Vladimir Zboykov: New times have come for jewelers

How a personal collection of minerals was thrown on the scrap-heap, who is behind the destruction of gemstone consumption culture in Russia and why jewelers will soon have to choose between business and prison – all this was told to Rough & Polished...

Yesterday

Changing preconceptions in the diamond and financial markets

Eli Avidar is a man on the move…literally. In April, the former Israeli diplomat stepped away from the CEO’s office at the Israel Diamond Exchange, a position he had held for more than two years, and from the Israel Diamond Institute, where he had been...

13 august 2018

Chasing a dream…

Elina Chan, MD of Shenzhen Shi Qing Yu Zhubao Ltd completed her higher education from Xiamen University and Master’s degree from Hong Kong University. To achieve her dream to start a business, Elina gave up numerous job opportunities in Hong Kong and...

06 august 2018

Pangolin Diamonds using termites to find kimberlite indicators in Botswana

It is not a secret that the rate of kimberlite discovery in Botswana has dropped considerably and research has shown that termites can help diamond explorers have an understanding of the transport mechanism of kimberlite indicator minerals from the kimberlite...

30 july 2018

In another fifty years, we’ll have a different scale of valuation, and all those items of natural origin – including diamonds – will sharply increase in price

Within the framework of the Qatar-Russia 2018 Year of Culture, the World Diamond Museum hosts an exhibition of the Qatar Museums at the State Historical Museum in Moscow – "Pearls: Treasures of the Seas and the Rivers," that opened on 11 July...

24 july 2018

Soviet ‘garimpeiros’: artisanal diamond mining in the USSR

30 april 2018

Artisanal diamond mining is forbidden in today’s democratic Russia. But it was a thriving sector in the totalitarian Stalin’s USSR. What's interesting, free artisanal miners - actually, they were private entrepreneurs - mined at the same deposits where the Uralalmaz’s prisoners did. For example, in 1949, 533 artisanal miners worked at the Ural placers and they accounted for over 40% of all the rough diamond production.

What was the reason of such a tolerant attitude of the Stalin’s administration towards the free artisanal miners even after the diamond industry came under the charge of the ‘punitive’ institution in 1946 - the Ministry of Internal Affairs? It would seem that the image of a person mining rough diamonds at his own peril and risk and having only goods-and-money relationship with the government didn't fit in the Soviet ideological persuasions and was nowhere near ‘the builder of communism’. How could this strange historic paradox be explained?

To begin with, the first diamond deposit in the USSR was discovered by artisanal miners and not by geologists. Below are excerpts from the correspondence of I. Malyshev, Minister of Geology of the USSR, and N. Voznesenskiy, Vice-Chairman of the Council of Ministers of the USSR:

“Confidential. Minister of Geology of the USSR. June 28, 1947. Attention of Vice-Chairman of the Council of Ministers of the USSR Comrade Voznesenskiy N. A.

In 1937, during gold washing in the riverbed of the Yershovka River in the Chusovskoiy District, the Molotov Region, diamonds were found by the artisanal miner Kolykhmatov Afanasiy Yakovlevich. The same year, a discovery claim was made by comrade Kolykhmatov. The geological exploration crew sent in 1938 to the discovery area confirmed the presence of diamonds in the gravels of the Yershovka River, and besides, on the analogy, it found new alluvial deposits in the vicinity of the Kusiye-Aleksandrovsk settlement. A 1 000-rouble bonus was given to comrade Kolykhmatov A. Ya. for this discovery. Later on, comrade Kolykhmatov A. Ya. was awarded the Medal ‘For Distinguished Labour’ by the government. In September 1946, the All-Union Reserves Committee approved the commercial diamond reserves in the volume of 9,500 carats in the Kusiye-Aleksandrovskaya group of deposits. According to Resolution of the Council of Ministers of the USSR No.1978-832ss, the Ministry of Internal Affairs of the USSR shall start up the commercial diamond mining at these deposits. I request your permission to give a 50 000-rouble bonus to comrade Kolykhmatov A. Ya.»

“Confidential. Council of Ministers of the USSR. Resolution No.11273-rs dated August 19, 1947, Moscow. Kremlin. Allow the Ministry of Geology to give a 50 000-rouble bonus to comrade Kolykhmatov A. Ya. for the discovery of the diamond deposit. The said expenses should be made out of budgetary allocations for the geological exploration in 1947. Vice-Chairman of the Council of Ministers of the USSR N. Voznesenskiy.”

So, the discoverer priority is clearly determined. It should be noted that in 1928-1936, several geological field crews from the reputable R&D institutes in Moscow, Leningrad and Perm (then called Molotov) did diamond exploration. No success, they failed to find a single crystal. It was an artisanal miner with a 4-year school education and vast experience in gold artisanal digging who found the diamonds. And he understood at once that he had found a deposit – he delineated the resource, set stakes and filed an application. According to the laws in force at that time, he had a full right to develop this deposit. An interesting situation arose – all the diamond mining in the USSR belonged to the Kolykhmatov and Son company for some time. But there existed a grim reality of 1937 and the lucky artisanal miner decided not to tempt fate and he responded to requests of senior comrades and gave the deposit to the government for a medal. At that time, the government awards did not lose their importance yet as they did at the later stage of the USSR, and the Medal ‘For Distinguished Labour’ was of high-status. At that time, there were no special decorations for discovering deposits. The Stalin’s Prize that was later awarded for such achievements was established in 1939, and the title of honor ‘Discoverer of Mineral Deposit’ – in 1970.

Artisanal miner Kolykhmatov was quite happy with the medal and did not express any complaints or grievance. So, why did the question arose about his award nearly 10 years after his discovery of the deposit?

The matter is that in 1946, an intense work started on the preparation of the Decree ‘On the Development of the National Diamond Industry’, and at one of the meetings, Stalin asked who had discovered the first diamond deposit. It was not acceptable to tell lies to the Leader and the Minister of Geology confessed that it was discovered not by geologist but by an artisanal miner in 1937. Then there was a brief dialogue:

- Artisanal miner? Still alive? Still working?

- Working.

- Awarded?

- Yes, a medal.

- Not enough!

The minister understood the Stalin’s “Not enough!” the right way. 50 000 roubles was the money component of the Stalin’s Prize 2d Class. It was a considerable sum of money at the time. It suffice to say that Pobeda car costed 16 000 roubles. It was the first time of awarding the State Prize in the national diamond industry. And it was received by a free artisanal miner.

Thousands prisoners of the Uralalmaz worked for a ration, set of clothes and the bed of boards in a camp hut. Free artisanal miners also worked at the same deposits. For money. Huge amount of money! As back as 1941, there was a fierce dispute between People’s Commissar of Non-Ferrous Metallurgy P. Lomako and People’s Commissar of Finance A. Zverev on how much should artisanal miners be paid for the diamonds purchased from them.

The People’s Commissariat of Non-Ferrous Metallurgy worked out a special scale of evaluation to pay the artisanal miners. In particular, the rough diamond price for carat for stones weighing 1.0-1.5 carats was set at the level of 2 100 roubles (at that time, 350 roubles was the average salary in the USSR). What is more, only the weight was taken into account – the diamond imperfections and colour were not evaluated. The motives beneath the decision were given in the Lomako’s letter dated February 13, 1941 addressed to the Economic Council under the Council of People's Commissars of the USSR and it read as follows:

«1. The scale was developed for the prices to be paid by Tekhnopromimport with account of the rouble exchange rate and value appreciation due to the war in Europe plus appreciation related to the difficulty in mining and creating the artisanal miners’ interest in this business.

2. In developing the scale, the significant diamond scattering was taken into account in the known placers and diamond grades of about 0.5 carat per 100 cubic meters of gravels.”

Lomako was cunning when he said that he geared the purchase prices for the Ural diamonds to the import prices. The USSR imported low-end industrial quality diamonds, the gem quality diamonds were not imported by the USSR. In his price list, Lomako kept the imported goods evaluation scale ratios but multiplied the data by a really whopping factor, probably, to create an interest in this issue”. Such an attitude of the People’s Commissariat of Non-Ferrous Metallurgy drew sharp criticism by the People’s Commissar of Finance A. Zverev:

“The prices at which the People’s Commissariat of Non-Ferrous Metallurgy proposes to buy rough diamonds from the artisanal miners are estimated based on the current imported diamond prices multiplied by a factor of 13.5… The price scale for rough diamonds proposed by the People’s Commissariat of Non-Ferrous Metallurgy exceeds the Yuvelirtorg’s maximum buying-in prices for polished diamonds by 3-4 times for smaller stones and by 1.5-2 times for larger ones.

The People’s Commissariat of Finance of the Union of the SSR believes that the prices for uncut diamonds bought from the artisanal mines should be set with account of the existing buying-in prices for polished diamonds…” 

The People’s Commissar of Finance proposed to pay 1 300 roubles per carat. The Zverev’s scale was accepted to pay to artisanal miners. These prices were in congruence with those used by the Yuvelirtorg, and earlier by Torgsin, to buy the polished diamonds from the population (these prices were approximately 50% of the world ones) to subsequently export them to the USA and Europe. Such high prices for the Ural rough diamonds were attributed, first, to their excellent jewellery quality (up to 90% of the Ural production was suitable for the polished diamond manufacture), and second, to the lack of the technology that could allow the artisanal miners to extract small-size industrial crystals. Only in 1946, the special prizes were established by the Decree ‘On the Development of the National Diamond Industry’: 50 000 roubles for the development and introduction of the ‘carbonado’ - black diamond - capturing method and 75 000 roubles for the development and introduction of the diamond powder capturing method. Put it simply, industrial diamonds were not produced at the Ural area at that time at all. And it was not reasonable to use high-purity gem quality large diamonds, especially that the USSR had no problems at all with importing industrial diamonds in the 1930s-1950s.

Stalin considered the diamond mining in the Ural area only as the source of goods ensuring inflow of foreign currency and having high unit cost. The highest gem quality rough diamonds were in demand on the market, it was one of few goods that the USSR could export due to guaranteed and fast sales. That is why A. Mikoyan was charged with the supervision over the diamond industry; in the Political Bureau, he was responsible for foreign economic relations and all the rough and polished diamond export-import operations passed through his hands. The Vneshtorg received the first parcel of the Ural rough diamonds weighing 400 carats in September 1942.

As for the effective producers of these goods – the free artisanal miners - you have got to forgive them for their ideology. This was how two poles of the Stalin’s diamond industry – the artisanal miners and the prisoners – were formed. The Soviet ‘garimpeiros’ did diamond exploration and mining practically up to Stalin’s death and disappeared together with the ‘diamond GULAG’ (Central Administration of Prison Camps).

Sergey Goryainov, Rough&Polished