Russia’s Alrosa, the world’s top diamond producer by output, saw sales for rough and polished diamonds fall to US$15.6 million in April, as the coronavirus pandemic continues to hit demand.
The figure compares to the US$152.8 million the diamond miner fetched in March and the US$405 million in January.
Deputy CEO, Evgeny Agureev, said restrictions to slow down the spread of the virus and falling demand had reduced trade to a minimum. He said he hoped to see an upward trend in demand as early as the third quarter.
Last week, the Russian state-controlled company decided to halt production at two of its mines, saying that extended lockdowns for key players in the supply chain, including polishers and top retailers, has worsened market conditions.
It also said it would offer options for online trade and relaxed payment terms for its contracts in March.
The diamond market began suffering from the effects of COVID-19 in early March, and measures to contain it have already pushed big and small miners over the edge.
The pandemic has already squashed diamond miners’ dawning hopes of a recovery in a sector already reeling from weak prices and demand since late 2018.
De Beers, the world’s largest producer by value, cut 2020 production guidance by a fifth last month. It had earlier cancelled its April sales event.
Canada’s Dominion Diamond Mines, the controlling owner of the Ekati mine and a 40% partner to Rio Tinto (NYSE: RIO; LSE: RIO) in the Diavik mine, filed for insolvency protection in April.
Lucara Diamond (TSX: LUC), another Canadian company, recently posted a net loss of US$3.2 million, or 1¢ per share, for the first three months of the year. The figure was in sharp contrast with the US$7.4 million in net income, or 2¢ in earnings per share, the miner reported in the same period last year.
South Africa’s Petra Diamonds (LSE: PDL) has recently delayed interest payments to borrow US$21 million in new debt, a crucial move to keep the company afloat.
Investment banks are increasingly reluctant to extend credit to diamond producers, as inventory is not being sold and defaults are possible, analysts have warned.
“We are concerned about oversupply of rough diamonds following the reopening of economies, as a lot of inventory could potentially be flooded into the system and the market might not be able to absorb all of it, resulting in increased pricing pressure,” Citi said in a research note to clients in early May.