De Beers, Alrosa Sign Last Rough Diamond Supply Agreement

A memorandum on supply arrangements between Alrosa and De Beers, for the period 2006-2008, was signed yesterday at a ceremony attended by De Beers’ Managing Director Gareth Penny and Alrosa President Alexander Nichiporuk. According to De Beers, The memorandum complies with the commitments that De Beers made to the European Commission (EC), and that were adopted by the Commission in a decision on February 22, 2006.

According to the EC decision, De Beers' purchases of rough diamonds from Alrosa will decrease from $600 million in 2006, to $500 million in 2007 and $400 million in 2008. After that the two are not allowed to trade in rough diamonds with each other.

In December 2001 the two signed a five year, $4 billion rough diamond supply agreement. It was never approved by the EC, which finally terminated the trade between De Beers and Alrosa several months before it was to end. During that period the two diamond giants traded on a ‘willing buyer, willing seller' basis.