Alrosa's Q1 Production and Sales Decline from 2018, Launches New Mine

Rough Market
17/04/2019 17:56

Alrosa's rough diamond production in Q1 2019 declined significantly from the same period in 2018, as did its sales, impacted by a sharp decline in prices and a larger share of small-size diamonds in the sales mix and lower prices mostly for medium-size diamonds. Production as well as sales, however, have increased in comparison to the previous quarter, as demand for small- and medium-size rough diamonds gradually revived across Q1 2019 as dealers and retailers were restocking their supplies after the holiday season, despite the diamond market performing weaker than usual for that part of the year due to lower jewelry sales during the Christmas season.

The Russian diamond mining giant's Q1 sales tumbled by 38% to $988 million from $1.61 billion during the first three months of 2018, outpacing the 21% decline in the volume of carats sold (10.6 m carats) as a result of prices falling by 20% y-o-y. Their total sales value in Q1 2019 increased by 19% compared to the prior quarter despite the average realised price for gem-quality diamonds falling 19% to $123/carat. This was due to Q1 rough diamond sales growing by 18% to 10.6 m carats. This included 7.9 m carats of gem-quality diamonds (up 50% q-o-q) as cutters were restocking their supplies of small- and medium-size diamonds. Q1 2019 polished sales fell by 31% at $16.3 million, while they achieved $23.7 million in Q1 2018. Alrosa's Q1 2019 production grew 5% from Q1 2018 to 7.8 million carats. The company’s inventory increased 16% to 14.3 million carats as of March 31, compared with a year earlier.

ALROSA launches new diamond deposit in Yakutia - the Zarya pipe

Following the launch operations at the Verkhne-Munskoye deposit, Alrosa has now launched diamond production at the Zarya pipe, Aikhal Mining and Processing Division. The new deposit's expected life exceeds ten years. In 2021, based on the projected roadmap, the enterprise is to reach the design capacity of 1.25 million tons of ore per year. It estimated total diamond resources at the deposit to be 3.5 million carats, valued at US$1 billion. The company says the massive investment needed to develop the deposit was made more appealing by the fact that it does not require construction of a new mining and processing division and a plant, as the Zarya pipe is located 3 km from Aikhal Mining and Processing Division. "It is a landmark event for both ALROSA and our country," said CEO Sergey Ivanov. "It is already the second deposit launched in Yakutia in such a short span of time, which demonstrates mineral wealth of our homeland and enormous potential of our company."

 

The miner has forecast a 4% increase in production to 38 million carats for 2019, compared with 36.7 million carats last year.