Announcing its operating results for the last quarter of 2019 and the full year, ALROSA said that diamond production increased 5% and sales dipped 12% during the 12 month period as compared to a year earlier, leading to a 33% increase in diamond inventory as on December 31, 2019.

Annual diamond output stood at 38.5 m cts (2018: 36.7 m cts), driven by higher production at the Botuobinskaya pipe and ramp-up at the V.Munskoye deposit.

ALROSA sold 33.4 m cts of rough diamonds of which 24.2 m cts were gem-quality (2018: 38.1 mcts : 26.4 m cts) during the year, the fall being a result of lower demand and midstream destocking.

Inventory at the year end rose to 22.6 m cts (Dec 31 2018: 17 m cts) with “diamond production exceeding sales volumes throughout the year”.

The company also reported that the 12M diamond grade improved by 3% to 0.93 cpt, driven by an increase in high-grade ore processing at the Botuobinskaya pipe. However, 12M prices were at $133/ct (down 19%) with the average diamond price index for 12M 2019 going down by 6% vs 12M 2018.

The miner said that the “market environment normalised” in the last quarter of the year citing different factors for this change. On the one hand was the “improved consumer sentiment in the US” as reflected in the pre-holiday mood and the preliminary data for sales during the Christmas period, and on the other was the “flexible sales approach of diamond miners”. The “reduced diamond supply” along with a “decline in cutting and polishing operations”, coupled with the rise in demand resulted in “midstream destocking”.

This was reflected in the quarter on quarter improvement during Q4 2019, with production declining 27% to 8.8 m cts (Q3 2019: 10.3 mcts); sales rising 28% to 8.2 m cts (Q3 2019: 6.4 m cts) and inventory increasing marginally by 4% to 22.6 m cts (Q3 2019: 21.7 m cts). 

Q4 average realised prices for gem-quality diamonds rose by 9% q-o-q to $148/ct, driven by an increased share of medium- and large-size diamonds, though the Q4 diamond price index declined by 2% q-o-q.