Alrosa Pauses Production at Two Mines

RAPAPORT… Alrosa has suspended production at two of its less profitable mines, citing the heavy impact of the coronavirus on diamond demand. The company will also rethink its group output plan for 2020 at its board meeting later in May. 

The Aikhal underground deposit will be on care and maintenance from May 15 to September 30, while mining will cease at the Zarya open-pit operations from May 15 until December 31, Alrosa said Tuesday. Both sites are in the Yakutia region of eastern Russia.

“The decision [was] taken due to the decrease in demand and sales for diamonds, as the major consuming economies are struggling with economic headwinds caused by the global spread of [coronavirus],” the miner explained. The closure will help minimize buildup of unprofitable inventory, as the two pipes have the lowest margins in the company due to the types of diamonds they produce, Alrosa added.

The company will lay off some staff members, with some going to work at other Alrosa operations. Some workers will stay at Aikhal and Zarya to carry out maintenance and other essential services. Zarya currently employs 180 mine workers, while Aikhal has 502 staff members. The two mines together yielded 2.6 million carats in 2019, out of group production of 38.5 million carats.

“[A] 2020 production-plan change will be considered at the board meeting in May,” Alrosa added. “The company intends to recommence production at [the] suspended assets as the market situation improves.”


Image: The Aikhal mine. (Alrosa)