Alrosa, one of the world’s largest diamond miners, has forecasted an uptick in diamond prices in the months ahead, driven by rising demand and slowing supply. Sergey Takhiyev, the company’s head of corporate finance, highlighted that the normalization of diamond inventories will be a key factor in this anticipated price increase.
Takhiyev also projected a substantial decline in global diamond mining capacity, potentially dropping by up to 20% from levels seen in 2018-2019. Although it remains unclear whether this refers to Russian or global production, Takhiyev pointed to a broader trend of diminishing resource availability combined with the growing market for luxury goods, especially fine jewelry, as key drivers of long-term price increases.
The forecasted decline in mining capacity is attributed to natural resource depletion over the years. In addition, increasing consumer interest in high-end jewelry is expected to outpace supply, thereby contributing to the upward price trend.
In response to the industry’s ongoing challenges, Alrosa announced in November that it would suspend some of its less profitable operations and reduce its workforce by approximately 10%, affecting around 3,500 employees. This move aims to cut the company’s labor costs by 10% as part of a broader strategy to weather what CEO Pavel Marinychev described as a “deep crisis” in the global diamond market.
Recent financial reports from Alrosa show a sharp 34% drop in revenue for the three-month period ending June 2024, totaling $680 million, underscoring the tough conditions faced by the company and the broader diamond industry. However, despite these short-term challenges, the company remains optimistic about the future prospects of diamond prices.
Disclaimer: This information has been collected through secondary research and TJM Media Pvt Ltd. is not responsible for any errors in the same.
