ALROSA UNVEILS STRATEGY TO STREAMLINE DIAMOND MANUFACTURING

The Supervisory Board of Alrosa has approved the miner’s three-year strategy for developing and streamlining its diamond cutting and polishing units for 2020-2022, as well as the plan to integrate the recently-acquired manufacturer Kristall into the Alrosa Group. The plan includes a set of measures focused on improving product mix efficiency, production cycle optimization and the creation of a consolidated sales system for polished diamonds, a strategy they believe will improve the operational efficiency of Alrosa’s consolidated diamond cutting activities.

The Alrosa Group currently includes diamond cutting companies Diamonds of Alrosa (branches in Moscow and Barnaul), and Kristall (Smolensk), which was purchased from the state in October this year. Together they account for more than 60% of diamond cutting and polishing in Russia. The company says it will redistribute its mix of rough diamonds for cutting, with fancy-colored and large colorless diamonds sent to Moscow while colorless diamonds weighing 1 to 10 carats will be moved to Smolensk to reduce costs. Small-size diamonds will be cut in Barnaul and Smolensk. The total cutting volume will exceed 200,000 carats of rough diamonds.

The focal points of the strategy includes the centralization of rough-diamond allocation and polished sales; Diamonds of Alrosa will be selling the polished products. Alrosa plans to create a consolidated sales service for polished diamonds based at this branch. Some of the employees of Kristall’s sales divisions will move to the new sales division.

“We aim to improve the quality of interaction with customers, develop new sales channels, implement joint marketing programs with jewelry manufacturers and introduce more automation and modern technologies,” says Sergey Ivanov, Alrosa CEO. “In our opinion, the merger of diamond cutting platforms will make it possible to reduce production costs and get a stable market share for polished diamonds with Russian origin marked by a high quality of cutting.” He also noted that their efforts to improve the efficiency of the Diamonds of Alrosa branch led to a positive financial result in 2019 for the first time in three years.