Alrosa, one of the world’s largest diamond producers, has officially begun mining at a promising new kimberlite pipe—the Karpinsky-2—located at its Lomonosov deposit in the Arkhangelsk region of northwestern Russia. This new source is projected to significantly boost the company’s output in the coming years, offering a fresh injection of rough diamonds to the global market.
In this comprehensive guide, we will explore everything you need to know about this development: from the geology of the Lomonosov deposit, the economic significance of this project, Alrosa’s production strategies, to the impact on the global diamond trade. Whether you’re an investor, a gemstone enthusiast, or simply curious about the diamond industry, this article will provide you with valuable insights in a conversational, easy-to-understand style.
1. Who Is Alrosa? An Overview of the Diamond Giant
Before we dive into the specifics of the new mine, it’s important to understand who Alrosa is and why this development matters.
Alrosa is a Russian state-controlled company and the world’s largest producer of rough diamonds by volume. The company is responsible for producing nearly 30% of the global diamond supply. It operates mainly in the Sakha Republic (Yakutia) and the Arkhangelsk region.
Over the past decades, Alrosa has built a reputation for:
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Large-scale open-pit and underground mining operations.
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Sophisticated ore processing facilities.
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Strict environmental and ethical standards.
With the global diamond market constantly evolving, any shift in Alrosa’s production has ripple effects across the industry.
2. What Is the Lomonosov Diamond Deposit?
The Lomonosov deposit is the largest diamond-bearing deposit in Europe. Located about 100 kilometers from Arkhangelsk city, it has long been a strategic asset for Alrosa.
Key facts about Lomonosov:
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Discovered: 1980s during Soviet geological surveys.
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Reserves: Estimated at over 115 million carats of rough diamonds.
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Mining Operations: Started in the early 2000s.
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Pipes: Comprises six kimberlite pipes—Arkhangelskaya, Karpinsky-1, Karpinsky-2, and others.
Until recently, production focused mainly on Arkhangelskaya and Karpinsky-1 pipes. The Karpinsky-2 pipe marks an exciting expansion phase.
3. Karpinsky-2 Kimberlite Pipe: A New Frontier
Kimberlite pipes are volcanic formations that serve as the primary sources of diamonds. The Karpinsky-2 pipe has been known to hold substantial reserves, but only after extensive sampling and testing did Alrosa decide to proceed with full-scale mining.
According to Alrosa’s estimates:
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Ore Reserves: Over 40 million tonnes of diamond-bearing ore.
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Potential Yield: Significant, with grades expected to support long-term economic extraction.
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Exploration History: First sampling began in 2018 to assess economic viability.
This pipe is the third of six at Lomonosov to enter production, underscoring Alrosa’s methodical approach to resource development.
4. Why Is This Expansion Important for Alrosa?
This expansion is more than just a new mining site—it is a strategic move to strengthen Alrosa’s position during a challenging period for the diamond market.
Several factors make Karpinsky-2 a critical project:
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Offsetting Declines: Alrosa has paused production at smaller, less profitable deposits to control costs during the downturn. Karpinsky-2 offers a more efficient, high-yield alternative.
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Diversification of Supply: By bringing a new pipe online, Alrosa can maintain consistent output even if other mines underperform.
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Revenue Stabilization: Fresh production can help compensate for recent revenue drops.
5. Production Milestones and Early Performance
Alrosa’s CEO, Pavel Marinychev, recently provided updates on progress. Within the first five months of this year:
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The company exceeded its ore production targets at the Severalmaz deposit, which neighbors Karpinsky-2.
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Processing improvements led to a 9% increase in volume.
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Over 1.2 million carats of rough diamonds were produced during this period.
These strong early results demonstrate the potential of the new deposit to deliver steady output.
6. The Broader Economic Context
To understand why Alrosa is focusing on new projects like Karpinsky-2, you have to look at the economic backdrop.
In the first quarter ending March 31, Alrosa’s:
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Revenue fell 42% year on year, totaling RUB 58.13 billion (~$709 million).
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Net profit declined 29%, reaching RUB 14.48 billion (~$177 million).
Several factors contributed:
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Weaker global demand for polished diamonds.
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Sanctions and trade restrictions impacting Russian exports.
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A cautious approach from retailers in the U.S., Europe, and Asia.
By adding a high-grade production source, Alrosa is positioning itself to weather volatility and support its balance sheet.
7. Government Support and the Role of Gokhran
Another important element is the role of Gokhran, Russia’s state-owned precious metals and gems repository.
Recently, Russian Deputy Finance Minister Alexei Moiseyev announced that:
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Gokhran could purchase up to $985 million worth of Alrosa’s rough diamonds over the next three years.
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These purchases act as a buffer for domestic producers, helping sustain operations during market downturns.
This measure underscores how strategically important diamond mining is to Russia’s economy and why the success of Karpinsky-2 matters beyond Alrosa itself.
8. Environmental and Ethical Considerations
Mining new deposits always raises questions about environmental impact and ethical sourcing. Alrosa has stated it will:
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Follow stringent environmental monitoring protocols.
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Implement progressive land rehabilitation plans.
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Maintain its certification under the Responsible Jewellery Council (RJC).
The company also continues to participate in the Kimberley Process, which aims to prevent the trade in conflict diamonds.
These commitments are vital for maintaining trust with global clients and ensuring Russian diamonds remain competitive on ethical grounds.
9. Impact on the Global Diamond Market
What does this mean for buyers and jewelers around the world?
Potential effects include:
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Increased Supply: With new rough diamonds entering the pipeline, there could be downward pressure on prices if demand does not keep pace.
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Supply Stability: Alrosa’s output helps stabilize the market amid uncertainty from other producers, such as De Beers and smaller African operations.
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Competitive Edge: Efficient Russian production could challenge rivals on both price and volume.
Overall, the start of Karpinsky-2 production is a signal that Russia is determined to maintain its leadership in the diamond sector.
10. Future Outlook for Alrosa
Looking ahead, several factors will influence how successful this expansion proves:
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Recovery of Global Demand: As consumer confidence rebounds, especially in China and India, polished diamond sales should improve.
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Currency Dynamics: Exchange rates impact the competitiveness of Russian diamonds on the world market.
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Further Development: Additional pipes at Lomonosov could eventually be brought online, further enhancing production capacity.
Alrosa’s combination of state backing, modern technology, and large reserves positions it well to navigate these challenges.
Conclusion
The launch of mining operations at the Karpinsky-2 kimberlite pipe is a significant milestone for Alrosa and for Russia’s diamond industry as a whole. In an era marked by economic uncertainty and shifting consumer trends, this new source of rough diamonds offers a crucial lifeline to sustain production and revenue.
From the rich geology of the Lomonosov deposit to the company’s commitment to ethical practices, Alrosa is proving that strategic resource management and innovation remain at the heart of the diamond business. As global markets adapt and demand recovers, the output from Karpinsky-2 will undoubtedly play a pivotal role in shaping the future of the industry.
For stakeholders across the supply chain—from miners and traders to jewelers and consumers—these developments reaffirm that Russia’s diamond story is far from over. In fact, with projects like Karpinsky-2, it may just be entering an exciting new chapter.