Alrosa launches Eurasian Diamond Centre in Vladivostok as Eastern Economic Forum gets under way

Alrosa, Russia’s largest diamond mining operation, launched the Eurasian Diamond Centre in Vladivostok yesterday to coincide with the opening of the second Eastern Economic Forum tomorrow, when representatives from more than 200 Russian companies and  similar number of potential overseas investors, mainly  from Japan, South Korea, China and  Singapore, but also from as far afield as Germany are expected to descend on the port. President Putin will welcome the guests, including Japan’s Prime Minister Shinzo Abe.
Both initiatives are designed to attract inward investment. For its part, the diamond trading hub is expected to handle as much as $1bn of business by 2o18, according to Alrosa’s CEO Andrey Zharkov, who also confirmed that Hong Kong’s wholesale gem distributor KGK Group had become the first overseas company to sign up to the Centre, which eventually hopes to position itself as a Far Eastern alternative to Antwerp and Dubai. The project is being backed by the Russian government which recently sold off a 10.9% stake in the company for $814m. Alrosa sold a combined  total of $745m of gems to India and China last year, and  plans to double sales to the Asia Pacific region within two years.
With Russia looking at a budget deficit of $6.5bn – over 4% of GDP – for 2016, the Kremlin’s plans to invest in the Far East region’s infrastructure has been severely curtailed. Attracting  inward investment from abroad  to help it tap into the significant deposits of gold, titanium, rare earth metals, coal and hydrocarbons that lie in its vast and inaccessible interior is consequently  one of the principal reasons the Forum was set up  last year.  With demand for electricity in the  Asia-Pacific region as a whole growing rapidly, the idea of creating an energy ring linking Russia, Japan, Korea, China and Mongolia is also on the agenda; Russia’s RusHydro and Japan’s Mitsui are scheduled to unveil a  financial model for an an energy bridge between the two countries.
A new economic model for a Northern Sea Route (NSR) that would use the Russian Arctic as a shipping corridor between Asia and Europe will also be presented at a separate session.
There are 130 agreements worth a total total of $15.3bn  waiting  to be signed off at the forum, according to Russia’s Far East Development Minister Aleksandr Galushka,who added that he expected that figure to have doubled by this time next year. Russia’s Far East is also seriously underpopulated, with just 6.3 million people living in an area that is larger than the size of India.