Kristall Diamonds
Kristall holds a unique exhibition
A unique exhibition of painting and jewellery from the collection of the State Hermitage will be held in Smolensk. It will be opened on February 9, 2006, on the premises of Kristall. It is the first time in history that a polishing company runs a joint marketing and promotional programme with a museum of world-importance.
The exhibition called “Russia. A Look Through the Centuries” is part of the project “The Hermitage in the Capital of Russian Diamonds”, which includes lectures of prominent Russia art experts, concerts of the Hermitage Symphony Orchestra. Etc.
The organizers of the event: The State Hermitage, The Smolensk State Museum, Kristall Production Corporation, and Kristall Jewellery Corporation
Kristall Production Corporation
J-dex has invited Edward Shtirbescu, the Marketing Director of Kristall, to outline the important changes in the Russian diamond industry as well as other allied industries in which ALROSA is gaining stakes.
ALROSA, the second largest diamond miner in the world to De Beers, is merging with Kristall, Russia's largest diamond cutter and polisher. The new company is seeking new sales and markets for its polished diamonds. The article highlights the company's marketing initiative in Dubai as an example of its outgoing sales drive. Shtirbescu also explains the new fifth ‘C' – Charm, developed by Kristall scientists.
Kristall Production Corporation from Smolensk is the largest Russian polished diamonds manufacturer. Established in 1963, the company has grown today into a complex operation combining under its roof science, manufacture, technology and marketing.
In 1992 the company was the first Russian manufacturer to enter the international diamond market independently. Today Kristall's offices operate in Belgium, Hong Kong, United States, and UAE. Owing to the highest quality standards and flawless business reputation the company has acquired a worldwide clientele.
The company is a member of the Association of Russian diamond manufacturers, headed by Maxim Shkadov, Kristall's general director.
The company's policies on manufacturing, pricing, sales and marketing are based on scrupulous research and analytical work, carried out by the company's specialists.
The approach to rough supplies – the basis of polished manufacturing is differentiated: Kristall purchases rough diamonds both on the internal, and international markets. The main supplier is ALROSA, the major Russian rough producer, with which Kristall is connected by long-term fruitful relations.
In December 2005 ALROSA and Kristall signed a new contract on rough supply, the first in line with ALROSA's new distribution strategy. This model contract is based on the Regulation on Diamond Sales Procedure and Terms approved by the Federal Antimonopoly Authority and fully complies with the RF competition legislation.
Besides, Kristall purchases rough diamonds at Gokhran (State depository for precious metals and precious stones) tender sales, at the Diamond Trading Company sights, as well as on the free market.
In 2005 Kristall's sales amounted $347 million, 11.19% up compared with 2004 ($310 million).The company has about 3 thousand employees. 100% of Kristall's shares belong to the state.
ALROSA and Smolensk Kristall Sign Supply Agreement
On 27th December, 2005 an agreement on rough diamond supply was signed by ALROSA President Alexander Nichiporuk and Smolensk Kristall CEO Maxim Shkadov. This model contract is based on the Regulation on Diamond Sales Procedure and Terms approved by the Federal Antimonopoly Authority and fully complies with the RF competition legislation.
This is the first contract signed in line with ALROSA's new distribution strategy, which provides for the distribution of the larger share of its rough diamond production to its regular customers under long-term supply agreements. The contract will be effective for 1-year term with a possibility of renewal. In this way ALROSA will ensure a stable market for its rough diamond production, and buyers will have a guarantee of accessing high-quality rough.
ALROSA intends to form its customer list on the basis of applicants' business reputation, solvency, and availability of manufacturing capabilities. OAO PO Kristall, Russia's largest diamond manufacturer, meets all the above requirements – it possesses its own state-of-the-art cutting and polishing know-how of world renown and large-scale diamond manufacturing operation.
The contract is seen as a new step towards strengthening ALROSA-Kristall relationship, adding a specific dimension to the initiatives by the RF government aimed at the companies' merger. ALROSA and Smolensk Kristall intend to capitalize on the opportunities opened by the agreement for further joint efforts to promote Russian diamonds worldwide.
Smolensk Kristall 2005 sales
The 2005 sales of Smolensk Kristall, the largest Russian polished diamonds manufacturer, were up 12% ($347 m.) as compared with 2004 ($310 m.).
The company's principal rough supplier is ALROSA, although it is a regular participant of Gokhran (State Depository for precious metals and stones) tender sales (rough diamonds of special sizes – 10.8 cts.+), and a client of the so-called secondary (or free) market in South Africa and Belgium. Since 1998 Kristall is the sole Russian DTC sightholder.
The majority of Kristall's clients are based in Belgium, US, Hong Kong and UAE. The company's overseas offices operate in Antwerp, Hong Kong, Ramat Gan, New York, LA, and Dubai.
100% of the company's shares belong to the state.
The Siberian Confrontation
Today the federal centre controls 37% of ALROSA shares (the Russian Finance Minister Alexei Kudrin heads the Supervisory Board), 32% belong to the Yakutian Property Ministry, 23% - to the company employees, and 8% - to municipal entities. Late in 2004 Vladimir Kalitin, former President of ALROSA, who represented the interest of the local administration, was dismissed. Alexander Nichiporuk took over.
At the beginning of 2005 in was announced that Moscow's share in will be augmented through additional emission – by adding shares of a number of other companies to the ALROSA's capital. It was assumed that these would be the largest Russian diamond manufacturers – Smolensk Kristall, Almazny Mir (Moscow) and the Prioksk non-ferrous metals plant. It was said that the decision on the issue should have been taken by February, 2006.
The agreement of augmenting Russia's share in ALROSA (from the present 37% to 50% plus one share) was arrived at in December. According to the signed statement Russia and Yakytia have agreed to divide the property of, on which basis ALROSA was created in early 90-s.
But the Yakutian State Assembly (Il Tumen) decided to call in question the scheme of the transfer, noting that seizure of Yakutalmaz could have political consequences.
The second half of 2005 faced several protest waves organized by the Peoples Front “Yakutia-ALROSA”, established with private support from the part of the ruling regional elite. Ivan Shamaev, a local public activist, is at the head of the “Front”; he is also the leader of a nationalistic organization Sakha Public Centre. “The Front” casts open threats to the President of Russia to stop diamond production in the republic if part of its property is transferred into the federal ownership.
During his visit to Yakutsk in early January President Putin announced that 40% of the shares will remain at the disposal of Yakutia (32% for the republic, and 8% for the municipal entities.
Nichiporuk, quoting Putin, said that all the profits that will be lost by the republican budget must be compensated from the federal budget.
ALROSA Executive Board Meeting
The Board approved target objectives for 2006 as follows:
- drafting a five-year development plan for 2006 - 2010;
- drafting a program aimed at lower diamond breakage during ore treatment;
- development of efficient methods and technological solutions for underground mining at Udachnaya;
- diversification into oil and gas and coal sectors of Sakha (Yakutia);
- focusing prospecting efforts in promising territories in operational areas of Aikhal and Nyurba Mines;
- completion of exploration and beginning of development at Botuobinskaya, Verkhniaya Mouna deposits;
- organization of diamond exploration in Angola.
The Board approved basic economic and production targets for 2006 as follows:
- Diamond production by OAO ALROSA-Nyurba consolidated subsidiary USD 2087.1 million
-Diamond production by ALROSA Co. Ltd. USD 1 597.1 million
-Core product sales: USD 2 893.6 million
- ALROSA Co. Ltd. USD 2 273.6 million
- ALROSA-Nyurba consolidated subsidiary USD 620.0 million including:
– rough diamonds USD 2 734.4 million
- polished diamonds USD 159.2 million
- Total sales by ALROSA RUR 75 075.4 million including
- industrial production RUR 69 672.5 million
- Profit from sales RUR 21 215.1 million
- Net profit RUR 14 867.3 million
- Capital expenditure RUR 12 994.4 million
- Exploration expenses RUR 2 085.7 million
- R&D expenses RUR 444.2 million
- Maximum debt level at year's end RUR 998.6 million
ALROSA Expanding Into Oil and Gas
Based on materials from ITAR-TASS.
ALROSA, the state-owned diamond monopoly, said it would acquire majority stakes in several Sakha republic-based oil and gas assets, expressing long-term interest in the natural resources sector.
The world's second-biggest diamond producer said in a Dec. 30 statement that the company's board, headed by Finance Minister Alexei Kudrin, approved the acquisition of 50.4 percent of Sakhaneftegaz, an oil and gas exploration unit that until last fall had been held by embattled oil major Yukos.
In addition, ALROSA will buy a stake of 75 percent plus one share in Yakutgeofizika, a Sakha-based oil and gas geological research enterprise, and also in firms subscribing to an additional share issue by Yakutgazprom, the main upstream gas producer of Sakhaneftegaz, the statement said.
ALROSA did not disclose the sum or time frame for the acquisitions and could not be reached for comment on Monday.
Chris Weafer, chief strategist at Alfa Bank, interpreted the move as part of the government's broader plan to foster ALROSA as a major holding in the metals and mining sector, “the only strategic industry in which the state does not have a controlling arm.”
“The current asset accumulation is inconsistent with what we'd been hearing about ALROSA beforehand. It seems the government is trying to feel out a role for ALROSA going forward, ... attempting to transform ALROSA into a broadly based metals holding,” Weafer said.
At present, the federal government has only a 37 percent stake in Alrosa, with Sakha authorities wielding 32 percent and 7 percent dispersed throughout Sakha. The rest lies in the hands of private investors.
Once the state gains majority control of the diamond monopoly, the oil and gas firms could be used for asset-swapping to forge ALROSA into a national champion in the metals and mining industry, Weafer said.
In contrast, Adam Landes, an oil and gas analyst at Renaissance Capital, said he read Alrosa's plans as an intention to cement the company's local energy needs, similar to copper producer Norilsk Nickel's part ownership of Norilskgazprom.
“The Sakha region is not connected to a national infrastructure network. All its oil and gas seem to be consumed locally,” Landes said.
During President Vladimir Putin's visit to the Sakha republic on Jan. 6, the Sakha President Vyacheslav Shtyrov said that ALROSA planned to invest about $3 billion in building three mines in eastern Siberia to keep to planned diamond production levels up to 2015, Shtyrov's web site reported.
This year, ALROSA is set to mine $2.1 billion in rough diamonds, the company said in a Dec. 28 statement.
ALROSA Holds Its Second Polished Auction in Tokyo
On 26th January, 2006 at IJT 2006 – International Jewellery Tokyo ALROSA held an auction to sell polished diamonds manufactured by its Brillianty ALROSA polished division.
63 polished diamonds in the range from 0.3 to 22 cts were offered for sale at the aggregate upset price of USD 1.6 million. 23 big international companies entered the auction as bidders. The total worth of the goods sold amounted to USD 580 thousand.
The auction was organized in conjunction with the Tokyo Diamond Exchange. The bidding was made directly at ALROSA's IJT booth, which is an indication of ALROSA's high credibility with the Tokyo Diamond Exchange. The leadership of the TDE expressed their high opinion of the organization and the results of the auction.
This is ALROSA's second auction at International Jewellery Tokyo. Last year the polished auction netted USD 410 thousand.
THE CHARM INDEX:
INSTRUMENTAL MEASURING OF THE OPTICAL PROPERTIES OF POLISHED DIAMONDS
Authors:
V.K.Baranov, A.G.Golubinsky, R.I.Il'kayev, S.V.Rebrov,
Russian Federal Nuclear Center – All-Russian Scientific & Research Institute of Experimental Physics,
Sarov, Nizhegorodsky Region
A.M.Bocharov, A.A.Mukonin, M.A.Shkadov,
“Kristall” Production Corporation”, Smolensk
This article presents the results of the first world experience of using an instrument to measure polished diamonds' optical properties and the brilliance beauty index called “Charm”. The article suggests that this instrument can produce an objective estimate of a polished diamond's brilliance beauty and that the value of polished diamonds is more expedient to be estimated rather by five “C”- than by four “C-factors”, the most: important of which are Charm and Carat Weight.
It is generally known that the quality and the value of polished diamonds are currently determined by the following “4C”:
• Clarity – presence of internal and external characteristics in a polished diamond.
• Color – a polished diamond's degree of transparency.
• Cut – proportions and finish of a diamond and the presence of some deviations from the acknowledged standards.
• Carat Weight.
The value of any diamond is determined on the basis of these features and in conformity with the developed price-lists. Each parameter, with the exception of Carat Weight, is defined by the experts in certain observing conditions. Still these assessments are of subjective nature and depend both on the environment and the observers' skills. In addition it should be recognized that all these factors only indirectly define the main aspect of a diamond's appearance – the beauty of its brilliance. So certain doubts arise with regard to the objectivity of the existing estimates of a polished diamond's beauty and thus its value.
In this regard the researchers of the Russian Federal Nuclear Center (Sarov) and “Kristall” Production Corporation” (Smolensk), using computer program of modeling the brilliance of precious stones, first developed a generalized parameter – defining algorithm directly evaluating the brilliance beauty of polished diamonds and then developed and manufactured an instrument for its objective measuring. Charm Index is defined on the basis of software calculated or instrumentally measured optical properties of a diamond's brilliance that can be perceived by an observer's eye. All the measurements are averaged at a lot of observation angles taking into consideration average physiological abilities of a human eye.
Optical properties of a diamond's brilliance
1. Brightness or Brilliance Intensity
This parameter defines a polished diamond's brightness and is evaluated by light reflectance before and after refraction of light beams within a diamond. This optical property is mainly affected by the light losses resulting from the imperfection of a diamond's cut that cause the light leakage through its pavilion as well as from the presence of light-absorbing characteristics in the diamond material. In the process of evaluating the brilliance beauty it is believed that the brighter is the diamond the more attractive it is.
2. Dispersion or Fire
This parameter defines the ability of a polished diamond to disperse the incident light into spectral colors. In other words it can be determined as chromatic saturation of a diamond's brilliance. This property is most obviously visible in polished diamonds with high clarity grades and a good geometry of cut. In the process of evaluating Charm Index it is believed that the higher is dispersion the more beautiful the observed diamond is.
3. Sparkle
In our opinion the Sparkle parameter consists of two optical properties perceived by a human eye:
•Relief of the brilliance pattern specifying an average quantity of sparkles in the brilliance pattern discerned by a human eye (the static component of the sparkle parameter);
• Shimmering (scintillation) of the brilliance pattern specifying the changes of the brilliance intensity when inclining or rocking a diamond (the dynamic component of the sparkle parameter).
Both brilliance relief and shimmering are of optimal meaning for a human eye as they create the most comfortable perception of the brilliance beauty. We consider the optimal values of these components to be embodied in the brilliance of those polished diamonds that are currently acknowledged as the most beautiful ones, for example, such diamonds as Rnd57, with facet angles and proportions producing “Hearts & Arrows” effect. With lower values of relief and shimmering parameters a diamond's brilliance looks less attractive. It can be seen comparing Rnd17 and Rnd57 where the latter demonstrates a much better brilliance. With all the other conditions being the same, a less sophisticated Rnd17 cut has accordingly 10 and 3 times smaller relief and shimmering values in comparison to Rnd57. With very high values of relief and shimmering another extreme occurs and the eye ceases to discern the majority of sparkles and their flickering, this being the result of the limited keenness of the human sight. In addition the sparkles having a small area or located too close to each other tend to merge into the average light of the brilliance pattern and it looks as if they disappeared. Quick changes of the brilliance intensity related to higher values of shimmering also cease to be perceived by the eye due to its temporary inertness, that is they also become less visible.
4. Geometry of the brilliance pattern
The pattern parameter defines the presence or absence of large dark spots visible by the human eye and treated as the defects of the brilliance pattern. In our view the following is to be considered as the pattern defects: a dark spot in the center, a ring in the middle part or a dark edge of the pattern, a half-moon spot that appears while the diamond is sloped at 30°-40° etc. The pattern parameter has its maximum value when extremely distinguishable dark sports are absent and when the brilliance intensity is approximately uniform all over the pattern.
Charm Index is an integral characteristic describing a polished diamond's properties when it moves on the basis of processing a large number of brilliance frames (from 50 to 360 frames) with various slopes of the diamond which actually form a film demonstrating the diamond's brilliance. The following psychophysiological features of the human perception were taken into consideration and mathematically expressed:
• Generalized assessment of a complicated object is performed on the basis of estimating less complicated components (physical stimuli) influencing the assessment of the object on the whole;
• On exposure to any stimulus the minimum threshold exists as well as the saturation effect in perceiving it;
• Any physical stimulus is evaluated in relative units where it is compared to a generally accepted standard;
• Generalized assessment of perceiving various stimuli is derived as their average harmonic value which, within the generalized assessment, more aggressively responds to the negative factors than, for example, in arithmetic mean or geometric mean averaging.
In other words, this latter feature of human perception may be expressed as a well-known proverb about “a fly in the ointment”.
The work on the evaluation criteria of a diamond's brilliance consisted of the following steps:
• Creating an electronic atlas of the round-cut diamond's (Rnd57) brilliance based on the brilliance–modeling computer program and containing more than 4500 films demonstrating the brilliance of diamonds with different pavilion and crown angles and table size.
• Improving computer program that allows the simultaneous viewing of several brilliance–demonstrating films on the screen in the synchronous mode as well as the step viewing of the separate brilliance patterns and their scaling.
• Obtaining the generalized quantity evaluation of the diamond's brilliance beauty for a lot of cuts with different geometry in the course of viewing the electronic atlas of brilliance by several well-trained independent observers.
In the process of viewing the electronic atlas some various characteristic features of the diamond's brilliance became more obvious especially in the course of the comparative synchronous viewing two or more brilliance films. It is possible to draw a parallel between both the cuts with similar and very different brilliance where some brilliance components are displayed more obviously and define their influence on the generalized assessment. The round-cut brilliant diamond (Rnd57) with strictly specified geometry and “hearts & arrows” effect was chosen as a standard to compare to.
It should be noted that the creators of the electronic atlas did not aim to obtain the maximal spatial resolution of the brilliance characteristic features that can be only seen under a microscope or a loupe with large magnification. Computer program modeled the viewing environments perceived by a person of the European origin with normal sight.
At the same time in the process of viewing the brilliance–demonstrating films it is possible to scale the images with different magnifications that corresponds to viewing diamonds under microscope, 10X loupe or with unaided eye at the distance of 25-30 cm.
The algorithm of calculating Charm Index is determined on the basis of the quantitative assessments of the diamond's brilliance obtained by the trained independent observers in the process of the multiple viewing the films in the atlas of brilliance. The extent to which an optical property of brilliance influenced the generalized assessment, that is Charm Index, was empirically determined basing on the most precise data array obtained by the observers. The earlier model of the Charm – measuring device developed by “Kristall” Production Corporation” Public Company measures Charm Index (Ch) by the 10-number scale where the comparison diamond has Ch=9.0.
Edward Shtirbescu
Tel.: (4812) 62-2714
Fax.: (4812) 61-0118
E-mail:eshtirbescu@kristallsmolensk.com
Dubai gets new sparkle (article taken from Emirates Today)
New diamond will cut a name for Dubai
Only city in the world to have a gem named after it.
A prestigious new diamond called the ‘Dubai cut' has been launched on the world market, aiming to develop the emirate's position a major trading hub for the precious gem.
The diamond's key feature is the creation of a unique cut which contains 99 facets to reflect the 99 holy names of Allah.
“The Dubai cut is the latest stage in the development of Dubai into an important world centre for the diamond industry,” said Ahmad Bin Sulayem, chief operating officer of the Dubai Metals and Commodities Centre (DMCC).
The DMCC has commissioned the diamond, which will be produced by Kristall Corporation, Russia's largest polished diamond producer, under an exclusive patent.
Kristall will make about 1800 of the Dubai stones each year. Each diamond will be laser-inscribed with a serial number and a certificate of authenticity stating that the stone has been mined, cut and polished to the highest standards.