Russian/De Beers Trade Agreement Imminent

December 11, 2001

Russian/De Beers Trade Agreement Imminent

Alrosa, Russia's diamond monopoly, and De Beers will sign a new trade agreement within the next week, a highly placed Alrosa source told the BBC Monitoring Service.

The agreement will reportedly supply De Beers with fewer diamonds – $ 4 billion over five years – than the previous pact, which parceled out $3.5 billion over four years. "It is highly important that a much larger amount of diamonds will be processed here in Russia," said Vyacheslav Shtyrov, Alrosa's chief, at a news conference convened by Russian President Vladimir Putin.

However, at the same press briefing, Finance Minister Aleksey Kudrin said, "The mutual relationship with the world's biggest producer and supplier, the De Beers company, which sells diamonds, is for us of principal importance." Kudrin also said the new agreement should determine relations between the two companies on issues of extraction, processing and export.

For the first time in 40 years, the Russian government will not be a party to the agreement between Alrosa and De Beers, paving the way for the companies to decide more matters free of state interference. "Obviously, the state cannot remove itself from regulation in the industry. Now, however, it is no longer a direct party to this agreement ... an important and sensitive detail is to be able to find a measure of how to retain the influence of the state and at the same time, give freedom to the market," said Shtyrov.

– by Peggy Jo Donahue

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