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Russia
By Svetlana Shelest
ALROSA reported that production in the first nine months of 2015 totaled 29.6 million carats, signifying a 16 percent year-on-year increase. ALROSA’s preliminary estimate of the total sales for the first nine months of the year is set at 23 million carats. Revenue is expected to reach at least $2.7 billion. In the third quarter of 2015, ALROSA sold 4.9 million carats, including 3 million carats of gem-quality diamonds, at an average price of $182 per carat and 1.9 million carats of industrial diamonds at an average price of $9 per carat. Also in the third quarter, ALROSA reduced its gem-quality rough diamond prices by 8 percent to align with the slowdown in the diamond market. Company President Andrey Zharkov said at the Annual General Meeting (AGM) of the World Diamond Council (WDC) that he expects the trend to continue and that the year-on-year decline in rough prices at the beginning of 2016 should stay within 15 percent. At this point in time, the company has confirmed its previously announced production plan of 38 million carats for 2015.
ALROSA hosted the WDC’s 11th annual AGM on October 12th and 13th in Moscow, the first time the meeting was ever held in the Russian capital. It opened with addresses by Zharkov and Russia’s Deputy Minister of Finance Alexey Moiseyev. In his speech, Zharkov noted, “I am sure that all participants of our market realize collective responsibility for its further development, which can be ensured by making the value of the natural stones our strategic priority.” In his interview with the media during the meeting, Zharkov said that Russian legislation has been recently updated to include amendments to the federal law regulating the turnover of precious stones, introducing a strict definition of precious stones as those exclusively of natural origin and defining all stones of synthetic origin, even those possessing characteristics of natural stones, as falling outside this definition. The updated law takes effect in November and will oblige sellers to provide the merchandise with the clear indication of each stone’s origin as natural or synthetic and supply information on the method of processing the stones may have undergone to improve the qualities, and therefore the value, of each stone. The amendments will contribute to “making the turnover of natural stones legal and transparent,” said Zharkov.
The meeting concluded with the election of Andrey Polyakov, ALROSA’s vice-president since 2013, as vice president of the WDC. He will succeed current WDC President Edward Asscher at the end of his presidential term in May of 2016. AGM participants approved a strategic plan for the WDC for the coming two years that confirms its commitment to maintaining the Kimberley Process (KP) principles and strengthening the world diamond market reputation.
In an interview with the media at the AGM, Moiseyev offered insight into the government’s plans for the diamond bourse project announced in September. “We see our task in creating an efficient rough and polished trading platform in Russia,” he said. “We are currently reviewing multiple options, not only a diamond bourse option — although the status of a free port recently given to Vladivostok indeed presents some unique opportunities to be explored. There are also legacy enterprises in Russia that have accumulated solid expertise in the diamond trade since the Soviet Union times, and we are also considering the option of using them as a foundation for such a trading platform. We are currently reviewing all possibilities.” Moiseyev said that current work is aimed at producing the concept, which he expects to be ready in 2016.
On October 2, Russian Jewelers Guild held its Third International Economic Forum in Moscow. The forum sees its goal as providing a platform for cooperation among the country’s diamond miners, polishers, jewelry manufacturers and the state agencies regulating their operation and the country’s economy, with the purpose of facilitating possible legislative improvements that would stimulate further development of Russia’s diamond pipeline and jewelry industry on the whole. Chief Executive Officer (CEO) of the Russian Jewelers Guild Association Eduard Utkin explained in his interview with Rapaport Magazine that the view of the situation shared by industry players in the country’s jewelry market is that the crisis has set in for the long term. Promoting exports of Russian jewelry is seen by many as a solution. However, current laws regulating import and export taxation of the precious stones and metals contribute to a high production cost of Russian jewelry, rendering it not competitive enough in its pricing for the international markets. Although in terms of quality and design, according to Utkin, the jewelry “is up to the competition.”Article from the Rapaport Magazine - November 2015. To subscribe click here.
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