The Soviet Union’s Institute of Geology and Geophysics in Novosibirsk has begun building a 2,000 –square-meter gem-producing factory but builders must wait till next year before construction starts up again, says deputy director and geochemist Vitaly N. Efremov.

            The four-story factory, with an undisclosed number of workers, is to help raise the institute’s capacity to produce “millions of carats” of raw materials, including synthetic emeralds, alexandrites and spinel, Efremov said in a recent interview in Bangkok.

The institute is the Siberian branch of the USSR’s Academy of Sciences. In June, it signed a 10-year agreement with Pinky Gems Co. of Thailand under which it would supply the latter with synthetic raw materials. Efremov said it would involve more than 100,000 carats of synthetic emeralds a year alone.

The arrangement with Pinky Gems is good, says the institute’s consultant Gennadi Yu, Khlebnikov, who noted that problems were more likely “inside the Soviet Union.” Khlebnikov, who heads the privately-run Sotrudnichestvo, handles consultancy work in engineering, marketing, consulting and productions.

            Restrictions involving export licenses and other limitations show that “perestroika” or political restructuring is not going very smoothly, Khlebnikov said. Soviet President Mikhail S. Gorbachev popularized perestroika in 1985 when he came into power. Differences between the state and the Russian Federation, the largest of the 15 republics in the Soviet Union, over rights to diamond areas sited in that republic, had stalled a five-year project worth 5 billion U.S. dollars, Efremov said.

            “Before perestroika, the state had certain authorities. During perestroika, the state signed with De Beers but the Russian Federation (President Boris N. Yeltsin) disagreed with that contract. Then the state authorized Almazjuvelirexport to sign the contract with De Beers. What is going on?” he asked, reflecting the confusion that often prevails in doing business with Moscow.

            De Beers Centenary, the new Swiss-based operation of the South African group, has secured an exclusive contract to export and market Soviet diamonds for the next five years. In return for entering the Central Selling Organization agreement, the Soviets are to get 1 billion U.S. dollars as an up-front payment which has been secured against stockpiles of diamonds held by the Soviet agency, Glavalmazzoloto. The advance will be repaid from sales of Soviet diamonds to be made on the world markets over the five years from November this year, which are estimated to top 5 billion dollars.