Are De Beers and Alrosa Close to Sealing EU Deal?

Nearly three years after they signed a $4 billion five-year diamond sales agreement, De Beers and Alrosa still haven’t received the European Union’s approval for it despite intense efforts to resolve the issue.

 

In December 2001, De Beers and Alrosa agreed the South African diamond firm would buy $800 million a year of rough diamonds from the Russian miner.

Since De Beers’ marketing arm, the Diamond Trading Company, is based in Britain - a member of the EU – the Union’s approval is required, especially since De Beers and Alrosa are the world’s two largest diamond companies, together mining and selling well over 60 percent of the world’s annual supply.

Some will accuse the EU of snail pace activity, making its decisions almost irrelevant. But others, perhaps not the biggest fans of De Beers, view the EU as being cautious as it attempts to closely monitor the world’s biggest diamond miner and its business practices.

While the two companies are working on a ‘willing buyer / willing seller’ basis, there is no doubt that this odd situation benefits no one, and recent talk in the market was that the three sides were trying to resolve the issues.

The sides are not saying much publicly, but last month, Alrosa first Vice President Alexander Nichiporuk told Canadian visitors that the company expects a decision shortly. “We expect a decision in principle in October. After that, it could be six months, in other words April, before the decision is finalized.”

According to a De Beers spokesperson: “De Beers and Alrosa have made substantial progress in their dialogue with the Competition Directorate of the European Commission and have submitted joint proposals which we hope that the Commission will find acceptable.”

In the meantime, Alrosa is starting to consider marketing its goods independently on the international market - not out of a great desire to do so so much as out of necessity.