Diamond Processing Promising in Armenia

YEREVAN (RFE/RL)–With the announced creation of a new state diamond processing company–the Armenian government hopes that better prospects are being opened for development of that industrial branch in Armenia–which would turn it into an important international production hub. The new enterprise–called the Armenian Diamond Company (ADC) has been set up on the basis of another state firm–the Shoghakn diamond processing factory–dissolved earlier this year. The difference is that ADC is not intended to engage in manufacturing operations. Its task is perhaps more difficult: to help the growing number of small private firms to find partners in the international market.

In this case–the international market amounts to the South African company De Beers–the worldwide monopoly in the sales of processed diamonds. It is the already existing business ties with De Beers that the government wants to capitalize on. Orders from the South Africans increasingly dominated Shogakn’s production volumes in recent years. And those ties–underpinned by concrete agreemen’s–will be at the heart of the newly established ADC’s activities.

Armenia’s present annual exports of processed diamonds are estimated at $40 million. The figure is modest compared with Israel’s $4 billion diamond exports. But the government predicts that within five years the cooperation with De Beers will result in a tenfold increase in exports–with some 6,000 new and well paid jobs.

The projection looks realistic considering De Beers’s peculiar strategy. The latter tends to prevent development of diamond-processing industries in those countries that themselves have big deposits of raw diamonds. Russia comes to mind as an example of such strategy–as most of its processing plants have gone bankrupt since the start of market reforms–even though their products were renowned for their high quality. This gives government officials hope that with a correct strategy and proper work organization Armenia–which has no diamonds in its soil–will be able to occupy the freed market space to become a key world diamond processor.

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