Home / World Business
Tue, Jul 14, 2009 - Page 10 News List

Director of Russian diamond giant told to quit amid slump

AFP , MOSCOW

The head of Russia’s state-owned diamond giant Alrosa said he was leaving his job yesterday amid disapproval over his handling of a deep slump in the diamond market, the Kommersant daily reported.

“I am leaving the post of president of Alrosa as of July 13. This is the decision of the chairman of the supervisory board,” Alrosa president Sergei Vybornov told the newspaper.

Until the global economic crisis, Alrosa produced about 25 percent of the world’s diamonds, second only to South African mining giant De Beers, which produced 40 percent. But the economic slowdown has caused demand for the precious gems to plunge and Alrosa’s board was reportedly unhappy with Vybornov’s response.

“The collapse of the company’s sales policy became the main reason for the resignation,” Kommersant quoted an unnamed source in the Alrosa supervisory board as saying.

Alrosa had long sold diamonds on the Russian domestic market at a discount while reaping profits on its sales abroad, but its sales on the open market have dried up since the crisis began.

While De Beers slashed production by 90 percent in the first quarter of last year to prop up the market, Alrosa continued to mine diamonds and stockpile them, prompting speculation about its motives.

Some media reports have suggested that the reason was because the company’s main shareholder — the Russian state — feared that closing mines would throw people out of work and spark social unrest.

Alrosa is more than 90 percent state-owned, with Russia’s central government holding a 50.9 percent stake and roughly another 40 percent belonging to local and regional governments in Sakha, a diamond-rich region of Siberia.

This story has been viewed 1287 times.
TOP top