Focus on

rough diamonds

Photo courtesy of Alrosa.



Since the start of the coronavirus epidemic during the first quarter of the year, the world’s two largest rough diamond suppliers, De Beers and Alrosa, have consistently resisted calls to reduce the price of rough diamonds. At the same time, both companies relaxed rules governing their customers, allowing then to cherry-pick and even refuse merchandise offered during the regular sales cycles.

That approach now appears to be over, with De Beers reportedly deciding in August to reduce  the price of its diamonds, telling sightholders that it would be cutting prices for larger stones by almost 10 percent during the scheduled sales week. The news was reported by Bloomberg, who said its sources asked not to be identified.

According to the Bloomberg report, De Beers reduced the price of rough goods larger than 1 carat by as much as 10 percent, but held the price of smaller stones steady, since demand for such merchandise is low at present and a price cut would be unlikely to encourage demand.

For its part, De Beers declined to comment on the report.


Just a few days later, again according to a Bloomberg report, Alrosa said that it would be following suit, but reportedly changed its billing system so that buyers could not ascertain which stones were being discounted, or by how much.

Instead of issuing invoices with the price of each stone listed, the Russian diamond company was said to have issued a single invoice total for each customer. Alrosa did not explain the change.

The move by both companies was not completely unexpected, nor was it seen by analysts as a sign of desperation on the part of the two companies, on the contrary. 

With demand starting to climb in the market but liquidity low in the midstream, it is felt that the producers are trying to assist their cash-starved clients replenish their inventories, and are nudging them toward the type of goods that are more widely sought after in the marketplace.

The 910-carat Lesotho Legend, discovered in 2018 and sold for $40 million.

“We avoided speculative trading during the worst phase of the crisis, keeping ‘price over volume strategy’ intact. We believe it is the only viable strategy to protect the value of the stones in the market conditions our industry faced recently,” said Evgeny Agureev, Alrosa’s head of sales, according to Bloomberg. “As demand for the rough diamonds starts to recover, we make sure that prices under our long-term contracts reflect the actual market trends and a confirmed real demand.”

Sorting diamonds at Alrosa. (Photo courtesy of Alrosa)


The past several months have required a skillful balancing act on the part of the world’s two rough diamond producers, who have struggled to defend the value of diamonds, particularly during the period that many jewelry stores were closed, because of the COVID-19 lockdowns. It was an approach not necessarily emulated by several of the smaller producers, some of whom were reported to be selling goods at a 25 percent discount, cutting into De Beers and Alrosa’s market shares.

De Beers and Alrosa’s policy was to sit tight, using their own cash reserves to outlast the dramatic falloff in sales. De Beers did shut down reduce production at a number of mines, but for the most part Alrosa kept production steady. It, however, has received support from the Russian government, which purchased goods from the mining company and deposited them in vaults of Gokhran, the state repository for precious gems and metals.

During the the second quarter of 2020, De Beers and Alrosa sold a combined $130 million in rough diamonds. This compared to sales of $2.1 billion during the same period in 2019.