The Russian authorities have sharply increased sales of diamonds from state reserves amid growing global demand, higher prices and a shortage of rough in Russia’s largest producer, PJSC Alrosa.
On Tuesday, the Gokhran RF announced the next auction for the sale of rough diamonds in the amount of 768.7 thousand carats.
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On September 7, 77 lots will be put up for sale with a total initial cost of about $ 19 million, follows from the materials on the agency’s website (.xls).
At the previous auction, held on July 23, Gokhran sold a record 1.018 billion carats, gaining $ 139.2 million – 22% more than the starting bid price.
Initially, the Ministry of Finance set a limit for annual sales and the state fund of the Russian Federation at $ 67 million, but it was exhausted in four auctions, which took place in May, April and February.
According to Bloomberg, in June, the government decided to raise the bar, after which the volume of sales increased sharply.
The July auction sold almost as much as the previous four (1.202 billion carats). September, according to the Gokhran, will be a quarter less.
It is not known for certain how many diamonds have been accumulated in Gokhran. Analysts at VTB Capital estimate the volume of reserves accumulated over the past 13 years at $ 1.1 billion. Most of them were purchased from Alrosa during the 2008 global financial crisis.
Alrosa, which, according to Interfax, acquired 70% of almahs at the last auction, claims a serious shortage of raw materials on the world market amid falling production, accelerated by the pandemic.
“Diamonds are in maximum demand. Gokhran’s auctions will allow diamond cutters to purchase the raw materials they need to fulfill current orders, the level of which exceeds historical highs, “Kommersant quoted the company as saying.
According to Bloomberg, De Beers – the largest diamond producer in the world – has raised prices at each of the auctions held this year, including by 5% in the last sale in July.
By completely selling off its diamond reserves from Gokhran, Russia will be able to cover 60% of the global market deficit in 2021-22, VTB Capital estimates. However, even sales of $ 500 million will be enough to stem the rise in diamond prices and create the risk of an excessive increase in inventories, analysts say.