The company said in its Q3 2021 update that diamond production reached 8.8 m carats, while proceeds from rough and polished diamond sales totalled $938 m.
The higher diamond output going up by 26% qoq was driven by seasonal growth in gravels processing from Almazy Anabara, increased processing of ore at the Udachny Division, and planned rise in output at the Nyurbinskaya diamond pipe.
Q3 diamond grade was seasonally down 20% qoq to 0.76 cpt on increased production at alluvials. 9M grade went up 3% to 0.95 cpt as a result of a drop in the share of gravel processing at Almazy Anabara and increased processing of ore from the Udachny mine.
Q3 diamond sales reached 9.2 m ct, incl. 0.7 m ct of diamonds purchased as part of Gokhran auctions in Q2 and Q3 2021, a decline of 20% qoq (+83% yoy) mainly due to the lack of rough diamond inventories available for sale and the high base effect of Q2 (Q2 sales totalled 11.4 m ct, incl. 4.5 m ct from inventories). Sales of gem-quality diamonds amounted to 6.5 m ct (-13% qoq). 9M sales were up 1.4x to 36.1 m ct, incl. 0.9 m ct purchased as part of Gokhran auctions and 12.9 m ct from inventories. Sales of gem-quality and industrial diamonds amounted to 23.7 m ct (+2.1x) and 12.4 m ct (+3.5x), respectively.
Diamond inventories as at the end of Q3 increased by 0.2 m ct qoq to 8.6 m ct. Ore and gravels inventories saw a seasonal decline to 11.0 mt (-24% qoq and ‑19% yoy).
Average realised price for gem-quality diamonds in Q3 declined by 6% qoq to $136/ct due to changes in the sales mix on the back of increased supplies from assets with lower prices. The 2% yoy growth amid a 22% yoy uptick in the price index was driven by the normalisation of sales volumes and changes in the sales mix.
Q3 average price index gained 10% qoq (+22% yoy), +25% YTD and +12% to early 2020 level, reaching Q2 2018 level.
Diamond (rough and polished) sales in Q3 reached $938 m (-20% qoq and +59% yoy), incl. $904 m from rough and $34 m from polished diamond sales. 9M sales delivered a 2.1x growth to $3,274 m, incl. $3,133 m from rough and $141 m from polished diamond sales.
ALROSA said in its market update that jewelry demand is strong in all the key markets. At the same time, rough diamonds stocks at miners are at minimal levels as supply structurally dropped. The company sees limited risk of any meaningful supply response globally.
Demand for rough diamonds remains strong. Supply shortages will continue to be offset by a recovery in rough diamond prices. The rough diamond price index has returned to the 2018 levels, with polished diamond prices surpassing the 2018 average. ALROSA maintains its policy of satisfying only requests backed by the real demand to ensure the sustainability of the whole diamond pipeline.
Vladimir Malakhov, Rough&Polished
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