Gokhran's Rough Diamond Sales Drop to $32M

Russia's State Precious Metals and Gems Repository Gokhran sold about $32 million (RUB 1.016 billion) worth of rough diamonds from the state fund in the January to July period, compared with more than $94 million (RUB 3 billion) one year ago, an official at the Finance Ministry, which manages Gokhran, told Interfax. Gokhran sold 12,057 carat diamonds at its one large auction in 2012, held in March, for $26.02 million, Rapaport reports citing Interfax.
Weaker demand from the diamond market had an impact on Gokhran's revenue, but the ministry expects sales to pick up in October and is not yet planning to announce a second auction in 2012 for large rough diamonds (weighing 10.8 carats and above).
Gokhran's 2012 target for the sale of precious stones is about $156 million (RUB 5 billion), apart from diamonds, Gokhran sells a small volume of cut diamonds and emeralds. Gokhran sells larger diamonds at auction rather than smaller rough diamonds, but in both cases they are only purchased by companies registered in Russia.
Gokhran is not planning a second auction to sell large rough diamonds this year, but one is possible if revenues from the sale of smaller diamonds will significantly lag behind the amount set in the budget toward the end of the year, the official said. "There is still time, as sales will peak in October and continue to Catholic Christmas," he said.
Gokhran had sold $116 million worth of rough diamonds and cut diamonds in 2011, and by August sales revenue exceeded the forecast threshold, which was then raised. "This year we are instead lagging behind - so there is a crisis on the rough diamond market," the official told Interfax. "Demand is sluggish this year, unlike last year," he said.
A small part of the diamonds from Gokhran is exported by Almazyuvelirexport, whose services are used to evaluate market value when selling from the state fund and buying from ALROSA. So far Almazyuvelirexport has not sold a single carat, the official said.
The biggest deal of 2012 with Gokhran participation was not a sale but a purchase. The repository bought rough diamonds from ALROSA in the second quarter for the first time since 2009, when the government instructed Gokhran to buy around $1 billion worth of ALROSA rough diamonds and Kristall cut diamonds.
The new deal with ALROSA was worth $109 million (RUB 3.48 billion), the Finance Ministry official said (ALROSA did not disclose the amount). Gokhran was to buy up to $125 million (RUB 4 billion) worth of rough diamonds in 2012, and the ALROSA supervisory board approved this in May.
Gokhran will not make anymore significant purchases of rough diamonds in 2012. The official explained that changes to budget guidelines can only be made with a government resolution.
Initially, Gokhran planned to buy 2 million carats of rough diamonds from ALROSA, but it acquired 464,000 carats, as ALROSA offered higher-quality and larger stones. Gokhran and ALROSA valued the rough diamonds jointly.
Gokhran will not be buying much from Kristall this year. It will spend RUB 2 million on 20 carats of cut diamond samples. Gokhran's spending on precious metals and stones in 2012 is forecast at RUB 9.95 billion down from RUB 10.45 billion in 2011.