Alrosa Relaxes Sales Terms Amid Market Crisis

RAPAPORT… Alrosa is allowing clients to defer up to 60% of their rough-diamond allocations at this month’s contract sale, claiming the concession will help buyers handle the current market difficulties.

“Amid such market uncertainty, it wouldn’t be right to keep our customers tied to their original contracts,” Evgeny Agureev, the Russian miner’s deputy CEO, said in a statement Thursday. “We hope that Alrosa’s flexible sales policy and support measures will help market participants adapt to the new conditions, and [get through] them successfully.”

In normal trading conditions, the company requires its long-term clients to buy 80% of the goods it earmarks for them. However, while that was the case in 2018, industry slowdowns have forced it to reduce the minimum to 70%, then to 55%, and more recently to 50%. At the March session only, which ends Monday, customers need to buy at least 40% of their allotted diamonds, and may push the rest of off until May.

The Alrosa Alliance program works in a similar way to De Beers’ sightholder system. The miners and their clients agree on a supply plan for an upcoming contract period, with customers receiving only a limited right to refuse or defer purchases. However, both companies have become more flexible in the past year as the weak polished market has left dealers and manufacturers unwilling to buy large rough volumes.

In February, De Beers let its sightholders delay purchases of rough diamonds destined for the Chinese retail market due to the coronavirus. Alrosa’s concession in March applies to all its goods, not just those popular in the Far East.

Meanwhile, Alrosa’s supervisory board has reelected Sergey Ivanov as CEO and chairman for another five years. He joined the miner in March 2017.

Image: Rough diamonds. (Alrosa)