In the past few days, the Russian minerconveyed the decision to India's Gem and Jewellery Export Promotion Council (GJEPC), claiming weak consumer demand as the reason.
This action is in response to a recent request made by the GJEPC for rough producers to behave in a responsible manner. The businesssaid in a note to the GJEPC, which Rapaport Newswas able to witness:
Alrosa has decided to temporarily halt the allocation of rough diamonds in September and October 2023. We believe that this approach is going to have a stabilizing impact by strengthening the market’s supply-and-demand balance. This will aid the prevention of overstocking, especially with manufacturers closed for Diwali.- Russian Miner
Despite being subject to US sanctions ever since the conflict in Ukraine began in February, Alrosa has managed to keep up its sales.
In the first half of 2023, the revenue of the corporation remained relatively consistent from one year to the next at RUB 188.16 billion ($1.9 billion).
Insiders in the sector say that the majority of the rough is exported to India. Because of slow demand in the United States and China as well as competition from lab-grown stones, the diamond trade in that country is in the midst of a severe crisis.
As a result of a sales slump that has exceeded production cuts made by manufacturers, inventories have accumulated, which has led to falling prices.
In a letter sent earlier this month, the GJEPC urged diamond miners to exercise "responsibility" in their business dealings in order to avoid exacerbating the current crisis.
In response to the criticism, Alrosa stated that the company "expresses equal concern and strives to reverse the existing trend of diminishing demand."
The Russian company stated that it would welcome a similar approach from other industry players, such as miners, cutters, and retailers, "on the matter of rough-diamond purchases and sales" as a "reciprocal effort."
According to a second statement the mining company released on Wednesday, it anticipates that the positive effects of its decision will become apparent in the market by the beginning of the year 2019.
"Alrosa has always followed the practice of supporting market stability and leveling its volatility," a representative for the miner said in an interview. "Our solid and high-quality asset base and stable financial position allow us [to implement] such measures."
De Beers, on the other hand, will maintain its holdings but will pursue sales with a "responsible approach," "just as we have previously when faced with challenging industry conditions," according to a representative for the Anglo-American unit that was quoted in the article.
This week, the firm is hosting its September sight, and it has already given clients the option to postpone up to half of their rough purchases for the remaining two years of the 2023 fiscal year. The representative for De Beers continued:
We will focus on additional supply flexibility as necessary to meet sightholders’ evolving requirements.- Representative for De Beers
Based on the report by Reuters from last Friday, which cited Belgian government officials, the news comes amid growing hopes for a ban on Russian diamonds by the Group of Seven (G7).
An announcement regarding the restriction is likely to take place within the next two to three weeks. A proposal to maintain the separation of diamonds originating in Russia and those originating from other countries is also being facilitated by the World Diamond Council (WDC).