Alrosa's Goal: Lead by Carat Output, Does Not Expect Sharp Rough Price Increases

(IDEX Online News) - Alrosa wants to become the undisputed diamond leader, aiming to be the largest supplier by carat in the near future. De Beers, until recently the long-time global leader, decreased production in 2008 due to the economic crisis and as a result, the company and Botswana lost their top spot to Alrosa and Russia.

During an executive committee meeting in Moscow last week, the leading corporate goal for 2011 was maintaining global leadership by carat output. Other goals included investing in the underground mine construction program, improving efficiency through cost reduction, energy saving measures and improved labor productivity.

Last year, Alrosa held the lead and is likely the leading producer today too. While De Beers is expected to meet its production plan of 31 million carats, IDEX Online expects Alrosa to report mining about 34 million carats in 2010.

However, the lead will likely be short lived. In 2011, Alrosa plans to produce 34.438 million carats, while De Beers intends to increase production to nearly 40 million carats.

Alrosa projects 2011 income from diamond sales to reach $3.53 billion, a 3.2 percent increase over 2010’s expected income, indicating that it does not expect prices to increase much next year.  

For 2011, Alrosa projects a pre-tax profit of RUB 14.85 billion ($478.4 million) and net profit of RUB 10.54 billion ($339.7 million). The projected net profit is RUB 4.61 billion ($148.5 million) increase from 2010.