Russia's Gokhran may not sell diamonds from Alrosa for two years
March 10, 2010
It could be at least another two years until Russia's State Precious Metals and Gemstones Repository, the Gokhran, begins to sell the rough diamonds it has bought from diamond mining giant Alrosa in the past two years.
Alrosa stopped commercial sales of rough diamonds at the end of 2008, when the global financial crisis slashed demand for gems. It only resumed commercial sales in July last year, and sold $1.1 billion in rough goods to the Gokhran.
"The Gokhran is not a standalone diamond market participant," said Gokhran CEO Vladimir Rybkin in an interview with the Rough&Polished news agency. "Our mission is to top the budget up to the extent stipulated by the government.
"As for the diamonds we have bought in 2008 and 2009, we won't be selling them this year or next. This is a large amount — we have never bought as much — and it will take a long time to sort and value the diamonds. They might appear on the market in 2012 or 2013," Rybkin said.
Rybkin said the value of the diamonds that Alrosa sold the Gokhran during the economic downturn had already risen 5 percent and could well continue to rise.
"I'm hoping that the upward trend will be irreversible from the second half of this year and that prices will match their 2007 level by the start of 2012," he said.
The Gokhran will buy more diamonds from Alrosa, with Rybkin saying it could buy up to $1 billion of diamonds this year.
"I think that this year Alrosa will still not be able to [dispense with the Gokhran's support], but it might not need all that support," he said in comments cited by Interfax.
Alrosa head Fyodor Andreyev believes the company will be less dependent on the Gokhran for diamond sales this year.
"We've budgeted for $870 million in diamond sales to the Gokhran this year, but we are discussing the feasibility of this with the Finance Ministry because in our estimates, we'll be able to sell everything on the market fairly successfully unless there's a second wave of crisis. We'll be discussing this further at board meetings," Andreyev told Interfax recently.
