Russian diamond output stalls as new projects proposed

The Yakutia region of northeastern Russia produced cut and polished diamonds worth US$20 million in the first half of 1998.

As a result of a shortage of rough diamonds, Tuimaada Diamond, the region’s largest processor, has been polishing and cutting small stones received as long ago as last year. Yakutia’s processing industry has an annual capacity of 100,000 carats valued at US$150 million.

The region’s government blames the industry’s poor performance on high processing costs of up to US$200 per carat, poor sales owing to a lack of required licences and the absence of steady supply.

Elsewhere in Russia, three companies have announced plans to explore for and develop diamond prospects in the northwestern district of Arkhangelsk.

De Beers Consolidated Mines and local firm Soglasiye plan for a joint-venture company to spend $800 million exploring prospects in the Lomonosov diamondfield. According to Russian surveys, the region contains $12 billion worth of diamonds, 60% of which are described as gem or near-gem quality.

Alrosa, Russia’s largest producer and exporter of rough diamonds, is also looking to invest in the region. The company intends to spend $50 million to draft a preliminary feasibility study for the Arkhangelskaya and Karpinsky No. 1 pipes by the end of the year. If the pipes are deemed minable, commercial production could begin in 2003.

De Beers and Soglasiye will also have a hand in developing that project. The companies own a 27% interest in Severalmaz, the company that holds the mining rights to the project, as well as a 25% stake in Alrosa.

— With files from Interfax News Agency.