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Alrosa Mulls Raising Output Target

Jul 3, 2017 3:29 AM   By Rapaport News
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Alrosa may increase its sales and production forecasts for this year following strong rough-diamond demand in the first five months, particularly from Indian buyers, the company said.

Manufacturers’ resurgent appetite for rough helped the Russian miner sell off 5.7 million carats of inventory during the period. The company said had it reduced its stockpiles about 30% to 13.7 million carats as India’s cutting sector recovered from last year’s demonetization policy. The buoyant market led Alrosa to raise prices by 3% between January and May, it added.

“Our budget for 2017 is based on 39 million carats in both production and sales,” said Igor Kulichik, Alrosa’s chief financial officer (pictured), in a recent conference call. “We are adjusting our annual budget, and most likely we will increase both the production and sales targets for the year.” 

The executive, speaking ahead of the second quarter’s June 30 end date, said sales for the three-month period were due to be significantly higher than those of the first quarter, in which revenue fell 17% year on year. The company nonetheless saw a 17% rise in sales volume for the first quarter, pointing out that the stockpiles it had sold off were of lower quality than the previous year’s. Sales in May soared 33% over figures from the same month last year.

“We see sustainable demand in the first and second quarters, and it is not going down, both from our Indian partners and other market players,” Kulichik said. “The Indians were so fast to recover that it was even a surprise to themselves. This was because the monetary reform did not hit them as hard as they probably expected, so after that, they bought everything they could buy.”

Clients in other regions are also in good shape, driving strong demand across all categories, Kulichik added.

Alrosa’s strategy contrasts with that of De Beers, which has restricted supply this year despite strong rough demand, according to sightholders.

Images: Alrosa
Tags: Alrosa, Igor Kulichik, mining, Production, production forecast, Rapaport News, sales, sales forecast
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