At the KP Intercessional meeting in Kasane Russia provided detailed and comprehensive response to all groundless allegations

28 June 2022 16:15

Russia has always been and remains an exceptionally responsible participant of the Kimberley Process with established best practices that were used to establish the KPCS back in 2003. We reiterate that attempts to question Russia's full compliance with the KPCS and its spirit are totally unfounded and speculative, built on misconception and aimed at misleading other Participants, Observers and the public in general. We therefore condemn the far-fetched accusations against us.

Tax and dividend payments from Russian diamond mining operations are the backbone of community development in Yakutia, where 90% of diamonds produced. Yakutia is home for around 1 million people, including indigenous communities that live in very harsh climate conditions, and direct and indirect employment in diamonds production is in many cases the only opportunity to many of them. The budget of Yakutia receives virtually all the budgetary and other tax payments that sustain dedicated investments into local communities for over 50 years. Just a few numbers: 

  • Diamond miner ALROSA is a key employer: over 90% of employees in our industry are locals from Yakutia, including 11% - are indigenous people of the North
  • Almost 100% of all taxes (incl. employees income tax, profit tax, mining royalties) goes directly to regional Yakutian budget and to local communities

Dividends from diamond mining (latest payments done back in 2021) are paid to all stakeholders, incl. to institutional investors, local private investors, and primarily to Yakutia and 8 local communities in the mining areas. Russian Federal budget is a net donor of the Yakutia budget (dividends from diamonds are 5-10x lower vs direct and indirect subsidies to Yakutia). Dividends are the most important source, and for some local communities – the only source, of funding to repair roads and utilities, schools, kindergartens, hospitals, etc. With almost 40% of the regional budget’s inflow being created by diamond mining, the livelihoods of 1 million people of Yakutia fully depends on the stability of the diamond mining in the region. Bottom line: for the past 10 years the only payments from diamond mining in the region that were not allocated to Yakutian regional development are dividends paid to minority shareholders, at the largest scale residing in the USA and EU.

The Russian Federation absolutely condemns the orchestrated attempts of CSC, backed by absolute minority of some Western Participants, to politicize the work of the Kimberley Process by deliberately distorting or even openly replacing its basic principles. We deem it absolutely unacceptable to blur the profile of the KP.

The Russian system of state control over the production, import and export of rough diamonds formed the basis of KPCS. Moreover, today our system is not only inherently Russian. The system is imbedded in the regulatory framework of the Eurasian Economic Union, which includes five member states also participating in the Kimberley Process. This most stringent system in place has shown its efficiency in not allowing “conflict diamonds” appear on the territory of the Union since the inception of the KP. Therefore, any short-sited attempts to recognize Russias’ diamonds as not compliant with the requirements of the Kimberley Process only show low level of awareness.

We also remind that Russia has championed the work on the revision of the definition for the past 5 years, often being the only Participant that was trying to forge consensus among sometimes-opposite views around the table, an uncomfortable fact that CSC tries to pass out their mind. The outcome of that work is the legacy letter that was co-signed by us together with the 2018 KP Chair (EU) in 2021. We are committed to continue discussions on the definition of conflict diamonds within the next review cycle to be started in 2023. We believe that success of this work is possible exclusively on a de-politicized basis in full compliance with the KP rules.

We therefore call on our opponents to refrain from further speculative accusations, abstain from political demagogory and concentrate on the substantive work of the KP, showing respect for other Participants and the global diamond mining in general. We urge all the KP Participants and Observers to strictly follow the Rules and Procedures of the KP and the agenda that is agreed upon by consensus.