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. Last Updated: 07/27/2016

Russia Extends Gem Deal With De Beers for 3 Years

LONDON -- South African diamond giant De Beers and Russia's biggest diamond producer Alrosa said Friday that they agreed to extend a key trade agreement between the two companies for at least three years.

Under the current agreement, due to expire on Dec. 31, Alrosa, which produces virtually all of Russia's diamonds, sells some of its production to De Beers.

"The parties have formed a joint working group that will prepare documents necessary for the extension of the trade agreement," the companies said in a joint statement, adding that the group started work Friday.

Earlier this week, Alrosa, or Almazy Rossii-Sakha, said a supervisory council, representing the governments of the Russian Federation and the Republic of Yakutia in eastern Siberia, had approved extending the current agreement in place since October 1997.

The supervisory council decided that extending the agreement would allow further integration of the Russian diamond complex with the international market.

In addition, the extension would maintain stability on international markets, and allow for an increase in diamond prices and for greater contributions by Alrosa to Russia's budget as a result of its trading activities, Alrosa said.

Alrosa has already agreed this year to sell a minimum $550 million worth of diamonds through De Beers, out of a planned production of $1.5 billion.

But analysts have said the actual amount to be sold through De Beers this year was likely to be much higher, possibly around $1 billion.

De Beers controls some 75 percent of the world's uncut diamond market through its central selling organization.