Russia’s top diamond miner expected to complete new agreement with De Beers

Almazy Rossii-Sakha (ARS), Russia’s largest producer and only authorized exporter of rough diamonds, and South Africa’s De Beers Consolidated Mines are believed to be inching their way towards a new trade deal, according to Interfax News Agency.

The deal will be based on a bilateral trade agreement drafted by the companies in September 1996, said Lev Safonov, vice-president of ARS.

De Beers recently announced it would stop buying Russian diamonds as of Jan.

1 under the terms of a contract signed with the former Soviet regime in 1990.

That agreement expired at the end of 1995.

During a recent press conference in Moscow, Raymond Clark, head of De Beers’ office in Moscow, said Russia had bypassed De Beers to sell a large amount of diamonds on the world market.

In October 1996, De Beers told the Russian government it would dissolve the old contract after Dec. 31, 1996, unless it showed signs of ratifying a new trade agreement.

ARS expects to sell US$1.4 billion worth of rough diamonds in Russia and abroad this year. The Russian gem-cutting industry has a consumption requirement of at least $1.2 billion rough diamonds annually.

Vladimir Panskov, a Russian economics minister, said a deal must be signed at all costs. “Otherwise we will simply ruin the world diamond market. Neither De Beers nor Russia can work normally without the agreement.” He added that in February 1996, just before a framework agreement with De Beers was signed, “we studied this issue for a long time and concluded that an agreement would be beneficial and vital for Russia, both in terms of rough diamond production and international cut and polished diamond sales.” The draft agreement with De Beers is undergoing legal appraisal, following which it will be referred to the Russian government, he said.

Interfax News Agency is represented in North America by Interfax-America, based in Denver, Colo.