Russia May Increase Diamond Production

According to data posted by the Ministry of Natural Resources, the abundance of Russian diamond resources enables the increase of diamond production by one half through the year 2006. However, the growth will require $2.5bn in investments.

The industry is currently exposed to a number of difficulties. The first problem - high production costs - is due to the fact that most of the diamond deposits are located in the sparsely populated severe-climate areas in the far north. Secondly, most of explored deposits are in deep diamond mines, while the further drilling of mines for extraction operations and a switch to underground extraction will cause a decline in productivity and an increase in diamond costs. Meanwhile, new primary deposits will be unable to compensate for the drop in diamond production of the old ones.