ALROSA Projects Production To Decline, Will Hold 30 Large Diamond Auctions in 2018

Rough Market
29/12/2017 00:42

In a recent meeting concerning the 2018 budget, Russian diamond mining giant ALROSA said diamond production is planned at 36.6 million carats in 2018, representing an approximately 7% decline from the 39.3 million carats it is likely to produce this year. In the absence of production from the Mir mine, which was crippled and closed as the result of a major flood at the asset in August, they plan to achieve 36.6 million carats backed by higher diamond output at their strategic mining assets: the Udachny underground mine will see an increase from 1.6 to 3.9 million carats, Severalmaz – from 2.4 to 3.3 million carats. They also intend to support 2018 supply and sales by tapping into accumulated diamond inventories, offering an improved sales mix and, therefore, higher average price of gem-quality diamonds vs 2017.

ALROSA says it implements a program to manage costs and improve efficiency, which is expected to keep the company’s costs flat in 2018. Their costs may be brought down even further through the disposal of non-core gas assets, which are expected to be sold at an auction in Q1 2018.

ALROSA to hold 30 international auctions for the sale of special size rough diamonds in 2018

On December 28, ALROSA announced it is planning to hold 30 international auctions for the sale of special size natural rough diamonds over 10.8 carats. Two auctions will be held in New York where ALROSA’s trade office will resume its full-scale operation. Five auctions will be held in the first quarter, with ten taking place Q2, six in Q3, and nine auctions in the Q4. The largest number of auctions (11) will be held in Moscow. In April and September, the Company will hold auctions in Vladivostok. It is also planned to hold auctions in the largest international diamond trading centers where ALROSA’s sales offices operate. Two of them will be held in Antwerp, four in Dubai, six in Ramat Gan and three in Hong Kong.

“Russian laws stipulate that special-size rough diamonds over 10.8 carats can be sold only at auctions,” explained Yevgeny Agureev, director of ALROSA'’s United Selling Organization. “Such diamonds are traditionally in high demand both on Russian and international markets. As a rule, 60 to 100 companies from different countries take part in auctions for their sale.” He also noted that preliminary figures from 2017 indicate the company, "sold 153,000 carats worth almost USD 365 million at international auctions for special size rough diamonds.” ALROSA sold 153,000 carats of special-size rough at auctions this year, garnering nearly $365 million, he added.

ALROSA receives first diamonds from Verkhne-Munskoe deposit

Also today (December 28), ALROSA announced that its Udachny Mining and Processing Division completed the removal of 75 tons of diamondiferous ore from Verkhnyaya Muna for the trial processing at Processing Plant No. 12 and recovered first diamonds from Verkhne-Munskoe deposit. The development of processing technology is required to prepare for commercial launch of the deposit scheduled for 2018. The next batch of ore from Verkhne-Munskoe deposit, 250 tons of ore and 50 tons of diamond-bearing sands, will arrive at the Processing Plant No. 12 in the fourth quarter of 2018 as part of commercial development of the deposit. 

The development of Verkhne-Munskoe deposit is ALROSA’s largest investment project. The deposit is located 170 kilometers from Udachny Mining and Processing Division. Four kimberlite pipes have been explored so far: Zapolyarnaya, Deimos, Novinka, Komsomolskaya-Magnitnaya. Their aggregate inventory is 64.8 million tons of ore with the average grade of 0.6 carat per ton, totaling 38.4 million carats.