Unique ALROSA stone is not allowed at Sotheby's

ALROSA's plans to sell premium diamonds through the Sotheby's auction house are in jeopardy. As Kommersant learned, Gokhran froze the very first transaction planned by ALROSA for implementation through Sotheby's. The diamond, weighing 47.48 carats, was classified by Gokhran experts as unique, the export of which from Russia is prohibited by law. Previously, the same experts refused to recognize the diamond from which this diamond was made as unique.

Photo: Kommersant / Pavel Kassin / buy photo

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Photo: Kommersant / Viktor Chumachev

Photo: Kommersant / Pavel Kassin / buy photo

Photo: Kommersant / Grigory Sobchenko / buy photo

Photo: Kommersant / Pavel Kassin / buy photo

The fact that ALROSA had a conflict with Gokhran when trying to sell a large diamond through the Sotheby's auction house follows from a letter from the president of the diamond company, Fyodor Andreev, addressed to the head of Gokhran, Vladimir Rybkin (Kommersant has a copy). It contains a request to re-examine the 47.48-carat diamond, which was classified as unique by an expert subcommittee headed by First Deputy Head of Gokhran Andrei Kutepov. Meanwhile, the diamond was made from a diamond weighing 128.44 carats, which was examined by this subcommittee and was not classified as a unique stone, Mr. Andreev writes. Despite the fact that the diamond is quite large, it has fairly average characteristics - 7/3A, he notes.

The controversial diamond was produced by the ALROSA branch "ALROSA Diamonds" during the implementation of a program of experimental work on the production and sale of diamonds made from diamonds of especially large sizes. All work within the framework of its implementation was authorized by the supervisory board of ALROSA, which includes representatives of the Ministry of Finance and Gokhran, continues Fedor Andreev. The program, in particular, involves “the production of high-quality and large diamonds from diamonds of especially large sizes mined by the ALROSA group for sale at auctions held by the famous British auction houses Sotheby's and Christie's.” As Kommersant previously reported, ALROSA is currently preparing to sign a memorandum with Sotheby’s, under which the auction house will engage not only in sales of premium diamonds, but also in the marketing of ALROSA itself on the American market (see Kommersant on March 14).

This is not the first time that Gokhran has frozen the sale of premium stones. Since the late 1990s, seven diamonds weighing more than 50 carats each have been classified as unique. None of them were ever sold, since in accordance with the Federal Law “On Precious Metals and Precious Stones” the owner has the right to sell them or use them in his own production only if there is an official refusal from the Gokhran of Russia, and then from the authorized body of the subject of the Russian Federation in whose territory it was found unique stone. “In practice, the main problem is determining the contract price for unique precious stones,” says Mr. Andreev. The total limit value of the seven diamonds is $7.21 million, but their market value when sold at auction, in his opinion, “will exceed their limit value many times over,” which is calculated based on the Ministry of Finance price list.

Yesterday, ALROSA confirmed to Kommersant its plans to sell large, high-quality diamonds through international auction houses. “ALROSA faced a problem when a diamond made from a diamond that was not classified in this category was recognized as unique. We believe that this is a contradiction that prevents the company from implementing its commercial projects, and together with the Ministry of Finance and Gokhran we are working to resolve this problems,” an ALROSA representative told Kommersant.

In turn, Gokhran believes that the lack of unique status of the diamond from which the controversial diamond was made cannot be a basis for refusing to study it “in the manner prescribed by law.” When deciding to classify the diamond as unique, the members of the subcommittee (there are nine in total) voted unanimously, which was recorded in a special protocol, a source in Gokhran told Kommersant. At the same time, an additional argument in favor of such a decision was the fact that “there are no diamonds with similar aggregate characteristics in the State Fund and the Diamond Fund of Russia.” Vladimir Rybkin has already informed the management of ALROSA about his refusal to re-examine the controversial diamond, Kommersant’s interlocutor added. Mr. Rybkin was unavailable for comment yesterday.

Rough & Polished agency expert Sergei Goryainov emphasizes that the current practice in Russia of classifying precious stones as unique is opaque. “There are no clear criteria, Gokhran does not publish anything, this is a purely administrative decision. There is no such thing anywhere in the world. For example, extremely rare pink diamonds mined at the Argyle mine in Australia traditionally become the decoration of Rio Tinto auctions. Lack of clear rules of the game in the overly bureaucratic diamond industry market, if ALROSA enters an IPO, it may lead to excessive volatility of this security,” he notes. In his opinion, a stone that has an interesting historical trail can be recognized as unique. “For example, the Count Orlov diamond stored in the Diamond Fund can be considered a national treasure, or stones that were attributes of coronation regalia,” the expert believes. He recalled that during the Soviet era, Gokhran itself actively sold historical stones: “The history of Gokhran’s sale of truly unique imperial jewelry of the 18th century at Christie’s in March 1927 is well known.”

Elena Kiseleva

Gokhran freezes diamonds