Image credit: ALROSA
(FINMARKET.RU) - The Government of the Russian Federation has increased the limit on the purchase of precious metals and precious stones to the State Fund 3.4 times as much, as it follows from the draft federal budget for the next three years, published on Wednesday after being submitted to the State Duma.
“In addition, the possibility of buying out rough diamonds from ALROSA to the State Fund of Russia in 2021 is being considered in order to minimize the negative consequences associated with the spread of a new coronavirus infection in 2020 and to support ALROSA,” the document said.
The limit for purchases for the next year is thus set at about $ 500 million. This is the minimum threshold for a deal between ALROSA and Gokhran to sell and purchase diamonds. The deal is being prepared on behalf of the President of the Russian Federation in response to the request of the head of Yakutia, who, even before the escalation of the coronavirus situation, proposed to buy out ALROSA's diamonds in the amount of $ 500 million to $ 1 billion. With the aggravation of the pandemic, Yakutia proposed to consider a purchase for $ 1.7 billion.
Now the deal can go through several tranches: for example, half of the deal’s amount - by the end of the year, while the second half - in the first or second quarter of 2021, the head of ALROSA, Sergei Ivanov said earlier. The timing and amount of such purchases will depend on the company’s needs and state of the diamond market. For example, if the market recovers in September-October, ALROSA will postpone the sale to next year, he added.
The amount of proceeds from the sale of state reserves of precious metals and precious stones from the State Fund for the next year is set at 5 billion rubles, and in 2022 and 2023 - 4.5 billion rubles.
"It is planned to sell small-sized diamonds, as well as other low-liquid types of valuables that are not of interest for long-term storage as part of the State Fund of Russia and retained their vendibility (for example, jewelry made of precious metals and / or gemstones of mass production and other types of similar valuables," the document said.
