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A few thoughts about subsoil mineral resources

28 may 2018

On April 5, a roundtable was held at the Federation Council of the Russian Federation Federal Assembly ‘On the validity of introducing criminal liability for unauthorized development of subsoil resources and de facto stealing of precious and semi-precious stones from the state causing serious damage during their extraction’.

Here, it should be stressed that while considering any issues regarding the toughening of liability for ‘unauthorized development of subsoil resources, etc.’, it is first and foremost necessary to have an understandable and intelligible legal procedure for such development of subsoil resources. At present, there is no such a procedure in the Russian Federation.

The Subsoil Law of the Russian Federation that has been in effect from the early 1990s (Order no. 84 dated 19.05.1994) provides for three types of licensing: licence for mining, licence for exploration and licence for collecting.

At present, the only type of licence available for use by the gemstone industry is the licence for collecting because, in the first place, most sites that are of interest in terms of raw gemstone materials do not have the rank of a deposit at all and, secondly, the deposits with estimated reserves are not profitable because investments in the preparation for mining and building the appropriate infrastructure are ten times higher compared with any profit expected.

From 2010, according to the new orders (No. 551 dated 17.12.2010), it is forbidden to declare ‘commercial use’ as the purpose of collecting, and these orders specify that this type of licence cannot be issued for ‘precious and semi-precious stones’, which in fact made it impossible for all small-scale businesses to legally acquire Russian gemstones. It turns out that the body granting licences (the Russian Federal Agency for Subsoil Use or for short, Rosnedra) uses the All-Russian Classifier, where, for example, aquamarine, alexandrite, amethyst, jadeite, emerald, morion, ruby, sapphire, topaz, chrysolite, chrysoprase, chrome diopside and rock crystal are attributed to ‘precious stones’ under the All-Russia Classifier of Raw Minerals and Underground Waters 1450211.

Those who compiled the All-Russian Classifier, of course, heard nothing about the Federal Law ‘On the precious metals and precious stones’ because they, probably, live on some other planet. But it is strange that the officials issuing licences were not aware of it, as they seem to stay on this planet together with us.

By the way, the licences for extracting fossil ivory are granted without any trouble. It is interesting that these are licences for ‘collecting collectible materials’. Personally, I do not understand what kind of relation there is between those tons of fossil ivory and the collectible materials, as fossil ivory is a typical raw material used to make handcrafted goods?

Over the last two decades, Russia saw the emergence of a market of raw gemstone materials involving over 500,000 persons, according to some estimates. It is worth mentioning that most of these people want to work legally and follow clear rules. The existing strategy to curb the illegal activities in the field of raw gemstone materials without any preliminary elaboration of legal ways for such activities is wrongful as it puts all the market stakeholders – except state-owned businesses - outside the legal field.

It is also worthy to note that any way of mining large amounts of raw gemstone materials without a smart sales policy can cause a global price collapse in the world market, as these materials are not industrial and the demand for them is limited. This is what we witness in recent years – a sharp decrease in prices (several-fold) for amber and jade due to large supplies of these gems to China, the major consumer of amber and jade in the world.

Based on the above, three conclusions can be made:

1. It is necessary to amend the Subsoil Law of the Russian Federation. And the sooner, the better.

2. It is necessary to strictly regulate all the terminology, especially that relating to the ‘precious’ (subject to the separate law of the Russian Federation) and ‘semiprecious’ stones. In this case, “entities are not to be multiplied without necessity.”

3. The state-owned corporations that entered this market should not behave like an elephant in a china shop and they should better have consultations more often with the real experts in this field, rather than with ‘managers from Oxford.’

Dmitry Lisitsin for Rough&Polished

Dmitry Lisitsin
is the Chief of the Exposition Department at the Samotsvety Museum (Gemstones Museum), which is a federal state-funded institution. He also is an expert in the field of mineralogical materials at the Ministry of Culture of the Russian Federation.


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