included a secondary public offering (SPO) of ALROSA’s 10.9 percent stake. In early February, the Russian government announced that it is considering parting with another 8 percent of the miner’s shares and privatizing the country’s largest diamond polisher Kristall Smolensk along with a number of other assets from 2017 through 2019. Talks about privatizing Kristall Smolensk first started in 2014, but the plan was put on hold by the Ministry of Economic Development. Kristall’s stock is currently fully owned by the state, represented by the Federal Agency for State Property Management (Rosimushchestvo). Should the government go through with the plan, the state’s share in ALROSA will decrease to 25 percent plus one share. Both companies are on the government’s list of strategic assets.
St. Petersburg opened 2017 with its traditional Junwex show, which is considered to be the country’s biggest jewelry-trading event of the year. Jewelers noted that sales of more expensive and mid-market jewelry remained at the level of 2016, while the sales of less expensive jewelry increased up to 20 percent year on year. Svetlana Maksimova, general director of jewelry-maker Casting House, said she observed two main positive changes: customer confidence finally began to grow, with people starting to ask again for 2-carat and 3-carat diamonds, and more buyers are now open to purchasing stones below H color and VVS2 clarity. “It is thanks to our tireless efforts educating customers,” she said. “Due to little expert knowledge of the matter, the customers used to ask for high-grade diamonds even in the small-weight categories where these characteristics do not matter that much. This trend seems to be finally breaking, and buyers are learning to appreciate a good cut and the fire and brilliance of the diamond over internal flawlessness.” Mikhail Khorkov, marketing and sales manager of Brillianty Belomorya — the name translates to Diamonds of the White Sea — shared with Rapaport Magazine that the company’s diamond jewelry sales at the show went up by about 20 percent year-on-year, fueled by demand for more affordable jewelry with stones up to .3 carats. Kristall Smolensk noted that the show sales were good, though a little below expectations. Dmitry Kuntsev, director of Smolensk Diamonds, the company’s jewelry division, told Rapaport Magazine that “the economic crisis was still affecting the demand, which shifted toward smaller gems of up to .3 carats.” However, many buyers came to ask for a price quote for 1-carat, 2-carat and 3-carat stones. “Our experience tells us that this customer behavior is a harbinger of reviving customer confidence and future purchases,” concluded Kuntsev. Kristall Smolensk won two first prizes in the Diamond Classic of the Century category of the Junwex St. Petersburg design competition with an “Aphrodite” ring boasting an 11-carat centerpiece diamond and a “Harvest” necklace featuring a 5-carat fancy yellow diamond, yellow sapphires and fancy-cut diamonds. “‘Harvest’ is our new collection, which is being developed right now. The reception of the pilot piece was good at the show, and we plan to finalize it and launch sales soon,” said Kuntsev.Article from the Rapaport Magazine - March 2017. To subscribe click here.
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