New export duties threaten ALROSA with multi-billion losses

The introduction of an export duty on certain categories of rough diamonds could significantly impact ALROSA's financial performance. Analysts estimate that the new tariff could reduce the company's EBITDA by approximately 15-16% as early as 2026, and by almost a third in 2027, according to Kommersant.

According to a government decree, an 8% export duty on certain types of diamonds will take effect in September. The new regulations apply to rough and partially finished stones weighing from 0.45 to 10.8 carats, as well as special-size diamonds over 10.8 carats.
The initiative is part of the government's plans to stimulate the development of the domestic diamond cutting industry. Earlier, Deputy Finance Minister Alexey Moiseyev noted that Russian diamonds are virtually nonexistent on the domestic market, while the global diamond cutting center is located in India, where approximately 90% of the world's mined diamonds are currently processed. 

According to the official, the new measures should primarily affect those categories of rough diamonds that are economically feasible to process domestically.
The consequences could be significant for ALROSA. The company accounts for over 90% of Russia's diamond production and remains one of the largest players in the global market, controlling approximately a third of global production. Exports account for approximately 90% of the company's revenue, so the additional costs will directly impact its primary sales channel.

Investment experts believe that the imposition of the duty will put additional pressure on business amid ongoing problems in the diamond industry and the strong ruble. 
Analysts estimate that the impact on the company's operating profit could increase by several billion rubles next year. If current market conditions persist, the impact on EBITDA will intensify as the new tariffs become fully effective. 
Experts draw special attention to the wide range of diamonds affected by the duty. In fact, the new rules apply to a significant portion of exported rough diamonds—from relatively small stones to large and especially large specimens.

Following the announcement of the duty, ALROSA shares were among the top decliners on the Moscow Exchange. Investors fear a deterioration in the company's financial results in the coming years and further pressure on its export revenue. 

Alex Shishlo, Editor in Chief of the European Bureau, Rough&Polished