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Fyodor Poludennyi: “Our aim is to be among the most renowned brands of Europe, America and other parts of the world”
fyodor_poludennyi_x.jpgCreating the Russian national brands is among the tasks set by the Russian Jewellers Guild for themselves. Probably, it is no mere chance that Gagik Gevorkyan, the Guild’s leader, was the initiator of establishing the first family jewellery brand in Russia dubbed GEVORKYAN. The brand philosophy is to translate the best ideas and traditions that contribute to the strengthening of a family, bringing up of a new generation on the values of love and mutual respect. Fyodor Poludennyi, this Brand Director, tells about it in his interview to Rough&Polished.

The Replica of the Great Imperial Crown of the Russian Empire is a masterpiece of Russian gem cutters and evidence that they are among the best artisans in the world
maxim_shkadov_x.jpgIn early September, Interfax hosted a press conference with the participation of Maxim Shkadov, CEO of Russia's largest diamond manufacturer Kristall on the further fate of the Replica of the Great Imperial Crown made by Smolensk gem cutters. Maxim Shkadov told the audience how his company had come over the idea to recreate the Crown of the Russian Empire and discussed its further fate, as well as answered questions from Rough & Polished regarding the state of the diamond market and its prospects.

Ari Epstein, CEO of AWDC: Diamond pipeline to unclog and demand to pick up in 2-3 months
ari_epstein_xn.jpgIn early September, ALROSA hosted a meeting on New Development Drivers of Global Diamond Business in the framework of the Asia Pacific Eastern Economic Forum meeting in Vladivostok. The panel session looked at the current state and future prospects of the diamond industry. Leading diamond and jewelry industry figures took part in a debate on the challenges facing the business on September 3, including Ari Epstein, CEO of Antwerp World Diamond Centre (AWDC), who was interviewed by Rough & Polished on this occasion. Epstein shares his views on demand recovery in the diamond market, competition with India and the establishment of a diamond bourse in Vladivostok.

Moscow to host the Third International Economic Jewelry Forum
galina_ananyina_x.jpgOn October 2, 2015, Moscow will host the third edition of the International Economic Jewelry Forum to be held at the Congress Centre of the Chamber of Commerce and Industry on Ilyinka Street under the headline "New Realities, New Challenges, New Strategy in a Changing Global Market" with the support of Russia’s Finance Ministry, Gokhran, Assay Chamber, ALROSA, Russian Jewellery Trade Club and RESTEC JUNWEX media holding. In the run-up to the Forum, Galina Ananyina, President of the Foundation for Development of Jewelry Art in Russia and Chairman of the Organizing Committee of the Third International Economic Jewelry Forum answered the questions from Rough & Polished.


ALROSA received a high rating for corporate governance practice
The Russian Institute of Directors (hereinafter the RID) has raised the rating of Public Joint Stock Company ALROSA according to the grading scale of the National Rating of Corporate Governance (NRCG®) up to the level 7+ – Developed Corporate Governance Practice.

Commerce Secretary of India Ms.Teaotia meets Export Promotion Councils
At a special meeting convened on October 7th with representatives of 27 Export Promotion Councils (EPCs) to discuss ways to promote exports, Commerce Secretary (Government of India) Ms. Rita Teaotia announced some immediate sops and promised further action based on the suggestions received according to a report in

Weak diamond prices force Botswana to mull 'bold' economic stimulus plans
Botswana, which is currently enduring the effects of poor diamond prices, is planning to use some of its $8.5-billion in foreign exchange reserves to stimulate the economy, according to reports.

Great Depression and Drivers of Diamond Market


Commenting the results of the summit held by the G20 ministers of finance, IMF Managing Director Dominique Strauss-Kahn said that unemployment will continue to rise and reach its peak in 2010. Some analysts in the United States, Japan and EC released a similar forecast immediately before the summit. These evaluations appear sufficiently grounded and add some certainty to the short-term development prospect in the global rough and polished diamond market. Since there is a rigid correlation between rising unemployment and decreasing spending power of the population it will take about one year for global polished demand to continue its free fall which means there is no unbiased ground for any growth in rough prices and in the nearest time the speculative potential of rough diamonds will be close to zero. However, one year is not a long period especially taking into account the relatively low-speed turnover of funds in the diamond business. This is why dealers considering the possibility to buy rough diamonds at current prices offered by major diamond miners and staking on growth in their speculative capacity would be certainly eager to get a high probability indicator (at least qualitative) to determine the time when the population’s purchasing power will start going up – especially so in the United States which would actually mean a true end to the crisis in the diamond market.

May be while seeking such an indicator it is worth to resort to analogy based on comparing the current crisis with the Great Depression of 1929 – 1933 at least because the scale of these two events are now obviously commensurable.

The market of rough and polished diamonds during the Great Depression was significantly different from the current one both in its structure and scale. By 1929, De Beers had a real control of 60% of the world rough output, while the Untied States provided for 80% of polished consumption. Due to the market crash followed by an economic disaster unemployment in the United States shot up from 3.1% (1929) to 24.9% (1933). At this level of unemployment demand for polished diamonds and consequently for rough diamonds as well plummeted virtually to zero. De Beers curtailed its output in a drastic way and in March 1932 closed all its mines – the company’s output in South Africa fell to 14,000 carats (before the crisis the global diamond output exceeded 7 million carats).

The diamond market was saved due to the two circumstances: the extreme monopolization and large-scale orders for industrial diamonds due to dramatic militarization of the economies of the future participants in the Second World War. In 1933, De Beers gave birth to the Central Selling Organization which sold over 90% of the world diamond output and while its bort sales (in terms of value) started to catch up with that of gem diamond sales. The monopolistic control of prices at the input of the diamond pipeline and gigantic “defense orders” legally coming from allies and under “grey” and “black” schemes from the countries of the Axis allowed the diamond market to survive the hard war time successfully. It is noteworthy that production of gem-quality diamonds developed a stable trend towards growth only after the main economic aim of the Second World War was reached and major raw material markets got their new master while the US dollar turned to be a global reserve currency. On the whole, it took quite a long time to solve this task: almost 15 years passed from the exchange market crash in 1929 to the Bretton Woods Conference and 16 years to the Quincy Pact.

It would be probably unconstructive to draw parallels between the functioning of the rough market during the Great Depression and the events which followed the then downturn and its current state. The conditions have changed to a great extent. However, if we accept the ever more popular point of view that the modern crisis, as the Great Depression in its own time, are the tools of a controlled market transformation to serve the interests of certain market players then we may give a try to estimate the time of about-turn on the market of rough and polished diamonds and pinpoint the indicators.

The most important process preceding the Great Depression was the Dawes Plan to pump the Weimar Republic with American investments and placing German bonds on U.S. exchanges. As a result, by 1929 Germany’s economy was the second in the world, while its engineering and chemical exports were the first, but its financial system de facto was wholly controlled by the FRS. In our opinion, one modern analogue of the above process may be the creation of an export-oriented economy in the People’s Republic of China. The Chinese miracle was at the expense of western (mostly American) investments; by most of its performance indicators China occupies the second place in the world and similarly to the Weimar Republic got into a vicious circle: the critical mass of its national budget is derived from products exported to the investor countries, while China itself turned out to be a record holder of investments in U.S. treasury bonds.

The collapse of commodity exchanges in 1929 followed by a most harsh financial crisis in 1930-1933 cancelled the Dawes Plan turning the securities held by German concerns as well as German bonds into trash and wiping out the financial system of the Weimar Republic. In the result the power in Germany was seized by the national socialists who were politically able to secure the only possible vector in the country’s development after the collapse of its financial system – hard-line militarization. 1933 gave the start for a world-wide militarization and preparation for the planned war whose main economic goal was finally attained in Bretton Woods. By analogy, we may suggest that the current crisis stage is pursuing the aim to decrease the margin rate of Chinese exports down to a critical threshold where any further downward breakthrough (or a close threat of such) will force China to take resolute actions to acquire control over mineral and energy sources indispensable for the country’s survival. Development of domestic demand may not be a means to weather out the crisis since it cannot yield foreign currency income necessary to buy energy products and raw materials and only serves to increase the cost of labor further worsening the situation since it makes the earning capacity of export weaker. Any deepening of crisis envisages only one tack in China’s political and economic movement – towards control over mineral and energy sources and of course territories necessary to “dump” the excess of its population rapidly expanding to 1.5 billion people who will soon start suffering even from lack of drinking water (94% of China’s population is using 46% of the country’s territory while the rest is not suitable for living and China’s proportion between drinking water reserves and the population number is 6 times higher compared to the average world standards).

Taking into account that China’s most earnest attempts to get control over mineral and energy producing transnational corporations have been strictly suppressed by political means it should be admitted that the virtually unpopulated Eastern Siberia may turn out the only real venue for Chinese expansion. This is confirmed by the fact that China’s mainland armed forces grew four times during the last eight years on the backdrop of entire disregard to developing its navy which would be necessary if the target of such expansion were Africa.

The clash between the two totalitarian regimes in the course of the Second World War which was explicitly and implicitly organized and backed up by English and American financial clubs has cancelled all the potential claims of continental Europe for raw mineral markets and the global financial system for a long time. Any potential conflict between China and Russia is unlikely to pass over to large-scale warfare taking into consideration that both countries possess nuclear weapons. It is more likely to turn into a prolonged and tough bargaining periodically complicated by “hot” border conflicts. In the result China in some way or other will start a large-scale development of Eastern Siberia with its highly affluent raw mineral fields but where weather and mining and geological conditions are much worse compared to Africa. China’s access to mineral and energy sources in Eastern Siberia will economically turn this country into what once was the USSR, the nominal winner in the Second World War, namely into a junior partner of the true supervisors of the global financial system.

Thus, China’s dwindling export (in our opinion, lowered by about 20% against the current level) accompanied by a simultaneously accelerating process of expansion into Eastern Siberia will indicate that the target of the global financial crisis is reached and the trend in purchasing capacity of the population in the United States, Japan and EC is turning about towards growth. These are the two unbiased drivers on the markets of rough and polished diamonds.

Sergey Goryainov, Rough&Polished


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