Meeting with Alrosa

Meeting with Alrosa

Thoughts and Updates

A month ago, I’ve concluded a visit to the Alrosa offices in Moscow. Attending the meeting were the new President of Alrosa, Sergei Ivanov; VP of Alrosa, Andrei Poliakov; company secretary Peter Krarcheev; Chairman of the Israeli Diamond Institute, Mr Shmuel Schnitzer and myself. This was our first meeting with the President, Mr Ivanov, and it was pleasant and cordial. I congratulated him on his new appointment, and invited him to visit the Israeli Diamond Exchange.

The topics discussed at the meeting were important, and the discussion was fruitful.

To start, I wanted to personally congratulate Mr Ivanov on the DPA decision to increase marketing budgets. The growth in the annual budget this year is of undoubted significance, and it will all be all used in the six remaining months of the year. I expressed my hope that the budget will continue to grow in the upcoming years.

The second topic I raised was Alrosa auctions in Israel. I told the President about the new auction center recently opened at the IDE compound. We discussed the popularity of Russian goods in Israel, about the increase in available raw materials offered in the Alrosa centers in Israel, and mostly about the compatibility of the goods to the Israeli market - stones of 2 carats and larger.

The third, and perhaps the main topic, was the development of ways for small and medium manufacturer to deal with traditional Sight method.

As we all know, the method increases the centralization and the control major Producers and manufacturers hold over the supply and price of diamonds, creating an obstructing stumbling block for small and medium manufacturers.

In an attempt to change the situation, I brought up before President Ivanov an idea I’ve been developing for quite some time: the establishment of an Israeli buyer group for the purchase of raw materials.

The idea is simple in its base, but is made up of many small details, only a part of which has been finalized. A number of Israeli manufacturers will unite, under the IDE management and patronage, to purchase raw materials for the sum of 7-10 million dollars monthly, creating a new channel for raw material supply from Alrosa directly to Israel.

This way, manufacturers who had to rely on subcontractors so far, will be able to purchase the raw materials directly from the source, buying only the goods suitable to their needs, and knowing they have the correct and specific raw materials they are looking for - all at the right price.

I am pleased to say that both the President of Alrosa and its Vice-president see this suggestion in a positive light, and they have expressed their consent in principle to its founding.

Of course, the road it yet long, and is not void of regulatory hurdles, so it is important that we build a clear, transparent and responsible mechanism to regularize this activity.

We are working in full force on this initiative, and I hope to be able to update you soon on additional positive developments.