Russian Diamond Production – planning more independence and reorienting to Asian markets


As the rough diamond market continues to recover after having stagnated in 2015, Russian diamond miner Alrosa Group has boasted stronger sales in the first quarter of 2016: the company’s revenue soared by almost 37 percent, reaching $1.56 billion, while its profit more than doubled to $758.8 million.

“Revenue from diamond sales jumped 41 percent to $1.48 billion, with sales to Belgium, Alrosa’s largest trading partner, soaring 43 percent to $774 million. Sales to India surged 58 percent and revenue from Israel and the United Arab Emirates both increased.”

Alrosa is one of the world’s largest producers of rough diamonds in carat terms, accounting for about a third of global rough diamond production. Alrosa shares its top positions with the Anglo-American company De Beers, which many credit with having popularized the purchase of diamond engagement rings. Together the giants control about two-thirds of the market.

Simultaneously, the company is seeking to boost its sales in Southeast Asia.

As of yet, only five percent of Alrosa’s sales are in China, but the company is planning to double the figure in the nearest future.

Moreover, according to Rambler News Service, Alrosa is considering the possibility of direct sales to its Southeast Asian customers bypassing the Antwerp Stock Exchange, where the company’s diamonds are traded.

Svetlana Shelest of Rapaport Magazine has called attention to the fact that the mining company is also pushing ahead with its project to develop a rough and polished trading platform in Vladivostok, which it announced in 2015.

“Trading in Vladivostok will be organized and run by ALROSA itself — unlike trading at the Moscow Exchange — and primarily be aimed at developing an export-import exchange with the Asia-Pacific region, taking advantage of the mining company’s stock and infrastructure and the free port privileges of Vladivostok,” Shelest underscored.

What’s more important, the Kremlin has approved the partial privatization of the diamond company. Moscow plans to sell 10.9 percent of the government’s stake in Alrosa, aiming to make more than 60 billion rubles ($909 million) this year. The Russian government (43.9 percent), Russia’s Republic of Sakha (25 percent) and ulus of Yakutia (8 percent) are the company’s largest shareholders.

Following the announcement, Chinese investors have signaled their interest in the partial privatization of the company.

But that is not all: despite the Western sanctions policy championed by Washington and Brussels, American and British investors are considering buying Alrosa stakes as well, and with good reason. The company is demonstrating sustainable growth with its market capitalization having risen 41 percent to $8.8 billion this year.

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Categories: Business, Russia

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