Alrosa might sign 3-yr diamond contract with Tiffany
MOSCOW. Nov 28 (Interfax) - Alrosa , Russia's diamond mining monopoly, has signed a long-term rough diamond supply contract with U.S. jeweler Tiffany & Co, one of the world's leading jewelry brands, Alrosa said in a press release.
"On behalf of Alrosa the document was signed by the company's CEO Fyodor Andreev, while Andrew W. Hart, President of Laurelton Diamonds, signed it for Laurelton Diamonds," it said.
On Wednesday, the newspaper Kommersant cited sources familiar with the negotiations as saying that Alrosa and Tiffany might sign a three-year contract under which Tiffany would initially purchase at least $60 million worth of high-quality rough diamonds per year. Alrosa does not estimate the amount of rough diamonds to be sold in its official press release.
"For Alrosa it is a priority to enter into direct long-term contracts with major companies involved in the manufacturing of final products - polished diamonds and jewelry. And we are pleased that the number of our regular customers is now joined by such a global brand with a long history as Tiffany. In recent years, Laurelton was on repeated occasions among Alrosa's buyers of rough diamonds under one-off contracts. The signing of a long-term agreement will make our partnership permanent and serve to increase the supply of diamonds to Tiffany," Andreev is quoted as saying in the press release.
Alrosa is interested in attracting new clients from among global jewelry makers, which would guarantee diamond purchases, including during periods of weak prices for rough and cut diamonds. Most high-quality diamonds are currently sold on the domestic market, with some resold by Alrosa's Russian clients, Kommersant reported. Alrosa is prepared to redistribute sales of high-quality rough diamonds in favor of new clients as current long-term contracts expire, the paper reported its sources as saying.
Nearly half of Alrosa's long-term agreements with clients expire in 2013.
Alrosa, Smolensk diamond cutter Kristall and Tiffany in 2005 discussed the possibility of a joint jewelry brand, developing a collection with Russian cut diamonds under the Tiffany brand. Alrosa's former chief executive Sergei Vybornov said in mid-2008 that the company had begun to sell rough diamonds to Tiffany directly, but the amounts were small. Later, Tiffany also limited itself to one-off purchases of Alrosa's product.
Laurelton Diamonds, a subsidiary of Tiffany & Co founded in 2002, purchases rough diamonds for further cutting and subsequent transfer to Tiffany. It has its own diamond cutting facilities located particularly in Belgium, Vietnam, Mauritius, South Africa, Botswana and Namibia.
Alrosa now has 35 long-term clients who buy diamonds in standard lots and boxes during monthly trading sessions. On its website, Alrosa discloses information only about 24 clients, including Chow Tai Fook, the leading jewelry manufacturer in China, with which Alrosa signed a two-year contract in November. Some clients have not authorized publication of information about themselves.
Alrosa's Russian clients include Kristall of Smolensk, Ruiz Diamonds, Yakutia's EPL Diamond and Mosalmaz, which is owned by state company Almazjuvelirexport, through which Alrosa by law sells control batches of rough diamonds.