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Valery Rudakov: I hope this crisis will not last for more than two years

02 november 2009

Valery Rudakov, Chairman of the Committee for Support of Entrepreneurship in Mining and Production of and Trade in Precious Metals and Gems of the Chamber of Commerce and Industry of Russia, answered the questions filed by Rough&Polished.

The head of Gokhran said that his agency will buy $3 billion worth of diamonds from ALROSA in 2009 – 2010. What is your opinion of this decision?

I think this decision is correct. The role of ALROSA for this country as a whole and for Yakutia in particular is extremely important; this company should not be ruined. The support rendered by the state has allowed the company to launch a new underground mine in due time – so the company has a future. And the money taken from the national budget and Gokhran will not be gone – the state is buying strategic goods which can be sold with profit when the crisis will be over and the need for diamonds will start to increase. Therefore, I am convinced there will be no harm for the country and Gokhran if the latter will beef up its diamond stock in the nearest three or four years.

The rough market is often criticized for insufficient transparency. In particular, the pricing policies of major diamond-mining companies are still not open to public as well as their price-lists. Do you think price-lists for rough diamonds if patterned after those issued for polished diamonds can partly remove this problem?

I am in support of maximum transparency in the diamond market and I believe that any movement in this direction is positive. The example of the Kimberley Process proved to everyone that openness is an effective tool protecting against illegal mining and smuggling and preventing penetration of criminal and terrorist elements into the diamond industry. In Russia, cancelling of many diamond industry secrets inherited since the Soviet time was favorable for market development. As for pricing, today it is governed by competition. Formerly, prices set by De Beers for their sightholders were actually world prices, being some kind of analogue to the London fixing for gold. No price-list was published, but all the buyers knew the prices. Now any agreement between major diamond miners on some uniform principles in marketing policy or on some kind of uniform price-list appears to be problematic since the market is functioning in a competitive environment. Therefore, promptly published information about price movement for rough diamonds based on real transactions could be a useful reference point for market participants and contribute to market transparency. But only provided that such a tool will not become a means of price manipulation in favor of some player.  

Could you give your forecast as to the time of recovery in the diamond industry?

I hope this crisis will not last for more than two years. The governments of economically advanced nations are taking adequate measures to overcome the crisis, and these measures are expected to be a success. Everything will straighten out and prices for rough diamonds will recover since the opportunity to buy polished diamonds is an indicator of people’s living standard. What can match the noble pleasure of true men to give wonderful jewelry pieces as gifts to true women?

Galina Semenova, Rough&Polished, Moscow