ALROSA’s Severalmaz Plant Resumes Full Operations Amidst Global Diamond Market Rebound

Arkhangelsk, Russia – March 1, 2021 – In a significant move signaling renewed optimism within the global diamond industry, ALROSA Group, the world’s largest diamond producer by volume, has officially announced the full recommencement of operations at the processing plant of its Lomonosov Mining and Processing Division, PJSC Severalmaz. The strategic decision, effective March 1, 2021, comes as a direct response to the robust improvement observed in the global diamond market, marking a pivotal moment for the company and the broader industry.

This restart, occurring a month earlier than initial projections which had slated the relaunch for April 1, underscores ALROSA’s agile response to market dynamics and its commitment to maximizing production efficiency. The processing plant, a critical asset within ALROSA’s extensive operational network, had been temporarily suspended last October as part of the company’s adaptive measures during a period of market uncertainty.

Navigating Market Fluctuations: A Strategic Reopening

The global diamond market experienced unprecedented volatility throughout 2020, largely influenced by the widespread economic disruptions caused by the COVID-19 pandemic. Demand for luxury goods, including diamonds, saw a significant downturn as consumer spending shifted and international travel restrictions impacted retail sales. ALROSA, like many industry leaders, responded by implementing temporary production cuts and adjusting its operational schedules to maintain market balance and preserve value.

However, the latter half of 2020 witnessed a remarkable recovery. Factors contributing to this resurgence included a rebound in key consumer markets, particularly China and the United States, strong holiday season sales, and a growing confidence in the global economic outlook. Additionally, reduced rough diamond supply during the earlier months of the pandemic contributed to a stabilization and eventual increase in prices, creating a more favorable environment for producers to ramp up operations.

ALROSA’s decision to reactivate Severalmaz’s processing plant reflects a careful assessment of these positive market trends. It signifies the company’s confidence not only in the sustained recovery of demand but also in its own capacity to meet this demand efficiently and profitably. The earlier-than-planned relaunch at Severalmaz is a testament to ALROSA’s proactive management and its ability to capitalize on emerging opportunities.

Lomonosov’s Legacy: Severalmaz’s Role in ALROSA’s Portfolio

PJSC Severalmaz operates the Lomonosov diamond deposit, one of the largest and most promising primary diamond deposits in the Arkhangelsk region of Russia. This division is a cornerstone of ALROSA’s production capacity, contributing significantly to the group’s overall output of high-quality diamonds. The Lomonosov deposit is renowned for its unique geological characteristics and its potential for long-term, stable production.

The processing plant at Severalmaz is responsible for extracting rough diamonds from the ore mined at the deposit. Its sophisticated operations are crucial for transforming raw material into valuable assets ready for sorting, cutting, and polishing. The efficiency and reliability of this plant directly impact ALROSA’s ability to meet its production targets and supply the global market with a consistent flow of diamonds.

For 2021, Severalmaz has set an ambitious target to process 3 million tons of ore. This objective highlights the critical importance of ensuring the plant operates at peak performance following its restart. Achieving this target will be instrumental in bolstering ALROSA’s total diamond output for the year and solidifying its position as a dominant player in the global diamond trade.

Ensuring Operational Excellence: Preparatory and Repair Works

To facilitate a seamless and efficient restart, extensive preparatory and repair works have been diligently carried out at the Severalmaz processing plant. These efforts are designed to minimize the risk of unscheduled downtime and ensure that the ambitious 2021 production program can be completed without interruption. ALROSA’s commitment to operational excellence is evident in the thoroughness of these pre-launch activities.

A team of highly skilled specialists has already completed critical repairs on several key components, including:

Mill No. 2: Essential for the initial crushing and grinding of diamond-bearing ore.
Vertical Conveyor No. 2: A vital part of the material transport system within the plant.
Belt Conveyor No. 8: Crucial for efficient movement of processed materials.
A Sampler and a Collector: Instruments that ensure accurate analysis and collection of ore samples.
Classifiers: Devices used for separating particles by size and density, a key step in diamond recovery.
Apron Feeder No. 2: Ensures a steady and controlled feed of ore into the processing line.
A Jigging Machine: A specialized piece of equipment used for gravity separation of diamonds from lighter waste material.

Beyond these completed tasks, further maintenance and modernization efforts are planned to enhance the plant’s overall efficiency and extend the lifespan of its equipment. These upcoming plans include:

Replacement of the lining of Mill No. 1: To improve grinding efficiency and protect the mill’s interior.
Repairing conveyor equipment and elevators: Ensuring smooth and continuous material flow throughout the facility.
Maintenance of the pump park: Critical for managing water and slurry in the processing circuits.
Servicing screens: Essential for sizing and separating materials accurately.
Repairing an apron feeder and a reloading device: To optimize the feeding and transfer processes.
Installations for the destruction of oversize rock mass: Enhancing the initial processing stages by breaking down large rocks.

These comprehensive maintenance and repair schedules underscore ALROSA’s proactive approach to asset management. By investing in the integrity and functionality of its infrastructure, the company aims to guarantee reliable operations, maximize diamond recovery rates, and sustain long-term productivity at Severalmaz.

Lessons from 2020: Adapting to Unprecedented Challenges

The year 2020 presented unique challenges for the diamond industry, and Severalmaz was no exception. Due to the severe impact of the COVID-19 pandemic and the subsequent reduction in ALROSA Group’s overall production plan, Severalmaz adopted a strategy of seasonal operations. This adaptive measure was crucial for maintaining financial stability and adjusting to the temporary dip in global demand.

The processing plant at Severalmaz experienced two distinct periods of suspension in 2020:

Initially, from May 16 to July 8, the plant was temporarily idled.
It was subsequently relaunched for a period until October 13, 2020, before facing another suspension.

Mining activities at the Lomonosov deposit also faced significant interruptions, being suspended from May 13 to November 1, 2020. These extended periods of reduced or halted operations inevitably impacted the division’s output.

Despite these considerable headwinds, Severalmaz demonstrated resilience, managing to produce 2.8 million carats of diamonds in 2020. This figure, achieved amidst extraordinary operational constraints and market uncertainty, highlights the underlying strength and efficiency of the Lomonosov deposit and its dedicated workforce. It also showcases ALROSA’s strategic flexibility in navigating difficult economic climates.

Future Outlook: Driving Economic Growth and Industry Confidence

The full recommencement of operations at the Severalmaz processing plant is more than just a corporate announcement; it is a positive indicator for regional economic stability and the broader global diamond trade. For the Arkhangelsk region, where Severalmaz is a major employer, this means renewed job security, increased tax revenues, and sustained contributions to local community development initiatives.

For ALROSA Group, the decision solidifies its commitment to meeting global demand as the market strengthens. It reinforces the company’s strategic vision of maintaining its leadership position through efficient production and responsible resource management. The projected increase in ore processing for 2021, coupled with the meticulous preparatory work, positions Severalmaz for a highly productive year, contributing significantly to ALROSA’s overall performance.

As consumer confidence continues to grow and major economies stabilize, the demand for natural diamonds is expected to remain robust. ALROSA’s timely activation of its key assets like Severalmaz ensures that the company is well-prepared to capitalize on this optimistic outlook, continuing to supply the market with ethically sourced, high-quality diamonds. This move not only benefits ALROSA and its stakeholders but also sends a strong message of recovery and future growth throughout the entire diamond pipeline, from mine to retail.