Alrosa to produce 102mn carats of US$ 9.55bn until 2012

Gaze at India for US$ 01bn sales in 2010
Searching more buyers in India


In the recently held meeting of the Alrosa EC (Executive Committee) under the chairmanship of Fyodor Andreev in Mirny, Republic of Sakha (Yakutia) is also the President of Alrosa, endorsed the Financial Model’ for the Alrosa Group. The Model’ contains basic guidelines for the Alrosa Group to develop their annual financial plans until 2012, a subject to final approval by the Supervisory Board.

According to the endorsed model road map until 2012, Alrosa to produce 102.32mn carats of diamonds that worth of about US$ 9.55bn at aggregate sales. For the underground mining structure the model provides RUB 24, 728.40mn. Consequently, Alrosa intends mining of 33.55mn carat diamonds that estimated of worth US $ 3.15bn at sales during the 2010 calendar year said in a release.

Instead of selling rough to Gokhran, Alrosa sell a rough that worth of US$ 240mn to Russian player and rough of US$ 685mn worth traded amid global players. Altogether Alrosa bag US$ 925mn during the Q1, 2010 and release says that ‘the company has produced some 8.60mn carats of rough diamonds in Q1.’ Even in the Q2, 2010 the Alrosa expects the same sales around of US$ 900mn
According to Alrosa officials, “the Alrosa Supervisory Board that provides for putting in places a system of supplying large customers through long-term contracts, and for geographic diversification of its distribution and sales.”

De facto Alrosa had been suspended commercial sales upon systemic financial weaknesses learned at the end of the year 2008 and recommence sales by July 2009 which de facto was a shifting of stockpiles worth of US$ 1.326bn to the Gokhran. Because of its strategic entity Alrosa performed well and the Russian Information Center that claimed Alrosa, the largest global diamond producer in the year 2009. Alrosa dig out about 34.70mn Cts of rough diamonds in 2009 that worth of US$ 2.34bn.

That would take long time to sort and tag value the rough which Gokhran has purchased in July 2009 from Alrosa. Year 2012 would be a most likely when Gokhran might make available earliest the rough to market. According to Gokhran view rather its hope that H2, 2010 will hike up prices and corresponding growth will set up rough price at the level of 2007 again in the Q1, 2012.

By learning that absence of Gokhran rough, Alrosa put forwarded sales plan to tap global diamond centers and big players too. In this row, Alrosa invited Vladimir Putin. Putin learned, "As I see it, there is enough work here for another 50 years” and announced package to face global economic weaknesses, “we should allocate considerable funds to it, some billion, or 35 billion roubles. We have already passed that decision.” Putin announced at Alrosa.

Equally Alrosa understood from Putin that, Russia aims to more than double trade with India to $20 billion by 2015. Alrosa delegation joined Putin and visited India in the month of March this year. Putin inked multi billions pact with India and Alrosa inked three mammoths, DIL, Rosy Blue & Ratilal Becharlal & Sons on long-term supply basis, in terms of the current market prices. “The contracts provide that the range and prices of the rough goods to be supplied will be agreed upon by the parties on a quarterly basis, based on the current situation in the global diamond market, with a possibility of additional supply” Said officially.

According to Alrosa, they target India to sell rough that of a worth of US $ 01bn to generate a third of its total revenues in 2010. Alrosa is looking for US $ 3.3bn revenues this year. In 2009, Alrosa sales to Indian diamond manufacturers amounted to over US $ 500mn which was equivalent to half of the company’s export sales.

That inked Alrosa pact worth a total of US$ 490mn and that will realize on rough sales over the next three years. To attain US $ 1bn target, Alrosa would go to rest big fishes in India to sale rough for its remainder target value. In the context official said, “Alrosa attaches strategic importance to establishing direct, long-term and win-win relationships with diamond manufacturers and expanding geographic diversification of its trade.”