Alrosa could mothball alluvial diamond deposits in 2026 - dep finance minister
MOSCOW. May 19 (Interfax) - Alrosa , which plans to reduce diamond mine output 15% this year, has looked into mothballing a number of alluvial deposits, Deputy Russian Finance Minister Alexei Moiseyev told reporters.
"They've analyzed how cost-effective it would be [to mothball some deposits] and we've backed them here. It's quite difficult to shut a deep mine, of course, but not an alluvial one," he said.
Those deposits will reopen as soon as the market stabilizes and prices rise, he said.
Moiseyev also said the Finance Ministry was still looking at the possibility of buying rough diamonds for the State Fund this year. Diamonds have not been purchased and the Finance Ministry continues to monitor the situation.
Alrosa is, if not in the best-placed in the diamond mining industry, then "second best." "As far as we know, De Beers is in a significantly worse position; they have very negative EBITDA. Thankfully, Alrosa hasn't got to that point yet. The company got rid of a lot of debt when times were good and built up a cash cushion that means it can feel generally secure," Moiseyev said.
The diamond market has been in serious crisis for a year and a half, he said, but is now showing signs of stabilization, judging by sales by African sellers at the end of April. "We are seeing signs that the market is stabilizing. We hope that growth will ensue," Moiseyev said.
Overall, a major diamond shortage is possible in about five years, as a lot of mines in Africa and Russia are reaching the end of their life, he said. "This is exactly the sort of situation where the strongest wins. I'm sure Alrosa will survive, but some others probably won't," he said.
Any other means of support apart from budget-funded sales to the State Repository are not being discussed.
Moiseyev also said an export duty on rough diamonds might be imposed this year, but it would be lenient. "Not all diamonds [will be subject to the levy], only those that can be cut and polished cost effectively in Russia," "We're working closely with Alrosa, they don't particularly want this, of course," he said.
The rationale for the duties is to support Russia's own diamond cutting industry. "We effectively lost our industry after duties on diamonds were abolished following Russia's accession to the WTO. We'll lose the expertise we still have if we wait any longer," Moiseyev said.
