Alrosa Plans Larger Rough Diamond Supply to Indian Market
February 24, 10
Russian diamond miner Alrosa has committed to larger direct rough diamond supply to the Indian Market. The agreement is part of a wider effort by the Indian industry to ensure direct rough diamond supplies from producing countries.
Alrosa, about half of whose sold production in 2009 was to Indian buyers, intends to raise the number of contract Indian buyers from the current seven to about 30.
Alrosa Vice President of Sales Yuri Okoyomov would not publicly commit to a specific level of supply or a schedule, however in a press conference in Mumbai Tuesday, he said that the company is seeking an agreement with the Russian government to have a flexible supply to the state repository Gokhran.
This will allow the diamond miner to increase or decrease supply to the market, based on the economic environment. Okoyomov said he still has concerns about the economic conditions in 2010.
In 2009, Alrosa sold to Indian buyers about $550 million worth of rough, about half of its sales to the open market. The rest of its production was sold to Gokhran.
One of the key issues during the recent global recession was the ability of contract buyers, such as DTC Sightholders, to refuse to buy some of the offered goods, if they felt they were not economical. "This is something we have discussed internally, and decided on a shift of policy" Okoyomov told IDEX Online. According to Okoyomov, Alrosa will allow contract buyers to turn down goods, depending on the economic situation and the specific goods.
The company will select contract buyers by their manufacturing and financial strength as well as their sales goals, Okoyomov stated. The prices of goods will change according to market pricings, he added, with a small periodic tender serving as a way to gauge market prices.
Alrosa, as the rest of the industry, continues to view the recent increase in rough prices with worry. "Rough prices are rising faster than polished. This is not good, and we are looking at this with concern," Okoyomov said, "if we see prices go up, we will take this into account." As to practical steps, he said the company will take a balanced approach. The company will continue to supply the market at reasonable prices, but won't flood it either. Ultimately, buyers will need to act responsibly, was the message. Perhaps underscoring this, Okoyomov estimates 2010 global rough diamond sales to total $11 billion.
From an Indian prospective, the increased Alrosa supply is not just good news. It is also part of a wider drive to source rough diamonds. "We will go to the countries that have goods not under [selling] contracts," Gem & Jewellery Export Promotion Council (GJEPC) Chairman Vasant Mehta said about this policy, referring to goods that are not bought by major producers such as De Beers.
"We want to avoid the middlemen. A strong middleman creates a speculative drive," he added. The GJEPC and India Diamond Inc, a consortium of some 60 diamond manufacturers, are trying to secure direct supply from a number of African countries, including