ALROSA to suspend production, optimize personnel amid market crisis

ALROSA, which controls nearly one third of global diamond mining, is considering suspending production at a number of its least profitable sites in 2025 and optimizing costs.

Among the many reasons, excess overstocking in the diamond pipeline in India was the major problem… when by the end of 2023 the inventory was estimated to be worth the equivalent of ALROSA’s annual production! This was compounded by the slowdown in the Chinese economy and other geopolitical reasons. This market crisis resulted in the ALROSA reducing prices for the second straight year.

As of now, while jewellery demand in the US market seems to be recovering, and diamond jewellery demand in India and China is growing, ALROSA hopes that diamond prices will start to rise in 2025.

Reportedly, ALROSA is currently optimizing the payroll and planning to reduce it by 10%, which will affect top management as well. The mining company is also reviewing plans for run-of-mine processing, mine output that will affect the volume of diamond mining. This could reduce production in 2025 but not disrupt the strategy for developing deposits.  None of ALROSA’s mining and processing plants will stop during this period during this exercise. Incidentally, ALROSA mined 34.6 million carats of diamonds last year.

In 2020, due to fall in demand of diamonds due to Corona, ALROSA planned to reduce production by 6% compared to the previously target in 2020. The company mined 32 million carats instead of 34.2 million carats, and suspended operations at its Severalmaz site in the Arkhangelsk, as well as at the Aikhal mine and Zarya pit.

Though, ALROSA planned to reduce production to 26 million carats annually, the company gradually put all assets back into production after the trade revived at the end of 2020. Now, ALROSA plans to continue diversification projects, including gold mining, energy projects, including exploration at oil and gas fields in Yakutia.

ALROSA, being a state-owned company, has the support of the Russian Government, and has confidence to run the mines and support the diamond manufacturing industry in India in the future.