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"Diamond Valley" of Yakutia

  • Published in Economy
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27% of global rough diamond is produced in Yakutia, but why at least half of this resource potential is not being used?And how to increase the production of diamonds and enter the global jewelry market?To achieve that territory of priority development "Diamond Valley" will be created in Yakutia.
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The aim of the project "Diamond Valley" is the creation of favorable conditions for intensive development of the domestic jewelry and diamond-cutting industry through tax incentives on the territory of Yakutia, the creation of engineering and production infrastructure at the cost of the state and private financing, and most importantly - the simplification of administrative procedures.

The practical implementation of the project will begin in 2015 and by 2030 it will increase the gross sales of diamonds and jewelry.Budget expenditures for the creation of the Territory of Advanced Social-Economic Development are projected at 1.7 billion rubles.With this starting position the cutting and jewelry manufacturing are estimated by experts as "precocious" industry.

Today, the “ALROSA” Company produces 27% of the world's diamonds.But most of them are sold abroad - that's where the giant added value accumulates. The "Diamond Valley" will manufacture the final product.That’s how the domestic demand for rough diamonds will increase and the export of finished products will be organized.
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Much of raw material and little product

The Republic is interested in the efficient use of raw materials and the manufacture of diamond value-added products.The market of precious stones and metals has changed in recent years.Firstly, 180 thousand tons of gold mined throughout the history of gold production and only 3,000 tons of last year give evidence of the reduction of explored precious metals reserves worldwide.Secondly, the global demand for jewelry and diamonds fell by 36%, or $22 billion. This amounts to 509-510 tons of metal.But at the same time, small diamonds are in demand in China and the United States.
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If we talk about the Russian market of precious metals and precious stones, the total amount in 2013 in monetary terms amounted to 805 billion rubles, or 2.1% of Russia's GDP, which, of course, is not much.181 billion rubles were earned from the sale of jewelry.

As for diamonds, last year the world production reached more than 130 million carats, 37 million of which are mined in Russia.According to this indicator Yakutia plays a leading role, but according to a cost of mined precious stones Botswana takes the lead.

And in the diamond market the leading positions are taken by India, Asia (China, Thailand, Hong Kong), Israel.In this segment Russia only takes 5%.We send raw materials abroad having all the possibilities for diamonds cutting in the country.And if this trend does not change, the jewelry market will remain in its infancy. Lately there is a tendency of substitution of expensive products for cheap ones with small diamonds. Still the consumer demand depends on product quality. The Russian market does not always follow the world fashion; monotonous assortment of stores prevents to keep up the trend.

There is a solution

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Minister of Industry of the Republic Andrey Panov agreed that the Republic has all the conditions for the manufacture of high added value products of rough diamonds.But such known issues as a high level of general wear of basic production assets, lack of professional staff and high cost of credit resources prevent cutting factories to really develop.Shortage of working capital to purchase raw materials, poorly developed distribution network, as a consequence - the high cost of production, which cannot compete with Russian and foreign manufacturers, and the remoteness of the region aggravates all these circumstances.

The creation of the territory of priority development, specializing in jewelry and lapidary production, which will have a wide range of tax, customs and other preferences, may be a good solution. This will change the situation.

The proposal for the establishment of the diamond cutting cluster in Yakutia, which will be included in the list of the territories of priority development of the Far East, was previously approved by the Ministry of the Russian Federation.The project has been included among the 14 Far Eastern territories of advanced socio-economic development (TOSER).The "Diamond Valley" project has already attracted interest from China and Dubai. Foreign companies have expressed their desire to become residents.

Preferences of the state can lead to cost reduction and increase demand for the jewelry.Special economy management in the territories of priority development will allow to increase the gross sales of diamonds and jewelry sevenfold; to achieve ninefold increase in positive balanced financial result. This will provide the budget effectiveness in the form of total taxes paid - 8.8 billion rubles.

Specialized customs office, departments of the Russian Federation Gokhran and the Assay Chamber are to be created for successful operation of the “Diamond Valley” in Yakutia.“This is the only way to reduce the time for administrative procedures, including registration of export of finished products.The customs post will work with finished products, and will not be engaged in rough diamonds resale”.This will help ensure the manufacturing of the final product to take place exactly in the "Diamond Valley”.