Alrosa Posts $460.7 Million Net Loss in H1

Russian diamond miner Alrosa is finding that mining and not selling is not good for a company’s bottom line. Alrosa posted a net loss of 14.7 billion rubles ($460.74 million) in the first half of 2009.

Not surprisingly, the majority of the losses were in the first quarter of year, when it posted a 13 billion rubles ($407.5 million) net loss. Year-over-year, Alrosa posted net profits of 112.57 million rubles ($3.5 million) in the first quarter of 2008 and 3.43 billion rubles ($107.5 million) in the first six months of 2008.

Revenue in the first half of 2009 fell 58.3 percent to 13.41 billion rubles ($420.37 million). Sales of rough diamonds fell 79.6 percent and polished diamonds fell 82.8 percent. The drop represents reduced sales, as well as a drop in market prices. According to an Interfax report, the cost of sold goods fell to 11.58 billion rubles ($363 million), from 16.69 billion rubles ($523 million) the year before.

“Alrosa hadn't sold anything for more than six months and only returned to the market in July,” the company said. Continued mine production and construction were Alrosa’s main expenses.

Alrosa owes its creditors 115.54 billion rubles ($3.6 billion), borrowing heavily to fund the construction of a number of underground mines at a cost of about $1 billion each.