Alrosa cutting 2009 diamond output 20 percent

14 April 2009 | 04:47 Code : 18973 Geoscience events
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Russia’s Alrosa, the world’s second-largest diamond producer, on Friday cut its...
Alrosa cutting 2009 diamond output 20 percent

Russia’s Alrosa, the world’s second-largest diamond producer, on Friday cut its 2009 production plans by a fifth as the global financial crisis dents demand for the gems.Diamond producers across the globe have been hit as the world economy weathers its worst financial crisis since the Great Depression and consumers tighten their belts.Russia’s luxury market has come down with a bump as oligarchs’ fortunes shrink, jobs and salaries are slashed and banks become reluctant to dish out cheap loans.Alrosa, which had previously expected to keep production levels unchanged this year, now counts on producing $1.87 billion worth of diamonds, down from $2.36 billion in 2008.As a result, its net profits will shrink to 2.2 billion roubles ($65.15 million) from 3.8 billion last year, it said."The corrected plans are justified by a number of factors, including the sizeable drop in sales volumes on the diamond market and the changes in the rouble’s exchange rate against the dollar," the state-controlled company said in a statement.The Russian rouble has lost around a quarter of its value versus the dollar in the last six months in adjustment to lower global commodity prices and a slowing domestic economy.In recent months Alrosa has been selling all its output to Russia’s Gokhran state precious metals and gems repository.But it will need to find other buyers if it is to meet even the revised production plans -- Gokhran aims to spend 45.4 billion roubles on buying precious metals and diamonds this year, just $1.34 billion at current rates. (Writing by Toni Vorobyova; editing by Sue Thomas)


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