MOSCOW - The global recession sapped demand for all kinds of commodities - like steel and grain - yet small burlap bags are still arriving by the planeload at Russia’s state-owned diamond company.

Each day, the contents of the bags spill into the stainless steel hoppers of the receiving room. The diamonds are washed and sorted by size, clarity, shape and quality; then, rather than being sent to be sold around the world, they are wrapped in paper and whisked away to a vault - about three million carats worth of gems every month.

“Each one of them is so unusual,”said Irina V.Tkachuk, one of the few hundred people, mostly women, employed to sort the diamonds, who sees thousands of them every day.“They are all so beautiful.”

It could be years before another woman admires that stone. Partly because of its reluctance to lay off workers, Russia this year surpassed De Beers as the world’s largest diamond producer. But the global market for diamonds is so dismal that the Alrosa diamond company, 90 percent owned by the Russian government, has not sold a rough stone on the open market since December, and has stockpiled them instead. As a result, Russia has become the arbiter of global diamond prices.

Though it is a major commodity producer, Russia has traditionally not embraced policies that artificially keep prices up. In oil, for example, Russia benefits from the oil cartel’s cuts in production, but does not participate in them.



Diamonds are an exception.“If you don’t support the price,”Andrei V.Polyakov, a spokesman for Alrosa, said,“a diamond becomes a mere piece of carbon.”

In an attempt to carefully calibrate its re-entry on the global market, without forcing prices still lower, Russia is relying on two things: the Soviet-era precious gem depository - created to hold jewelry confiscated from the aristocracy after the 1917 revolution - and capitalist investors, who Alrosa hopes will buy diamonds as an investment, like gold.

Until last year, De Beers produced about 40 percent of the global rough stone supply, and Alrosa 25 percent. But De Beers, which is prohibited under a European Union antitrust agreement from stockpiling, closed mines in response to the glut in rough stones. Russia is loath to do that, as authorities in Moscow, concerned about potential unrest by disgruntled unemployed workers, try to keep workers on the payroll.

In the first quarter, De Beers reduced output by 91 percent compared with the previous year. The diversified mining companies Rio Tinto and BHP Billiton also curbed production.

Meanwhile, the market for wholesale polished diamonds, worth about $21.5 billion, is expected to fall to about $12 billion in 2009, according to Polished Prices, an analytical service for the industry.

Russia historically remained mostly a quiet player in the market. But after the collapse of the Soviet Union, the Russian diamond industry created a formal alliance with De Beers, selling the South African company half of each year’s production at a discount intended to subsidize De Beers’s generic diamond advertising undertaken in the 1990s, mostly in the United States.

Now, the Russians are in control. Alrosa is seeking to ignite demand by selling gems under long-term contracts to wholesale buyers in Belgium, Israel, India and elsewhere. It is also working with a Moscow investment bank, Leader, a subsidiary of the Russian natural gas monopoly Gazprom, to market diamonds to investors. Under the plan, investors would buy diamonds but the gems would not be released to jewelers for several years.

At the Alrosa unit that receives diamonds, called the United Selling Organization, Elena V.Kapustkina sorts about 45,000 carats of diamonds every day.

“It’s just a job,”she said. When asked whether diamonds had lost their romance for her, Ms.Kapustkina blushed.

In fact, she said, her husband, a truck driver, gave her a half-carat ring 22 years ago.“Of course I love it,”she said.“It’s from my husband.”