Alrosa Receives Option to Sell to Gokhran

RAPAPORT… Alrosa has received approval to sell rough diamonds to Russia’s state depository, Gokhran, this year, enabling the miner to offload inventory should the market deteriorate.

The company did not sell goods to Gokhran in 2020, as the industry situation improved in the second half of the year, an Alrosa spokesperson told Rapaport News this week.

However, the government has given the miner an option to sell rough to the gem and precious-metal depository in 2021, without obligating it to do so. The company declined to disclose the amount under discussion, but it said the state had set a limit of RUB 39.82 billion ($540.1 million) on Gokhran’s purchases of precious metals and stones for the year.

Alrosa was in talks with the government over a sale of between $500 million and $1 billion in rough last year, when a slump in demand during the coronavirus crisis led to a buildup of inventory. However, trading picked up in the second half as manufacturers sought goods to fill shortages ahead of the holidays.

“With [the] Russian Federation as one of the major shareholders, Alrosa is in a constant dialogue with the [Ministry of Finance],” the spokesperson for the miner said. “This discussion resulted in a decision not to proceed with a Gokhran rough-diamonds purchase in 2020 on the back of the rough-market rebound we have seen from August.”

The 2021 sale option is a “sort of assurance in the persisting uncertainty,” she added.

Alrosa is scheduled to release its 2020 sales data Wednesday, and operating results on January 21.

Image: Rough diamonds. (Alrosa)