Alrosa: quality assets, stable financial state to allow us to maintain balance on market
MOSCOW. Sept 20 (Interfax) - A high-quality asset base and a stable financial position allow Alrosa to implement measures aimed at maintaining the balance of supply and demand in the market, the press service of the Russian company said in response to an announcement by the Indian Gem and Jewelry Export Promotion Council (GJEPC) that Alrosa would suspend diamond sales in September and October. Alrosa also expects this measure to help stabilize the market by early 2024.
"Alrosa has always adhered to the practice of supporting stability in the market and smoothing out its volatility. A solid and high-quality asset base and stable financial position of the company allow us to implement such measures. We expect that this will have a stabilizing effect to support the balance in the market and strengthen the stability of the links in the diamond supply chain by the beginning of next year," the company said.
Alrosa's decision was made in response to a corresponding request from the GJEPC amid concerns about a decline in demand for diamonds in international markets, which is causing disruptions in the operations of diamond cutting factories in the country.
The request by GJEPC head Vipul Shah was addressed to global mining companies, the Indian regulator said, but only Alrosa responded publicly.
GJEPC's appeal reflected the concerns of the Indian diamond industry on some key issues. These include declining demand, the impact of lab-grown diamonds (LGD), problems with polished diamond stocks and production, the economic downturn in the U.S. and China, geopolitical instability, changing consumer preferences and eroding confidence in natural diamonds.
"We request your support for a temporary adjustment in the supply of rough diamonds to better match current demand. This will help stabilize the industry and promote sustainable growth," Shah's appeal read.
The GJEPC made a similar request at the height of the pandemic in 2020, when polished diamond sales came to a virtual halt due to shopping center closures and travel disruption. At that time, the appeal was made to local companies, which the GJEPC asked to refrain from buying diamonds to reduce financial pressure on the industry.
India remains a key consumer of Russian diamonds, with annual exports estimated at $4 billion, despite U.S. sanctions imposed on Alrosa last year. The restrictions on Russian diamonds caused by Alrosa's inclusion in the SDN list have not yet prevented diamond cutting companies in India from buying and processing them, then exporting them to Western markets as polished diamonds that have undergone deep processing in India. The situation may change if the G7 and EU countries impose an embargo on diamonds from Russia, which will affect stones cut in other countries.