Russian diamond miner Alrosa is considering the acquisition of Russia's largest producer and exporter of polished diamonds, Kristall, which is valued at 1.89-billion ruble.

Kristall processes more than 200 000 ct/y of rough diamonds, with 90% of diamond feedstock supplied by Alrosa.

"On the back of the increasingly complex economic environment, Kristall has been going through some financial challenges in recent years. However, the business maintains its output volumes . . . boasting rich heritage, state-of-the-art equipment, and extensive expertise in rough diamonds cutting,” said Alrosa CEO Sergey Ivanov on Tuesday.

He noted that Alrosa was not new to cutting and polishing and that its Diamonds Alrosa branch was responsible for about 20% of polished diamonds in Russia. After consolidating Kristall, the group’s share in the Russian market would reach as much as 70%.

“We are quite optimistic about the integration prospects and have already embarked on preparatory work to start joint operations in cutting and sales. We will focus our efforts on developing new sales channels, including those in the US and Chinese markets, while also improving production efficiency by leveraging the latest diamond processing technologies, automating routine operations, and creating competence hubs to bring together high-tech equipment and industry professionals. We expect that our efforts to merge our cutting facilities will help reduce production costs and, subject to a favourable market environment, take up a considerable share of the market for best in class polished diamonds."

If approved by the Alrosa supervisory board, the sale and purchase agreement is expected to be signed by the end of this month.

The Kristall diamond factory was founded in Smolensk in 1963. Last year, Kristall production and sales were 105 700 ct and 111 700 ct of polished diamonds, respectively. Its total revenue amounted to 12.8-billion ruble, and net profit reached 40.7-million ruble.

In 2002, Kristall launched its own jewellery production, and the retail chain of Smolensk Diamonds, its jewellery entity, now has over 50 sales points in 30 Russian cities. Kristall's other entity, Almaz Servis, produces tooling and equipment for the diamond industry.