ALROSA Board Says Long-term Contracts to Remain Cornerstone of Sales Policy

The ALROSA Supervisory Board, at its meeting held on October 26, approved the Company’s Sales Policy Concept for 2018-2020, emphasising that long-term contracts will continue to remain as the cornerstone of its sales. The Board also announced some initiatives to develop the polished diamond trade under the Group.

ALROSA Vice President Yury Okoemov said, “The practice of long-term contracts, being implemented by the Company since 2009, has repeatedly proved its efficiency. It ensures sustainable employment for the seller and the buyer and protects them from price volatility in the diamond market. Therefore, long-term contracts will remain the key sales channel for ALROSA, their share in the volume of our sales will remain at the current level of about 70%.”

However, there will be some change in the contract, as the company said it is planning to switch over to annual mutual approval of the volume and assortment within three-year contracts. The existing contracts stipulate the monthly volume and assortment of purchased goods for the entire three-year period ahead. A switch to annual planning will allow both the Company and its customers to respond more flexibly to any changes in the market, ALROSA said.

Currently, ALROSA has long-term contracts for the sale of gem-quality rough diamonds with 47 companies from the international market, and 9 companies from the domestic market. There are also 3 long-term contracts with domestic companies for the sale of industrial diamonds. The new contract period will start on January 1, 2018. Upon approval of the Sales Policy Concept, the Company will proceed to draw up new contracts and finalise the list of long-term customers for 2018-2020.

Apart from long-term contracts, ALROSA sells rough diamonds in almost equal shares at auctions and under spot contracts, it said.

The Board also said it will take initiatives to develop the trade in a polished diamond. The Company’s affiliate DIAMONDS ALROSA, currently the second-largest cutting and polishing facility in the country is planning to increase its share of cutting and polishing of special-size and fancy-colored rough diamonds, as well as grow its share of sales in large diamond-consuming centers, including via ALROSA’s foreign-based trading companies.

The Board meeting also noted the need to implement marketing initiatives, primarily large-scale programs of generic marketing, for maintaining and strengthening consumer demand for diamond jewellery that encourages the demand for rough diamonds.