Russia, De Beers Sign Diamond Trade Deal

Russia’s diamond monopoly signed a long-awaited trade deal with South African cartel De Beers, opening the way for exports of large quantities of Russian diamonds. Under the agreement, De Beers will buy at least $550 million in rough gem diamonds from Russia--or about half the country’s annual output--in 1997 and 1998. For the other half, diamond monopoly Almazy Rossii-Sakha will let Russian cutters choose the best quality gems, then sell the remaining unwanted stones to De Beers. The outlines of the new deal were approved last year, but the agreement was held up, mostly by bitter infighting on the Russian side. Previous agreements have brought little joy for De Beers, which has complained for almost four years that Russian rough diamonds were being exported to cutters and polishers outside its Central Selling Organization, depriving the cartel of many higher quality gems. Besides half of Russia’s annual output, the agreement gives De Beers access to large diamond stockpiles, so the cartel’s purchases may be much higher than the $550-million minimum. Almazy and De Beers officials refused to disclose the upper limit of what De Beers is allowed to buy.