With the aim to allow the industry to better compete in a market that’s dominated by Indian manufacturers, Russia wants its biggest diamond miner to work more closely with the country’s top gem cutters.
According to Deputy Finance Minister Alexey Moiseev. the government wants Alrosa PSJC to offer more favorable terms to cutters including Kristall Production Corp., Russia’s largest, as part of a plan to boost the competitiveness of Russian diamonds. The producer is mostly state owned is mostly state owned and digs more gems out of the ground than any other firm.
“Cooperation currently is rather limited and it has to expand,” Moiseev said in an interview in Moscow.
In order Alrosa has largely shunned cutting and polishing, Alrosa has largely shunned cutting and polishing. Kristall and other Russian cutters are struggling to compete with much larger polishing centers like in India. are struggling to compete with much larger polishing centers like in India and currently buy stones from Alrosa at similar terms to overseas companies. At the same time, as young shoppers spend more cash on other luxury items such as electronics, there’s concern about stagnant demand and falling prices.
Moiseev said that the plan may lead to Alrosa selling about 10 percent of its gems domestically. the figure is “just an estimate of the demand from Russian cutters.” the figure is “just an estimate of the demand from Russian cutters” and this won’t be required sales.
Moiseev said that Alrosa could offer local cutters benefits, such as allowing them to buy only part of the contracted volume or choose certain stones and return the rest to the miner, although it would sell diamonds at market prices.
The country isn’t the only major producer to try to encourage more domestic manufacturing. De Beers was pushed to sell more diamonds to be cut and polished locally by No. 2 producer Botswana, as well as Namibia and South Africa. Canada has also spent years trying to boost its cutting and polishing industry.
And as the stones can be manufactured much more cheaply in India, most of those ventures have struggled somewhat. In India, as many as 1 million people are employed in the industry and about 90 percent of the world’s diamonds pass through the nation.
“It’s challenging to compete with India, but you can argue there’s a better chance of success now than before,” said Anish Aggarwal, a partner at consultant Gemdax in Antwerp. “The labor cost differential is shrinking as India becomes more expensive and there’s increased use of technology. For larger, more expensive rough diamonds, labor cost is a less important factor – expertise is the main thing.”
Moiseev said that as well as introducing regulation identifying origins of diamonds to make the market more transparent, Russia also plans to ease excessive controls for importing and exporting stones. The development of special nano marks on gems and creating special passports by year-end creating special passports by year-end are included in this.
“The ultimate goal is to get a person to be able to scan a code in the shop and find out where the stone in coming from,” Moiseev said, adding that more jewelers will use devices to help them detect synthetic stones.
(Adapted from Bloomberg)