October 23 is the Day of the Jewelry and Diamond Cutting Industry in the Republic of Sakha (Yakutia). Businesses in both sectors have achieved significant success.
Diamond-cutting cluster
The Ministry of Economy and Industrial Policy of the Republic of Sakha (Yakutia) is pleased to congratulate all the diamond cutters on the remarkable date - the 20th anniversary of the diamond cutting industry in the Republic of Sakha (Yakutia)!
October 23, 1992 can safely be called the start of cutting industry development. On this day, the Suntar Diamond Cutting Factory polished the very first diamond weighing 0.27 carat.
During its existence the industry has undergone great changes. Businesses came and went. Among those which remained were the companies keeping stable on their track and committed to their work.
The diamond cutting cluster was created in Yakutia in the course of 20 years. Now it includes an association of companies and organizations whose activities facilitate effective development for the diamond cutting industry. This cluster consists of mining companies, polishing factories, jewelry companies, research institutes, educational institutions, ministries and departments representing the industry at various levels.
Within the frames of clusterization we train specialists for our enterprises; the Institute of Physical and Technical Problems of the North named after Vladimir Larionov is engaged in research of physical properties of diamonds, while the North-East Federal University named after Maxim Ammosov and the Institute for Regional Economics of the North study the diamond market.
Yakut diamonds are highly valued in the international market. This is confirmed by high and rapidly rising production figures. Diamond cutting companies – OOO NPK EPL Diamond, OOO Yakutskaya Almaznaya Kompania and OOO Choron Diamond - became members of the international diamond exchanges in Israel and Antwerp. Yakut diamonds are sold worldwide.
The industry produced $2.1 billion worth of diamonds over 20 years of its existence. Yakut diamond manufacturers account for 23% of the total amount of polished diamonds produced in the Russian Federation. Diamond cutting factories paid more than 1.1 billion rubles in taxes at all budget levels from 2005 to 2011. There are 10 major factories in the Republic of Sakha (Yakutia): OOO NPK EPL Diamond, OOO Yakutskaya Almaznaya Kompania, OOO Choron Diamond, Diamond Cutting Workshop of GUP Komdragmetall RS (Y), OOO DDK, OOO Kristall 99, OOO Tunalgy, OOO Sata, OAO Sakha Diamond and OOO Pokrovsky Granilny Zavod.
2011 turned out to be very successful for diamond cutters. The factories have significantly boosted their diamond production and sales. Only in the first nine months of the current year they manufactured $197 million worth of diamonds, which is 5% up to the last year. According to 2011 estimates, Yakutia’s polished goods will reach $215 million in terms of value or 15% higher than in 2010.
Polished sales in the first nine months of this year generated $233 million, up 24% over the last year. According to estimates for this year, polished sales will reach $270 million, a 44% increase vs. 2010.
Most of Yakutia’s diamonds – over 60% - are exported to Belgium, Israel, the United States, China and other countries. High export rates were achieved by OOO NPK EPL Diamond, OOO Yakutskaya Almaznaya Kompania and OOO Choron Diamond.
The diamond cutting industry today is faced with a task to increase the production of diamonds, expand its distribution network of finished goods and increase the processing of rough diamonds on the territory of Yakutia.
Jewelry business
The jewelry industry appears to be the main consumer of gold and diamonds mined in the world. Currently, annual sales of diamond jewelry exceed $65 billion a year. Over the past 50 years the global jewelry industry grew at a pace of 2% per year.
In Russia, today there are about 20,000 jewelry companies, of which about 10% are large-scale businesses. Nevertheless, this country’s share in the global jewelry market is just a bit over 4%, indicating considerable capacity for further development. The Republic of Yakutia accounts for 67.4% in the total amount of jewelry produced in the Far Eastern Federal District.
Currently, Yakutia’s jewelry industry line-up features such companies as OAO AK Zoloto Yakutii, OOO Sahayuvelir, OOO EPL Yuvelir, OOO Dragotsennosti Yakutii, OOO UK Zvezda Yakutii, OOO Saha Taas. Among the successfully developing companies there are OOO Yakutskaya Almaznaya Kompania, IP Yegorov, UF Uran Sakha, Ohuor-Utum, and UF Simeh. There are companies providing jewelry repair and manufacturing services like OOO Kierge, as well as a number of jewelry workshops. In May this year OOO Pokrovsky Granilny Zavod started to manufacture jewelry. OAO Sakha Diamond and OOO Kristall 99 plan to begin jewelry production (from scratch). OAO Nyurbinsk Yuvelirno-Granilny Zavod is to resume its production.
The key economic metrics of production activity displayed by the jewelry companies reflect a positive trend. The companies paid more than 126 million rubles as taxes in 2010 generating a profit of more than two million rubles. These jewelry enterprises are cost-effective.
The positive dynamics in jewelry production continues in the current year, as evidenced by the performance of the jewelry enterprises in the Yakut Republic for nine months. Jewelry production in January-September 2011 amounted to 463.9 million rubles, being only 12% down compared with one year ago despite the rise in prices for gold and transition of jewelry companies to manufacturing more marketable jewelry made of silver. Jewelry sales reached 601.6 million rubles, up 4% to 2010. The share of individual entrepreneurs in the total production of jewelry is 2% of the total output.
Jewelry production in 2011 is expected to reach 1.140 billion rubles.
Jewelry production in Yakutia is based on centuries-old traditions of folk craftsmen. Now Yakutia’s jewelry factories unite professionals who create highly artistic products which won recognition not only in Russia but also abroad.
Jewelry is sold in Russia and across the CIS countries. The companies plan to expand their retail network and enter the international market.
Planned organizational work is underway to strengthen the image of the Republic of Sakha through participation of its jewelry enterprises in various exhibitions within the frames of the general stand, "Jewelry of Yakutia." Thus, at the JUNWEX Moscow-2011 International Jewellery Fair Yakutia was represented by 12 exhibitors. They used a single stand, "Jewelers of Yakutia," to showcase a wide range of goods - more than 3,000 jewelry items of classic and contemporary design and exclusive jewelry pieces with inserts of Yakut diamonds, rubies, sapphires, emeralds, garnets, beryl, amethyst and other gemstones. Also presented were certified diamonds, which according to customers’ orders could be set into jewelry on the spot. Silver products manufactured in traditional style attracted unabating interest.
Yakutia’s companies signed 40 contracts for selling jewelry and diamonds wholesale through retail networks in Moscow and in the Moscow Region, Yekaterinburg, Sakhalin, Magadan, Kamchatka, Volgograd, Anapa, Kursk, Yaroslavl, Nizhny Novgorod and other Russian provinces.
Yakut jewelry goods are recognizable and enjoy high demand from customers. If there is a favorable economic background - low inflation rate, rising living standards, support for the jewelry industry at the state level - there is every reason to believe that the jewelry industry will take its rightful place in the national economy.
Supported by the state
Creating an attractive image of the company, inviting demand and managing it appear to be a shared concern of the executive authorities of Yakutia, its trading and manufacturing businesses. In order to maintain the diamond cutting and jewelry industry the Government of the Republic of Sakha is assisting companies to take part in exhibitions through partial or full payment of exhibit space and is working with federal departments and agencies, the Council of the Federation of the Federal Assembly of the Russian Federation to improve the regulatory framework in the diamond complex and jewelry industry.
Improving the legal environment is the biggest and most complex job to be done. The Republic of Sakha (Yakutia) has put forward many initiatives in this direction, which are supported by the Jewelers Guild of Russia, PO Kristall (Smolensk) and several other Russian companies. The industrial legislation is obsolete; it is burdened with many directive-restrictive rules which are the legacy of the Soviet time. Yakutia’s government has prepared a package of proposals to improve the legal framework of the Russian Federation, which aims to create economic, social and legal conditions for stabilization and rapid development of high-tech and cost-effective diamond-cutting and jewelry production, ensuring competitiveness of jewelry goods in the Russian and world markets.
In early 2011, there were several meetings in Moscow at the office of Vyacheslav Shtyrov, Vice-Chairman of the Federation Council of the Federation Assembly of the Russian Federation, attended by the representatives of Yakutia’s government and diamond-cutting companies. The meeting addressed Yakutia's government bill on the turnover of precious metals and stones.
In addition, work is underway to establish a special economic zone (SEZ) to produce diamonds and jewelry in the Republic of Sakha (Yakutia) and open a specialized customs terminal (section) in Yakutsk. The SEZ will enjoy tax and customs privileges. This will allow the diamond cutting enterprises in Yakutia to successfully compete with other producers of diamonds. It is planned to increase the production of diamonds to $377 million or 75% up to the estimate of 2011.
The Ministry of Economy and Industrial Policy of the Republic of Sakha (Yakutia) congratulates all the jewelers and diamond cutters working in the Republic upon the Day of Jewelry and Diamond Cutting Industry in Yakutia and is confident that the task facing the diamond cutting and jewelry industries will be successfully solved!
Mikhail Osipov, Minister of Economy and Industrial Policy of the Sakha Republic (Yakutia)
