Monday, April 9, 2012

Russian diamonds no longer Surat diamantaires' best friend

Russian diamonds would no more be the best friend of diamantaires in the world's biggest diamond cutting and polishing centre in Surat.

The Association of Diamond Manufacturers of Russia (ADMR) has strongly opposed the request by ministry of commerce to Russian government on behalf of Indian diamantaires to formalize a mechanism for the sale of diamonds under long term contracts from its state precious minerals repository, Gokhran.

Russia's diamond manufacturing industry is slowly emerging out of the severe crisis it that been facing since 2009, when polished diamond production fell to an unprecedented low of $350 million. In 2011, Russia manufactured polished diamonds worth $850 million.

Industry sources said local diamantaires have been eyeing the rough diamond stockpile worth over $2 billion with Gokhran, which functions under Russian ministry of finance. The Russian state repository had suspended the sale of diamonds since 2008 following the global financial crisis when the demand for diamonds slumped.

Last year, Gokhran had announced that it will start selling the stockpile of rough diamonds in 2012 to prospective buyers.

"India is world's biggest diamond manufacturing centre, while Russian diamond manufacturing industry is far too small. The requirement of diamonds is very high in India than in Russia. However, Russian manufacturers should understand this," said a DTC sightholder.

Nevertheless, diamond manufacturers of Russia have criticized the move of Indian diamantaires and the ministry of finance for lobbying with Russia's ministry of finance to work out a mechanism for long term supplies from Gokhran.

As per the official statistics of Gems and Jewellery Export Promotion Council (GJEPC), India imported rough diamonds worth $370 million from Russia in 2010-11. Most of the rough diamond import was through the long term contracts and auctions by Alrosa, the world's biggest diamond mining company operating in Russia.

"Alrosa sells its rough diamond stock through long term contracts to about 22 clients in the world including from India, Israel and Belgium. Now, Indian diamantaires are eyeing the huge stockpile of rough diamonds lying with Gokhran. But, the diamond manufacturers of Russia do not want us to grab the diamond pie," said an office-bearer of GJEPC.

GJEPC office-bearer said ADMR had sent a letter to GJEPC expressing its indignation over the request made by India's minister of commerce, Anand Sharma. A letter signed by Maxim Shkadov, chairman of ADMR, states, "We understand whose interests are being lobbied by India's minister of commerce. We understand the pro-active stand of our colleagues, but, gentlemen, Russian also has its manufacturing industry and it is impossible to neglect its interest, it looks unethical."

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