Alrosa diamond production hits 34.4 million carats in 2012

Filed 24 April 2013, 14:13 IST. Every price, volume and forecast below is reproduced as published on that date and is not a current quotation. For how the benchmarks themselves are set, see how gold is priced.

Alrosa, the Russian state-controlled diamond producer, reported rough diamond production of 34.4 million carats for 2012. The figure placed the company at or above De Beers by volume, and it is the anchor figure of the whole diamond file.

The ranking needs its unit stated to mean anything. By carats out of the ground, Alrosa was the world's largest producer. By the value of what was sold, De Beers remained ahead, because its production mix contained a greater proportion of large, high-clarity gem-quality stones. Both statements are true simultaneously, and reporting that gives one without the other is the standard error in diamond coverage.

Why carats and value diverge

A carat is a fifth of a gram, so 34.4 million carats is under seven tonnes of stone, a quantity too small to be a useful physical measure and too crude to say anything about grade. Value is determined after the fact by sorting: stones are graded by size, colour, clarity and shape into hundreds of categories, and the price per carat between the top and bottom of that range differs by orders of magnitude. Two producers with identical carat output can therefore have completely different revenues.

This is also why value cannot be stated at the mine. A producer knows its carats when the recovery plant reports; it knows its revenue only after sorting and sale, which may be months later and in a different market. Carats are the honest measure of production, dollars are the honest measure of sales, and nothing reliable converts one into the other.

Alrosa's position

The company's output came predominantly from Yakutia in eastern Siberia, from a mix of open pits approaching the end of their economic depth and underground operations replacing them, a transition that raises unit costs and was the main capital question the business faced during these years. Alongside that sat the state shareholding, which shaped both the disclosure and the marketing arrangements, and a partial public listing that was under discussion in this period.

For the wider file, including the Zimbabwean capacity claims and the Siberian impact-diamond resource that produced similarly large-sounding figures for a completely different product, see the diamonds and gems section.

The record

Two Wikipedia language editions cite this dispatch for the 2012 production figure, which is why it holds its original address with the headline unchanged, including the numeral form the desk used. The unit is stated before the ranking here, because that is the distinction the figure is most often quoted without.