Alrosa Halts Rough Diamond Sales to Clients

Russian diamond monopoly Alrosa stopped selling rough diamonds to its customers in December, a spokesperson for the company confirmed. Instead, Alrosa is selling all its goods to the state repository Gokhran.

Alrosa keeps mining, but is selling the diamonds to the Gokhran instead of to the market

“We aren’t selling anything in the market at the moment,” Andrei Polyakov told Bloomberg. Last November, the company promised to curtail sales by up to 40 percent, with the remainder going to the Gokhran.

The move was declared at an emergency industry meeting in Antwerp in response to a demand from rough traders to decrease sales. Just prior to that meeting Alrosa clients declined to buy any goods from the giant diamond producer.

The Gokhran purchases places Alrosa at an excellent future position when demand will rise. Other producers, such De Beers, have slowed down mining to a near halt, leaving goods in the ground.

While Alrosa is continuing to mine, in Angola it stopped exploring its Catoca claim. Diamond extraction from the existing Catoca mine will continue, it emphasized. Alrosa said it is unlikely it will resume exploration at Catoca this year, due to the global financial crisis and the fall in commodity prices.

In November 2008, the firm adjusted its annual net profit forecast to 1.422 billion rubles ($51.2 million), a result of the drop in rough diamond sales and prices in the fourth quarter.