N e w s

Alexey Kudrin, the Vice- Prime Minister has left on Sunday for a business visit to Yakutia. The official purpose of this trip is to visit the diamond mining-region and to keep up with the latest state of affairs. However, the main target of Mr. Kudrin is be present at the ceremony of the signing of the fifth Trade Agreement between Russia's diamond monopolist ALROSA and world's largest diamond trader - De Beers. Its is important to note that only ten days ago the Government was not happy with the Agreement's content, but since then has changed its view.

Almost all state officers working in diamond industry, as well as the representatives of the two companies have arrived to Yakutia. Hence, the presence of Mr. Kudrin, who is also the head of the Government Committee on Diamond Industry, adds some weight to the whole event. In order to explain the situation, ALROSA has admitted to "Izvestia" that the Agreement should finally be signed on Monday, while De Beers has refused to comment referring to the confidentiality of the information Indeed the Agreement between the two companies should indeed be their private affair. Nevertheless, as ALROSA is under control of the State, it is not free to take any decisions without its approval. The latest events also proved that it was De Beers mostly in control of the situation.

Initially "ALROSA" would like to acquire its independence and to find other buyers than De Beers. However, in case if Russia was not willing to accept the conditions put forward by De Beers it did not seem possible to come to the agreement. That would have lead to the diamonds flowing freely to the market and the prices would have gone down at once, crushing the income of Russia's budget. Fairly pragmatic team of President V. Putin, mainly concerned with the payments of the State's debts, cannot simply ignore the fact that ALROSA annually produces $1,6 billion worth of diamonds.

According to the new Agreement ALROSA intends to sell De Beers $4 billion worth of diamonds within next five years. This suggested that the previously agreed reduction of the volume of diamonds sold to De Beers by ALROSA would not be fulfilled. (Nowadays, the sales volume of Russian diamond monopolist to De Beers is no less than $550 million). Later on it was announced that De Beers now wants to select the gems it intends to buy and not just accept what is on offer. The Committee on Diamond Industry did not accept such a dictate and offered to take the negotiations further.