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. Last Updated: 07/27/2016

Diamond Firm Plans To Go Transnational

Russia's biggest diamond producer and the official exporter of rough stones, Almazy Rossii-Sakha, announced Monday its plans to become a transnational corporation, similar to South African diamond group De Beers.

"We want to have the basic traits of the companies we deal with on the world market. Our scheme of operation will be similar to that of De Beers," the company's deputy president Vyacheslav Shtyrov said.

Almazy is setting up a unified selling organization, analogous to De Beers' London-based Central Selling Organization, which will have branches in world diamond centers like Tel Aviv and Antwerp, Shtyrov said. The company has four sales branches in London, Moscow and Russia's Yakutia republic.

"The sales network is one of the most important items for us. If we manage to create a network of sales departments in major world diamond centers, I am no longer sure what the next agreement with De Beers will be like," he said.

Last month Russia and De Beers hammered out an agreement, making De Beers the sole legal buyer of all Russian rough stones and recognizing Almazy as the sole exporter.

The deal will be finalized by a trade accord between the two companies later this month. It allows Almazy to control De Beers' buying prices, as it assumes that Almazy sells part of its output independently on world markets in proportion to what it sells to De Beers. It can now sell up to $170 million worth of diamonds this way.

The company is spreading its interests abroad and is involved in diamond mining projects in Angola and Namibia and in a gold project in Mongolia.

Almazy ended last year with a pre-tax profit of 3.29 trillion rubles ($685 million), and it expected to make a profit of 3.15 trillion rubles in 1996. The decline will be due to the launch of a new ore-processing complex.

Almazy plans to produce and sell $1.350 billion worth of diamonds this year, just below last year's $1.384 billion. It will invest 1.38 trillion rubles in its own development. It also plans to set up financial-industrial groups with Russia's major diamond cutting plants. It owns a big share in Yakutia's Tuymaada Diamonds complex and manages the regional government's share in it.

Shtyrov said bringing domestic prices for cutting plants to the average world level would prevent them from shipping rough stones abroad semi-illegally for cutting and polishing.

Shtyrov said Almazy considered issues of bonds and shares in affiliates, but it was cautious about letting in outside investors.

Employees own 23 percent of the firm. The Russian federal government owns 32 percent, 32 percent belongs to the Yakutian government and eight percent are owned by eight regions where the company is operating. Five percent are registered to a fund for military service support.