Russian Ministry of Finance says financial condition of ALROSA is stable

The financial condition of ALROSA, which is under US sanctions, is quite stable, and the company has a margin of safety to search for opportunities to sell its diamonds, Deputy Finance Minister Alexey Moiseev told reporters in the State Duma. According to the Interfax news agency, he noted that ALROSA's inclusion in the US Treasury's SDN list caused serious problems with diamond sales.
“Of course, ALROSA has serious problems, and in this regard, we are considering different options. So far, today we see that the financial condition is quite stable, and the company has the ability and strength to look for opportunities to sell its diamonds,” Moiseev said answering a question about the possibility of selling part of the company’s production to Gokhran, Interfax said. In particular, the Ministry of Finance expects to increase the share of the company's goods sold in the domestic market.
“One of the initiatives that we are currently preparing regards possible liberalization in the circulation of rough and polished diamonds in the domestic market to provide some part of the market, at least in Russia, for such goods,” he said. The Ministry of Finance has already submitted its proposals to the government. When asked if the proposed liberalization is related to tax breaks, as in the case of investment gold, Moiseev said: "This including."
Previously, ALROSA, regulators and banks were exploring the possibility of organizing exchange trading in investment diamonds in Russia, but the idea did not meet mass amplification and failed to expand beyond the sale of single expensive stones and jewelry.
The domestic market usually accounted for no more than 10% of ALROSA's revenue, while the largest Russian consumer of rough, Smolensk-based Kristall, is now part of the ALROSA Group.
Russia supplies about 30% of the world's diamonds. In early March, the United States banned the import of rough and polished diamonds from Russia, but this measure does not apply to products that have undergone significant transformational processing outside of Russia. The bulk of rough diamonds from Russia are cut in India, which produces 95% of the world's polished diamonds. For India, diamond cutting and jewelry manufacturing is the third largest source of export earnings.
Although ALROSA's key sales channels have not yet been sanctioned, important long-term customers of the company, such as US retailers Signet and Tiffany, have stopped buying. The ban from Tiffany now owned by LVMH Moet Hennessy Louis Vuitton includes polished diamonds of Russian origin regardless of where they were cut.
At the same time, some Indian diamond manufacturers began to reject stones from Russia due to the created uncertainty preparing to indicate the origin of each stone and redirecting diamonds from Russia to the markets of China, Southeast Asia or the UAE, according to a Bloomberg report in mid-May.