De Beers and Alrosa, the Russian diamond monopoly, have offered proposals that they say will meet all the European Union’s objections to their contract.
According to reports, Russia will sell almost two-thirds less diamonds to De Beers than it originally proposed.
The new deal says Russia will sell $700 million in stones to De Beers in 2005. That will gradually fall to $275 million a year by 2010. The level will then be $275 million a year after that. The original agreement called for Russia to sell De Beers as much as $800 million a year.
The two parties were forced to make modifications of their contract when the European Commission opened proceedings on the original trade agreement in January 2003, on the grounds that it also constituted an abuse of De Beers’ monopoly power.
The new arrangement will be published in the EU Official Journal so that interested parties can give their views to the Commission within one month from the date of publication.
Alrosa president Alexander Nichiporuk told the Russia news agency Itar-Tass that they are “considering other partners, companies with a solid financial status that wish to have sustainable supplies of Russian natural diamonds.”
Alrosa is also looking to diversify into other commodities, including natural gas production, the Financial Times reported.