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It may be a classic case of the right hand not knowing what the left is doing. But, perhaps in an unguarded moment , the Russian government disclosed , for a brief moment, its intentions to become the true leader of the global diamond industry. Currently accounting for some 17 percent of the world rough diamond production, and possibly sitting on billions of carats of mineable diamonds, still underground, Russia wants to upgrade from a leading diamond producer to promoting diamond and jewellery manufacturing in the domestic market. Meanwhile, however, the Russian government’s control over diamond production and manufacturing is conducted almost like in the days of the iron curtain, with elements of secrecy and possibly old world tactics, which have obstructed its growth and transition as an international world leader, excelling in diamond manufacturing and marketing.
By: Diamond World News Service
Aug 3 2013 3:34PM
Reference: 8056  

More than 60 years ago, following World War II, Stalin, the infamous Soviet dictator, ordered the construction of the Mirny diamond mine, in the harsh frozen landscape of East Siberia, in Russia, to satisfy the country’s need for industrial grade diamonds. Stalin did not live to see the completion of the Mirny mine, an open pit mine, more than half a kilometre deep (1722 feet) and 1.25 kilometres (3900 feet) across. At the zenith of its operations, this tireless mine went on to produce over 10 million carats of diamonds annually, with a large percentage being gem quality diamonds. Some of the world’s largest diamonds are mined in Russia and it could possibly be sitting on a treasure trove of diamonds, still underground.

Straddling Europe and Asia, lies Russia, the largest country in the world, where diamond mining continues to be big business, with Alrosa its largest government owned diamond company in the exploration, mining, manufacture and sale of diamonds, accounting for 17 per cent of the world’s diamond production from mines, in some of the most hostile places on earth.

Fifty years ago, at the height of communism, in an acknowledgement of its natural wealth, and to build on its advantage, the government moved to make the former Soviet Union the only country where there would exist both rough diamond production and polished diamond manufacture.


“The creation of the cutting and polishing industry was an extremely complicated and difficult task,” writes Vyacheslav Shtyrov, Deputy Chairman of the Federation Council of the Federal Assembly of Russia, in his contribution in the book, “Setting Light to Diamonds.” The book was published on the occasion of the 50th anniversary of Russia’s largest diamond cutting and polishing plant, the Kristall Production Company of Smolensk. In the book, a long string of past and present industry captains recount their experiences with surprising candidness, and mete out advice for future, vertical development and growth of the Russian diamond and jewelry industry and trade.

The government constructed seven big diamond manufacturing plants. Starting with Smolensk, additional factories were established in Moscow; in Barnaul, a city south of Russia, on the western Siberian plane; in Gomel in White Russia, in Vinnitsa, in Ukraine; in Yerevan in Armenia; and in Chardzhoum in Turkmenistan. “These factories had no equals in the world in terms of production scale and they became a model for polished diamond manufacturing operations,” states Shtyrov.

But today most of these cutting and polishing factories, established in the erstwhile Soviet Union, do not exist anymore. “Some of them found themselves beyond the borders of Russia, others, for subjective reasons, sank into degradation. Whereas we rank with the world's leading rough diamond producers, we occupy a regrettably modest place in the field of diamond cutting and polishing,” informs Shtyrov.


However, a single large plant survived. Kristall Production Company (KPC), in Smolensk, Russia, some 350 kilometers west of Moscow, is a thriving diamond cutting and polishing plant, which has been churning out millions of carats of polished diamonds, for the past five decades.

At a time when all manufacturing has moved out to the low wage countries of Asia, to India, China and some of the smaller Asian ‘tiger’ economies, this government owned diamond manufacturing facility, which survived, recently celebrated its 50th anniversary. Every year Kristall polishes over 600,000 carats of rough diamonds.

All the technological development beyond the traditional cutting and polishing tools and the improvements and high tech solutions are local, or Russian. Kristall runs its own cutting school, technological development department, tools shop and equipment repair department. Speaking to workers in the factory, the floor operators and department managers at each level of the corporate hierarchy, what comes through is their pride and love for their jobs, and the factory as an organization.

The company is credited with having created the famous "Russian make" polished diamonds of top quality, desired by well known international diamond jewellery brands.

Government Controls

However, considering the government controls, it is incredible that Kristall has become a model for polished diamond manufacturing operations, on its own steam.

“From being a company that basically produced what it was told to produce by government officials who had no clue about what the market needed, it has made the transition to a firm that operates and competes in the free market,” states Yuri Rebrik, who worked at KPC from 1976 to 2005, and served as Kristall’s Director General during the years 1998 to 2005.

With his appointment to the top position at KPC, Rebrik saw his main mission to protect the interests of the company from encroachments by the officialdom. At the time, all diamonds that were cut by KPC were handed over to the Gokhran, the State Repository, which in turn marketed the stones through "a state foreign trade agency called Almazjuvelirexport, which alone handled, in a centralized fashion, the selling of Russian precious stones and metals abroad. We came to understand the issues of competitiveness, pricing practice, demand-consistent production practice depending on marketing situations, rather than orders from above. We began taking into account the reality of market cyclicality," states Rubrik.

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We offer Rough Uncut Diamonds from Private Communal Mine Operators Around Africa. We can also arrange Alluvial Gold (Dust/Nuggets). crm-international{at}africamail.com
By Increasing the taxes on Imported Jewellery to almost 42 % the Russian Government has made it very economical for smugglers to bring in Millions of Dollars of Diamond and Gold Jewellery every year. Instead of taxes flowing into the government coffers the bribes are spent of creating Black economy and supporting Illegal International Trade. Russia badly needs Jewellery designers so that your citizens do not lap up all that the US and Middle east discard. You need to open up import of artisans and technicians from abroad into russia to help in manufacturing so that you could get cheaper rates of manufacturing for Russian jewellery. I am sure that once you can bring down the cost of manufacture and trade in Russia, russia could very easily export Modern Gemstone jewellery to the entire world! I have seen some very good manufacturing of Russian Jewellery but your market does not allow for mass production so your industry just can not grow!
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