Gokhran May Buy US$1bn of Alrosa's Rough

Market Analysis
03/09/2020 18:34

According to an opinion piece by Rough&Polished's Sergey Goryainov, the Russian State Repository may be in the process of buying US$ 1 billion worth of (rough) diamonds from Alrosa, the Russian mining giant, to alleviate the pressure on the company as the industry suffers from the COVID-19 pandemic. The author believes that what he describes as a "bailout" for both the industry and Alrosa by the Gokhran is inevitable and necessary move. In the 2008-2009 crisis, Goryainov reminds us, Gokhran purchased nearly US$2bn worth of goods, allowing Alrosa to recover quickly and even gain, as they became the world's largest producer with a market share that jumped from 22 to 29%. The analyst cautions that today's situation is slightly different, however, saying the current status of the Russian state budget, with lower oil prices, state revenue and taxes, may not allow for the Gokhran to wait long enough for the market to fully recover to sell off the purchased stocks in the best conditions.