(IDEX Online) - Alrosa's Q2 profit slumped by 98 per cent, to just $3.6m, as the COVID-19 pandemic saw demand for diamonds all but evaporate.The release of its results came days after the Russian state-owned miner, and the world's biggest producer of diamonds by volume, reported a 79 per cent drop in sales (rough and polished for July were just $35.8m).Despite the disappointing performance, the company believes the retail sector is showing signs of recovery and that will result in some return of demand for rough within a month.For now, this growth has been met by existing diamonds' stocks at the mid-stream cutters, but we believe that the cutters' purchasing activity will start to recover in September ahead of the seasonal growth in demand for polished diamonds in November-January," said Alrosa's CFO Alexey Philippovskiy.But he cautioned that a second wave of coronavirus, which could "tame the nascent recovery".The company is widely reported to be seeking another rescue deal to sell up to $1bn of its rough to Gokhran, the finance ministry's precious metals and gems repository, as it did to survive the the 2008-9 global financial crisis.Alrosa has, like its biggest rival De Beers, been pursuing a price-over-volume strategy and has been offering what it calls unprecedented flexibility to its long-term clients during "extremely challenging market conditions".Pic shows a large, rough diamond, courtesy Alrosa