The Russian company, one of the world’s biggest diamond miners, posted results of 16.9 million carats of rough diamonds in the six months ended 30 June 2016. This represented a 6 per cent decrease from the 18 million carats manufactured in the first half of 2015.
Despite the fall, Alrosa’s sales results for the first half of 2016 showed revenues of RUB146.9 billion (AU$3 b), a 32 per cent rise compared with the same period in 2015.
The company’s net income increased 121 per cent to RUB82.7 billion (AU$1.7 b) in the first half of 2016, up from RUB37.5 billion (AU$0.8 b) in the corresponding period last year.
A preliminary sales report indicated that in the second quarter of 2016, Alrosa sold 9.6 million carats of diamonds, including 7.1 million carats of gem-quality diamonds at an average price of US$169 (AU$226).
Alrosa is possibly forecasting a drop in demand as it has downgraded its production plan for 2016 from 39 million carats to 37 million carats and announced it would reduce gravel processing at its alluvial deposits.
Falling trends
The company is not the only diamond producer to scale back operations. Alrosa’s figures follow a trend of decreasing levels of production, which has been attributed to unfavourable market conditions including lower demand and prices.
One of its major competitors, De Beers Group, has already reduced output. Its production of rough fell 15 per cent from 15.6 million carats in the first half of 2015 to 13.3 million in the first half of 2016.
Production in the second quarter of 2016 was also down 20 per cent to 6.4 million carats, compared with the previous corresponding period.
The drop reflects a “decision to reduce production in response to prevailing trading conditions in the second half of 2015”, a statement on the company’s website read.
Another diamond company, Rio Tinto, saw production at its Argyle mine in Western Australia increase to 6.9 million carats in the first half of 2016 – a 4 per cent rise compared to the same period the previous year – while its operation in Diavik, Canada, produced 2.1 million carats, a 5 per cent drop year-on-year.
The company has lowered its diamond production guidance for 2016 to a range of 18 to 21 million carats after previously setting a target of 21 million carats.
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