Strategy by its nature is long term affair while operations often use tactics in order to adjust to the terrain situation. This is valid in military affairs and commercial business too. Alrosa diamonds of Russia in not an exception.
The eye opener for the largest diamonds mine-holder of the world came when the West sanctioned Alrosa diamonds by name and pulled its CEO Pavel Marinychev into the sanctions net in January 2024. Already Alrosa has incorporated the policy of stabilizing balance between supply and demand into the strategy table. Sanctions only expedited the execution of this part of business strategy. Alrosa foresaw two developments.
a) Overall decline in the price of diamond roughs that besets the industry since beginning of the 2020 decade would continue for quite sometime
b) Direct export to major buyers need to be curtailed to save them from the effect of western sanctions
Alrosa’s financial muscle is legendary. Being the largest roughs manufacturer in the world she exported a top volume of 46 million carats. Her source of roughs from Siberian mines ensure that Alrosa has nearly 95% of steady supply translating into approximately 27.5% of the global supply.
Although there is no question of supply, the day to
day demand spectrum changes require balancing. Monitoring the demand scale on
the one side and listening to the major buyers in India need to go hand in
hand. Yet, Pavel Marinychev succeeded in this challenging job because most of
the diamond processors are located within the city of Surat, India. Besides Alrosa had years of exposure in
dealing with them.
Adjusting to the concern of buyers is part of Alrosa business strategy. In late 2023 when India’s Gem & Jewellery Export Promotion Council (GJEPC) requested a temporary stoppage of roughs export from Russia to India Paul acceded and sliced the export quantity in September & October of 2023 in order to prevent oversupply of roughs leading towards price dips. An excellent example of miners - processors coordination. By the way, Indian diamantaires process nine tenth of the global cut & polishing of roughs.
Yet another feature of Alrosa business strategy is to opting for indirect exports. By using third parties and dummies Alrosa continues to keep up her export volume under the nose of western nations whose tracking mechanism of original source of roughs is yet to take off the ground.
A notable hallmark in Alrosa business strategy is to harness the un-exported volume of roughs. Quietly the company began to cut & polish diamonds within Russia to cater to the demand of domestic gem & jewellery for turning out fashionable jewellery pieces using the splendour & sparkle of the famous ‘Russian cut”.
Cheers!
Muthu Ashraff Rajulu
Business Strategist
Mobile: + 94 777 265677
E-mail: cosmicgems@gmail.com
Blog: Business Strategist
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