Loss-Making Alrosa Suspends Mining at More Deposits

(IDEX Online) - Alrosa has suspended mining at several more unprofitable deposits as it steps up cost-cutting measures amid continuing weakness in the diamond market.

The latest suspensions were announced on November 9 by CEO Pavel Marinychev and include operations run by Alrosa's subsidiary Almazy Anabara, which accounts for 11% of group diamond production.

"We have suspended mining at our least profitable deposits. We are optimizing our costs," he said in an interview with Russian television channel Almazny Krai, as reported by The Moscow Times, RBC and Vedomosti.

Marinychev said the state-controlled miner had already factored the measures into its 2026 budget but did not rule out further spending cuts.

Most permanent employees and some contract workers at the affected sites would be transferred to other operations, including the Khaptasynnah gold-mining operation in Yakutia and the Degdekan gold deposit in the Magadan region.

Alrosa has not identified the individual deposits affected by the latest suspensions or quantified the production being taken offline.

The latest measures follow a series of closures and suspensions over the past 18 months, suggesting an increasingly extensive retreat from less profitable mining operations.

In March 2025, Alrosa suspended work at four operations: the Zapolyarny and Magnitny open pits at its Verkhne-Munskoye deposit, and the Khara-Mas and Ochuos alluvial deposits in the Anabar River valley. The latter two were operated by Almazy Anabara.

The four operations accounted for approximately 3% of Alrosa's planned production. The company said their suspension would save 9 billion rubles (approximately $109 million) annually.

IDEX Online reported at the time that Alrosa had considered permanently closing some low-margin mines. A management letter to employees outlined options including mining the richer sections of deposits for two years before shutting them, potentially resulting in substantial job losses.

The company instead opted for temporary suspensions, preserving the possibility of restarting operations if market conditions improved.

There was a further suspension in July 2026, when Alrosa's Severalmaz subsidiary halted mining operations for approximately three months. Severalmaz operates in the Arkhangelsk region of northwestern Russia and accounts for about 10% of Russian diamond production.

The November announcement appears to represent another significant round of retrenchment. While the number of newly affected deposits has not been disclosed, the involvement of Almazy Anabara is notable. The subsidiary accounts for 11% of Alrosa's overall production, compared with the approximately 3% of planned output represented by the four operations suspended in 2025.

The figures are not directly comparable, however, since the 11% represents the subsidiary's entire contribution, rather than the proportion now being suspended. It is therefore not yet possible to establish whether the latest measures involve a greater production reduction than the previous closures.

In August Alrosa reported a net loss of $115 million for the six months ended June 30, compared with a $474 million profit a year earlier. Revenue fell 33% year-on-year, while EBITDA dropped 61% to $173 million.

Free cash flow was negative by $204 million during the first half and by $402 million over the preceding 12 months. Its stockpile of unsold rough diamonds was valued at approximately $1.83 billion at the end of June.

The company produced 29.8 million carats in 2025, a 10% decline year-on-year, and expects output to fall further to between 25 million and 26 million carats in 2026.

Despite the cutbacks, Marinychev has pointed to tentative signs of improvement in the market, saying Alrosa had raised prices for larger polished diamonds three times during 2026.

"For the first time in the last three years, we have seen the green zone, meaning a small but nevertheless positive increase in diamond prices on the global market," he said. "Fortunately, this trend is continuing. It is slow, but it is still growth."

Pic courtesy Almazy Anabara.