Report on Tajikistan's Ruby Industry

UNCLAS DUSHANBE 001554 SIPDIS SENSITIVE DEPARTMENT FOR EEB/ESC/TFS John Marshall Klein, and EAP/MLS Laura Scheibe E.O. 12958: N/A TAGS: ETRD EMIN ECON PREL EFIN TI SUBJECT: Report on Tajikistan's Ruby Industry REFTEL: State 127059 ¶1. (U) This message is sensitive but unclassified. Please protect accordingly. ¶2. (U) Embassy staff met with Isojon Kurbanov, Deputy Head of the Mining Department in the Tajik Ministry of Energy and Industry to discuss reftel. According to Kurbanov, in Tajikistan state authorities control and monopolize mining, production, and export of precious stones, including rubies. There are several agencies and levels of government involved in mining and exporting precious stones, including the Presidential Administration, the Government of Tajikistan, the Ministry of Energy and Industry, the State Mining Technical Control Agency (Gosgortekhnadzor),the Ministry of Finance, the State Commission on Evaluation, and the state-owned enterprise Djamast ("Amethyst" in English). The fundamental document regulating precious stones operations in Tajikistan is the Resolution of the Government of Tajikistan No. 215, dated May 6, 2006, entitled "Rules on sales and purchase of precious stones in Tajikistan." ¶3. (U) According to Kurbanov, in the past only Djamast had the authority to conduct geological surveys and mine precious stones in Tajikistan. However, the Government recently granted a license to a South Korean firm to conduct geological surveys and mining in Tajikistan. ¶4. (U) Djamast reports annually to the Ministry of Energy and Industry and to the State Mining Technical Control Agency on the results of geological surveys and production of precious stones. Every year by February 15 Djamast must report on annual estimated deposits and mining output using form "5-GR." Djamast must also submit a classified report, "1-DMK," to the State Statistical Agency of Tajikistan on production volumes and activities at each mine. ¶5. (SBU) Although Djamast issues certificates of origin for precious stones mined in Tajikistan, according to the law, Djamast must sell all precious stones to the Ministry of Finance. The Ministry then separates the stones by quality and sells those of lower quality on the open market. The higher quality stones are kept in a Ministry safe until the President personally authorizes their export. ¶6. (U) Tajikistan's rubies are of lower quality then Burma's because Tajik operations use explosives to mine rubies, whereas Burmese miners extract them by hand. Tajikistan's official ruby export markets are mainly Russia, Germany, the Czech Republic, South Korea, and Thailand. In Thailand a company named called Yavorskyy (yavorskyy@yahoo.com) is said to buy Tajik rubies. ¶7. (SBU) However, according to Embassy contacts in the Gorno-Badakhshan Autonomous Area, where Tajikistan's rubies are mined, there is a healthy illegal trade in rubies originating in the areas of Murgab and Khorog. There have reportedly been criminal cases in Pakistan and India involving the seizure of illegally-mined and exported stones from Tajikistan. The official mining season in Murgab runs from April through mid-October, when cold weather shuts down state operations. This does not mean that activity comes to a halt, however. According to Embassy contacts, scores of illegal miners brave the frigid temperatures to extract rubies using explosives. Although Kurbanov said that Tajikistan's State Security Committee (GKNB) is aware of these activities, the Embassy is aware of no effective measures taken to stop them. ¶8. (U) Mr. Kurbanov declined to discuss the actual amount of rubies Q8. (U) Mr. Kurbanov declined to discuss the actual amount of rubies produced in Tajikistan, or to state their market price. In late 2006, however, the Ministry of Energy and Industry reported to the media that Tajikistan hoped to reach 42 million somoni ($12.35 million) worth of annual production of semi-precious and precious stones by 2015. ¶9. (U) Industry representatives were unwilling to provide detailed chain-of-custody information on stones originating in Tajikistan. Even if they were able to do so, however, the amount of illegal production would make such information questionable. ¶10. (U) Post will report on any further information about ruby production in Tajikistan that becomes available. JACOBSON