ALROSA reporting Q4 and 12M 2018 operating results said that diamond production volume in 2018 touched 36.7 million carats. The Company sold a total of 38.1 million carats (down 8% y-o-y) in the period; while sales proceeds increased by 6% to US$ 4.5 billion.

In Q4 2018, diamond production decreased by 2% as compared to the previous quarter (q-o-q) but was up 2% y-o-y to 10.3 million carats, “driven by seasonal suspension of production at alluvial deposits, which was almost fully offset by increased output at underground mines”, the Company said. 

For 12M 2018, production stood at 36.7 million carats – lower by 7% y-o-y. This, ALROSA attributed to the shutdown of the Mir underground mine and the completion of open-pit mining at the Udachnaya pipe.

The volume of processed ore and gravels went down 2.3 times q-o-q (up 3% y-o-y) to 7.5 million tonnes in Q4 2018, as a result of the seasonal suspension of production at alluvial deposits. 

In 12M 2018, volume of processed ore and gravels increased by 3% to 40.5 million tonnes. This was, in the main, attributed to increased gravel processing at Almazy Anabara alluvial deposits (up 8%) and Mirny Division (up 10%).

While in Q4 2018, the average diamond grade per tonne of ore increased 2.3 times q-o-q (down 0.2% y-o-y) to 1.38 cpt; in 12M 2018, the average diamond grade was flat at 0.91 cpt. “A 10% y-o-y decrease was mainly driven by the shutdown of the Mir underground mine in August 2017 and increased production at lower-grade assets,” the Company stated.

ALROSA sold nine million carats (up 34% q-o-q) of rough diamonds in Q4 2018. This included 5.3 million carats of gem-quality diamonds (up 12% q-o-q) and 3.7 million  carats of industrial diamonds (up 87% q-o-q).

For 12M 2018, ALROSA’s diamond sales were to the tune of 38.1 m carats (down 8% y-o-y); including 26.4 m carats of gem-quality diamonds (down 12% y-o-y) and 11.7 m carats of industrial diamonds (up 5% y-o-y).

“Diamond inventories at the end of 2018 saw a seasonal increase of 10% q-o-q (down 6% y-o-y) to 17 million carats,” ALROSA revealed.

The Company went on to state that in Q4 2018, average realised prices for gem-quality diamonds fell by 23% q-o-q (up 10% y-o-y) to US$ 153/ct. This was due to a lower share of large diamonds sales. In 12M 2018, the average realised prices grew by 21% and reached US$ 164/ct.

The diamond price index in 12M 2018 gained 3.7% on the back of recovering diamond demand, the Company stated.

“In value terms, Q4 sales declined by 13% q-o-q to US$ 845 m (down 7% y-o-y), with diamond sales (ex. polished diamonds) amounting to US$ 824 m,” ALROSA reported. “12M total sales increased by $241 m (up 6% y-o-y) to US$ 4,507 m. Diamond sales rose by US$ 242 m, despite lower sales in carats by 8%.”

For 2019 forecast the Company has announced a production guidance of 38 m carats (up 4% y-o-y).

Presenting a market overview, ALROSA said that in 9M 2018, the global diamond jewellery market grew by 5% y-o-y. “North America, the world’s largest diamond jewellery consumer, showed stable sales growth through the year, up 5% over 9M 2018,” the Company noted.

However, the Company said that in most of the South Eastern Asia, including India, the diamond jewellery sales growth slowed down, “with some countries showing a decline triggered by devaluation of local currencies against US dollar”.

China saw a high demand in early 2018, which drove a 7% sales growth in the region in 9M 2018; however preliminary data on the diamond jewellery sales in China in Q4 2018, shows a decline.

“The trend of weaker demand for lower priced stones that emerged in Q3 continued into Q4 2018,” ALROSA observed. “Demand for rough diamonds echoed the situation on the polished diamond market, where uncertified melee diamonds saw the strongest price decline due to oversupply, weak rupee and lower liquidity in India. Lower prices for small-size diamonds coupled with flat personnel expenses decreased the profitability of melee diamond polishing.”

The Company cautioned that data on Q4 2018 and 12M 2018 production, sales, prices, and inventories is preliminary, and may be updated; and that data presented on the diamond market is the Company’s estimate.