Alrosa Appealing EU Decision to End Sales to De Beers

The Russian diamond mining monopoly Alrosa is appealing an EU decision that ended its rough diamond sales to De Beers. The February decision adopted a phasing out commitment by De Beers to end the trade between the two companies by 2009.

The European Competition Commission adopted the plan after investigating De Beers, the Supplier of Choice initiative, and the 2001 Alrosa-De Beers trade agreement. At the time of the decision, Competition Commissioner Neelie Kroes said, “For the first time in the history of the diamond market there is an opportunity for genuine competition. De Beers’ long-running primacy can now effectively be challenged by its biggest competitor, Alrosa.”

Though the plan was agreed after long negotiations between the sides, Alrosa is now attempting to appeal the decision.

According to sources in Alrosa quoted in the Moscow Times, “The company is defending its interests, which it believes have been damaged by the EC's ruling.”

Since the decision was made, Alrosa has opened rough diamond sales offices in Geneva and Dubai, and committed to open a sales office in Israel. The company also plans to open a rough diamond sales office in New York. While selling to many companies might be more expensive then selling only to De Beers, through these sales, Alrosa will be able to realize full market prices for its goods.

According to the EU adopted agreement, De Beers' purchases of rough diamonds from Alrosa will decrease to $500 million in 2007 and $400 million in 2008 before ending completely in 2009.