Alrosa to Create Diamond Brand

Alrosa, the Russian diamond mining monopoly, plans to start marketing polished diamonds under its own brand sometime next year.

Vyacheslav Shtyrov, president of Alrosa, said 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 one-fifth of global production of around $8 billion.

Alrosa currently sells half of its US$1.5 billion output abroad—almost all through De Beers—and half locally, and it intends to double the size of its diamond-cutting business to US$200 million by 2005. The De Beers sales contract with Alrosa expires at the end of this year.

The new Russian brand is likely to be developed in conjunction with Kristal Smolensk, the largest diamond cutter in the former Soviet Union and developer of the “Russian cut.”

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

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, and 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. The money will be used to finance a modernization and development program.