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Russia's Alrosa, the world's largest diamond producer by output, plans to boost revenue from selling rare, coloured stones where demand is stable, although it is a niche business.

Nature gives fancy colours to about one in every 10,000 rough diamonds of gem quality that are mined around the world.

The stones that can be blue, pink or green form a special asset class, relying on a consumer passion for something exotic and unusual. This also means they are less affected by other factors driving supply and demand in the main diamond market.

The global market for polished coloured diamonds is now dominated by Rio Tinto and Anglo American's De Beers. But state-controlled Alrosa aims to compete.

"We hope that … Alrosa will become one of the global leaders in sales of polished coloured diamonds," Evgeny Agureev, the head of Alrosa sales division, told Reuters.

He said the stones would come straight from the producer, ensuring "transparent origin" in an industry that has been working hard to prevent stones that have been mined in areas that could fuel conflict from reaching the market.

Alrosa and De Beers produce about half of the world's rough diamonds of all types, white or coloured.

But Alrosa's marketing system can sometimes lack the more sophisticated image of its rivals, given the firm's Soviet past. It has tended to sell rough diamonds in bulk, without sifting out the coloured gems that can earn a premium.

Till now, its diamond polishing business of clear and coloured stones has been modest, generating just 2 percent of its total $4.6 billion revenue in 2017.

Agureev said that, starting from 2018, Alrosa would sort its diamonds into 19 categories of stones and would aim to polish most...

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