Moscow, 15 October 2021 – ALROSA, a global leader in diamond production, reports its Q3 2021 diamond production of 8.8 m carats. Proceeds from rough and polished diamond sales totalled $938 m.

Q3 and 9M 2021 trading update:

• Q3 ore & gravels output increased by 19% qoq to 9.5 mt driven by resumed operations at the Zarnitsa and Zarya pipes (suspended in 2020). Output doubled yoy on the low base effect of 2020 (suspended operations at Zarya, Zarnitsa and V.Munskoye, reduced mining at Almazy Anabara). 9M output increased by 8% to 26.1 mt, driven by resumed mining and gradual ramp-up of the Udachny UG mine to its design capacity.
• Q3 ore & gravels processing increased by 58% qoq (-0.3% yoy) to 11.5 mt due to a seasonal growth in the processing of gravels from Almazy Anabara and ore from the Udachny UG mine following the launch of processing plant No. 12. 9M volumes were 24.5 mt (-1%).
• Q3 diamonds output was up 26% qoq (-5% yoy) to 8.8 m ct, driven by: 1) seasonal growth in gravels processing from Almazy Anabara, 2) increased processing of ore at the Udachny Division, and 3) planned rise in output at the Nyurbinskaya pipe. 9M output rose by 1% to 23.3 m ct.
• Q3 diamond grade was seasonally down 20% qoq to 0.76 cpt on increased production at alluvials. 9M grade went up 3% to 0.95 cpt as a result of a drop in the share of gravel processing at Almazy Anabara and increased processing of ore from the Udachny mine.
• Q3 diamond sales reached 9.2 m ct, incl. 0.7 m ct of diamonds purchased as part of Gokhran auctions in Q2 and Q3 2021, a decline of 20% qoq (+83% yoy) mainly due to the lack of rough diamond inventories available for sale and the high base effect of Q2 (Q2 sales totalled 11.4 m ct, incl. 4.5 m ct from inventories). Sales of gem-quality diamonds amounted to 6.5 m ct (-13% qoq). 9M sales were up 1.4x to 36.1 m ct, incl. 0.9 m ct purchased as part of Gokhran auctions and 12.9 m ct from inventories. Sales of gem-quality and industrial diamonds amounted to 23.7 m ct (+2.1x) and 12.4 m ct (+3.5x), respectively.
• Diamond inventories as at the end of Q3 increased by 0.2 m ct qoq to 8.6 m ct. Ore and gravels inventories saw a seasonal decline to 11.0 mt (-24% qoq and ‑19% yoy).
• Average realised price for gem-quality diamonds in Q3 declined by 6% qoq to $136/ct due to changes in the sales mix on the back of increased supplies from assets with lower prices. The 2% yoy growth amid a 22% yoy uptick in the price index was driven by the normalisation of sales volumes and changes in the sales mix.
• Q3 average price index gained 10% qoq (+22% yoy), +25% YTD and +12% to early 2020 level, reaching Q2 2018 level.
• Diamond (rough and polished) sales in Q3 reached $938 m (-20% qoq and +59% yoy), incl. $904 m from rough and $34 m from polished diamond sales. 9M sales delivered a 2.1x growth to $3,274 m, incl. $3,133 m from rough and $141 m from polished diamond sales.
• Market update: jewelry demand is strong in all the key markets. At the same time, rough diamonds stocks at miners are at minimal levels as supply structurally dropped. The Company sees a limited risk of any meaningful supply response globally.

* Balance inventories of ore and gravels (excl. off-balance inventories).

** For gem-quality diamonds. For quarterly indicators Q1 2017 = 1.00.

Diamond market overview

• End demand remained stable in the key USA market and was supported by demand recovery in other regions, including Europe, the world’s third largest jewelry market. In China, demand growth slowed down as a number of drivers impacted the country's overall economic growth. The market is optimistic about the upcoming Christmas season, which in the USA will see an earlier than usual start this year. Jewelers started placing orders for polished diamonds as early as July.
• Midstream has been gradually ramping up its cutting capacity after stocking up on rough diamonds in the first half of the year. Increased production of polished diamonds is due to completion of holiday orders for the USA before Indian cutters close down for the Diwali festival celebration, which will start on 4 November and last two to three weeks. Polished diamond prices stabilised in August and September, supported by solid demand from the USA and a seasonal increase in the inventories of some of the categories of polished diamonds.
• Demand for rough diamonds remains strong. Supply shortages will continue to be offset by a recovery in rough diamond prices. The rough diamond price index has returned to the 2018 levels, with polished diamond prices surpassing the 2018 average. ALROSA maintains its policy of satisfying only requests backed by the real demand to ensure sustainability of the whole diamond pipeline.

Hereinafter, data on Q3 and 9M 2021 production, sales, prices, and inventories is preliminary and may be updated. Data on the diamond market is the Company’s estimate.