Access to rough diamonds has always been an issue for diamond manufacturers, and the backdrop to much commercial and national strife. Last week this was exemplified when a Russian manufacturing association said they are "outraged" by an Indian appeal to formalize sales by a Russian diamond repository.

The outcry (see below) followed a request by India's Minister of Industry Anand Sharma to Elvira Nabiullina, Russia's Minister of Economic Development, to formalize a mechanism for the sale of diamonds to India by the Gokhran, Russia's State Depository for Precious Metals and Gems.

The Gokhran is holding a large inventory of rough diamonds, and many of India's diamond manufacturers are interested in polishing it.

In an open letter to the Indian council, Association of Diamond Manufacturers of Russia (ADMR) CEO Maxim Shkadov called the request an understandable pro-active stand; at the same adding it is impossible to neglect Russian manufacturers' interests, saying, "It looks at least unethical."

The emotional appeal included a reference to Zimbabwe, stating that unlike the African country, Russia is a "civilized market" with "civilized rules."

Shkadov, who is CEO of Russia's largest diamond manufacturer Kristall, accused Indian traders of driving up prices of rough diamonds in 2008 and of offering to pay Alrosa 10-15 percent more for rough if it ditches its Russian clients.

IDMA Secretary General Ronnie VanderLinden called Shkadov's letter "frank" and "a welcome fresh breath of air."

"The leaders of both of these national diamond manufacturers associations know each other very well and therefore this frank and open letter is an argument held among friends. I am sure that ADMR's contentions will be taken very seriously by GJEPC," VanderLinden said.

GJEPC was not immediately available to comment.

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