ALROSA Head Brings in Dynamic New ApproachJuly 05, 18
Anyone observing the global diamond industry will have noticed a new approach at Russian diamond mining monopoly ALROSA, the result of its new president Sergey Ivanov taking over the reins.
Hardly a week goes by without ALROSA announcing a new development. Ivanov, who is only 37-years-old, has been pushing through changes at a rapid pace since assuming the top position. While there may have been many who thought he was appointed largely thanks to his high-level connections – and that may be the case – Ivanov has, nonetheless, shown he has a dynamic approach to business in general, and ALROSA’s agenda in particular.
Appointed in March last year for a three-year term, he is the son of the former head of the Kremlin administration which doubtless gives him great confidence in taking on the challenges posed in running the world's largest diamond producer by value.
But for all the cachet attached to running the diamond giant, the firm can also get rid of its top person rapidly and without any sentimentality. In the past 10 years alone, there have been a number of CEOs, with former CEO Andrey Zharkov leaving the post before schedule reportedly as a result of an argument over the company’s budget for 2017.
Ivanov was previously a senior vice-president of Russia's largest lender, Sberbank, where he had been working since April 2016. Before that, he headed insurer SOGAZ.
Within months of Ivanov’s appointment, veteran senior official and vice-president Andrey Polyakov was eased out. Bizarrely, the miner only announced it officially after a media statement from the World Diamond Council (WDC) that Polyakov would be stepping down as WDC president.
And Ivanov wasted no time in meeting leading members of the global diamond trade, from Dubai to Israel, India and Belgium. One industry official I spoke to who has met Ivanov describes hm as very level-headed and business-like. “He is a nice enough, but clearly his aim is to push ALROSA up to a higher level, and he is in a hurry to achieve that.”
Despite the changes, Ivanov started out saying that although there will be modifications to the mining firm’s development strategy, no fundamental adjustments were expected. It will still be focused on strengthening its leadership in diamond mining and building market strength, he commented.
The initial aims made by Ivanov and his new team were aimed at cutting expenditure and streamlining operations. He made no secret of the fact that the company needs to be reformed to provide increased manageability and transparency.
The firm’s announcements continue to flow into newsrooms thick and fast. It is increasing its sales in Dubai, Israel and Vladivostok, it is putting a strong emphasis on environmental programs, and just last month it announced a dividend for 2017 of $618 million. It also displayed a lighter touch in its marketing work by announcing that football diamonds would be launched in honor of the World Cup, with a collection of 32 round diamonds weighing 0.3 carats each named after the countries participating in the global soccer tournament. All the diamonds, the firm said, are high quality, D to F color and VVS2 to IF clarity stones mined in Russia and cut by ALROSA's subdivision, DIAMONDS ALROSA.
There was also an interesting announcement regarding worldwide diamond jewelry sales which I believe was a first for the diamond miner and more in line with similar announcements distributed by its great rival De Beers. ALROSA said there had been a 7% rise in such sales in the first quarter of this year, and proceeded to provide a country/region-by-region breakdown. In addition, the miner is aiming to acquire veteran Russian diamond polishing company Kristall this year.
What’s next for ALROSA under Ivanov? Would it be reasonable to assume that being a much larger diamond producer than De Beers in volume terms, which once used to buy its production, Ivanov is now plotting a way of improving the marketing of the firm’s diamonds in order to increase its per carat price? De Beers has spent enormous amounts of money and resources over many years to persuade the diamond industry and consumers that this is the case. If this is, indeed, Ivanov’s aim, he has certainly has his work cut out for him.