Alrosa – Growing with India

Alrosa – Growing with India Alrosa – Growing with India Jim Vimadalal, Director,ALROSA Indian Representative Office speaks with Mines to Market on ALROSA’s objectives to strengthen ties with Indian customers and why this is a good time for it to be in India. What will be your initial focus in India? Being the largest diamond supplier in the world, ALROSA is very interested in the establishment and development of its relations with India. Opening the office is a logical step in this process. ALROSA’s representative office will not conduct a trading activity. Currently, the main objective is to significantly strengthen the work with Indian customers and industry organizations. I will bring information about the company to the local market. My responsibility is to negotiate with new potential customers and tell them about the possibilities of cooperation with the company, to solve any technical issues for existing customers, to interact and exchange information with industry organizations, to discuss issues of possible cooperation and joint initiatives. Today, ALROSA demonstrates a desire to have a deep understanding of each market, analyze and be in close contact with the industry to quickly address any challenges. Of course, I wish the company to become more renowned in the Indian market. Today, ALROSA is widely known among a narrow circle of clients and industry organizations with which it works, but not as well known, for example, in retail, or among consumers. I think this is also an area in which we could work. What makes this the right time/opportunity for you to open an office in India? Today India is the largest diamond cutting center in the world. According to various estimates, around 70 to 90% of all diamonds in the world come here for cutting. Certainly, being the largest diamond supplier in the world, ALROSA has a long successful history of cooperation with India, including industry organizations of India. In 2017, ALROSA directly supplied to Indian companies, rough diamonds for about $700 million. But if we summarize this figure with purchases of companies with Indian capital, registered in another countries, the final result will be much higher. ALROSA has 55 long-term clients for gem quality diamonds and 10 contracts for industrial diamonds. There are 15 Indian companies among this number. In addition to this, more than 140 companies are allowed to buy ALROSA’s diamonds through auctions and spot sales. Of course, given this history of cooperation and the role of the parties for the market, opening the office was just a question of time. The topic has been under discussion for a long time. The final decision is a direct consequence of the agreements stipulated in the Memorandum of Cooperation (MoC) signed by ALROSA and GJEPC in June 2017. The Memorandum was acknowledged and supported at the highest political level, by the President of Russia -Mr. Vladimir Putin and the Prime Minister of India Mr. Narendra Modi. Alrosa – Growing with India Any targets set for the first year of operations in India? As I mentioned, last year ALROSA directly sold to Indian companies rough diamonds worth about $700 million, which represents 16% of the company’s total sales. We don’t set any strict targets of increasing this share to any concrete figure, but have an understanding that we are interested in expanding our presence in India, forming a list of reliable clients and partners. In the same time, we need to remember about keeping our sales balanced and diversified enough. Do you see business in India requiring you to adopt a different approach compared to ALROSA’s other global operations? The world diamond market today is global, and you cannot say the rules of the game differ from country to country. Diamond trading has its own industry practices and standards, common for every market. Moreover, there are a few well-known diamond hubs in the world, and all the major players have their affiliates in all of these hubs. Of course, India has its own advantages. First, being here, you are in a close contact with the polished producers, and this gives you a deep understanding. It is also worth mentioning, that India is quite a prospective market for diamond jewelry consumption. It has a long tradition of wearing jewelry and a growing middle class. This promising outlook can be proven by the fact that the DPA last year launched the generic marketing campaign for promoting diamonds here. It means that all the diamond mining giants consider the Indian market as having a high potential. What initiatives are you looking at to work with trade organizations in India? ALROSA has many projects and topics for discussion with industry organizations of India and I hope that the India office could be the driver of this process, making the interaction faster. In particular, the company has a Memorandum of Cooperation with the GJEPC, which includes many important issues – for example, support of the SNZ work and the discussion on trade within that zone. It also includes measures to counter the penetration of synthetic stones to the market. Illegal sale of synthetics is a very important topic for the industry. We will support measures aimed at legislative division of trade of natural stones and synthetics on the market, exchanging information on companies that are engaged in illicit trafficking. I think we will also intensify cooperation in the framework of exhibitions and other public events to get to acquaint industry representatives with the company and its capabilities, its position and contribution to the development of our market. What is the current demand behavior for rough diamonds in the global market? We see a rather positive beginning of the year. In Q1, ALROSA showed strong enough sales results (about $1.6 billion in 3 months). In general, we see a fairly stable demand for diamonds of all categories on the market. Prices for polished diamonds also show a positive trend. Retailers are restocking after the very good results of sales in winter holiday season, jewelry sales during the Chinese New Year also exceeded expectations. Overall, we expect it to be a stable enough year for the global rough and polished diamond market with some normal seasonal fluctuations. What are your global expansion plans? Today ALROSA is the world leader in diamond mining, accounting for about 30% of the worlds’ rough diamond supply. We are also a leader in mineral resources, having more than 1 billion carats in subsoil, which is enough for at least of 25 years of mining. Of course, one of the goals is to maintain this leadership. The company also aims at improving operational efficiency, working on decreasing operational costs and implementing new technologies. ALROSA is also the industry leader in terms of social investments, which is confirmed by the PWC research. We spend about 3% of revenue for social projects annually. In 2017, spendings amounted to about $150 million, allowing the company to implement more than 500 social and charity initiatives. One of our goals is to bring this information to the market and to consumers, as the modern consumer is very aware of ethical business and the diamond’s origin. Alrosa – Growing with India

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