ALROSA Posts 2% Rise In Q3, Down 11% In Jan-SeptOctober 23, 18
(IDEX Online) – ALROSA has posted a 2% rise on the year in diamond output in the third quarter of this year, but an 11% decrease in the first nine months of 2018.
The miner reported that diamond production grew by 23% on the previous quarter in Q3 to 10.5 m carats due to seasonal growth in output at alluvial deposits, an increase in ore and gravels processing, and the ramp-up of the recently launched assets to design capacity.
However, there was an 11% decrease in January-September to 26.4 million carats mainly due to the shutdown of the Mir underground mine (UM) and the completion of open-pit mining at the Udachnaya pipe.
In Q3 2018, the average diamond grade per tonne of ore was lower by 28% q-o-q (down 7% y-o-y) to 0.61 cpt, mainly due to seasonal growth of production at alluvial deposits, the firm said. A 14% decrease in diamond grade in 9M 2018 to 0.8 cpt was caused by the closure of the Mir UM in 2017 and production growth at lower-grade assets.
Q3 Group rough diamond sales (ex. polished diamond sales) were 6.7 m carats (down 26% q-o-q), including 4.7 m carats of gem-quality diamonds (down 26% q-o-q) and 2.0 m carats of industrial diamonds (down 27% q-o-q). 9M diamond sales were 29.1 m carats (down 9% y-o-y), including 21.1 m carats of gem-quality diamonds (down 12% y-o-y) and 8.0 m carats of industrial diamonds (up 1% y-o-y).
Inventories as at the end of Q3 2018 were up by 42% q-o-q (down 11% y-o-y) to 15.5 m carats, driven by a seasonal production growth at alluvial deposits and lower sales volumes.
Growth of average realized prices for gem-quality diamonds: following sales in July through September, average realized prices* (including product mix change effect) grew by 22% q-o-q (up 18% y-o-y) to $199/ct due to improved mix as sales of +10.8 and +2 carat stones grew.
The diamond price index grew by 5.2% year-to-date, driven by improved demand, the miner said.
Q3 sales decreased by 10% q-o-q to $973 m (up 13% y-o-y), with gem quality diamond sales (ex. polished and industrial diamonds) amounting to $949 million.
The firm's production forecast for this year remains unchanged at 36.6 million carats, a decrease of 8% y-o-y.
In H1 2018, the diamond jewelry market grew by 6% as all key markets enjoyed rising sales, with the exception of India. The stagnant growth in India was due to local banks' reluctance to fund the diamond industry.
In H1 2018, the diamond jewelry market was in the positive territory, among other things, due to the robust growth of major markets in the US and China. The North American market saw diamond jewelry sales rise by 5% y-o-y. In Asia and Europe, sales in dollar terms added 8% y-o-y (up 3% and down 3%, respectively, at constant exchange rates).
In Q3 2018, the rough diamond market experienced a traditional seasonal slowdown due to summer holidays. Beginning in the second half of August, cutters were loading production facilities to accumulate sufficient diamond inventory ahead of the Diwali festival holidays starting on 7 November. Resumed market activity following the summer slowdown saw weaker demand for inexpensive goods due, in part, to the depreciation of the world currencies against the US dollar.