Russia is the world's largest source of rough diamonds, accounting for 23.5% of the total diamond production in terms of volume, and 25% in terms of value in 2010.

Revealing this here in its new analysis, “Outlook of the Russian Diamond Market”, growth partnership company Frost & Sullivan said Alrosa, the Russian state-owned company, was the largest diamond manufacturer in the world, followed by De Beers, Rio Tinto and BHP Billiton.

The report added that the Russian diamond market was export driven and was heavily dependent on global demand. In 2010, the exports of Russian rough diamonds increased by 28%.

The new analysis found that the market had earned revenue of US $4.79 billion in 2010 and was estimated to reach US$5.74 billion in 2015.

Although the outlook for the market looks bright with the upswing in consumer demand and climbing diamonds prices, the report pointed out that there were some challenges throwing a cloud of uncertainty over its future prospects. Large-scale mining activities had caused depletion of natural resources and environmental deterioration. In the long term, environmental protection would assume greater importance and safety regulations were expected to become more stringent in Russia, in line with global trends.

The Frost & Sullivan analysis confirms that for the last 20 years, no large diamond deposits had been found in the world ‒ all new deposits were low grade compared with existing ones.

“Companies are bound to face difficulties in mining for low-grade deposits in new, challenging locations, given the increasing complexity of extraction,” it stated. “These circumstances indicate escalating costs of inputs, and mining companies will also be expected to meet strict safety requirements for working conditions and protection of employees.”