Russia will avoid flooding the world diamond market, as it did in the 1990s, with the stocks it has been building up since demand slumped last year, the nation’s monopoly producer ZAO Alrosa said, Bloomberg reported.



“The situation is completely different and the mentality changed a lot,” Chief Executive Officer Sergei Vybornov said in an interview published by Bloomberg yesterday. “Nobody wants to destroy the diamond market.”

More than a decade ago, Russia began offloading rough, or uncut, diamonds as its need for hard currency became acute, leading to a rift with distributor De Beers, the report said . This time, the state and Alrosa will coordinate to avoid a repetition of events that “crushed the diamond market for a very long time,” Vybornov said.



Polished diamond values have fallen by an average 31% since peaking in August, according to PolishedPrices.com, as the global economic slowdown prompts consumers to curb spending on luxury goods. Gem Diamonds Ltd., the operator of the Letseng mine in Lesotho, said this month that first-quarter diamond prices collapsed 52% from a year earlier, said the report.



State-owned Alrosa suspended sales to the market last year, instead shipping gems to government depository Gokhran, Vybornov said on May 26. As a result, the company pared output by about 4%, he said, in contrast with De Beers’s 91% cut in the first quarter. This year, in a sign of improving conditions, it plans to offer about two-thirds of production to the state, the report said.



Alrosa is resuming sales of rough diamonds to the market this month, Vybornov said, with as much as $1 billion going to 15 companies in Antwerp by the end of the year.

Alrosa may gain influence over the diamond market as a result of Russia’s increased holdings of diamonds, and buy mining companies that aren’t able to survive independently, including some that may be listed in London and Toronto, Vybornov said.



“It would be a good time for sure to look at possible mergers and acquisitions, but we need first to get a clear vision for the sales,” he said.

“We will have these diamond stocks, huge stocks, after the crisis,” he added. “We will play a definitely much more important role than before.”