US embassy cable - 04YEREVAN2320

UNCLAS SECTION 01 OF 03 YEREVAN 002320 
 
SIPDIS 
 
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E.O. 12958: N/A 
TAGS: KTDB, BBSR, BEXP, BTIO, AM 
SUBJECT: (IMI) OVERVIEW OF ARMENIA'S DIAMOND-CUTTING 
INDUSTRY 
 
 
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SUMMARY 
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1.  This cable reviews the diamond-cutting industry in 
Armenia as of October 2004.  It includes an overview and 
contact information for major diamond-cutting enterprises 
and a discussion of the possible advantages in Armenia for 
foreign investment.  End summary. 
 
2.  Diamond processing has been one of the most rapidly 
developing industries in Armenia.  By value, diamonds are 
now Armenia's largest export and import.  In value-added 
terms the industry's production has risen from USD 89 
million in 1999 to USD 250 million in 2003.  All the large 
diamond factories have capacity for expansion, and are open 
to any foreign cooperation that can help them procure 
supplies of raw diamonds, the industry's limiting factor. 
 
3.  Before independence, Armenia boasted one of the seven 
large Soviet diamond-cutting plants.  Armenia still has a 
generous allowance of raw diamonds under Russia's export 
quota system, but the rising price of Russian diamonds has 
meant that the quotas have gone unfilled while diamond 
processors have turned to other suppliers and agreements 
with western firms. 
 
4.  Currently, there are about 50 companies active in 
diamond cutting in Armenia.  They can be divided into three 
groups: 
 
--  Foreign-owned companies that ship their own diamonds to 
Armenia for processing (Shoghakn, Arevakn, Lori, and 
Diamotec Factories); 
 
--  Companies that buy raw diamonds from their own suppliers 
and sell the finished product through their own distribution 
channels (Diamond Company of Armenia); and 
 
--  Locally-owned companies that polish diamonds on a fee- 
for-service basis for foreign customers who supply the uncut 
diamonds and take back the finished products (Andranik, 
Aghavni, Dzoragyugh factories). 
 
5.  Armenia's largest diamond factories are those wholly 
owned by foreign firms who are both the primary supplier and 
client.  Belgium's Arslanian Cutting Works, owned by Haik 
Arslanian, an ethnic Armenian businessman from Antwerp, 
employs about 400 diamond cutters in its Lori factory that 
produces USD 75 million in diamonds annually.  The Belgian 
company Tashe operates a smaller diamond cutting plant, 
Arevakn, in the village of Nor Hajn, Kotayk province.  In 
the same village Russian-Israeli businessman Lev Leviyev 
owns a processing plant that employs nearly 1,500 cutters 
and exports its entire product for sale in Israel.  The 
Belgian luxury jewelry company Rosy Blue owns and supplies 
the Diamotec polishing company, which employs 700 diamond 
cutters in the town of Talin, Aragatsotn province. 
 
6.  The Diamond Company of Armenia (DCA) produces USD 30 
million of cut diamonds annually.  Unlike the other large 
diamond factories, DCA is independently owned and finds its 
own suppliers of raw diamonds and controls the distribution 
of its product.  DCA employs 1,000 people. 
 
7.  Several smaller Armenian firms (namely, the Andranik, 
Aghavni, Dzoragyugh factories) finish diamonds and other 
gems on a fee-for-service basis.  For interested investors, 
Armenia's diamond industry offers the following advantages: 
 
-  Availability of inexpensive, highly qualified diamond 
cutters; 
-  Availability of modern equipment at the existing plants; 
-  No taxes on imports of raw materials and exports of 
finished products; 
-  No taxes on repatriation of profit; and 
-  Government support of the industry aimed to facilitate 
new investment. 
 
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MAJOR DIAMOND CUTTING COMPANIES 
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Aghavni 
Arshak Mkhitaryan, Director 
Nor Geghi village 
Kotayk province 
Tel: (374-24) 21-434 
 
Andranik 
Vladislav Tovmasyan, Director 
Nor Hajn village 
Kotayk province 
Tel: (374-24) 42-650 
Fax: (374-24) 42-667 
E-mail: info@diamonds.am 
Website: www.diamonds.am 
 
Arevakn 
Vardan Andreasyan, Director 
2 A. Harutyunyan Street 
Nor Hajn village 
Kotayk province 
Tel: (374-24) 41-067 
Fax: (374-24) 41-068 
 
Diamond Company of Armenia (DCA) 
Gagik Abrahamyan, President 
1 Ayasi Street, 
Yerevan-82 
Tel: (374-1) 589-993 
Fax: (374-1) 543-916 
E-mail: dca@arminco.com 
Website: www.dca.am 
 
Diamotec 
Edgar Hovhannisyan, Director 
Town of Talin 
Aragatsotn province 
Tel: (374-49) 02-282 
 
Lori 
Grikor Shahnazaryan, Deputy Director 
Nor Hajn village 
Kotayk province 
Tel: (374-24) 23-7ll 
E-mail: grikor@lorinor.am 
 
Shoghakn 
Sergey Gasparyan, Managing Director 
Nor Hajn village, 
Kotayk province 
Tel: (374-1) 282-592 
Fax: (374-1) 281-769 
E-mail: diamonds@shoghakn.am 
Website: www.shoghakn.am 
 
Yerevan Jewelry Plant 
Emil Grigoryan, President 
12 Arshakunyats street, 
Yerevan-23 
Tel: (374-1) 525-321 
Fax: (374-1) 525-713 
 
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KEY CONTACTS 
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Ministry of Trade and Economic Development of Armenia 
Gagik Mkrtchyan, Head of Diamond Cutting Industry Department 
5 Mher Mkrtchyan Street, 
Yerevan-10 
Tel: (374-1) 566-198 
Fax: (374-1) 566-198 
E-mail: g_mkrtchian@yahoo.com 
 
Association of Jewelers and Diamond Manufacturers of Armenia 
Emil Grigoryan, President 
Arthur Gyulnazaryan, Managing Director 
12 Arshakunyats street, 
Yerevan-23 
Tel: (374-1) 563-893 
Fax: (374-1) 544-202 
E-mail: goldjew@infocom.am 
 
GODFREY