Alrosa August Diamond Sales Expected to Total $196 Million
August 31, 09
 Not clear how Alrosa will meet its $2 billion annual sales goal |
The renewed sales by the Russian company come at a difficult time. The rough diamond market is in a glut, with excess supplies from all major diamond miners. These goods were often bought by traders at high prices with the intention of trading and not polishing them. These traders are currently unable to sale much of the goods. They point out the Alrosa goods in particular as expensive and unmovable.
On the other end, Alrosa’s own financial woes, in particular nearing loan payments, are pressing issues that demand a positive cash flow.
After halting sales in November 2008, the company renewed sales this summer. In July, Alrosa reported it sold about $150 million worth of goods. According to the company, the sales come as “the current market situation has enabled Alrosa to resume its trading operations and sizably increase market supply.”
One of the buyers in July was the largest Russian diamond polisher, Kristall of Smolensk. Kristall plans to buy some $100 million worth of rough diamond from Alrosa this year.
In late July, incoming Alrosa President Fyodor Andreyev announced that the company intends to meet its ambitious goal of $2 billion in diamond sales in 2009.
The almost $350 million in sales to the market, coupled with about $380 million in sales to the state repository Gokhran brings total known sales in 2009 to ~$730 million. Even if the Gokhran gets the promised extra $500 million budget that Prime Minister Putin called to allocate so Gokhran could buy more diamonds, the miner will still not achieve $2 billion in sales.
According to an Interfax report, a source familiar with negotiations between Alrosa and the Gokhran claimed the sides reached an agreement for the repository to buy $1.5 billion worth of rough diamonds from Alrosa this year and as much again in 2010.