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Alrosa reviews sales strategy

Alrosa has begun culling a list of more than one hundred buyers to implement the long held view that the company's sales will be better managed if Alrosa concentrates on trading larger carat volumes with a smaller number of buyers, according to industry sources. One of Alrosa's traditional buyers told PolishedPrices he does not expect the client reduction will affect the well known buyers in Antwerp, Israel, or elsewhere. Another expressed doubt that the number of reductions will be significant. An industry source in London said: "The idea that the client list should be reduced, with expanded sales to bigger clients, has been there for a long time. Alrosa wants to create something similar to De Beers' sightholders, and have 10 to 15 large clients, instead of 100 to 200 small ones." The source said the current number of buyers on Alrosa's client list is "more than 100 clients for sure." A Russian industry source cautioned that Alrosa's client cull strategy "has been pending for a long time, but it is a long way from talking about it to actually implementing it." The state-owned Russian mining company has not added new clients in Russia, he said. “It has been very hard, almost impossible to get on to this domestic list. There have been exclusions, when clients violate some rules, or fail to buy the proper volumes." Several industry sources said that before it can make significant revisions to its clientele, Alrosa will have to renegotiate its long term sales strategy with De Beers. Since the European Court nullified the European Commission ruling terminating all rough sales between Alrosa and De Beers, the way is open for the two companies to decide on a fresh target for annual sales. The minimum they had earlier agreed on for this year, before the EC-ordered termination, was $275 million. It is now expected in Moscow that Alrosa and De Beers will make a new accommodation, but nobody is confident of predicting the target value for annual sales. Separately, Sergei Uhlin, the long time vice president in charge of Alrosa's international relations, has been appointed by CEO Sergei Vybornov to head the company's global sales from the start of the New Year. Uhlin will be responsible for the new client list and for sales strategy.



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