Israel to Get Rough Diamonds From Russia, Angola

May 2, 2005

Israel to Get Rough Diamonds From Russia, Angola

At a meeting on April 28, Israel's Minister of Industry Trade & Labor, Ehud Olmert, and Russian Minister of Transport & Communication Leonid Reiman reached agreement on foreign trade issues that included diamonds. Reiman accompanied Russian President Vladimir Putin on his visit to Israel last week.

The two ministers agreed Russian state diamond company Alrosa would sign an agreement at an Israel-Russia joint economic committee meeting in Moscow in June that will mean a direct supply of rough diamonds to selected Israeli diamond merchants, without middlemen, according to Globes, an Israeli business news site. The supply of rough diamonds from Russia to Israel is a strategic interest, said Olmert, and this was backed by Putin.

The two ministers also reached agreement on foreign trade credit lines and reciprocal investment protection. Olmert heads the Israeli party at the Israel-Russia joint economic committee, and Reiman the Russian party.

Globes also reported last week that Russian state diamond company Alrosa and Dan Gertler Israel, the DGI Group, will begin marketing to Israel diamonds from Angola's Katoka mine this month.

Alrosa and Israel's largest diamond exporter Lev Leviev jointly own the Katoka diamond mine, which is expected to export $250 million worth of diamonds a year to Israel. Angola's total diamond exports are estimated at $1.5 billion a year.

Alrosa and Gertler will also cooperate in developing Angola's diamond mines, under an Angolan government liberalization program and allocation of diamond marketing franchises among several companies. Gertler is considered Leviev's strongest competitor in Africa, alongside Benjamin Steinmetz.

Sunland Mining is one of the three companies chosen to market Angolan diamonds since the government abolished the state monopoly last month. The other franchisees are Sodiam International and Yakson. Neither company is believed to have Israeli partners.

Alrosa's decision to market Katoka diamonds in Israel means another new source of rough diamond for Israel, and the first of its kind. By marketing Angolan diamonds in Israel, DGI is greatly strengthening its position as a leading source of rough diamonds. DGI previously had a monopoly on the export of diamonds from the Democratic Republic of the Congo. Although the monopoly was cancelled two years ago, DGI is still a major player in the Congolese diamond market.

Diamond industry sources say that the tightening ties between DGI and Alrosa are likely to spread to the Congo. Gertler and DGI declined to comment on the report.

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