Russia’s AGD Posts 4th Straight Annual Loss
Russia’s OAO Arkhangelskgeoldobycha (AGD), an exploration company that holds the license to the $5.5 billion Verkhotinskoye diamond deposit in northern Russia, posted a loss for the fourth consecutive year.
Commenting on the loss, Lyudmila Biryukova, director of the company’s shareholders’ department, said, “We have an extensive investment program and high production costs.”
The company, partly owned by Conoco Inc., had a loss of 57.9 million rubles ($2.1 million) compared to a loss of 102.8 million rubles in 1998. Revenue more than doubled to 192.8 rubles from 74.1 million rubles in the previous year.
Alrosa to Pay Dividend
In contrast to AGD, Russia’s Alrosa, the major distributor, announced on June 17th that it will pay an annual regular cash dividend of 1,500 rubles per share. Alrosa’s stock began trading, ex-dividend, on May 16th. Alrosa also announced an alliance with Kristall, the largest diamond cutter in Russia, to join forces and double the country’s diamond output.
DeBeers accepts Russian Price Increases
According to the BBC Monitoring Service, Alrosa of Russian proposed to increase the price of uncut diamonds. The decision was based on an increasing demand for diamonds in the world market. Its proposal was accepted by DeBeers. Alrosa and DeBeers already have an existing trade agreement where the Russian company sells no more than $550 million in diamonds through the central trading organization. This agreement expires at the end of 2001 with a hint from the Russians that a new agreement may not be automatic.
Russia Encourages Local Cutting
The lower house of the Russian parliament passed, by majority, the second reading of a bill which would create an exemption from VAT for the sale of rough diamonds domestically and the import of rough diamonds into Russia. The aim of the bill, presented by Deputy Minister of Finance, Mikhail Motorin, is to develop the production of cut diamonds in Russia and to make it easier to buy raw materials on the world market for domestic polishing and production.