Alrosa plans to create its own diamond brand

Alrosa, the Russian diamond mining monopoly, plans to start marketing polished diamonds under its own brand some time next year, the Financial Times (FT) reported Friday.

Vyacheslav Shtyrov, president of Alrosa, said in London this week that the creation of a new brand would be Russia’s contribution to the diamond industry’s campaign to raise its profile. Russia is the second-largest source of diamonds in the world, accounting for a fifth of global production of around $8 billion, FT reported.

Mr Shtyrov joked that, since the bear is a traditional Russian symbol, Alrosa would have to fight Canada, which markets its diamonds with a polar bear, for the right to the ursine brand, FT reported.

Alrosa, which sells half its Dollars $1.5 billion output abroad, almost all through South African giant De Beers, and half locally, intends to double the size of its diamond-cutting business to Dollars $200 million by 2005, FT reported.

The new Russian brand is likely to be developed in conjunction with Kristal Smolensk, the largest diamond cutter in the former Soviet Union, FT reported.

The new brand would not compete directly either with the “Forevermark”, the trademark for rough diamonds sold by De Beers’ marketing arm, the Diamond Trading Company, or with the diamond jewelry which will be marketed under the “De Beers” brand by its new joint venture with LVMH, FT reported.

The De Beers sales contract with Alrosa expires at the end of this year. Mr Shtyrov said that Alrosa’s detailed discussions with De Beers over a new contract were likely to start next month, once the Russian government’s diamond committee has set the parameters some time this month, FT reported.

Mr Shtyrov said that it was likely that the majority of its exports would continue to be channeled through De Beers, FT reported. He expressed surprise at some media reports suggesting that Israeli diamond entrepreneur Lev Leviev, who has a stake in Catoka, an Angolan diamond mining company, alongside Alrosa and the Angolan government, could win a substantial portion of the Russian diamond sales currently channeled through De Beers.

Alrosa is hoping to raise some $650 million in international capital markets in the first quarter of next year, up to $ 300 million in bonds, the rest in a variety of ways. This would be part of a $2.5 billion five-year financing requirement, with the remainder coming from the company’s own resources, FT reported. The financing is designed to allow a modernization and development program.