ft...4 nov 98 Russia welcomes diamond deal with De Beers
By Arkady Ostrovsky in Moscow
The cash-strapped Russian government has welcomed a marketing agreement signed between Almazy Rossii-Sakha (Alrosa), the country's largest rough, or uncut, diamond producer, and De Beers of South Africa.
The deal, worth $80m to $100m a month depending on marketing conditions, extends for three years an agreement with De Beers to market Russian diamonds.
It is particularly important for the Russian government, which owns 32 per cent of Alrosa and which is running a huge budget deficit.
Russian diamonds make up about a quarter of total sales by De Beers' London-based Central Selling Organisation, which, in turn, accounts for more than
60 per cent of world trade in rough diamonds.
Yevgeny Primakov, the Russian prime minister who met De Beers in Moscow, said Russia was interested in long-term co-operation with the South African cartel.
"We are working on a very important territory for us and considering your position in this field, we are interested in our further co-operation," he said.
Under the deal, Alrosa agreed to sell at least $550m of diamonds a year - half its output - through De Beers. It can also sell 5 per cent of its diamonds on the international market independently. The two sides will set up a watchdog to monitor the implementation of the agreement and prevent "leakages" of diamonds from Russia through unofficial channels.
The agreement follows disagreements that peaked in January 1997 when De Beers stopped formal arrangements with Russia after 40 years. Viacheslav Shtyrov, president of Alrosa, which produces 98 per cent of Russian rough diamonds, said it was this year's most important event for diamonds.
Demand for diamonds has been badly hit by the Asian financial crisis this year and Nicky Oppenheimer, chairman of De Beers, said: "In the present conditions of destabilisation of the world diamond market, only joint efforts by large diamond producers can settle the situation."
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