Alrosa’s Udachny mine began operations in 2014 and it is expected to become Russia’s largest diamond mine and one of the world’s biggest. (Image courtesy of Alrosa)
Russia’s Alrosa, the world’s top diamond producer by output in carats, added to the increasing gloominess in the industry Wednesday by revealing it was able to sell only 42% of the precious stones it mined in the quarter ending in September.
The rough-diamond miner extracted about 11.6 million carats in Q3, or 20% more than in the same period last year. However, it sold merely 4.9 million carats in the period, according to the quarterly results published today.
Konstantin Yuminov, an analyst at Raiffesenbank AO, told Bloomberg the company’s results reflect a clear collapse in global demand, which is forcing producers, including Alrosa, to stockpile a portion of the output. “This situation may roll over to the next year,” Yumoniv noted.
In the first nine months of the year, the Russian giant mined 29.6 million carats, 16% more than the previous year, and sold 23 million carats, it said. Revenue from rough diamond sales will be more than $550 million in the third quarter and at least $2.7 billion in the January to September period, the company added.
Diamond miners have been dealing this year with falling prices, difficulties to sell their existing inventory into softening markets, and tougher financing conditions.
Some of them, such as Anglo American-owned De Beers — the world’s No.1 diamond producer —, have decided to try boosting sales by spending more in marketing, particularly in China.
The goal, says the company, is to prop up growth and attract new consumers, targeting women between the ages of 18 and 29, and buyers in third- and fourth-tier cities.
Rival Rio Tinto (LON:RIO), the third-biggest diamond miners, prefers to wait as it believes that China’s demand for the precious rocks will pick up pace faster than the global average soon, driven by gains in household wealth that would trigger a demographic and cultural shift across the nation.
3 Comments
Andjelo Mwembya
Medina GC and Moziki pty ltd. will follow this trend and focus more on the mining than trading the rough diamonds. So that when the market is back in full force we push more on our trading operations.
Chris Kuntz
So interesting. Exactly one year ago, I did not know much about diamond markets. Now three of my largest customers are diamond mining companies. I have been told about the relationship between China and gemstone diamonds – but now I see more clearly what is really happening in the market, thanks to this article. There is only so much margin that can be shaved off by gains in efficiency at an operations level……….the rest it seems is purely supply and demand economics ( Say’s Law )
ALPHANAVARRETE ALFONSO
I am really amazed about the digging style Miners like you are are doing…is it the best,safest and the easiest way to do it? Or do we have to redesign an alternative? I can see some danger in it? And a big possible delay when it comes to bad weather…