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Kremlin blocks Alrosa subsidiary overseas

MOSCOW, July 12 (RIA Novosti) - The other day the Finance Ministry sent to the government a draft resolution on providing of a diamond export quota to Alrosa-Nyurba, the Yakutian subsidiary of the Alrosa diamond monopoly, for 2005, a leading business daily reported Tuesday.

Kommersant wrote that the draft had been blocked in the Presidential Administration, where the cabinet had sent it for coordination.

It was the fifth attempt to get an export permit for the country's second largest diamond producer, a source in the Finance Ministry said. The sides refuse to make public the differences that prevent the quota from being granted, because quota distribution is a confidential affair.

They have reached a deadlock. Alrosa-Nyurba sells 100% of its output via the Unified Sales Organization, a structural division of Alrosa (about 23% of the global output). But it cannot use Alrosa's quota to sell its diamonds overseas (the Russian diamond monopolist was granted a five-year quota in 2003). Instead, Alrosa-Nyurba has applied for a second one-year quota of its own.

"It seems that some officials in the government and the presidential staff are blocking the decision under some pretexts," the newspaper was told in Alrosa's press service. "Alrosa-Nyurba produces nearly $140 billion worth of output that cannot be sold on the domestic market. In other words, the export of Russian diamonds is being blocked despite the favorable market situation."

An Alrosa spokesman said the situation looked "challenging" against the backdrop of Russia's plans to join the World Trade Organization, one of whose conditions is the abolition of export quotas.

Alrosa-Nyurba is involved in survey work, prospecting for and producing diamonds in the Nakynskoye ore field in Yakutia. Last year it produced diamonds worth almost $500 million.

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