Jul 13, 2009
Head of Russian diamond giant forced to quit
Jul 13, 2009
MOSCOW (AFP) — The head of Russia's state-owned diamond giant Alrosa said he was leaving his job amid disapproval over his handling of a deep slump in the diamond market, the Kommersant daily reported.
File photo shows a miniature clock tower decorated with diamonds on shows during an exhibition organized by the Russian 'Alrosa' diamond company. The head of Alrosa said he was leaving his job amid disapproval over his handling of a deep slump in the diamond market, the Kommersant daily reported - Photo: AFP/File/Alexander Nemenov
"I am leaving the post of president of Alrosa as of July 13. This is the decision of the chairman of the supervisory board," Alrosa president Sergei Vybornov told the newspaper.
Until the global economic crisis, Alrosa produced around 25 percent of the world's diamonds, second only to South African mining giant De Beers, which produced 40 percent.
But the economic slowdown has caused demand for the precious gems to plunge and Alrosa's board was reportedly unhappy with Vybornov's response.
"The collapse of the company's sales policy became the main reason for the resignation," Kommersant quoted an unnamed source in the Alrosa supervisory board as saying.
Alrosa had long sold diamonds on the Russian domestic market at a discount while reaping profits on its sales abroad, but its sales on the open market have dried up since the crisis began.
While De Beers slashed production by 90 percent in the first quarter of 2009 to prop up the market, Alrosa continued to mine diamonds and stockpile them, prompting speculation about its motives.
Some media reports have suggested that the reason was because the company's main shareholder -- the Russian state -- feared that closing mines would throw people out of work and spark social unrest.
Alrosa is more than 90 percent state-owned, with Russia's central government holding a 50.9 percent stake and roughly another 40 percent belonging to local and regional governments in Sakha, a diamond-rich region of Siberia.
Vybornov will be replaced by Fyodor Andreyev, currently the vice-president in charge of finances for Russia's state railroad monopoly Russian Railways, Kommersant reported, citing sources in both companies.
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