Russian diamond miner Alrosa has released its first financial results in a year, and they show its sales have held up despite international sanctions stemming from Russia’s invasion of Ukraine.
Alrosa’s sales for the first half of 2023 totaled 188.2 billion rubles (approximately $1.99 billion), compared with 188.9 rubles in the first half of 2022. In the pre-invasion first half of 2021, the company sold 182 billion rubles in gems.
Analyst Paul Zimnisky says that “the ruble was all over the place around [2022],” which could affect results.
It’s unclear, says Zimnisky, if Alrosa made any sales during the first half of 2023 to the Gokhran, the Russian State Fund of Precious Metals and Precious Stones. After sanctions were imposed, the country’s foreign minister, Anton Siluanov, suggested the Gokhran might buy Alrosa’s goods.
Alrosa’s profits for this year’s first half amounted to 55.5 billion rubles (approximately $580 million), compared with 85.3 billion rubles in 2022 and 54.2 billion in 2021. Profits were partially hurt by the imposition of a “mining tax”—which appears related to Russia’s February 2022 invasion of Ukraine—as well as currency volatility, Zimnisky says.
Kimberley Process (KP) statistics have generally shown Russian diamond exports holding up, despite many buyers turning their backs on Russian goods. In 2022, the country exported $3.9 billion in diamonds, the KP said, down only slightly from $4 billion in 2021.
In its results, Alrosa acknowledged that “the sanctions pressure on the company and the increased volatility in the markets…may affect business continuity in the future.… Due to the uncertainty and duration of these events, [Alrosa] is unable to accurately and reliably assess their quantitative impact on their financial situation.”
However, it said, “The described circumstances do not call into question the continuity of operations for at least 12 months after the [current] date.”
And while sanctions do not seem to have had a significantly impact on Alrosa’s financial results, the miner’s statement said that “continuing political tensions in the region, as well as sanctions imposed by a number of countries…continue to provide negative impact on the Russian economy.… It is possible that active measures, undertaken by the government and the Central Bank of the Russian Federation, as well as business representative communities, managed to minimize the negative consequences for the Russian economy as a whole, but to assess the full extent and scale of the possible consequences is not possible.”
One-third owned by the government of the Russian Federation, Alrosa was slapped with U.S. sanctions in April 2022, shortly after the invasion of Ukraine. The G7 has discussed expanding sanctions to ban all Russian diamonds.
Alrosa recently appointed a new CEO, Pavel Marinychev, who has discussed diversifying the miner. Its financial results were first reported by Reuters.
Top: Alrosa’s Karpinsky-1 (left) and Arkhangelsk (right) mine deposits (photo courtesy of Alrosa)
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