ALROSA – Page 17 – The Diamond Certification Laboratory of Australia (DCLA)

Alrosa Profit Drops in Third Quarter

Weak rough-diamond demand led to a decline in profit at Alrosa in the third quarter, the Russian miner reported.

Profit slid 44% to RUB 13.5 billion ($211.6 million) for the three months ending September 30, as revenue faltered and the company’s margin fell, it said last week.

Sales decreased 37% to $611 million, as proceeds from both rough and polished diamonds declined. Rough sales slipped 37% to $601 million, while the average price for gem-quality diamonds slid 32% to $135 per carat, reflecting sales of a higher proportion of small-sized diamonds. Sales volume dropped 5% to 6.4 million carats.

“The diamond-jewelry demand was affected by increased macroeconomic uncertainty that put a damper on consumer confidence,” the company noted. “Amid the declining demand since the beginning of 2019, diamond-jewelry manufacturers and cutters have been actively reducing their stocks of end products and rough diamonds.”

Rough output grew 14% year on year to 12.1 million carats for the quarter, stemming from the launch of production at the Verkhne-Munskoye deposit, as well as higher production from the Botuobinskaya pipe.

In the first nine months of the year, the miner produced 29.7 million carats, up 12% year on year. Rough sales for the January-to-September period fell 34% to $2.39 billion.

Alrosa’s sales grew 9% year on year to 264.4 million in October, as prices and demand continued to stabilize, the miner noted. Rough-diamond sales increased 9% to $253.9 million for the month, while polished jumped 17% to $10.4 million.

However, despite the growth in October, weakness in the market affected the company’s ten-month total. In the first ten months of the year, sales fell 31% to $2.7 billion. Rough-diamond sales dropped 32% to $2.6 billion, with polished declining 43% to $47.2 million.

Source: Diamonds.net

Alrosa Sales Decline at Slower Rate

Alrosa’s sales fell 24% year on year to $258.7 million in September, amid continued market weakness.

However, the total was the highest in four months, and reflected a noticeable recovery in the small-stone sector, the Russian miner said last week.

“It is partly due to the traditional autumn market revival after the holiday period, and a slight increase in demand from Indian cutters and polishers ahead of the Diwali festival,” said Alrosa deputy CEO Evgeny Agureev. “The most noticeable increase [was] sales of small-sized rough diamonds.”

Rough-diamond sales decreased 23% to $256.5 million for the month, while polished revenue plunged 69% to $2.2 million.

Alrosa’s sales fell 34% to $2.42 billion in the first nine months of the year. Revenue from rough stones dropped 34% to $2.39 billion for the period, while polished-diamond sales slid 50% to $36.8 million.

However, while sales have seen a slight boost, Alrosa thinks a full recovery will take longer.

“The market is still facing low demand for rough diamonds, though there has been a gradual recovery for some categories of diamonds,” Agureev added. “We still believe it will take some time to get a balance between supply and demand.”

Agureev, who has been the director of Alrosa’s United Selling Organization (USO) since 2017, was promoted to deputy CEO of the group last week.

“Given the difficult conditions in the global diamond market today, Evgeny will continue to improve the efficiency of the entire supply chain of the company and look for new approaches to stimulate rough-diamond sales, as well as to increase the level of interaction with the company’s customers and expand the customer base,” noted Alrosa CEO Sergey Ivanov.

Source: Diamonds.net

Alrosa Board Approves Kristall Takeover

Alrosa is set to finalize its acquisition of diamond manufacturer Kristall in a $29 million deal in October, following approval from its supervisory board.

Alrosa expects the RUB 1.89 billion sale-and-purchase agreement to be signed by the end of the month, with a concrete plan for the manufacturer’s integration into the company to be in place by the end of the year, it noted.

Kristall is the leading polished-diamond manufacturer in Russia and Europe, processing more than 200,000 carats of rough annually. While Alrosa already runs a manufacturing unit, the acquisition of Kristall is set to expand its share of the polished-production market from 20% to 70%.

“Despite the fact that Alrosa is currently a key supplier of rough diamonds to Kristall, it accounts for as little as 0.5% of Alrosa’s sales of rough diamonds,” Alexey Philippovskiy, Alrosa’s deputy CEO, said Wednesday. “The deal value is less than 1% of Alrosa’s net assets and, according to our estimates, the purchase price will not exceed Kristall’s net assets at the date of the transaction.”

Last year Kristall produced 105,700 carats of polished diamonds, with sales of 111,700 carats. It reported revenue of RUB 12.8 billion ($199.1 million) and profit of RUB 40.7 million ($633,040). The company also operates a jewelry entity and a business that produces tooling and equipment for the diamond industry.

Source: diamonds.net

Alrosa mulls acquisition of diamond factory

Russian diamond miner Alrosa is considering the acquisition of Russia’s largest producer and exporter of polished diamonds, Kristall, which is valued at 1.89 billion ruble.

Kristall processes more than 200 000 ct/y of rough diamonds, with 90% of diamond feedstock supplied by Alrosa.

“On the back of the increasingly complex economic environment, Kristall has been going through some financial challenges in recent years. However, the business maintains its output volumes boasting rich heritage, state of the art equipment, and extensive expertise in rough diamonds cutting,” said Alrosa CEO Sergey Ivanov on Tuesday.

He noted that Alrosa was not new cutting and polishing and that its Diamonds Alrosa branch was responsible for about 20% of polished diamonds in Russia. After consolidating Kristall, the group’s share in the Russian market would reach as much as 70%.

“We are quite optimistic about the integration prospects and have already embarked on preparatory work to start joint operations in cutting and sales.

We will focus our efforts on developing new sales channels, including those in the US and Chinese markets, while also improving production efficiency by leveraging the latest diamond processing technologies, automating routine operations, and creating competence hubs to bring together high tech equipment and industry professionals.

We expect that our efforts to merge our cutting facilities will help reduce production costs and, subject to a favourable market environment, take up a considerable share of the market for best in class polished diamonds.”

If approved by the Alrosa supervisory board, the sale and purchase agreement is expected to be signed by the end of this month.

The Kristall diamond factory was founded in Smolensk in 1963. Last year, Kristall production and sales were 105 700 ct and 111 700 ct of polished diamonds, respectively. Its total revenue amounted to 12.8 billion ruble, and net profit reached 40.7 million ruble.

In 2002, Kristall launched its own jewellery production, and the retail chain of Smolensk Diamonds, its jewellery entity, now has over 50 sales points in 30 Russian cities. Kristall’s another entity, Almaz Servis, produces tooling and equipment for the diamond industry.

Source: miningweekly

Pink Russian Diamond May Rank Among World’s Most Valuable Gems

A 14.83-carat pink gem found and cut by Alrosa PJSC is expected to fetch one of the highest prices ever for a diamond when the Russian company puts it up for sale later this year.

The oval stone, named The Spirit of the Rose, has been certified by the Gemological Institute of America as fancy vivid purple-pink with excellent clarity, excellent polish and very good symmetry, said Alrosa spokeswoman Evgeniya Kozenko. The sale is planned for November, she said.

The Spirit of the Rose diamond.

Colored diamonds, formed by impurities such as boron or nitrogen, are the most expensive and rarest, with pink and red stones fetching the highest prices. The Spirit of the Rose may be one of the most expensive pink stones ever, according to Eden Rachminov, the chairman of the board of the Fancy Color Research Foundation.

He estimates the potential price at between $60 million to $65 million.

Sotheby’s set the record for any gem ever sold at an auction in 2017, with its $71 million sale of the 59.6-carat Pink Star to Hong Kong-based jewelry retailer Chow Tai Fook Jewellery Group The stone was mined by De Beers, and dethroned the Oppenheimer Blue, which fetched $58 million in an earlier sale at Christie’s.

Kozenko declined to comment on how much Alrosa hopes to raise from the sale, but said that The Spirit of the Rose will be the most expensive stone ever polished in Russia. The company is still considering how to conduct the sale, with a decision expected next month, she said.

It’s a good time for a sale, as pink stones are about to get even rarer after Rio Tinto Group confirmed earlier this year that it was shutting its giant Argyle operation in Australia. The mine produces about 90% of the world’s pink gems.

Alrosa found the 27.85-carat rough stone at its alluvial mines in Russia’s Far East in 2017 and named it Nijinsky, after ballet dancer Vaslav Nijinsky. The preparation and cutting process, which took a full year, was done at Alrosa’s cutting factory in Moscow.

The Spirit of the Rose was named for the ballet Le Spectre de la Rose, staged by the Ballets Russes company, which premiered in 1911 and in which Nijinsky was a star.

Source: bloomberg

Alrosa Sales Hit Lowest Level on Record

Alrosa’s July sales slumped to their lowest point in three years, as weakness in the rough market continued to impact demand.

The Russian miner’s total sales slid 50% to $170.5 million for the month, it reported Friday. Rough-diamond sales, which account for the bulk of the company’s revenue, dropped 51% to $164.6 million. Polished sales increased 11% to $5.9 million. Previously, the lowest monthly total was $176.3 million in December 2016, according to Rapaport records. Alrosa has released its results every month since August 2016.

The decline resulted from an oversupply in the midstream, as manufacturers were unable to offload stones due to weak demand. “This factor was exacerbated by [the] low availability of credit facilities…in the midstream [and] trade tensions between [the] US and China,” explained Evgeny Agureev, director of Alrosa’s United Selling Organization.

Sales for the first seven months of the year fell 35% to $1.98 billion, with rough sales down 34% to $1.95 billion. Revenue from polished diamonds plunged 40% to $33.1 million for the January-to-July period.

However, Alrosa predicted an improvement in the situation as inventories even out.

“Recent statistics on the net imports of rough diamonds to India and net export of polished diamonds [out of that country] suggest that the diamond market is gradually coming back to supply-demand balance,” Agureev added.

Source: Diamonds.net

Alrosa recovers Fish-Shaped Diamond

Alrosa’s knack for recovering unusually shaped diamonds has scaled new heights with the discovery of a rough stone resembling a fish.

“In the photo, you see a very rare specimen: a rough-diamond crystal which pretends to be a fish,” the Russian miner wrote in an Instagram post Wednesday announcing the find.

As with its other similar hauls, Alrosa hooked the catch to a marketing goal, using the occasion to emphasize the care it takes to preserve sea life around its mines. Alrosa ecologists release “hundreds of thousands” of fish into rivers in Yakutia and its other mining regions every year, the company explained in the post. In October, it plans to introduce “valuable” broad whitefish into Siberian waters.

Last summer, the company unveiled a rough diamond resembling a soccer ball in the middle of the World Cup taking place in Russia, for which it was a sponsor. The company also found a stone that looked like a skull in time for Halloween, and stumbled upon a heart-shaped piece a few weeks before Valentine’s Day this year.

Source: diamonds.net

ALROSA SELLS $2.2 MILLION OF POLISHED AT ISRAEL DIAMOND EXCHANGE

Alrosa sold 14 polished diamonds weighing a total of 108 carats, and 48 fancy colored polished diamonds weighing 131.6 carats in total.

Companies from Israel, the US, Belgium, India, Hong Kong and Russia participated in the tender. The next polished tender in Israel is scheduled for this fall.

Pavel Vinikhin, Director of the DIAMONDS ALROSA cutting division, commented: “There is a continued interest in large polished diamonds over 3 carats in the market. Our assortment mostly consists of such stones.

In Israel, we presented polished diamonds of different colors and cuts. Despite the relatively weak market, the auction went well, and we are pleased with the results”.

Russia’s major diamond mining firms including Alrosa have urged India to amend consumer laws on synthetic diamonds so that there is clarity on the quantity of synthetic diamonds entering the country and how they are being used.

Industry executives said that around 5 million carats of synthetic diamonds are produced globally, and the volume is increasing, causing concern to rough diamond producers. A senior executive, who did not wish to be identified, told the Economic Times that a meeting was recently held between India and Russia on synthetic diamonds.

“India is the chair of the Kimberley Process Certification System (KPCS) for 2019 and the Russian Federation is the vice chair. The KPCS is a joint initiative of 54 members, including India and the European Union, to stem the flow of ‘conflict diamonds’ that are used by rebel groups to overthrow legitimate governments.

It came into effect on January 1, 2003 through a United Nations General Assembly Resolution and includes governments, civil society and industry.”

“During the meeting between Aleksey Vladimirovich Moiseev, the KPCS vice chair 2019 and deputy minister of finance of the Russian Federation Peter Karakchiev, Alrosa’s head of international relations department and other senior representatives of the Russian foreign office it was decided that the KPCS should work towards having separate HS (harmonized system) code implemented for synthetic rough diamonds at the national level and encourage participant countries to expedite the process of implementation.

Source: IDEX

11 Carat Purple Diamond Expected to Fetch Over $10M

Hong Kong based M&B Diamonds expects to sell a record setting purple diamond for more than $10 million, after buying the stone from Alrosa.

The cushion modified brilliant cut, 11.06 carat diamond is the largest fancy deep purple pink stone the Gemological Institute of America (GIA) has examined, according to the August 2018 grading report.

Alrosa originally debuted the gem as part of its “True Colour” collection in September at the Hong Kong Jewellery & Gem Fair. M&B bought it at tender in Moscow about two months ago, Roi Sheinfeld, owner of M&B Diamonds, told Rapaport News Wednesday.

M&B will preview the stone to customers by appointment only at its M&B Private Jewelers retail shops in Hong Kong and Singapore. While Sheinfeld chose not to reveal the stone’s purchase price, he expects the sale to yield more than $10 million, depending on the design.

“As it’s one of a kind…we will exhibit it as [a] polished loose diamond,” Sheinfeld added. “The client who buys it will have the privilege of sitting with our design team and creating a one of a kind bespoke piece.”