Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Russian diamond miner Alrosa will relax payment terms for long-term customers in its March trade session starting this week, it said on Thursday, as diamond sales fall due to the uncertainty caused by the coronavirus outbreak.
Sales by state-controlled Alrosa, the world’s largest producer of rough diamonds in carat terms, fell in February as the risks related to the spread of the virus hit demand for gemstones.
“Obviously, amid such market uncertainty, it would not be right to keep our customers tied to their original contracts,” Evgeny Agureev, Alrosa deputy chief executive, said in the statement.
Alrosa and Anglo American’s De Beers unit produce about half of the world’s rough diamonds
“We hope that Alrosa’s flexible sales policy and support measures will help market participants adapt to the new conditions, and pass through them successfully,” he added.
Alrosa and Anglo American’s De Beers unit produce about half of the world’s rough diamonds.
Alrosa traditionally mandates that its customers purchase a minimum amount of the total volume of diamonds agreed upon in initial contracts during its monthly trade sessions. During a stable market environment, such as in 2018, this level could be set as high as 80%. Earlier in March, Alrosa lowered the bar from 55% to 50%, and this mandatory minimum remains in place for the current trade session. Starting from this week, long-term customers of Alrosa’s March trade session, though still subject to the 50% minimum, will only be required to pay for 40% this month, while the remaining 10% can be purchased further down the line, but before the end of May.
Alrosa’s sales of rough and polished diamonds fell 14% to $346 million in February from January, it said earlier this week. It had originally planned to sell 37 million carats in 2020, but the coronavirus outbreak made this less predictable, the company said.
(By Polina Devitt; Editing by Polina Ivanova and Elaine Hardcastle)
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