Image credit: Kristall
ALROSA suspended the work of its diamond cutting operations until the end of the coming summer due to an unfavorable situation in the market, the Prime news agency said citing an interview Sergey Ivanov, the company’s CEO gave to the RBC TV Channel.
“As for the diamond manufacturing complex, almost all production, including the factory in Barnaul and Smolensk-based Kristall employing about one thousand workers, was put on forced downtime paid in accordance with the law until the end of this summer,” said Ivanov referring to the fact that ALROSA will not be able to sell polished goods that could have been produced, as the experience of Indian colleagues and companies from other countries shows.
“In India, the entire system of diamond manufacturing is stopped; the lockdown there has been extended until early May. It is possible that it will continue to be extended in a number of countries,” Ivanov explained.
In the interview with RBC, Ivanov also said that ALROSA plans to make adjustments to the production program for this year and will provide measures to reduce the production of rough diamonds for the next year. “We do not exclude the possibility that we will make certain adjustments to the production program because we entered the year with a high index of inventories and based on the current situation these inventories will last us for more than one year,” he said.
According to him, ALROSA does not currently need state support, but if the company will not have sales within three to four months, then the issue may worsen, and in this case the state has a support tool to bail it out. In this regard, Ivanov recalled that during the crisis of 2008, Gokhran purchased rough diamonds worth $ 1 billion from ALROSA to the State Fund, which was then sold with good profit.
The company said its sales of rough and polished diamonds amounted to $ 152.8 million in March 2020, down 59.5% vs March 2019 ($ 377.1 million). ALROSA earned $ 148.7 million from rough sales (against $ 369.2 million last year) and $ 4.1 million from polished sales (against $ 8.0 million last year).
Totally, the diamond miner raked in $ 904.2 million from sales in the first quarter of 2020 against $ 1.004 million in 2019 (a decrease of 10%). ALROSA also announced that it had terminated long-term contracts with some of its customers.
Victoria Quiri, Correspondent of the European Bureau, Rough & Polished, Strasbourg
