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Russia
By Svetlana Shelest
Russia’s largest diamond miner ALROSA reported a 26 percent year-on-year increase in rough and polished sales in 2016, according to the company’s preliminary estimate. The company has pegged its expected revenue for the year at $4.49 billion. In December 2016, ALROSA’s sales of rough totaled $176.3 million, while its sales of polished came in at $3.3 million. The company’s Vice President Yuri Okoemov pointed out in his press statement that the December sales were affected by the “weakening of small and middle-sized Indian diamond-cutting companies due to the monetary reform underway in that country.” The year’s results, however, are indicative of a recovery in the global rough market. The Russian miner also reported that its underground operation of the Mir mine reached full design capacity of 1 million tons of diamond ore per year by the end of 2016, a level of production that can be maintained for 50 years into the future. The Mir mine is the first of Russia’s developed diamond mines dating back to 1957. After Mir’s open-pit production was stopped in the early 2000s, the mine underwent a major capital repair before re-opening in 2009, and has been building up its capacity ever since. The company plans for the mine to produce an estimated $400 million worth of rough annually. A most recent update of ALROSA’s reserves and resources estimate in accordance with the Joint Ore Reserves Committee (JORC) code was released in January. It showed a 4 percent decline in resources, which shrank from 1.08 billion carats as of January 1, 2015, to 1.03 billion carats as of July 1, 2016. The company’s mineral reserves are now estimated at 653 million carats, almost 1 percent less than the previously reported 658 million carats. At the same time, Russian exploration agency Rosgeologia reported that its newest findings obtained in northern Yakutia are indicative of the presence of kimberlite diamond deposits that might prove to be similar in significance to the Mir and Udachny pipes. As Deputy Chair of Rosgeologia’s Science and Technology Committee Nikolay Pokhilenko stated via the Russian major news agency TASS, the detailed exploration works will commence in 2017. “We have identified seven prospective sites and calculated that exploration will require three years and a total of $2.02 million in investments,” he said.
Russia’s number one polisher Kristall Smolensk shared with Rapaport Magazine that both annual sales and winter holiday sales in 2016 were on par with 2015 results, which the company views as having achieved a level of stability. The company’s Director for Marketing and Sales Nikolay Afanasiev noted that prices went up for round-cut polished over 1 carat, while the prices for melee under .29 carats remained under pressure. Princesses fell completely out of favor, while cushions were a popular choice. Speaking of expectations for 2017, Afanasiev said, “We are looking into the future with cautious optimism. On the upside, there is hope for continued growth of the global economy and that of the U.S. in particular, while on the downside, there is some uncertainty in China and possible reverberations of the monetary reform in India.”
Russian jewelers reported mixed impressions of the year 2016 and its holiday season sales. Adamas, the country’s largest jewelry manufacturer and one of the top three jewelry retailers, shared with Rapaport Magazine that its diamond jewelry sales grew steadily in the second half of the year and its winter holiday sales showed a 5 percent year-on-year increase. Dmitry Baranov, the company’s operations director, said that jewelry with a large or prominent center stone was the most popular choice with premium diamond jewelry shoppers. On the other hand, Fyodor Poludenny, deputy director general of Estet, another major jewelry producer in Russia, told Rapaport Magazine that while total sales of the company’s premium diamond jewelry marketed under Gevorkyan brand in 2016 were on the same level as in 2015, in the more affordable categories they actually dropped year-on-year in monetary value, although the number of pieces sold went up. He also noted that demand was the highest for jewelry with large colored gemstones in diamond melee settings. Yekaterinburg-based Ringo Jewelry Holding Company stated that jewelry with .3-carat diamonds was their main bestseller throughout the year, while Valeria Arustamova, commercial director of the Valery Gold Jewelry House from South Russia, said that the company saw a 45 percent year-on-year increase in sales of engagement diamond rings with stones weighing between .5 and 1 carat. Alexander Kurgansky, founder and CEO of the Brilliant24.ru online diamond ecommerce site, pointed out that a surprising number of orders came in for investment-quality diamonds, such as type IIa, D and IF stones weighing 3 carats or more, to be set in jewelry. He also said that jewelry with round-cut H-color VS2-clarity .5-carat stones chalked up the most sales. Article from the Rapaport Magazine - February 2017. To subscribe click here.
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