New Alrosa Client List Excludes Leviev Firm

RAPAPORT... Alrosa has stopped supplying rough diamonds to Lev Leviev'sLLD Diamonds through its contract-sales arrangement, as part of a reshuffle of the miner's long-term client list.The tycoon's Israel-based firm is one of "several" former customersthat have dropped off the 2019 supply roster, known as the Alrosa Allianceprogram, the Russian company said. "Last year, there was a decision to exclude LLD from thelong-term client list due to noncompliance with Alrosa Alliance principles," aspokesperson for the Russian producer explained in an email to Rapaport Newsthis week. The Russian company has guidelines that state various possiblereasons for suspending a client.Alrosa has not confirmed the identity of the other companies it removed from the list.LLD has been under the spotlight since Israeli policearrested several of its employees in November on suspicion of smugglingdiamonds worth hundreds of millions of shekels into the country. Alrosadeclined to say whether the move was directly related to the probe, while LLDdid not respond to a request for comment. The Alrosa Alliance accounts for about 70% of the miner'srough sales by volume. It operates a similar arrangement to De Beers'sightholder system, offering stable supply to companies that can demonstratedemand and comply with its rules on business practices. Alrosa has expanded its list to 59 long-term buyers ofgem-quality rough for 2019, from 56 last year. The six new members were HongKong-based jewelry retailer Chow Sang Sang, Indian diamond firms KapuGems, Mohit Diamonds, VD Global and M. Suresh Company, and Switzerland-based manufacturer Richold. "We confirm the inviolability of Alrosa Alliance principles,and are interested in diversifying our client base, which has grown compared tolast year," said Evgeny Agureev, director of Alrosa's United SellingOrganization. While the new customers showed sufficient "trading activity" towarrant gaining long-term supply, "several companies dropped out from thelist," he added. The miner also accepted two Belgian companies, H.D. Diam andIGC Group, as candidates for potential future long-term contracts. Both firmshave previously bought from Alrosa in ad-hoc deals, known as spot transactions.Last year, Alrosa switched to annual assessments of clients'rough-diamond allocations, bringing its policy more in line with that of DeBeers. Under the old system, Alrosa's supply deals with clients held for threeyears.Image: A crew bus at Alrosa's Nyurbinskaya open-pit mine. (Alrosa)