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Russia
By Anastasia Serdyukova
The first new diamond mine in Russia in over a decade will become operational this autumn. The Grib deposit, owned by the country’s biggest private oil company, Lukoil, is estimated to hold over $5 billion worth of diamonds. By the fall of 2013, Lukoil is expected to complete digging an open pit mine almost 300 feet deep and constructing the necessary infrastructure. The depth of the mine, which is necessary to reach the kimberlite tube, is one of the challenges of developing Grib and represents a significant capital investment, according to Nikolai Pokhilenko, director of the Institute of Geology and Mineralogy at the Russian Academy of Science. The company’s projected spending at the site for 2010 to 2013 is $720 million, in addition to the $130 million spent in the 14 previous years. “Apart from the depth of the kimberlite location, the deposit has favorable conditions for development,” said Pokhilenko. The open pit is going to be 1,500 feet deep when it is finished and is expected to produce 57.1 million carats, according to the experts at SRK Consulting. The overall size of the deposit is estimated at 100 million carats. Construction of the local processing factory, with an annual capacity of 4.5 million tons of ore a year, is scheduled to begin in the fourth quarter of 2013.
Although Lukoil is an oil company, it says it plans to develop the diamond deposit without any help from diamond mining companies from Russia or abroad. When Lukoil’s subsidiary Arkhangelsk-Geoldobycha first took over the license for the Grib deposit in 1993, it entered into an arrangement to develop the diamond field jointly with De Beers Archangel Diamond Company (ADC), which was to provide expertise and investment capital. The partnership produced little more than a decade of disputes and litigation in various courts worldwide. An agreement was finally reached in 2008, but ADC dropped out of the project completely at the end of that year because a Russian government commission failed to approve the deal between the companies by that time. Lukoil’s representative told Rapaport Magazine that the company is not looking for a buyer for the deposit either in Russia or abroad. He said that Vagit Alekperov, Lukoil’s owner, did say that the mine could be offered for sale after diamond production begins. Russia’s largest diamond miner ALROSA, whose Lomonosov mine is located about 18 miles from the Grib deposit, wouldn’t comment on the issue. ALROSA is regarded as the most likely buyer if the mine were put up for sale. “Taking into consideration the high volume of investment into this project — around $850 million — and the difficult situation at the diamond market, the sale of the deposit is unlikely in the near future,” said Sergey Filchenkov, analyst from IFC Metropol, a Russian financial investment company. “It’s also unlikely that foreign investors would come into this project for the same reason.”
Jewelry sales were lower in the New Year holiday season of 2013, compared to that of 2012, according to most companies interviewed by Rapaport Magazine. The decline is attributed to the fact that most Russians have less money to spend on gifts. “The average check in shops fell from $2,000 to $1,000 on a year on year basis during the holiday season,” said Zhanna Klimova, marketing director of Ringo, an Ekaterinburg-based jewelry manufacturer and retailer. Yet, she said the overall volume of wholesale sales was very good at the Junwex jewelry show — the biggest show of the year — which was held in St. Petersburg in early February. Companies taking part in the show reported that two types of jewelry were most in demand: inexpensive items with less gold and smaller diamonds and expensive jewelry with a price tag of $20,000 and up. Dmitry Danilchenko, manager of Ural Jewellery Company in Ekaterinburg, said rings with diamonds of .20 carats and .30 carats, selling at around $1,300 retail, and items with topaz and garnet, selling at around $200, were most popular with buyers. Andrey Kruglyakov, marketing director of Russkiye Samotsvety, one of the country’s biggest jewelry makers, said the best-selling items were collections featuring melee diamonds and pieces that seemed to be made of golden lace, whose reduced weight made them less expensive.
“People want small diamonds of VS clarity,” said Nirav Shah, from Dubai-based DSM Jewellers LLC, who was looking for new customers at the show. Jewelry companies selling expensive jewelry said they were pleased with the show and holiday sales, adding that they sold items valued from $20,000 and even higher. Also selling well were figures cut out of various stones, often adorned with semiprecious or precious stones. Aleksandr Sukhanov from Gringor said figurines representing different professions are very popular as gifts for holidays and birthdays. The company’s collection at the exhibition included a policeman and a miner with a diamond instead of the light on his cap.Article from the Rapaport Magazine - March 2013. To subscribe click here.
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