The Alrosa VP speaks about human rights language, marketing, and—of course—synthetics
At this year’s JCK show in Las Vegas, Andrey Polyakov (pictured), the vice president of Russian diamond producer Alrosa who recently took over the World Diamond Council (WDC), spoke with me about his plans for the WDC, which represents the industry in front of the Kimberley Process. Here, he speaks about whether the KP will ever include human rights language and just what Alrosa thinks about synthetics.
JCK: Recently, the WDC attempted to mediate the ongoing dispute between the United Arab Emirates [the current KP chair] and the civil society coalition. Why did that fail?
Andrey Polyakov: I understand and respect the position of the NGOs. Yes, we do have valuation problem. The [UAE] KP chair organized a valuation seminar before the KP intersessional. There were a lot of interesting questions there. The big issue, that I think everyone agreed on, is that the weakest part of the chain is artisanal mining. In my opinion, the World Diamond Council, the civil society coalition, and the Diamond Development Initiative can create a road map for African governments where artisanal mining takes place.
Both the NGOs and the KP chair are doing a great job. I don’t want a situation where one of the diamond centers will start a fight with NGOs. It is useless, and everybody will lose. We want a positive agenda.
JCK: Speaking of that, the KP chair had pointed things to say about the NGOs at the intercessional.
Polyakov: Right now, there is too much emotion. We need to focus on the common agenda that we do have. My mission is to try and provide an opportunity for communication.
JCK: Does the NGO boycott hurt the KP?
Polyakov: The absence of any observers hurts the KP. The NGOs remain involved in KP’s everyday workings, in working groups, in conference calls, in review missions. We should find a way to get them back to full participation.
JCK: Do you think the KP will ever enact so-called human rights language?
Polyakov: The idea of the KP was very narrow: to create a platform or mechanism to stop conflicts fueled by diamonds. The mission has been completely accomplished. There is only now an issue in Central African Republic.
Do we need to talk more inside the industry about how to provide confidence in all spheres—labor rights and human rights and child labor? Of course we should. We as an industry should provide more guarantees to the final consumer. But that is the industry’s responsibility.
JCK: So you don’t think there will be human rights language?
Polyakov: The KP is like the United Nations, there are a lot of different opinions. It is better to go forward efficiently. The KP is the KP, with a narrow mandate: to prevent conflict that may be fueled by diamonds. The industry is the industry. Mostly, consumer confidence is the industry’s responsibility. We need to convince governments that we can self-regulate and guarantee that our supply chain is transparent.
JCK: The WDC has hired a PR agency. What will that do?
Polyakov: That is meant to provide efficient communication with our stakeholders. My personal experience, with the intercessional, is that there are a lot of misunderstandings because of lack of communication. Sometimes you need professional advice to deliver important industry information. A lot of people don’t understand the whole supply chain, why we need allocations, why we can’t just sell from mine to retail, why that is technically impossible. We should be communicating professionally with all stakeholders.
JCK: Putting on your Alrosa hat, some say that while De Beers, Rio Tinto, and Dominion all do individual promotional work, Alrosa does relatively little. Will that ever change?
Polyakov: We went public in 2014, so we have shareholders. Our strategy is quite simple: We are professional miners. Marketing a brand from Russia is very expensive. We do have a mandate to our shareholders to carry out the strategy we discussed in 2014.
Potentially, we may do some exercises that provide assurances as to the origin of our diamonds. We have found that may be commercially interesting. But that is not our core business. If we do it, it will be step-by-step. Our current strategy is simple but efficient.
JCK: Has the diamond market recovered from last year?
Polyakov: Let’s look at what happened last quarter. In 2015, I believe we were caught between forecasts and reality. Manufacturers thought that retail would continue to grow the same way as it did in 2014. But then we faced problems in China, and manufacturers overstocked. But the producers [cut back] supply, and exports from the stock of India manufacturers increased, and that had a beneficial psychological effect. When all the manufacturers saw the first positive signs, I’m sure they thought that producers might increase prices and they started to buy more.
I think that boom is over. My forecast is we will see a stable but positive year. But that is the rough and polished side of the business. We can’t predict what will happen with synthetics or the generic marketing campaign.
JCK: Speaking of which, how does Alrosa look at synthetics?
Polyakov: We’ll see. The only way is to divide the market. Some people buy and wear Swarovski crystals. Why not? The same will go for synthetics. The problem is illegal mixing of natural and synthetic diamonds. We are trying to do what we can, by providing detection technology, and providing a separate transparent supply chain for manufacturers and retailers.
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