YEREVAN.  Aug  6 (Interfax) - The government of Armenia and Russian diamond-mining monopoly Alrosa (RTS: ALRS) signed an agreement Monday on cooperation  in  the jewelry sector and polishing of gemstones, a source in the country's Economic Development and Trade Ministry's press service
told Interfax.

The   agreement   was   signed  by  Armenia's  Trade  and  Economic Development  Minister  Nerses  Yeritsian  and  Alrosa  president  Sergei Vybornov, who was on a one-day visit to Yerevan.
    
Vybornov  told  a  press  conference that Alrosa would be supplying Armenia with diamonds that are uneconomical to cut and polish in Russia.  He  said  the agreement called for three stages of cooperation, and
that the sides were at the first stage now. "During the second stage we' ll look  at forming joint ventures and, during the third stage, we could consider cooperation in the jewelry industry in Armenia," Vybornov said.
    
Vybornov  said the Russian jewelry market had big prospects. "We as the diamond  monopoly  ought to be developing the Russian market, and we could use  Armenian  jewelry  factories  to  place orders. The agreement elevates our relations to a new level," he said. Vybornov  did not specify which enterprises Alrosa might form joint ventures  with and how much in the way of rough diamonds it would supply to Armenia.  "We agreed on the main areas, but we're not yet prepared to talk about the details," he said.

Sergei  Ulin,  an Alrosa vice president, said a working party would meet in  Yerevan  in September or October to decide upon the enterprises in question and the terms for cooperation.  Armenia  has  not bought rough diamonds from Alrosa since last year because  prices  have  been  too high. Cut diamond production by Armenia
fell 22%  in  2006  compared  with  2005  to 88.048 billion dram ($242.2million),  and 31.6% year-on-year in the first quarter of 2007 to 12.583billion dram (current exchange rate is 337.09 dram/$1).  Alrosa  is  the  world's  second biggest diamond producer. It mines around a quarter of the world's diamonds.