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ALROSA is the world's largest company by volume of diamond production. It operates mainly in Yakutia, where it mines by both open-pit and underground methods, and sells rough diamonds to cutters around the world. Its shares trade on the Moscow Exchange under the ticker ALRS.
The company sells not jewellery but a raw material: rough diamonds, which other companies then cut and turn into polished stones. The buyers are cutting centres, above all Indian ones, and sales are made to long-term clients under contracts rather than on an exchange: diamonds have no single market quotation, because every stone is unique in size, colour and clarity.
This gives the industry its distinctive feature — the price is largely set by the producer itself, which regulates the volume of supply. When demand falls, the company can hold stones back in stock instead of selling them cheaper; this supports the price, but ties up working capital.
Production costs rise as the mines go deeper: open pits are converted into underground mines over time, and underground mining is more expensive.
Open pits and underground mines in Yakutia, as well as alluvial deposits.
Supplies of rough diamonds to cutting companies under long-term contracts.
The search for new deposits — for an industry with depleting reserves, this is a condition of survival.
Strengths and weaknesses describe the business itself. Opportunities and threats describe what may happen around it.
The company mines diamonds in Yakutia and sells the rough stones to cutting enterprises. The finished polished diamonds and jewellery are produced by the buyers of this raw material.
Because every stone is unique: size, shape, colour and clarity differ from one to the next, and no two parcels are the same. That is why sales are made under contracts with each parcel valued separately, rather than at a single quotation.
They have already taken part of the mass-market segment: a laboratory stone is physically almost indistinguishable and costs noticeably less. Natural diamonds hold their ground above all in the expensive segment, where origin matters.