Two titans of the diamond industry are in the news again. De Beers announced in February of this year that they would not purchase rough diamonds from Alrosa after 2008. This was a response to the European Commission’s probe into the potential monopoly abuse relationship between De Beers and Alrosa.
De Beers controls half the world market of rough diamonds and Alrosa, the Russian diamond producer, now mines a fourth of the world’s supply. De Beers has been buying diamonds from Alrosa since the early 1960s and Alrosa would like that relationship to continue because without De Beers, Alrosa has to do more cutting and polishing, which is a lower margin part of the diamond industry.
Last year EU said it had concerns that the volume of Alrosa’s rough diamonds purchased by De Beers might strengthen De Beers’ market share to the point of eliminating Alrosa as an alternative source of rough diamonds for cutters. Alrosa launched an appeal of the EU settlement. They are optimistic for a positive decision allowing Alrosa to continue selling diamonds to De Beers.
Earlier this month, De Beers and Alrosa agreed to purse joint prospecting projects in Russia and other parts of the world.