ALROSA will sell large diamonds at auctions run by Sotheby's. The company deems it important not only to have a premium to its price obtained at an auction, but also to promote its brand in the United States, Alexandra Terentyeva says in an article published by the Vedomosti Daily.
According to the company, ALROSA reached an agreement with the auction house of Sotheby's to sell diamonds manufactured by Brillianty ALROSA, as well as jewelry pieces graced with them. This was confirmed to Vedomosti by Mikhail Kamensky, CEO of Sotheby's Russia – CIS, who was present at the signing of a memorandum of cooperation between the two companies. The memorandum was signed on May 27, according to a press release of ALROSA.
In early 2013, ALROSA ran a test sale at Sotheby's (selling two diamonds) after which the company got a "very good price," says the company’s representative. Trade volumes through Sotheby's under the memorandum will so far be small, but for ALROSA it is important to have not only sales premiums, but the marketing component of the project: the United States is one of the main markets for diamonds and customers there are now more and more concerned about the origin of their stones. Since ALROSA is not well known in the U.S. market, selling gems through Sotheby's will help the company to promote its brand, the company’s spokesperson believes.
The memorandum suggests selling large diamonds and diamond jewelry pieces manufactured by Brillianty ALROSA. Gems earmarked for sale will be certified by the Gemological Institute of America (GIA), the company’s report says. Only premium segment diamonds will be offered for sale - in particular, the company is now preparing to sell a pink diamond over 10 carats in size, according to ALROSA’s spokesperson.
However, under the current law diamonds larger than 20 carats must first be offered to Gokhran and if the latter will deem some stone to be unique it will have the right to purchase it first at the market price.
ALROSA faced such a situation when its diamond of about 50 carats made for sale at Sotheby's has been recognized by the Commission of Gokhran to be unique and has not been approved to be put on the block, the spokesperson said. At the same time, the rough diamond from which it was made was not recognized to be equally unique. Now ALROSA is consulting with the Ministry of Finance and Gokhran to resolve this situation.
Brillianty ALROSA is a 100-percent subsidiary of the the diamond monopoly. The company is manufacturing diamonds of the so-called "Russian cut". Every year, ALROSA sells approximately $ 150-200 million worth of polished goods (the company’s earnings from rough sales in 2012 reached RUB 136.4 billion or $ 4.5 billion). Last March, ALROSA’s Executive Committee approved a plan to reform the cutting and polishing business. It was decided that Brillianty ALROSA will cut only large stones and the company will focus on manufacturing high-quality white diamonds and fancy diamonds. Small and medium-size diamonds will be processed by Orel-ALROSA and Kristall based in Barnaul, the company informed.
ALROSA has long been looking for a profitable way to sell not only rough diamonds but also polished diamonds of its own make. At the height of the crisis the company, then led by Sergei Vybornov, tried to develop the idea of selling large diamonds as an investment product and tried to launch a marketing program to promote such stones in team with other diamond mining companies.
Fyodor Andreev, President of ALROSA, who took the company’s helm in 2009, stressed two years later that the company’s cutting and polishing business needed a model that could generate profit.
Since then, ALROSA has been at pains looking for new clients. At the end of 2012, the company signed a long-term agreement for the supply of rough diamonds with Belgium’s Laurelton Diamonds, a subsidiary of Tiffany & Co., one of the world's largest retail chains selling top notch jewelry and luxury goods. And in April, ALROSA entered into an agreement of intent with the Shanghai Diamond Exchange, under which the parties are going to develop the principles and modalities of cooperation - in particular, meaning a possibility to organize trading in rough and polished diamonds.
