World’s Biggest Diamond Producer – in Russia – Suffers Giant Losses Due to US, EU Sanctions

Russia’s largest diamond producer reported almost a billion dollars in losses last year, representing a 26% drop in revenue from the year before. 

Alrosa, the world’s largest producer of rough diamonds by volume, said it had unsold products worth $1.3 billion compared to the previous year – marking a 78% decrease in net profit since 2023. 

The company has tied its economic troubles to sanctions imposed on Russia by the US and Europe, as well as volatility on Russian markets, according to the company’s financial statements for 2024. 

The US imposed sanctions against Alrosa as a part of its April 2022 package against Major Russian State-Owned Enterprises, with Alrosa on top of the list. The European Union imposed the import ban of Russian diamonds as part of the 12th package of sanctions announced in January 2024. 

By the end of 2024, Alrosa reported a 26% revenue loss, nearly half of its EBITDA, and a drop in net profit down to 19.3 billion rubles ($169.67 million). 

That is a 77.5% decrease in net profit compared to 2023 when Alrosa earned 86.8 billion rubles ($973 million). 

Apart from losses in cash, Alrosa also reported an increase in inventories – produced items stocked in warehouses – by 49.2 billion rubles ($432 million). The Moscow Times ties this to a drop in diamond sales to the Indian market.

Alrosa’s balance sheet showed unsold products worth 129.9 billion rubles ($1.3 billion). 

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The company wrote in its financial statements that the key reasons for losses are sanctions against Russia imposed by the US and the EU, reduced demand for jewelry, the Central Bank’s key interest rate hikes, inflation, and increased profit tax

“Alrosa, a Russian state-owned enterprise (SOE) and the world’s largest diamond mining company, which is also responsible for 90 percent of Russia’s diamond mining capacity,” the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) wrote. 

In November 2024, Alrosa announced it may cut staff and “may suspend some production in 2025”, Reuters reported.