Russia is seeking to strengthen ties with Brazil, India, China, and South Africa and other BRICS countries in response to tighter sanctions on diamonds from the G7 and EU.
Setting an agenda for “equal and fair interaction between the parties involved in all segments of the global diamond trade” was the focus of a roundtable discussion at the St. Petersburg International Economic Forum earlier this month.
Russia currently chairs BRICS (the initial letters of Brazil, Russia, India, China, and South Africa. Later additions are Iran, Egypt, Ethiopia, and the United Arab Emirates).
“The only universal mechanism for regulating the global diamond trade, the Kimberley Process Certification Scheme (KPCS), is being undermined by the attempts of numerous countries to introduce unilateral trade barriers,” said BRICS in a statement. Alrosa CEO Pavel Marinychev said: “New cooperation mechanisms will ensure the stability of the global diamond market and preserve the system of the free global trade of diamond products based on the core principles of the Kimberley Process.”
Russia warned back in November 2023 that sanctions on it diamonds would have a “boomerang” effect – harming the countries that imposed them more than Russia itself.
Nikolayev Aysen, head of Russia’s Yakutia republic, where state-controlled diamond miner Alrosa is based, told the BRICS audience: “Given the illegal unilateral restrictions that certain Western countries have imposed on Russian diamonds, it is crucial for us to support the efforts of ALROSA, which aim to diversify international supply markets. For example, this will make it possible to maintain the sustainable socioeconomic development of Yakutia.”
India’s exports of polished diamonds suffered a further drop in May, down by almost 15 per cent to $1.47bn.
But the year-on-year rate of decline shows some signs of slowing, according to new figures from the GJEPC (Gem and Jewellery Export Promotion Council).
It fell 20 per cent in January, 28 per cent in February, 27 per cent in March and 17 per cent in April.
Diamonds are faring significantly less well than India’s overall gems and jewelry sector, which saw revenue for April slip by 6 per cent to $2.48bn.
Manufacturers bought more diamonds year-on-year in April and May (up almost 2 per cent by volume) but the price slump means imports are down almost 10 per cent by value are down by almost 10 per cent to $2.39bn.
US Capitol building at sunset, Washington DC, USA.
US jewelers have warned Congress of the harm that new sanctions on Russian diamonds will cause for the entire retail sector.
The trade association Jewelers of America (JA) met with with a dozen Democratic and Republican lawmakers in both the House and Senate to voice concerns over the 1 September restrictions that will require all goods of 0.50-scts and above to enter G7 countries via Antwerp for verification.
They say a single import channel will “cause maximum damage to the global diamond and jewelry supply chain, while having minimal effect on Russia’s diamond revenues”.
JA is urging all its members to lobby Congress and explain that the way the restrictions are being implemented will hurt jewelry businesses.
“JA has been working tirelessly behind the scenes and this visit to Washington, D.C. was a critical step to ensure we minimize unnecessary disruptions to the U.S. diamond industry,” said JA president & CEO David J. Bonaparte.
He and fellow JA representatives also called for a “grandfathering” clause to cover goods imported before 1 March (when the 1.0-cts and above restriction was imposed) and for clearer guidance on whether the current size limit applied only to individual, loose diamonds or to the total weight of all diamonds in finished jewelry.
The US is rethinking restrictions on Russian diamonds after a wave of pushback from the industry and nations heavily involved in the diamond trade, Reuters reported on Monday.
Western countries have placed stiff restrictions on Russia’s diamond trade, with fresh sanctions in December banning the gems throughout the European Union. That’s a step up from the initial sanctions, which previously allowed the trade of Russian diamonds that were polished in other countries.
Diamond traders now need to self-certify that the gems they sell are not of Russian origin. By September, diamond traders in the European Union will need to send diamonds through a certification system in Belgium before selling them.
Those measures have helped crimp Russia’s war revenue, given that the nation is one of the largest producers of diamonds in the world. Yet the US, one of the world’s largest diamond consumers, could pull back on its commitment to implement the latest restrictions, three people familiar with the matter told Reuters.
Two sources said the US had pulled back on working with the G7 to implement the diamond ban and certifying that gems were not of Russian origin. Officials are “there but not engaging” in the discussion, one person said.
A senior White House official told Reuters the US would continue to work with the G7 on the Russian diamond ban, and that it had not changed its mind on the issue, but they noted several obstacles in enforcing the latest restrictions:
“We will want to make sure that we strike the right balance between hurting Russia and making sure that everything is implementable,” the official said.
The government has received pushback from firms and nations heavily involved in the diamond trade. Some African nations and Indian diamond polishers have complained about the latest restrictions, warning that the ban was faulty in its design and could raise problems in the industry. Diamond prices could also rise due to scarcer supply, they warned.
Virginia Drosos, the CEO of Signet, asked the US government to “stand against … the G7 Belgian solution,” according to a letter seen by Reuters.
De Beers, one of the world’s largest diamond miners, said it supported a ban on Russian diamonds but wants diamonds to be verified at the source of production, rather than in Belgium.
“The opportunities for, and likelihood, of Russian diamonds infiltrating the legitimate supply chain are in fact higher when you move further away from the source,” it told Reuters.
Russian diamond miner Alrosa has no plans to reduce production amid tougher Western sanctions, its chief executive Pavel Marinychev said on Thursday. The Russian finance ministry said last month that Russia will regularly buy diamonds from the sanctions-hit producer through a state fund, suggesting that Western restrictions on the country’s diamond exports may be having some impact. Group of Seven (G7) countries banned direct imports of Russian diamonds in January. A European Union and G7 ban on imports of Russia-origin diamonds via third countries came into effect last month.
A diamond held by dop is polished on rotating automatic cast iron lap
Prices showed signs of stabilizing during April, with an even mix of increases and decreases in many sizes, especially fancy cuts. Overall there were more clusters of price rises than we have seen of late.
It’s too early to positively identify a clear upward trend, but the “end of the lab grown boom” is arguably having an impact. Lab grown prices are now so low – in some case just 10 percent of natural – that many jewelers are opting not to stock them in inventory and are only buying them on consignment.
In addition the G7 sanctions, in place since 1 March, are now starting to bite, and to slowly push up prices.
They have effectively restored the De Beers monopoly, although its rough production is down by almost a quarter so far this year (as is Rio Tinto’s) and rough sales remain sluggish (down 18 per cent on last year). Meanwhile polished exports from India fell by 27 per cent during March to $1.2bn
Minespider, a leading traceability platform for tracking minerals and raw materials, and Star Diamond Corp., a Canadian corporation engaged in the exploration, acquisition, and development of mineral properties, have partnered to launch the Diamond Passport and comply with the new G7 rules.
G7 countries have put a direct ban on Russian diamonds and agreed to establish a verification and certification mechanism for rough diamonds to prove their origin, ensuring diamonds are not mined, processed, or produced in conflict zones.
Having over 6 years of traceability experience with companies like Google, Minsur, LuNa Smelter, and others, Minespider introduced its own Diamond Passport in March this year. The Diamond Passport contains all key information about the diamond, including its provenance data, the diamond’s unique DNA, such as size, shape, color, carat, clarity, cut, and specific inclusions (natural flaws or imperfections), certificates from gemological laboratories and other documentation about the diamond.
“Through our partnership with Star Diamond, we intend to significantly strengthen the company’s position in diamond mining at large-scale mining spots in Canada. The diamond industry requires a new reliable mechanism for the verification and certification of rough diamonds based on traceability, and we are proud to support this significant change with our robust technology and extensive experience in mineral traceability.” said Nathan Williams, CEO and Founder, Minespider.
Star Diamond Corporation is striving to ensure that diamond mining in Saskatchewan is conducted responsibly, with a focus on improving environmental performance and accompanied by strong social performance.
“Star Diamond is excited to partner with the team at Minespider as we prepare for the eventual production and retailing of our world-class conflict-free Saskatchewan diamonds. It is our aim to provide wholesalers/retailers and end purchasers with a complete provenance report on all of our gem-quality diamonds. This will ensure that end purchasers may rest assured that the diamond they purchase for their loved one is conflict-free and ethically produced in Canada.” added Ewan Mason, President and CEO, Star Diamond Corporation.
Antwerp World Diamond Centre (AWDC) chief executive Ari Epstein resigned unexpectedly on Thursday, the AWDC’s board of directors said in a statement.
A spokesperson for AWDC, Belgium’s main diamond industry group, said on Friday that Epstein, who had been CEO for 13 years, did not wish to communicate about the reason for his sudden departure, but Belgian financial newspaper De Tijd reported that Russian diamond sanctions had been the cause of conflict between the diamond sector and the Belgian government.
AWDC did not say who would replace Epstein as CEO. Epstein did not immediately respond to a request for comment sent via LinkedIn.
Following an EU ban on Russian-origin diamonds that took effect on March 1, rough and polished diamonds have to enter the EU and G7 countries with documentary proof and declarations that the stones are not of Russian origin.
Antwerp’s diamond dealers have said they are facing long and costly delays as a consequence.
Antwerp police conducted six raids on Wednesday and made four arrests as part of an investigation into some diamond imports suspected of being Russian-origin, Antwerp’s public prosecutor office said in a statement on Friday.
The investigation is the first related to the EU and Group of Seven (G7) import ban on diamonds from Russia that began on Jan. 1 to punish Moscow for its invasion of Ukraine. A wider ban on Russian-origin stones imported via third countries began on March 1. Russia’s state-owned company Alrosa is one of the world’s largest diamond miners.
The investigation was launched after customs officials seized diamonds in late February, the statement said. A spokesperson for the prosecutor said three shipments had been confiscated.
The Belgian city has for centuries been a global diamond hub, particularly for rough diamonds, though 90% of polishing is now done in India.
Sources familiar with the matter said the value of the three seized shipments was in the millions of euros. One source specified the overall value was around 8 million euro ($8.64 million).
A spokesperson for the prosecutor declined to comment on the combined value of the shipments. In the statement, the prosecutor’s office added that documents and digital media were seized during the raid.
Source: Reuters
Would be interesting to know how they test for origin
Antwerp’s diamond dealers face long and costly delays following an EU ban on Russian-origin diamonds that took effect on March 1 and has slowed imports, they say in a letter seen by Reuters.
The letter, dated March 13, said the disruptions would erode the competitive advantage of the centuries-old Antwerp diamond trade. It was addressed to Belgium’s main diamond industry group, Antwerp World Diamond Centre (AWDC), and requested a review of the new procedures.
Any impact is likely to be reduced by sluggish market conditions. Diamond inventories are high and prices have fallen. Paul Zimnisky, a global diamond analyst, said last month that prices were down 25% from their early 2022 peak.
Al Cook, CEO of mining company Anglo American’s De Beers’ diamond business, has said the miner would reduce production this year in response to surplus supply.
“While we fully support the decisions taken by Belgium, the European Union, and the G7 nations, in regards to the sanctions of January 1st 2024, the implementation of the measures to enforce the sanction has adversely affected all of our operations,” said the letter, signed by over 100 local firms.
“The intention was to prevent the flow of diamonds from sanctioned states, but the reality we face is the severe disruption of our supply chains, and alienation from the rest of the global trade.”
A Belgian government official said the delays were temporary and were easing.
The EU and Group of Seven (G7) countries agreed to ban direct imports of Russian diamonds to their markets as of Jan. 1 and before phasing in a full ban on Russian-origin stones via third countries from March 1 because of Moscow’s war in Ukraine.
Russia’s state-run Alrosa, which together with De Beers is one of the world’s top diamond producers, was also placed under sanctions by the EU.
Diamond hub Antwerp remains the world’s biggest diamond hub though 90% of stones are polished in India. Belgium pushed hard for the G7 to adopt a version of its proposed plan to try to prevent Antwerp from losing more business after major Western jewellers began eschewing Russian stones.
Diamond dealers said their shipments have been held up for over a week at customs even if the gems were straight from African producers.
The Belgian government official said shipments pending would be processed within 24 hours.
“The indirect ban coincided with the Hong Kong Diamond Fair which is an annual peak period… This, in combination with the expected teething problems caused some initial delay in processing of shipments during the first days,” he said.
Diamond dealers say they expect more problems when the additional tracing requirements take effect from September.
“We see the procedures will cause Antwerp to further lose competitive advantage… rather than deal a meaningful blow to any sanctioned products,” the letter said.
“The current trajectory threatens the existence of Antwerp’s diamond industry, a heritage of six centuries.”
The head of the AWDC, Ari Epstein, said the group would soon present the new measures, adding it was “acutely aware of the challenges and disruptions this timing may have caused”.
“Let me be unequivocally clear: the violation of sanctions is criminal in nature and not taken lightly by governments or our organization. Our commitment to compliance… is unwavering and absolute,” Epstein said in a statement.
Source: Dmitry Zhdannikov and Julia Payne mining.com
