ALROSA said yesterday that its Supervisory Board will consider the acquisition of a 100% stake in Joint-Stock Company Production Corporation Kristall, at a meeting to be held on September 24, 2019.

Kristall, the leading polished diamonds manufacturer in Russia and Europe, is currently entirely owned by the Russian state and operated through the Federal Agency for State Property Management (Rosimushchestvo).

“The key transaction terms are outlined in a decree signed earlier by the Chairman of the Government of the Russian Federation,” ALROSA said in its announcement statement. “The value of the 100% equity interest in Kristall is RUB 1.886 billion as determined by an independent appraiser.”

If approval of the Supervisory Board is obtained, ALROSA said its management will prepare and submit for consideration an action plan to develop and continue operating Kristall as part of ALROSA Group by the end of the year. Further, if the Supervisory Board approves of the acquisition, the sale and purchase agreement is expected to be signed by the end of this month.

Sergey Ivanov, ALROSA’s CEO commented: “On the back of the increasingly complex economic environment, Kristall has been going through some financial challenges in recent years. However, the business maintains its output volumes being Russia’s largest producer and exporter of polished diamonds, boasting rich heritage, state-of-the-art equipment, and extensive expertise in rough diamonds cutting.”

He added: “We are by far not a newcomer to the sector: our Diamonds ALROSA branch makes around 20% of polished diamonds in Russia. After consolidating Kristall, our share in the Russian market would reach as much as 70%. We are quite optimistic about the integration prospects and have already embarked on preparatory work to start joint operations in cutting and sales. We will focus our efforts on developing new sales channels, including those in the US and Chinese markets, while also improving production efficiency by leveraging the latest diamond processing technologies, automating routine operations, and creating competence hubs to bring together high-tech equipment and industry professionals. We expect that our efforts to merge our cutting facilities will help reduce production costs and, subject to a favourable market environment, take up a considerable share of the market for best in class polished diamonds.”

Presently, Kristall processes over 200,000 carats of rough diamonds per year, with 90% of its diamond rough supplied by ALROSA. Kristall’s international operations are run through its trade offices in the US, Hong Kong, and Belgium. The Company employs more than 1,800 people.

“In 2018, Kristall production and sales were 105,700 and 111,700 carats of polished diamonds, respectively,” ALROSA stated. “Its total revenue amounted to RUB 12.8 billion, and net profit reached RUB 40.7 million.”

What is more, in 2002, Kristall launched its own jewellery production, and the retail chain of Smolensk Diamonds, its jewellery entity, now has over 50 sales points in 30 Russian cities. Another one of Kristall’s entities, Almaz Servis, produces tooling and equipment for the diamond industry.

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