RUSSIAN GIANT ‘IMPLEMENTING’ DIAMOND DEAL WITH ARMENIA
By Hovannes Shoghikian

Radio Liberty, Czech Rep.
Dec 21 2007

Russia’s state-owned diamond monopoly said on Friday that it has
started implementing a recent agreement with the Armenian agreement
which should shore up Armenia’s declining diamond-processing industry.

Under the agreement signed in Yerevan in August, the ALROSA giant
undertook to resume supplies of Russian rough diamonds to Armenian
companies. Those supplies fell sharply in 2004 and ceased altogether
in 2006, contributing to an ongoing downturn in a sector that was
once a key driving force of Armenia’s economic growth.

The ALROSA chairman, Sergey Vybornov, said 22 Armenian diamond-cutting
firms applied to his company following the August deal but only
four of them were chosen to receive Russian precious stones. They
have already been supplied with $1 million worth of uncut diamonds,
he told reporters in Yerevan.

According to Vybornov’s deputy, Sergey Ulin, ALROSA, which mines
diamonds in eastern Siberia, plans to carry out at least $28 million
worth of such deliveries in the course of next year and could raise
their volume in 2009. He said the Russian giant, which accounts for
one fifth of global rough diamond sales, sees "optimistic grounds
for developing cooperation" with Armenia.

Underscoring the importance of that cooperation, both President Robert
Kocharian and Prime Minister Serzh Sarkisian received the visiting
ALROSA executives on Friday.

Minister for Trade and Economic Development Nerses Yeritsian said
after the talks the Armenian government will do its best to facilitate
ALROSA operations in the country. Yeritsian said the government is
also holding "active discussions" with the Russian company on the
possibility of expanding their presence into other sectors of the
Armenian economy. He gave no details.

Vybornov said in that ALROSA is negotiating with the authorities in
Yerevan over the possible of an unnamed Armenian mining enterprise.

It was not clear if he referred to the Indian-owned Ararat Gold
Recovery Company, which develops the bulk of the country’s gold
reserves.

According to government statistics, Armenian plants manufactured 25
billion drams ($82 million) worth of gem diamonds in the first half
of this year, down by 48 percent from the same period last year.

Armenia’s total diamond output dropped by over 17 percent to 93
billion drams in 2006, continuing the production slump that began in
2004. Refined diamonds have since ceased to be the country’s single
largest export and now account for just 1 percent of its gross
industrial production.

Government officials and analysts blame the sector’s decline on
a combination of internal and external factors, including falling
global demand for precious stones and the dramatic appreciation of
the Armenian dram.