OAO Sakha Diamond is the oldest Yakut diamond processing business. It was established on June 17, 1992 by Decree No. 272 of the President of the Republic of Sakha (Yakutia) "On Establishing Sakha Diamond Joint Stock Company" and was to specialize in the production of diamond tools and grinding powders made of industrial rough diamonds. On July 18, 2003 the Government of the Republic of Sakha (Yakutia) and Japan Auction Systems signed a trade and economic cooperation agreement. As part of this agreement, OAO Sakha Diamond started mass production of round ideal cut diamonds graded Excellent (Hearts and Arrows) from 0.18 carats to 5 carats in size in a new specially designed building of the local diamond cutting factory.
In July 2011, OAO Sakha Diamond and Sakha Diamond Corporation (Japan) signed a long-term agreement on cooperation in joint diamond sales through the Eurostar Diamond Traders Group (Shanghai). Under this agreement the parties modernized the diamond cutting process using the technological innovations offered by Eurostar Diamond, one of the world's leading diamond manufacturers with an annual turnover of about $ 1.8 billion.
Currently, the company is specializing in the production of polished diamonds, diamond tools, grinding powder and in providing services for laser cutting of rough diamonds. The operation has a manufacturing facility, warehouse and administration.
The Company had an authorized capital of RUB 540,000 at the end of the current reporting period having issued 54,000 shares with a nominal value of 10 rubles per share. Its major shareholders are Sakha Diamond Corporation - 58.84%; MIO RS (Ya) - 10%; AK ALROSA (ZAO) - 3.9%; OAO Tuymaada Diamond - 2%; other legal entities - 16.34%; and individuals - 8.92 %.
In 2012, Sakha Diamond introduced a system permitting to monitor the movement of rough diamonds in production and control labor hours, which was integrated into the overall network of Eurostar Diamond, enabling efficient production management. To monitor the process of movement and storage of rough and polished diamonds the Company is using the software produced by the Energy Scientific and Production Enterprise, while to mark rough diamonds and control technical parameters of diamonds being cut it is using the software produced by Sarin (Israel).
How rough diamonds are processed at the Company is shown in Fig. 1.
Fig. 1. Diamond processing at Sakha Diamond in 2010-2012.
The analysis of the graph shows that the yield ratio of polished diamonds in 2012 was 45.3%, which indicates a high level of technology used by the Company in cutting diamonds. In 2012, the machine pool of Sakha Diamond increased by 44 units compared with 2011.
Diamond manufacturing and sales at Sakha Diamond are shown in Fig. 2.
Fig. 2. Diamond manufacturing and sales at Sakha Diamond in 2010-2012.
The share of Sakha Diamond in the production of polished goods in 2012 reached 5.16% and is likely to increase.
In order to become a leading manufacturing company in the Republic of Sakha (Yakutia) with effective management and modern manufacturing technology, as well as the largest exporter of high-quality diamonds to China and Japan, the company plans to implement the following:
1. To sign a long term contract with ALROSA for the supply of rough diamonds in 2013.
2. To drive purchases of rough diamonds from YAPTA ALROSA to $30 million a year in 2015.
3. To increase production of polished goods from 650 carats per month in 2013 to 1,200 carats per month in 2015.
4. To reduce diamond manufacturing costs to $80 per 1 carat and reach a positive bottom line.
Yuri Danilov, Director of the Department of Subsoil Management Economics, Institute for Regional Economics of the North at Ammosov North-Eastern Federal University
