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Tech sector waxes as cutting trade wanes

Signet Jewelers’ James Allen takeover underlines Israel’s innovation prowess in the industry.

By Svetlana Shelest
Alrosa enjoyed a boost in sales for August, despite weakened performance during the first half of the year. It attributed the latter to the ruble’s recovery against the dollar and to a drop in rough-diamond prices. The company also reported pushing through a number of initiatives in both the rough and polished segments of the pipeline — including two auctions of large diamonds in Russia’s far east — even as it worked to recuperate from a flood that shut down its Mir mine in August.

Sales big and small 
   Alrosa’s revenue fell 17% year on year to $2.7 billion, with net profit for the period sliding 46% to $848 million. That was in part because the ruble-to-dollar rate grew 18% by mid-year, the company said, and in part because of a 15% decrease in the miner’s rough price per carat as it sold off a greater proportion of small stones in response to recovering demand in India. 
   Nonetheless, August sales “were slightly higher than a year earlier,” totaling $257.6 million, according to Alrosa vice president Yuri Okoemov, with $255.7 million coming from rough sales, and $1.9 million from in-house polished auctions. 
   In September, the company held two auctions at its Vladivostok-based Eurasian Diamond Center (EDC) in the framework of Russia’s third Eastern Economic Forum (EEF). The miner sold 45 large rough diamonds weighing a total of 1,293 carats, and 33 polished diamonds ranging from 2 to 12 carats — including fancy-cut and fancy-colored diamonds — for a total of $14.8 million. 
   The largest rough stone weighed 75.75 carats, and the most expensive one fetched nearly $1.75 million. The auction attracted about 50 companies from the US, India, Israel, Belgium, China and the United Arab Emirates, said Okoemov. Alrosa launched the EDC last year as part of the government’s decision to expand diamond trade with the Asia-Pacific region, taking advantage of Vladivostok’s free-port status.

Vladivostok goings-on 
   Vladivostok is also where Alrosa will be hosting the World Federation of Diamond Bourses’ (WFDB) annual Asian summit next year, the company announced. Alrosa president Sergey Ivanov recently joined the board of the Diamond Producers Association (DPA), replacing former company vice president Andrey Polyakov, who left the miner at the end of June. 
   Meanwhile, India-based manufacturer KGK Group opened a cutting and polishing factory in Vladivostok in September. The company announced plans for the factory a year ago as a Russian-Indian cooperation project contributing to the development of the EDC. 
   The factory, which spans 1,555 square meters and employs 400 personnel, aims to produce 150,000 carats of polished diamonds annually once it reaches full design capacity. The project’s total investment is estimated at $50 million.

Probing the Mir accident 
   At the EEF, Ivanov also shared the company’s plan for the Mir mine, which suffered a major flooding accident that resulted in the loss of eight miners in August. The operation will be on hold throughout 2018, and an independent, internationally recognized auditor will be contracted to investigate the causes and contributing factors of the accident. 
   Among the candidates are SRK Consulting, whose experts designed most of Canada’s diamond mines — including the Diavik mine, which has ore bodies under the Lac de Gras Lake — and DMT Group, which participated in probes of accidents at Russia’s Ulyanovskaya and Raspadskaya coal mines.

Article from the Rapaport Magazine - October 2017. To subscribe click here.

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