Alrosa to Double Diamond Sale to Asia in 2018

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By Marina Romanova

CrV6ASvUIAAIIH5A day ahead of the Second Eurasian Economic Forum, Russian PJSC Alrosa, the world’s largest producer of rough diamonds, has open its Eurasian Diamond Centre in Far Eastern port-city of Vladivostok. According to the miner press release, the company wants to boost gem sales to Asia-Pacific nations, including China, India, Japan, and Singapore; and improve cooperation with companies in the region.

The new trading platform will provide an infrastructure cluster to unite diamond industry companies and cater to export-import operations. The Centre will also be in charge for the search of “potential new partners and investors to set up manufacturing facilities for industrial grade diamonds and production of diamond cutting industry equipment.”

The company’s decision to establish a new trading platform in Russian Far East was largely seen as a part of nation’s sought to cut its economic reliance on western markets, as relations with the U.S. and European Union soured amid a two-year conflict in Ukraine. Special economic zone and comfortable visa requirements for foreigners were among other significant factors for opening the Centre in Vladivostok.

According to miner own estimations, Alrosa will be selling around US$14 million to US$16 million a month worth of diamonds from Vladivostok within two years. “I don’t think initially there will be any high volumes (of sales),” Yuri Okoemov, company vice president said at the Eurasian Diamond Centre opening ceremony on September, 2nd.

“At the beginning sales may amount to only US$7 million – US$8 million (a month), but the overall potential of the region is greater than that. Our task is to, at least, double the amount of diamond sales in the region by 2018,” Okoemov was quoted by Russian and international media as saying. As Alrosa CEO Andrey Zharkov said earlier to reporters, last year company sold a combined US$745 million of gems to India and China alone.

information_items_1164Alrosa hopes for US$1 billion of business to go through the trading platform in 2018, and more than 100 firms to involve in diamonds mining and polishing to be part of it. The Vladivostok-based cluster will focus on similar services to the leading manufacturing and trading centers in Mumbai and Antwerp, Belgium.

On sidelines of the Economic Forum, Alrosa already signed an ‘agreement of intend’ with its long-term Indian partner, KGK Diamonds, on the creation of a diamond cutting and polishing unit in the Eurasian Diamond Centre premises in Vladivostok.

KGK Group’s Russian companies SD Diamonds LLC and DDK LLC are engaged in the field of cutting and polishing of rough diamonds in Russia since 2004.  Alrosa has been supplying natural rough diamonds to KGK since 2008, the India Times reports.

The new manufacturing facility is planned to be developed approximately by July 2017 boosting the employment opportunities, beginning with about 150 employees that is estimated to grow up to 500 in subsequent years. The projected manufacturing capacity of at least 15 000 carats of natural diamonds per year will be reached within four years from its start.

On a verge of the second Eastern Economic Forum from August 23 to September 3 on the Russky Island in Vladivostok, company already opened an international auction of raw special-sized diamonds weighing more than 10 carats generated sales of more than US$18.2 million, TASS reports. 19 lots of diamonds with the total weight of 1,098 carats were offered. The largest raw diamond on the auction has the weight of 401.97 carats.

1044762252All 19 lots worth a total of US$14,636,000 were sold during the auction. The largest diamond was sold for more than US$3 million. The most expensive stone, weighing 125.79 carats, was sold for US$3.64 million. Thirty companies took part in the auction and tenders, with participants from Hong Kong, Israel, India, the U.S., Belgium and Russia.

The company’s sales to China alone may triple within the next two to three years, Zharkov said in an interview in Vladivostok. In terms of diamond jewelry demand, China’s market may grow near the size of the U.S. in five years, he said.

Russian diamond monopoly may expand its trading activity at the Shanghai Diamond Exchange and open an additional office in China, company announced in the presentation in Vladivostok. The producer is also considering starting its new trading platform in Mumbai, along with cooperation with Indian KGK Diamonds on the creation of a diamond cutting and polishing unit in the Eurasian Diamond Centre premises. Thus Russian Alrosa could contribute to already emerging intra-Asian trio of strategic partners – Russia, China and India.

Alrosa’s diamond reserves stood at 1.108 billion carats as of the beginning of 2016, according to Russian State classification standards. Overall financing for geological exploration by the company will total US$97.8 million in 2016.

The diamond miner plans to produce 39 million carats in 2017, up from a target of 37 million carats this year, Russian news agency Interfax quoted Andrey Zharkov as saying.