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Alrosa Rough Production to Fall in 2018

Russian company will sell inventory to maintain supply following flood at Mir mine.
Dec 24, 2017 8:25 AM   By Rapaport News
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Alrosa expects its rough-diamond production will decline about 7% next year, with the Russian miner selling off inventory to maintain supply, it said last week.

The company projected output of 36.6 million carats for 2018, compared with the 39.3 million carats it is on track to produce this year.

Production outlook over the next five to seven years will partly be “driven by the absence of the Mir volumes,” chief financial officer Alexey Philippovskiy said in an investor call last month, referring to the temporary closure of the Mir underground mine caused by a major flood at the operation in August. That deposit yielded 3.2 million carats in 2016, or about 8.5% of the company’s total production.

However, Alrosa will increase production at the Udachny mine to 3.9 million carats in 2018 from 1.6 million this year, while output in the Severalmaz division will rise to 3.3 million carats from 2.4 million, the company added.

Alrosa plans to support its 2018 sales with diamonds from its accumulated stockpiles, it said. It also expects an improved sales mix, meaning a higher average price for gem-quality diamonds than in 2017.

The miner will further lower costs through the disposal of its non-core gas assets, which it said it would sell in the first quarter of 2018. Alrosa CEO Sergey Ivanov, who replaced Andrey Zharkov in March, has implemented a variety of efficiency programs that will enable the company to keep its costs flat in 2018.

Image: Alrosa
Tags: Alexey Philippovskiy, Alrosa, andrey zharkov, mining, Mir mine, Mir underground mine, Production, Rapaport News, Rough Diamonds, Rough Production, rough-diamond production, Russia, Sergey Ivanov, Severalmaz, Udachny
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