Alrosa to Reduce Production and Workforce Amid Global Diamond Industry Challenges

Russia’s state-controlled diamond mining company Alrosa has announced plans to scale back production and reduce its workforce in 2025. 

This decision, according to CEO Pavel Marinychev, follows a period of declining diamond prices, weaker global demand and the impact of Western sanctions.

Impact of Sanctions and Market Decline

Alrosa, the world’s largest producer of rough diamonds by volume, has described the global diamond market as being in a “deep crisis”, highlighting that prices have declined for the second consecutive year. Compounding these difficulties are G7 and EU sanctions – to manage these pressures, the company plans to suspend operations in areas with limited profitability. Marinychev stated these operations could resume quickly if market conditions improve.

Alrosa plans to lower its labour expenses by 10%, a strategy that may lead to job cuts among its 35,000 employees. While Marinychev did not provide specific numbers, he noted that the reductions were aimed at ensuring the company can navigate the current challenges effectively.

Government Support and Production Outlook

The Russian government has provided occasional support to Alrosa by purchasing diamonds through its State Fund of Precious Metals and Precious Stones (Gokhran). In 2025, the government has budgeted $1.55 billion for the purchase of precious metals and gemstones, a measure intended to mitigate the effects of market oversupply.

Alrosa’s production reached 35.5 million carats in 2022, accounting for more than 90% of Russia’s diamond output. However, production levels are expected to decrease as part of the company’s cost-saving measures.