ALROSA Will Keep Long-Term Contracts as Core of Sales Policy

Rough Market
02/11/2017 09:18

Russia mining giant ALROSA recently confirmed the company’s Sales Policy Concept for 2018-2020 as the new contract period approaches; long-term contracts for the sale of rough diamonds with large trading, cutting and jewelry companies for up to three years will remain the cornerstone of ALROSA’s sales, though some changes have been introduced. Namely, ALROSA is planning to switch over to annual mutual approval of the volume and assortment within three-year contracts. The existing contracts stipulate for the monthly volume and assortment of purchased goods for the entire three-year period ahead. A switch to annual planning will allow both the Company and its customers to respond more flexibly to any changes in the market, the company stated.

“The practice of long-term contracts, being implemented by the Company since 2009, has repeatedly proved its efficiency," said ALROSA Vice President Yury Okoemov. "It ensures sustainable employment for the seller and the buyer, and protects them from price volatility in the diamond market. Therefore, long-term contracts will remain the key sales channel for ALROSA, their share in the volume of our sales will remain at the current level of about 70%.” ALROSA currently has long-term contracts for the sale of gem-quality rough diamonds with 47 companies from the international market, and 9 companies from the domestic market. There are also 3 long-term contracts with domestic companies for the sale of industrial diamonds. The new contract period will start on January 1, 2018. In addition to long-term contracts, ALROSA sells rough diamonds in almost equal shares at auctions and under spot contracts.

The Sales Policy Concept also includes the initiatives to develop the polished diamond trade. So far, the company’s affiliate DIAMONDS ALROSA is the second largest cutting and polishing facility in the country. ALROSA is planning to increase the share of cutting and polishing of special-size and fancy-colored rough diamonds, and increase the share of sales in large diamond-consuming centers, including via ALROSA’s foreign-based trading companies. Participants also noted the need to implement marketing initiatives, primarily large-scale programs of category marketing, to maintain and strengthen consumer demand for diamond jewelry that encourages the demand for rough diamonds. They note that future Diamond Producers Association campaigns, of which they were one of the founding members, will be launched in the Chinese and Indian markets.