(IDEX Online News) – Geologically, there are several good diamond mine prospects in the Yakutsk region of Russia, but they require intensive capital outlays to prove and develop, said Alex Popov, president of the Moscow Diamond Bourse.

 

“Alrosa doesn’t have the capital right now to invest in exploration and development of new mines, but if their planned initial public offering (IPO) goes well, then they will have the financial wherewithal to pursue new mine exploration and development,” Popov said, adding the rider, “If most of the capital generated by the IPO won’t be spent in debt servicing.”

 

Popov was speaking to the media at the inauguration of the first Indo-Russian Jewellery Summit, a buyer-seller contact program by India’s Gem &Jewellery Export Promotion Council (GJEPC) to promote exports of Indian jewelry to Russia, which started in Mumbai Monday.

 

The program has 12 invited Russian retailers set up in a series of intensive contact and business development meetings with 15 Indian jewelry manufacturers.

 

The program will also include confidence-building factory visits to the manufacturers’ units over a four-day period ending on the 23rd.

 

“The Russian jewelry industry is very new,” Popov said, “and like all new industries, it started from the top. Russia has all the high end brands. We now have a middle class that aspires to that kind of product but does not have the financial wherewithal of Russia’s rich. So there is a wide open market for good quality, up market designs at a more affordable price. The demand for quality is higher, because the expenditure is a high proportion of the consumer’s income.”

 

According to Popov, the perception of the Indian industry has been of lower quality product only. The summit program is intended to change that. “If we go away from here with the idea that it is worth coming back here to source product, I would term the initiative a success,” he said.

 

Hong Kong and Turkey have abolished visa requirements for Russians and consequently are enjoying very strong buyer visits from Russia, Popov noted. “The recent Hong Kong show had a very strong Russian buyer showing because it was easy to visit and offered a wide variety of Chinese product,” he observed.

 

There were also strong possibilities for joint ventures, Popov noted. “There are some 6,000 jewelry manufacturers in Russia, mostly small operations.

 

"Design and quality are an issue with them. If an Indian company were to tie up, offer design and small diamonds, the Russian units could insert the larger central stones, which are cut in Russia.”

 

On the issue of high tariff barriers, which Indian manufacturers have complained impede sales to Russia, Popov said the only way to reduce them would be on a government-to-government initiative basis.

 

Popov pointed out, however, that there were several ways to counter this. “The price of Cartier product in Moscow is the same as in the Paris outlets. The import tariffs are, therefore, being managed very successfully by them — completely legally.”

 

On the issue of the Russian production of synthetic diamonds, Popov said they didn’t pose a threat of any magnitude. Cost of production, he said, was the biggest hurdle.

 

“The biggest synthetic diamond factory in Russia has 200 machines and it takes a week to grow a one-carat diamond in each. If all those machines work 24/7 for 52 weeks, the output will be 10,400 carats. Add whatever the other, smaller units produce and it still doesn’t add up to a significant figure globally.”