Russia `Considering' Offers to Sell $1 Billion Diamonds Bought From Alrosa

Russia’s government may sell the diamonds it bought last year for $1 billion from ZAO Alrosa, the world’s largest rough diamond producer, Finance Minister Alexei Kudrin said.

“We are being asked to begin selling diamonds from the reserve we acquired last year,” Kudrin told reporters today in Yakutsk, eastern Siberia. “We are now considering these offers.”

The government bought the gems to support state-owned Alrosa after diamond prices plunged more than 40 percent from their 2008 record as the global recession reduced jewelry sales.

Russia has earned 15 percent to 18 percent on the diamonds after prices rebounded, Alrosa Chief Executive Officer Fyodor Andreev said in a July 12 interview. Gokhran, the state repository, may choose to sell the gems on its own or offer Alrosa “some kind of swap,” Andreev said at the time.

Prices of rough, or unpolished, diamonds have climbed this year after producers, including De Beers, cut output and gem dealers rebuilt stockpiles. Mirny, Russia-based Alrosa passed De Beers last year as the industry’s biggest producer.

The world market has “woken up” and prices for gems have recovered, “completely justifying” the government’s decision to support Alrosa last year, Kudrin said today.

To contact the reporters on this story: Paul Abelsky in Yakutsk, through the London newsroom at pabelsky@bloomberg.net

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