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Russia
By Svetlana Shelest
Russia’s second Eastern Economic Forum (EEF), the diamond industry’s top newsmaker in the country, took place in Vladivostok from September 2 to September 3. The world’s leading diamond miner ALROSA was the forum’s official partner and organizer of a number of key events. In the run-up to the forum, the mining giant held its first-ever international auction for special-sized rough diamonds, from 10 carats up, on Vladivostok’s Russky Island from August 23 through September 3. The company sold all of the 19 gem-quality stones entered into the auction, weighing a total of 1,098 carats, for a total of $14.6 million. The largest of the stones weighed 401.97 carats and sold for $3.05 million, while the most expensive stone, weighing 125.79 carats, fetched the price of $3.6 million. On the first day of the forum, the company also ran its first-ever Vladivostok-based polished diamond tender. The 28 large diamonds auctioned off were produced by the miner’s polishing subsidiary, Diamonds ALROSA, and brought in a total of $3.62 million. The largest gem weighed 40.25 carats and sold for $706,777, while the most expensive stone, weighing 20.31 carats, garnered $1.28 million. Five of the 28 diamonds weighed more than 5 carats and 18 of the total number of stones were fancy color diamonds. Both these auctions were the test runs marking the first milestone in the implementation of the Vladivostok diamond bourse, the long-term diamond industry development project for the Russian Far East that had been announced by the government in 2015. Russian Presidential Envoy to the Far East Yuri Trutnev initially termed the project ‘a bourse,’ but later adjusted his statement saying, “a bourse is, for the time being, probably too big of a term, but we will definitely launch a diamond trading platform in Vladivostok and develop it in the long term.” This year’s auctions “proved to be more than successful,” as Yuri Okoemov, ALROSA’s vice-president, commented to the press at the forum, explaining that the company “sold everything we brought to Vladivostok, and at a significant premium.” Andrey Zharkov, the company’s president, said in a press release dedicated to the tenders that “such auctions from now on will take place regularly in Vladivostok and their sales volume will increase over time.”
Having successfully completed the auctions, ALROSA officially announced at the EEF the launch of the Eurasian Diamond Center (EDC) project in Vladivostok. The center will enjoy trading benefits of the free-port status Vladivostok was granted by the Russian government in October 2015 and will serve “to diversify supply channels and facilitate diamond trade between Russia and Asia-Pacific states, particularly China, India, Japan and South Korea, while stimulating economic development of the Russian Far East,” said Zharkov in his opening statement at the forum. In his opinion, the EDC has the potential to double and even triple ALROSA’s direct sales to the Asia-Pacific region. At the moment, the miner is holding negotiations with a number of the region’s companies on possible cooperation, explaining the advantages of the infrastructure provided by the free port of Vladivostok and multiple so-called “priority development areas” that are being set up by the government around it. The ultimate purpose of these converging projects is to create a unique business environment that will bring together all segments of the diamond pipeline — such as mining, polishing and banking sectors, gemological laboratories, insurance and logistic companies — and to ease their successful interaction with preferential tax and customs regulations and simplified state control procedures. As Trutnev said at the EEF in 2015, “Vladivostok seems to be a more logical link between Yakutia and China than, for instance, Antwerp.” As part of its strategy to achieve this long-term objective, and also within the framework of the EEF 2016, ALROSA signed a partnership agreement with KGK Diamonds (I) Private Limited, its trading partner since 2008, aiming to establish and develop a cutting and polishing facility for Vladivostok’s Eurasian Diamond Center. The new company has tentative plans to go online in July 2017. The projected manufacturing capacity of at least 15,000 carats of polished per year is expected to be reached within four years from the launch.Article from the Rapaport Magazine - October 2016. To subscribe click here.
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