Alrosa maintained its production forecast for 2020 as the company reduced its rough-diamond stockpiles in the first quarter despite weak market conditions.
The miner expects production to rise 11% to 34.2 million carats this year, it said Thursday, but cautioned that its ability to sell will depend on the coronavirus situation.
“The diamond industry started 2020 in a good shape as consumer sentiment improved across key markets for diamond jewelry, inventories at the midstream normalized, polished-diamond prices began to recover, and diamond sales were quite robust in December and January,” Alrosa said. “However, the trend reversed as early as February, following the closure of markets in China and Hong Kong. The plunge worsened after COVID-19 spread to Europe and the US.”
The miner’s inventory decreased 6% to 21.1 million carats on March 31 from the 22.6 million carats it held at the end of 2019, it reported. However, it was 48% higher than a year earlier. Sales volume fell 11% to 9.4 million carats for the quarter, while sales value dropped 11% to $881.2 million.
Production rose 2% year on year to 8 million carats, reflecting increased operations at major mining projects in Russia’s Yakutia region.
During the quarter, output at the Aikhal underground mine jumped 42% year on year to 628,000 carats due to higher capacity at the processing plant. Production at the Udachny underground deposit rose 24% to 817,000 carats amid improved efficiency, while output at the Jubilee mine grew 6% as operations shifted to higher-grade ore.
Image: Rough diamonds. (Alrosa)