Alrosa Raises 2019 Diamond Output 5% to 38.5Mcts Despite Q4 Slowdown

Mining and Exploration
23/01/2020 13:53

Russian diamond miner Alrosa, the largest rough producer in the world, raised its output 5% to 38.5 million carats from 36.7 million carats in 2018 despite lower market demand which pushed their total diamond sales down 12% to 33.4 million carats. The combination of more production and softer sales increased their rough inventories by 5.6 million carats (+33%) to 22.6 million carats. The Russian giant's 2019 rough sales fell 26% to $3.27 billion as the average realised prices for gem-quality rough fell 19% to $133 per carat from $164 per caat last year.

Alrosa's Q4 2019 results, however, trended in a different direction compared to the year as a whole, with production down and sales, as well as prices, rising. While annual production rose as a result of increased output at the Botuobinskaya pipe and ramp-up at the V.Munskoye deposit, Q4 diamond output of 8.8 million carats was 27% lower than in Q3 2019 and 15% lower than Q4 2018 due to a drop in production at the Jubilee pipe and the International underground mine.

As Q4 output was declining, the 8.2 million carats sold during the quarter was a 28% increase compared to the previous quarter. And while sales still fell 9% shy of the volume sold in Q4 2018, the quantity of gem-quality stones (5.9 m cts) was 13% higher than in Q4 the year prior, mitigating the 3% decliine in the average price per carat. As a result, Alrosa recorded an 8% increase in rough sales, $888 million, as a result of a larger share of gem-quality diamond sales.

At $148 per carat, the average price of gem-quality goods sold in Q4 increased 9% over Q3, driven by a larger share of medium- and large size diamonds. Alrosa's average price per carat earned, after falling from $153/carat in Q4 2018 to $123/carat in Q1 2019, inceased gradually across each quarter of the year, while the average price index for the year fell 6%. 

Alrosa's rough sales include gem-quality as well as industrial diamonds. In 2019, the miner sold 24.2 million carats of gem-quality diamonds for $3.21 billion, and 9.3 million carats of industrial diamonds for $60 million. The company's polished diamond sales for Q4 amounted to $28 million, a 31% increase over Q4 2018, while their full-year sales totaled $65 million, down 32%. In October 2019, Alrosa Group consolidated Kristall Production Corporation, to which Alrosa sold $124 million worth of rough diamonds last year. Polished diamond sales by Kristall totaled $114 million.