June 26, 2014
By Paul Zimnisky
On a call with investors on June 24th, ALROSA provided figures that showed the company’s average price of rough diamonds (gem + industrial) sold in Q1 2014 was down 2.1% from Q1 2012, and up 0.5% from Q1 2013. In Q1 2014, ALROSA’s diamonds sold for an average price of $118.50/carat.
Sorting of diamonds in Mirnyy Russia. Image source: ALROSA.
ALROSA is a Russian diamond giant that has 9 primary diamond mines, 10 alluvial mines, and 2 mines in development. Given that ALROSA currently represents over a quarter of global rough diamond production, the company’s figures provide a good proxy for a typically opaque rough diamond market.
Breaking down the figures by gem-quality and industrial-quality diamonds:
ALROSA’s average price of gem-quality diamonds sold in Q1 2014 was down 15.9% from Q1 2012, and down 2.0% from Q1 2013. In Q1 2014, ALROSA’s gem-quality diamonds were sold for an average price of $154.60/carat.
The company's average price of industrial-quality diamonds sold in Q1 2014 was up 36.4% from Q1 2012, and up 31.9% from Q1 2013. In Q1 2014, ALROSA’s industrial-quality diamonds were sold for an average price of $12.00/carat.
In terms of carats produced, gem-quality diamonds currently represent 74.8% of ALROSA’s output, which is up from 64.2% in Q1 2012. In Q1 2014, ALROSA produced 9.5M carats of gem-quality diamonds, and 3.2M carats of industrial-quality diamonds. In Q1 2014, ALROSA’s gem-quality diamonds sold for 11.9 times the company's industrial-quality diamonds.
Industrial-quality diamonds are most commonly used for abrasive applications such as drill-bits and saw blades. The large majority >80% are produced synthetically primarily in India and China. The balance of industrial diamonds are produced as a by-product of gem-quality (jewelry-quality) diamond mining. For a diamond mine to be economic typically the majority of the value of production comes from gem-quality diamonds.
Global rough diamond production is estimated to be 126.3 million carats in 2014, which would be down 2.8% from 2013. Total value of 2014 production is estimated to be $17.8 billion, which would be up 1.7% from 2013. These figures represent an estimated decrease in global diamond production volume, but an increase in diamond prices in 2014.