ALROSA is considering the possibility of reducing production in 2021-22 to 26 million carats on an annual basis from the already revised 32 million carats this year due to the crisis in the diamond market. This is stated in the presentation for the issuance of the company's bonds, as per Finmarket quoting Interfax.
This is a serious downward change compared to previously published long-term production forecasts for 2021-30 of 37-38 million carats.
The production will be reportedly cut for the assets with high costs and low prices for raw materials. The production adjustments, according to the report, are estimated at 4 billion rubles.
The adjusted production plan will be reviewed by the Supervisory Board of the company in May this year.
ALROSA has already cut its production plan to 32 million carats in 2020 from 34.2 million carats, which is already a decrease of 6%.
Such a step may be associated with the suspension of activities at the the Aikhal underground mine and Zarya open pit, which account for about 2.6 million carats of diamonds or less than 7% of annual production.
Earlier it was reported that the operations at the Aikhal mine and the Zarya pit were temporarily suspended from May 15 to September 30 this year due to the “decrease in demand and sales for diamonds, as the major consuming economies are struggling with economic headwinds caused by the global spread of COVID-2019 virus”.
Measures taken by governments around the world to curb the spread of coronavirus infection are seriously affecting the diamond mining sector. Most of the mines in Botswana, South Africa and Canada have already switched to care and maintenance. Many diamond mining companies are revising their production plans downward. De Beers has revised its 2020 production guidance to 25-27 million carats from the previous target of between 32 and 34 million carats in response to the impact of COVID-19 on mining operations.
Angolan Endiama also revised its diamond production target in 2020 and reduced it to 8 million carats compared with the previous plan of 10 million carats.
Victoria Quiri, Correspondent of the European Bureau, Rough & Polished, Strasbourg
