A diamond giant plays up its Russian ties to appeal to Americans (The New York Times)

The article on the NYT website

Alrosa is not a household name, but it is a dominant force in mining and wants to increase its sales in the United States.

By Andrew E. Kramer

July 11, 2018

MIRNY, Russia — Shoppers want to know where their coffee is grown, where their clothes are made and where their iPhones are assembled. The world’s biggest diamond miner is now betting that they will also care where the jewels on their engagement rings are dug up.

Alrosa, the mining company, is mounting a campaign to tell the tale of its stones’ journeys from mines deep beneath the ground on to the fingers of betrothed couples around the world. Its one barrier? The diamonds come from Russia.

The company is not a household name. In fact, most people who buy a diamond ring at a jewelry store have probably never heard of it.

Alrosa is a dominant force in the mining industry, and now wants to increase sales in the United States, the world’s biggest market for the jewels. But with Moscow and Washington often at loggerheads, it is unclear whether the Russian state-controlled company’s efforts will bear fruit with American customers.

Tensions between the countries have worsened considerably in recent years. The two are on opposite sides of wars in Ukraine and Syria. A special prosecutor is investigating Russian election meddling in support of President Trump. The United States has imposed sanctions on Russian oil, metals and banking companies. (Russian diamonds have so far gone unscathed.)

“The current climate is working against them,” David Ferguson, a retail analyst at Renaissance Capital, an investment bank in Moscow, said of Alrosa. “Brand Russia, at this particular point in time, is not particularly strong overseas.”

Promoting their jewels’ Russian origins, Alrosa officials say, will put to rest concerns that a ring might hold a conflict diamond from Africa. The certification program developed to prevent the sale of so-called blood diamonds has been somewhat discredited in recent years.

For geological reasons, Alrosa’s diamonds come in a wider array of colors than those from African mines. And, the officials argue, associations with Russia will evoke not politics but romance, classical music and ballet.

“Mine to market is becoming very popular,” said Sergei S. Ivanov, the chief executive of Alrosa “Our customers are educated, all around the world. Often, when they come to a jewelry store, they ask, ‘Where is this diamond from?’”

With Alrosa diamonds, the answer is the sparsely populated Yakutia region — an area five times the size of France but with a population of just one million. Here, the company’s mines sink into the earth amid a wilderness of birches and snow, sparkling and pristine.

The Nyurbinsky open pit mine spirals down for about a thousand feet, circling around a core of ore called a kimberlite pipe. Miners methodically chisel out rock, while hulking, yellow trucks crawl slowly up the roads looping around the pit, each carrying dozens of tons of ore hiding a few precious diamonds.

Processing plants nearby then grind the ore into pebbles, which they put into 90-foot-tall tanks filled with a heavy liquid made of a powdered iron and silicon alloy suspended in water. In it, diamonds float and rock sinks. Last year in New York, Alrosa exhibited a collection of high-end diamonds cut from a single, 179-carat stone found here in Nyurbinsky.

Alrosa has been mining in the area for more than 60 years. Soviet geologists discovered a diamond mother lode deep in the Siberian wilderness, and the company was founded soon after, in 1957.

Today, Alrosa, which is majority-owned by the Russian federal and regional governments, produces about 28 percent of the world’s diamonds, as measured by weight. Last year, it earned $1.3 billion in profits on $4.6 billion of sales.

But the value of diamonds has generally risen more slowly than other luxury goods and precious metals like gold. Hence the need for a new marketing push.

Alrosa is exploring ways to trace the source of every diamond, potentially creating narratives for all its gems, something that had been reserved for only the largest stones sold at auction. If this is introduced for smaller diamonds, the buyer could identify the mine where the gem was discovered, or even the specific miner who unearthed it.

A diamond industry association’s focus groups showed that “a diamond is forever” — the tagline to a long-running campaign by the diamond behemoth De Beers, the world's second-largest miner — is probably the best-known slogan in the industry. But Americans in their 20s were not interested in the everlasting commitment it implied.

Instead, they were drawn to the idea that diamonds represent authenticity. The result was a new slogan, introduced last year by Alrosa and other diamond miners: “Real is rare. Real is a diamond.

“The value of diamonds is emotion,” said Charles Wyndham, a former De Beers diamond evaluator and the founder of Polished Prices, a company that tracks the wholesale market for diamonds. The goal is to “provide a little story, and people like stories.”

This page was last updated on 11 July 2018 at 15.33