Yerevan Vows To Shore Up Ailing Diamond Industry

Officials said a major Indian jewelry company, Firestone, would like to launch operations in Armenia as President Serzh Sarkisian visited one of the country’s largest diamond-cutting plants located near Nor Hajn, a small town about 15 kilometers north of Yerevan.

Sarkisian inspected the Lori plant’s production facilities before holding a meeting of senior government officials and industry executives. Firestone representatives were also present at the meeting which the presidential press office said focused on “the problems of the diamond-making sector and ways of solving them.”

According to Economy Minister Nerses Yeritsian, the Indians expressed a desire to make substantial investments in Lori and the broader sector. “We are talking about creating, within a short period of time, hundreds of new jobs as well as joint investments by the state and the private sector worth tens of millions of dollars,” Yeritsian told journalists.

The minister did not elaborate on the investment projects. He stressed instead the need to modernize a sector that still employs about 2,000 people. “Modernization is necessary both in terms of management and the diversification of sources of raw materials,” he said, according to the ARKA news agency.

Refined diamonds were Armenia’s most important export item throughout the 1990s and the early 2000s. The Armenian diamond-processing industry has been in freefall since then due to a host of mainly external factors, including a loss of reliable suppliers of rough diamonds.

One of them, Israeli billionaire Lev Leviev, effectively shut down his Armenian factory, also located in Nor Hajn, two years ago. The Shoghakn factory employed more than a thousand people.

According to official statistics, Armenia’s combined diamond output tumbled by more than half to 39,138 carats during the first ten months of this year. It was down by 14 percent, at 100,945 carats, in 2008.

The sector seemed to receive a new lease of life in August 2007 when the Armenian government and Russia’s diamond-mining giant Alrosa signed an agreement to supply some of the local manufacturers with Russian rough diamonds. Alrosa suspended these deliveries in spring 2008, reportedly because of a tax dispute with the Russian customs service.

The Alrosa chairman, Sergei Vybornov, pledged to resume the supplies and even provide a loan to their Armenian recipients during a visit to Yerevan in March. The government said at the time that the two sides will hold further talks on the terms of the “mutually beneficial loan.” No agreements to that effect have been announced since then.