Alrosa earned a total of $365 million in June, with $354.4
million coming from rough sales, and the remaining $10.6 million from polished,
it reported. The miner, which recently saw its Standard & Poor’s rating
upgraded from BB to BB+, also disclosed sales figures of $2.5 billion for the
first six months of the year. Rough auctions raised $2.44 billion, while the
polished sales generated $54.9 million.
Commenting on the results, Alrosa vice president Yuri
Okoemov described the rough market environment as stable. Thanks to strong
demand for rough, the miner reduced its stocks during the first half, selling
off cheaper, small stones in the first quarter and adding higher-quality gems
to the auction boxes in the second quarter. “The end of June, however, saw a
seasonal slowdown,” noted Okoemov.
A recent change in the governmental structure that oversees
the country’s cutting and polishing industry is giving Russian manufacturers
more hope of getting the federal support they need. The task of supporting the
industry, which previously fell to the Ministry of Finance, was reassigned to
the Ministry of Industry and Trade.
Maxim Shkadov, director of diamond-polishing firm Kristall
Smolensk and two-time president of the International Diamond Manufacturers
Association (IDMA), told Rapaport Magazine that he hoped this would be a
positive change, as “the ministry has a set of tools and mechanisms to support
domestic industries.”
Moreover, the recent changes in Alrosa’s senior management
staff have provided hope for closer cooperation between the miner and Kristall
Smolensk, both in production and business activities in the natural and
synthetic diamond markets, according to Shkadov.
“Since 2007, Russia’s production of polished dropped by 50%,
and the number of cutting and polishing businesses shrank by two-thirds, and
only Kristall Smolensk and Alrosa are keeping the Russian polishing sector
alive,” he said.
Kristall Smolensk’s production of polished declined from
$570 million in 2011 to $102 million in 2016, according to Yakutia-based
analytical agency Expert, which cited publicly available reports. Russia’s
total output of polished, the agency said, dropped from $800 million to $350
million in the same period.
The Russian Academy of Sciences’ Siberian Institute for
Geology and Mineralogy announced the start of a full-scale exploration project
that will seek out new diamond deposits in the Archangelsk region, home to two
commercially developed diamond sites: the Alrosa-operated Lomonosov deposit,
and the Grib mine, which Russian investment group Otkritie-Holding recently
acquired.
Archangelsk is Russia’s only territory outside of the
Republic of Yakutia — the country’s main rough mining site — known to have
diamond deposits. It has also remained one of the world’s least explored
diamantiferous areas to date. In mid-July, Dr. Elena Shchukina, who is heading
the new exploration project, told the TASS information agency that the
preliminary findings were indicative of over 100 potential diamond fields in
the Archangelsk region, and that further exploration would focus on the
region’s Arctic area.
Article from the Rapaport Magazine - August 2017. To subscribe click here.