Russian diamond mining giant ALROSA has tested a new payment mechanism enabling foreign clients to purchase rough stones using Russian currency. As an experiment, transactions were conducted with clients from China and India, and if necessary, the company is prepared to use this payment scheme in rubles in the future.
The Chinese company paid for the goods purchased at the auction for special-size rough diamonds (+10.8 carats) held by ALROSA in Hong Kong in June. By agreement with the winner of one of the lots, the contract provided for the payment in Russian rubles instead of US dollars. The Shanghai branch of Russia's VTB bank facilitated Alrosa's first ruble-based deal with the Chinese client. Additionally, one of ALROSA’s long-term clients from India paid for a scheduled diamond shipment under in Russian rubles. In this case, the buyer transferred the amount in rubles from his account in another Russian bank.
According to Evgeny Agureev, Director of USO ALROSA, payment through foreign branches of Russian banks makes it possible to speed up and simplify the payment process, as there is no more need to use correspondent accounts with other banks. “The practice in the international rough diamond market provides for settlements in US dollars between sellers and buyers of rough diamonds. We have tested an alternative payment scheme to understand the possibility of its implementation and nuances to be taken into consideration. The experience is positive, so we will apply it on an as-needed basis,” said Mr. Agureev.
According to The Moscow Times, another Russian miner, Norilsk Nickel, which vies with Brazil's Vale SA to be the world's biggest nickel producer and is the world's top palladium producer, said it was discussing the possibility of settling payments in rubles with foreign customers that had signalled their readiness for such an arrangement. The newspaper says the move follows calls from Moscow to reduce the role of the U.S. dollar in Russian trade and so limit the impact of U.S. sanctions. The Kremlin said on Monday that Russia favored bilateral trade with all countries in their national currencies, rather than the dollar, but that the idea needed detailed work before being implemented.