Russian diamond giant Alrosa reported a 25% drop in revenue for the first half of 2025, citing geopolitical tensions, global sanctions, and macroeconomic headwinds such as high interest rates and inflation as key factors behind weakening demand and rising costs.

Revenue for the January–June period fell to 134.3 billion roubles, while core earnings (EBITDA) dropped 42% to 37.1 billion roubles, the company said on Tuesday. The state-backed miner noted that elevated borrowing costs, inflationary pressures, and higher taxes continue to erode profitability.

Alrosa, which has been under U.S. sanctions since 2022, is grappling with increasing isolation in global markets. In January 2024, G7 countries imposed a direct ban on Russian diamond imports, followed by additional restrictions on Russia-origin diamonds routed through third countries—a move also backed by the European Union.

Despite these challenges, Alrosa posted a 10.8% year-on-year rise in net profit to 40.6 billion roubles ($506.7 million) for H1 2025, buoyed largely by a one-time gain from the sale of its 41% stake in Angola’s Catoca diamond mine. The deal, finalised in May 2025, transferred Alrosa’s stake to a subsidiary of Oman’s sovereign wealth fund, amid pressure on Angola to cut ties with Russian entities due to ongoing Western sanctions.

The sale brought in 15.9 billion roubles, helping partially offset the operational downturn. Prior to the deal, Catoca was jointly owned by Alrosa and Angola’s national diamond company, Endiama EP.

Meanwhile, Alrosa’s net debt soared nearly tenfold to 61 billion roubles, although its liquidity position remained stable, with cash, equivalents, and bank deposits rising 8.4% to 115.4 billion roubles.

“The relatively high level of the key rate and inflation continued to have an additional negative impact on the group in the first half of 2025,” the company stated, highlighting rising fuel and material costs.

Russia’s central bank recently began easing monetary policy, cutting the key interest rate from 20% to 18% in late July, offering some hope for relief in the second half of the year.

Alrosa remains the world’s largest producer of rough diamonds by volume, but faces ongoing hurdles in maintaining global market access amid increasing geopolitical friction.