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ALROSA looks to scoop up $ 6 billion from annual sales of rough diamonds

16 august 2012

ALROSA expects that its annual sales of diamond goods could reach $ 6 billion in the medium term given a favorable conjuncture in the world market, the PRIME News Agency says citing the latest financial statement released by the company.

In 2011, ALROSA retained a leading position in the global diamond mining by the carat volume of produced natural diamonds. The company’s aggregate diamond output totaled 34.5 million carats in 2011, while its sales of core goods reached $4.45 billion.

In 2012, ALROSA Group plans to produce 34.6 million carats of diamonds and drive its sales to about $5.1 billion.

Meanwhile, the diamond industry in the first half of 2012 experienced a negative impact of such factors as the slowdown in stock markets, economic tensions in Europe, and fall in the exchange rate of the Indian rupee. The Asian market, which accounts for major growth in diamond demand, is also going through a difficult period. The slowdown in the economies of China and India affect consumption in these countries.

As it is said in ALROSA’s statement, the exhibitors taking part in the JCK Las Vegas Show and Hong Kong Jewellery and Gem Fair in June 2012 noted that the amount of contracts was lower than last year. Despite the fact that the number of visitors at the exhibition in Las Vegas went up 17%, the transactions magnitude fell by 30% compared to last year. Most of the exhibitors in Hong Kong reported a strong pressure on prices from potential buyers. Deals were closed only if diamond sellers were able to reduce prices by 3-6%. This unstable situation is likely to last until the end of 2012, but in the long term the outlook is upbeat, and demand for diamonds will exceed supply.

The gradual depletion of world diamond reserves, as well as the absence of new major diamond deposits suggest that in the future global diamond production will remain relatively stable. The capacity of ALROSA’s mineral resources (due to engaging almost all diamond fields under opencast development and commencing underground mining on the company’s primary mines, as well as due to commissioning large mineral reserves in the deposits with a poor diamond grade) will allow the company to maintain its leadership in diamond mining. In addition, in the face of growing demand, diamond prices will continue to rise, the statement says.

ALROSA produces 97% of all diamonds of the Russian Federation, and the company's share in world diamond production is about 28% (in 2011). OAO Nizhne-Lenskoye and NP Uralalmaz account for the rest diamond output in the Russian Federation. The company has proven reserves sufficient to maintain current production levels for more than 25 years without reducing the quality of rough.

In addition, ALROSA has developed a strategic expansion program, which will allow it to increase its annual diamond production to 38-40 million carats up to 2021 and maintain leading positions in the global market. The company is intensifying exploration in Western Yakutia aimed at replenishing its mineral resource base. ALROSA allocated 4.12 billion rubles for exploration in 2011 and is going to maintain this level of financing in case of progressive development.

In Russia, diamond mining operations prevail (99%) on primary and placer deposits located in Western Yakutia. Outside this republic diamond mining is carried out in the Arkhangelsk region and on the western slopes of the Urals. In the long term, Western Yakutia will retain its status as a key strategic region of diamond mining.