ALROSA’s Rough Diamond Production Up 9% in Q1

Mining and Exploration
20/04/2017 09:05

ALROSA's Q1 2017 diamond production totalled 8.9 million carats, up by 9% year-on-year, to 8.9 million carats from 8.2m.cts. in Q1 2016, which is in line with its 2017 production plan of 39.2 million carats (+5% y-o-y increase). The growth in production was driven by ramping up diamond mining at Aikhal, Mir, International, Udachny underground mines and also by processing of higher grade ore from the Jubilee pipe at its Aikhal Division in Yakutia - an open pit mining operation and its largest, good for 29% of total production. The overall grade for the quarter (cpt) was 1.46 from 6.1 millon tons of ore and gravel processed, nearly a 10% increase from Q1 2016 and the previous Q4 2016.

As announced earlier this month, ALROSA's preliminary performance in Q1 2017 amounted to sales of 14.1 million carats of diamonds, including 11.0 million carats of gem-quality diamonds at an average price of USD 117 per carat and 3.1 million carats of industrial diamonds at an average price of USD 7 per carat. In Q1 2017, revenue from rough diamond sales amounted to at least USD 1.309 billion. Revenue from polished diamond sales totalled at least USD 32 million.

Sales plan

ALROSA's sales plan for 2017 remains unchanged, despite selling around 5 million carats from its inventory in Q1, company president Sergei Ivanov told Interfax. ALROSA plans to sell around 39 million carats in 2017, which is in line with their production level [of 39.2 million carats]. The company announced it did not have plans to either boost or cut its inventory. At the same time, according to Alrosa's operating report published on Thursday, a total of 5.2 million carats were sold from inventories in Q1. This is the difference between Q1 production of 8.9 million carats and sales of 14.1 mln carats. Responding to a question on whether the company's sales plan would be adjusted, Ivanov said: "I think that we will keep the sales plan."

According to data in the middle of March, ALROSA's inventory totaled 19 million carats with a value of $1.8 billion. "In terms of inventories, I think that we will soon be close to the level of our technical inventory," the president said. The volume of ALROSA's technical inventory, which consists of rough diamonds in the production chain from production to sale, as opposed to rough diamond prepared to be sold, is around 12 million carats, he said. ALROSA expects that the diamond market will be "fully comfortable from the point of view of sales" until the end of the year, the president said. "The first quarter was very good for us. The second quarter, just like with all rough diamond sellers, will be different. The figures will not be so impressive. But we are looking at the year very optimistically," he said.

The full version of ALROSA's Q1 2017 operational overview is available here.