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The state and utilization of rough diamonds in the Russian Federation

06 july 2020

(based on the materials of the State report ‘On the State and utilization of Mineral Resources of the Russian Federation in 2018’)

The Russian Federation has the world's largest diamond resource base - the gemstone reserves in the country's interior are nearly 1,135 mn carats. In addition, Russia accounts for huge impact diamond reserves in the amount of 268 bn carats.

Russia is a world leader in the production of rough diamonds: in 2018, 43.2 mn carats worth $3,983 mn were recovered in the country.

Characteristics of the diamond resource base

The basis of the Russian diamond resource base, as well as the world one, consists of primary deposits - kimberlite pipes, while the placers have a subordinate value. The Russia’s diamond resource base is highly concentrated as almost 80% of the diamond reserves are in the Republic of Sakha (Yakutia) where the unique kimberlite Yubileynaya, Mir, Udachnaya pipes, and large Internatsionalnaya, Nyurbinskaya, Botuobinskaya, Aikhal, Zarnitsa pipes, as well as the Verkhne-Munskoye deposit are located. The quality of diamond ore in these deposits is different; five of them are characterized by a high level of diamond content - more than 3 ct/t. Alluvial diamond deposits are also located in the Republic, the largest of which - the Nyurbinskaya pipe and Ebelyakh river placer - are unique in terms of their diamond potential, and the Nyurbinskaya placer, in addition, is characterized by a high average diamond content in the sands (5 ct/cubic metre).

Another 20% of the Russia’s diamond reserves are concentrated in seven kimberlite pipes of the Arkhangelsk region, six of which (the Arkhangelskaya pipe, Karpinsky-1 and Karpinsky-2 pipes, Lomonosov, Pionerskaya and Pomorskaya ones) form a group of deposits named after M. V. Lomonosov and are characterized by a relatively low ore quality with an average grade of 0.09 to 1.4 ct/t. The kimberlites of another deposit, a large pipe named after V. Grib, are comparable in grade to the pipes of the group of deposits named after M. V. Lomonosov, but they are of higher quality.

A small amount of diamond reserves (0.1% of the Russian ones) is in small low-diamondiferous placers in the Vishera river basin in the Perm Territory, as well as in the sands of the alluvial Ingashetsky area of the Shelekhovskaya placer in the Irkutsk Region.

In addition, in the Taimyr Dolgan-Nenets district of the Krasnoyarsk Territory, huge reserves of the industrial grade impact diamonds have been explored at the Skalnoye and Udarnoye deposits confined to the Popigai meteorite crater; on average, their ores contain diamonds in the amount of 7.1-18.5 ct/t.

Almost all significant diamond deposits are licenced. The only large unlicenced deposit is the Krasnopresnenskaya Pipe in the Republic of Sakha (Yakutia) with diamond reserves of 26 mn carats, but it is characterized by extremely difficult operating conditions. In addition, huge reserves of impact diamonds have not been transferred to be developed, it is highly questionable that they will be mined as they are located in a remote undeveloped area.

Despite the fact that Russia has a rich diamond resource base, in the future, it may face a rough diamond shortage due to insufficient prospected reserves as the inferred resources of the most reliable P1 and P2 categories are estimated at the level of just 0.4 bn carats each. At the same time, the significant P3 category inferred resources (less studied) are located in the country in the amount of above 3 bn carats. The bulk of the inferred resources of high categories (90% of the P1 category and 80% of the P2 category) are located in the interior of the Republic of Sakha (Yakutia), and mainly on the flanks and in deep horizons of the fields being developed. Only 12% and 15% of the Russian inferred resources - the P1 and P2 categories, respectively, are concentrated in the Arkhangelsk region’s primary diamond deposits, mostly within the Zolotitsky-Kepinsky kimberlite field. Small prospects for the reproduction of the diamond resource base are associated with the Mayardak area in the Republic of Bashkortostan where the P2 category inferred resources are estimated at the level of 23 mn carats. In the alluvial deposits of the Vishera river basin in the Perm Territory, there is an insignificant amount of the high category diamond inferred resources. In Siberia and the central part of Russia, the P3 category diamond inferred resources are estimated only.

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Status and development prospects of the diamond industry

In 2018, 24 diamond deposits were developed in Russia, including 13 primary and 11 alluvial deposits. 42.9 mn carats of diamonds were mined in the country. Diamond mining is carried out only in two regions - the Republic of Sakha (Yakutia) and the Arkhangelsk region. In the Republic of Sakha (Yakutia) that provides 77% of the precious stones output in the country, the largest primary deposits (the Yubileynaya, Udachnaya pipes, etc.) in the country, are developed as well as the alluvial ones (the Ebelyakh river placer, Nyurbinskaya one). The rest of the Russian diamonds are mined in the Arkhangelsk region at two pipes of the Lomonosov diamond deposit, and the V. Grib pipe.

The main diamond output in Russia is provided by the ALROSA Group, which includes AK ALROSA (PAO), as well as Severalmaz (PAO) and AO Almazy Anabara. PAO ALROSA-Nyurba, part of ALROSA, is in the process of liquidation from the fall of 2019. The enterprises of the ALROSA Group are developing all the diamond deposits in the Republic of Sakha (Yakutia) and the pipes of the Lomonosov diamond deposit in the Arkhangelsk region. The ALROSA Group comprises six production complexes that mine and process diamond-bearing ores and sands: the Aikhalsky, Nyurbinsky, Mirninsky, Udachninsky, and Lomonosovsky Mining and Processing Plants (MPPs), as well as the Almazy Anabara’s Mining and Processing Plant. The primary deposits are developed by open pit and underground methods, the alluvial deposits are mined by open pit and dredge methods. Ores and sands are processed at the MPP’s beneficiation plants, as well as the seasonal sorting and beneficiation plants (placer sands developed by Almazy Anabara). In 2018, the ALROSA Group’s enterprises produced 38.1 mn carats. All the Company’s mined deposits were operated, except for the Mir pipe that was shut down due to the accident in August 2017.

The only diamond mining company in Russia that is not part of the ALROSA Group is AGD DIMONDS, which is part of Otkrytie Holding and operates the V. Grib pipe in the Arkhangelsk region processing the ores at the beneficiation plant of the V. Grib Mpp.

Due to the fact that almost all significant diamond deposits in Russia have already been put into production, the prospects for increasing the diamond mining output are not great. In October 2018, ALROSA commenced commercial operations at the Verkhne-Munskoye deposit and started the open pit mining at the Zapolyarnaya pipe. The deposit will be mined at two pits with a total capacity of 3 mn tonnes of ore per year (about 1.9 mn carats) involving four of its five kimberlite pipes (the Zapolyarnaya, Deimos, Novinka, and Komsomolskaya-Magnitnaya ones). It is expected to reach full design capacity by 2024, and the expected life of the mine is 25 years. The mined ores are transported by road trains to the Udachninsky MPP for processing.

In April 2019, ALROSA launched the ore mining at the Zarya kimberlite pipe using the Aikhalsky Mpp, this pipe should compensate for the Komsomolskaya pipe’s retired capacities. During the year, it was anticipated to produce 100,000 tonnes of ore and to reach its full design capacity of 1.25 mn tonnes (about 355,000 carats of diamonds) in 2021. It was supposed to carry out mining at the pit to a 300-m depth for 11 years. However, in May 2020, mining operations at the Zarya pipe (as well as at the Aikhal underground mine) were suspended due to a drop in the global demand for rough diamonds due to the COVID-19 pandemic.

The Nyurbinsky MPP is used for the operation of the Mayskoye primary deposit and the Mayskaya placer. ALROSA planned to start the pit construction in 2020, to launch mining at these facilities in 2025, and to reach full capacity (300,000 tonnes of ore and sand) by 2027. The deposit reserves should last for 15-year mining.

The structure of the diamond industry of the Russian Federation

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At the end of 2017, the Severalmaz company operating in the Arkhangelsk region began mining the ore at the Karpinsky-2 pipe belonging to the M. V. Lomonosov group of deposits, which is planned to be mined as a single pit with the Karpinsky-1 pipe being developed. It is expected that based on the reserves of the Arkhangelskaya, Karpinsky-1, and Karpinsky-2 pipes, the enterprise will operate another 29 years. In the long term, Severalmaz plans to bring the remaining pipes of the M.V. Lomonosov group of deposits - the Lomonosov, Pionerskaya, and Pomorskaya pipes - into operation.

The ALROSA Group also implements several projects for the development of the alluvial deposits in the Republic of Sakha (Yakutia), the largest project being the Solur-Vostochnaya placer.

Reproduction of diamonds resources

Diamond exploration is conducted annually in Russia. In 2018, two alluvial objects were registered in the State balance of the mineral reserves of the Russian Federation for the first time: the Bill river (tributaries) and the Ochuos stream. A significant increase in the reserves - the A+B+C1 categories - was obtained at the Lyaseger-Yuryakh stream placer and the Nyurbinskaya one, as well as at the Yubileynaya pipe. The total increase in the diamond reserves, the A+B+C1 categories, due to the diamond exploration amounted to 7.3 mn carats.

The main volume of the diamond exploration is provided by the ALROSA Group’s companies. In 2018-2019, the additional exploration on the Yubileynaya and Zarnitsa pipes was carried out, it was carried out on the placer deposits of the Anabarsky and Prilensky diamondiferous areas (the Malaya Kuonamka and Maspaky rivers, as well as the Molodo and Mayat rivers, the Balagannakh stream, etc.).

The early stage exploration (prospecting and assessment) aimed at identifying new kimberlite fields and diamond deposits is also mainly conducted by the ALROSA Group’s enterprises in the Republic of Sakha (Yakutia) and the Arkhangelsk Region. In addition, diamond prospecting is carried out by AGD DIAMONDS and Proeks Servis in the Arkhangelsk Region, Almaining in the Perm Territory, Diamant in the Leningrad Region, and others.

In 2018, subsoil users spent 5.2 bn roubles on the geological exploration, 13% less than in 2017. Despite the significant investments, the increase in the diamond reserves in Russia is generally small. Over the past decade, they only twice exceeded their loss during mining: in 2009 (according to the results of the additional exploration at the Internatsionalnaya and Nyurbinskaya pipes), and in 2016 (the exploration of the deep horizons of the Aikhal pipe, re-evaluation of the Verkhne-Munskoye deposit reserves).

Domestic consumption and foreign trade

Rough diamonds obtained at the ALROSA Group’s beneficiation plants go to the diamond sorting centres in the cities of Mirny and Arkhangelsk where they are subdivided into size classes and are preliminary evaluated. Then, they are sent to the ESO ALROSA (Unified sales organization) in Moscow and to the YaPTA (Yakutsk diamond trading company) for final sorting and evaluation according to the price list of the Ministry of Finance. After evaluating, gem-quality diamonds from various deposits are mixed and subdivided into ‘boxes’ based on their similar characteristics. Industrial grade diamonds are supplied to the ALROSA Group’s Kommeral subsidiary in Mirny where part of them is used for the manufacture of grinding powders. The rough diamonds are mainly used for exporting.

In 2018, Russian enterprises received 43.2 mn carats of rough diamonds worth $3.98 bn. The average value of 1 carat was $92.3.

Most of the diamonds produced in Russia are exported. In 2018, 44.7 mn carats of diamonds worth $4,695 mn were sold abroad. The main export destinations are Belgium, India, the UAE. The average export price of the Russian diamonds in 2018 was $105 per carat.

The diamonds mined in Russia are mainly sold by the ALROSA Group. In 2018, it exported $3.9 bn worth of rough diamonds. The Almazyuvelireksport foreign trade association and AGD DIMONDS also export the precious stones from the country.

The ALROSA Group domestic sales in 2018 increased by 30% compared to the year ealier, amounting to $524.5 mn, including $0.4 mn worth of diamonds sold to the Gokhran of Russia. $518.5 mn worth of diamonds were purchased by cutting and polishing companies, including Kristall, APL Diamond, DDK, S. D. Diamond, Kristall-Diam, Diapur.

In addition, $141.1 mn worth of gem-quality diamonds were shipped to the ALROSA Group’s enterprises: the Brillianty ALROSA branch in Moscow, the ORYOL ALROSA in Oryol and the Brillianty ALROSA Diamonds in Barnaul. Since September 2019, Kristall, the largest cutting and polishing enterprise in Russia, has joined the ALROSA Group.

Russia imports a small amount of rough diamonds annually. In 2018, the country purchased 919,000 carats for $296.5 mn. The bulk of the stones were purchased in Belgium, Hong Kong, and the UAE. All these countries are diamond re-exporters; no one mines diamonds.

The apparent domestic consumption of the rough diamonds in Russia in 2018 can be estimated at $956 mn, given the sale of stones within the country (including the Gokhran of Russia), supplies to the ALROSA’s cutting and polishing units and the imports. This is by one third higher than in 2017, mainly due to an increase in the deferred payments for domestic consumers. The Russia's share in the total rough diamond consumption ($15.5 bn in 2018, according to Tacy Ltd) makes about 6% only.

Main conclusions

Due to the available powerful diamond resource base and its efficient development, the Russian Federation has kept its lead in the world in the natural rough diamond production for a long time. Nevertheless, while maintaining the current level of production, a significant reduction in the diamond resource base is possible in the long term.

The diamond exploration is constantly carried out, but the diamond reserves reproduction rate is low. The main thing is that over the last decade, not a single deposit was discovered having the diamond potential comparable with the deposits that currently provide most of the diamond production.

All this, given the shutdown of the Mir mine, one of the largest Russia’s diamond deposits, could adversely affect the country's diamond mining industry prospects. To create a sufficient prospected reserve, it is necessary to carry out exploration in areas with the localized P3 inferred resources, primarily in the north and south of the Republic of Sakha (Yakutia), as well as in Siberia (the Irkutsk Region, the Krasnoyarsk Territory), and in the north-west of the country (the Arkhangelsk Region and the Republic of Karelia). It is also advisable to carry out the diamond exploration in order to identify low grade but high diamond quality deposits.

Bibliography:

State report ‘On the State and utilization of Mineral Resources of the Russian Federation in 2018’

http://www.mnr.gov.ru/docs/gosudarstvennye_doklady/gosudarstvenny_doklad_o_sostoyaniy_i_ispolzovanii_mineralno_syrevykh_resursov_rossiyskoy_federatsii/ 

Anastasiya Smolnikova for Rough&Polished