Alrosa, De Beers Rough Diamond Sales in Limbo
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18.01.09, 10:27
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Mining
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The formal expiration of the last diamond trading agreement between De Beers and Alrosa on December 31 puts future sales in limbo, according to Moscow industry sources.
This is not the same thing as the embargo on trade, which De Beers has promised the European Commission (EC) in Brussels, nor a prohibition on diamond sales, which the EC attempted to impose in its ruling of February 22, 2006. That ruling was appealed by diamond miner Alrosa to the European Court of Justice.
In July of 2007, the court decided that the EC lacked the power to order the ban, and ordered the EC to pay Alrosa's costs.
At the time, Alrosa CEO Sergei Vybornov had said "there is a weight of legal possibilities to continue work with De Beers, if it wants to buy diamonds from us."
The lifting of the EC prohibition in 2007 allowed, in theory, for Alrosa and De Beers to agree on sales of between $275 million and $400 million worth of rough diamonds in the year that has just ended. Exactly how much was sold and bought has not been disclosed by either side.
An Alrosa source told PolishedPrices.com that so far this year there has been no transaction between the global diamond giants.
"I know we didn’t sell any rough diamonds to De Beers, as there were no applications from their side."
He added that fixing a transaction price is difficult. "The world price is as yet undefined, and nobody is buying now. Diamond sales have dramatically fallen and stocks are very large – both in polished and in rough."
Alrosa said it is currently not selling into the commercial market at all. "We now sell only to Gokhran (state stockpile agency). This is to make sure the price does not go any lower. The move is for more than two, perhaps three months. For the time being we will not sell to anyone," it said.
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By: PolishedPrices
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