18 Jun 2022 14:38

Alrosa stands by plans to produce 34-35 mln cts of diamonds in 2022 and restore Mir mine

ST. PETERSBURG. June 18 (Interfax) - Alrosa stands by original guidance to produce 34 million-35 million carats of diamonds in 2022 as well as plans to restore the Mir diamond mine, CEO Sergei Ivanov told reporters on the sidelines of the St. Petersburg International Economic Forum.

He said the company was on course to meet H1 2022 guidance.

"No, [we're not planning to lower 2022 production guidance]," Ivanov said on Friday. "I think we are on track and so far, despite certain difficulties, we are working exactly according to plan in the first half of the year, somewhere in this range. We do not plan to lower production in the second half of the year," he said.

Capacity is utilized and the investment program is being fulfilled, he said.

Even the Aikhal mine and Zarnitsa pipe, which contain lean ore and which were mothballed or scaled down during the pandemic, are running at full capacity. "We are trying to maximize production based on current market conditions. We are not reducing productivity anywhere," Ivanov said.

Neither is Alrosa dropping plans to restore the Mir mine. "It's a good project, its metrics are good," he said.

"We have a feasibility study, it's positive, but due to the circumstances is needs to be analyzed from the point of view of equipment. If it is from unfriendly countries, then there are equivalents from domestic and from friendly countries. Therefore, we will take a few more months for analysis, and then we will look at it together with shareholders," he said. The project is quite capital-intensive, there'll be a long interval between the start of investments and production of the first ore, he said.

Market demand for rough diamonds is still good although "a number of clients are concerned about sanctions and restrictions," he said.

The company has not adjusted prices since February.

"Interest in our products is high. This is the whole world [...] New companies are emerging that are now interested in tapping the niche left [after the departure of some customers]. We see that diamond production cannot be increased by any other players, which is all experts confirm," Ivanov said.

The general macroeconomic situation, characterized by high inflation and falling incomes, is a risk to maintaining demand for diamonds, "but in general it's as if demand for jewelry has not reacted to this."

"As for everything else we are more or less rising to today's challenges," he daid.

The possibility of the Gokhran or state repository buying diamonds from Alrosa is being discussed - the state is always ready to lend a helping hand - but there are no details yet, he said.