Russia Threatening to Leave De Beers

In one of their strongest statements to date, representatives of the Russian diamond industry indicated they may no longer sell to De Beers when their current contract with the company expires next year.

“After 40 years in the diamond business, Russia has grown out of children’s shorts and understands how to sell diamonds so as not to harm the market or our own interests,” Valery Rudakov, head of Russia’s gem reserves, recently told the Associated Press. Another Russian official told the AP it was time for Russia to go “on its own.”

Rudakov, however, says the country may retain some ties to De Beers, and he even raised the possibility that Russia might acquire a stake in the Diamond Trading Company division of De Beers.

A totally independent Russia-considered the second-largest diamond producer in the world-would be a blow even to the post-CSO De Beers. Some noted, however, that the Russian statement came prior to the World Diamond Congress in Antwerp, a time when Russian officials have made noises in the past. And Russian officials who represented diamond producer ALROSA at the Antwerp meeting expressed skepticism about the recent statements.

De Beers spokesmen noted that Russia was a long-standing partner of the company, with a relationship that dates back some 40 years.

Under its current contract, Russia sells only 50% of its mined output to De Beers, and the rest goes to local cutters. Officials say, however, that the current contract is stunting the local industry’s growth.