Major jewellers to cease buying Russian-origin diamonds after increased scrutiny

Alrosa diamonds in Moscow
Russian diamonds

Major jewellers are ditching Russian diamonds after facing increased scrutiny over how Russia’s state-controlled diamond monopoly could fund Putin’s war on Ukraine.

A host of high-profile international jewellers, including American brand Tiffany & Co, Swiss watch and jewellery-maker Chopard, Signet, the largest retailer of diamond jewellery, and Pandora, the world’s largest jeweller, have released statements saying they will stop buying diamonds – or in the case of Pandora, any materials – of Russian origin.

In mid-march, the Guardian reported on growing concerns that trade with Russia’s partly state-owned diamond miner was lining Russian state coffers, and could be funding Russia’s invasion of Ukraine; as well how jewellers could easily – and legally – circumnavigate sanctions by buying Russian stones processed through India. In the days since, multiple major retailers said they would stop sourcing Russian diamonds. This week, Pandora and Chopard were the latest to announce the move, with both saying they had instructed all suppliers to stop sourcing raw materials of Russian origin. They followed moves by Tiffany and Signet earlier in March.

Russia produces about 30% of the world’s diamonds – 98% of which are mined and sold by Alrosa, an enormous mining monopoly with close ties to the Kremlin. A third of Alrosa is owned by the central government, and another third by regional governments – the Russian republic of Yakutia and its administrations. The company brings in significant profits for its government shareholders, reporting sales of $4.16bn in 2021, resulting in a net profit of 91bn rubles ($943m). Putin has said in the past that it “gives serious revenues to the federal budget and regional budget”.

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Both the US and UK have introduced sanctions forbidding companies from doing direct business with Alrosa. The sanctions alone, however, are unlikely to stop the flow of Russian diamonds to the west, because the vast majority are exported rough to India, where they are cut and polished. Under US customs rulings, this is considered a “significant transformation” – so polished diamonds can be legally imported as an Indian product, not a Russian one.

Decisions over whether to truly pause trade of Alrosa’s diamonds will therefore fall to the industry, and to key certification bodies. Within the sector, however, a storm has been brewing over “responsible sourcing” groups that have remained quiet on sourcing of Russian diamonds, with multiple high-profile members resigning in protest.

The Responsible Jewellery Council (RJC) – one of the crucial jewellery watchdogs – was set up to help regulate the sector, improve its reputation, promote responsible sourcing, and eliminate “conflict diamonds” from supply chains. The Guardian reported earlier in March that the council had been accused of silence over Russian diamonds although it has issued guidance that members should comply with sanctions. While Alrosa has stepped down from the organisation’s board, it remains a member and has kept its “responsible” certification. The council has a number of past or present long-term Alrosa customers on its board.

Now, the council is facing a wave of exits. Brands that have announced they are leaving over the Russian diamonds issue include Pandora, Richemont, the owner of Cartier, and Kering, the owner of high-fashion brands including Gucci and Saint Laurent. On Wednesday, the organisation’s executive director Iris Van der Veken resigned over its handling of the issue. Van der Veken declined to comment.

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In a statement, Richemont, the owner of Cartier, said it was leaving the organisation in protest. “Richemont and its maisons do not wish to be members of an industry organisation that includes companies that contribute to financing conflicts and wars.”

Pandora representatives said the company was leaving the council after 12 years as a member, over its “failure to suspend Russian companies’ memberships and responsible business certifications and urge its members to suspend business with Russia. Pandora had previously requested that RJC take such actions.”

“The war requires all businesses to act with the utmost responsibility regarding any interactions or business dealings with Russia and Belarus. Pandora cannot in good faith be a member of an association that does not share our values,” chief executive Alexander Lacik said.

Gucci and Balenciaga owner Kering said the brand “does not want to be associated in any way with business practices that contribute to an endorsement of war.”

“The RJC is at a crucial crossroads,” said Cristina Villegas, director of the Mines to Markets program at development organisation Pact. “The current definitions of responsibility are silent on what happens when a company’s assets are being used to directly and indirectly fund an unprovoked conflict that’s displaced millions of people.”

RJC chair David A. Bouffard said in a statement that the council had “commenced an arm’s length, independent, third-party legal assessment … to consider the status of Alrosa as an RJC member”.

“The pace of this process may be frustrating, but this is an unprecedented situation, which is constantly changing and requires that the time be taken, to ensure that due process is followed as exhaustively as possible.” Bouffard said the process would conclude “imminently”.

Brad Brooks-Rubin, strategic adviser to the council, said the exodus of members was significant for the industry. “If the current trajectory continues and more members [leave]… there’s not another competing organisation in the industry,” he said. “That leaves the jewellery industry exposed to real concerns about: what standards are you implementing? What does it mean to be responsible, sustainable, ethical? The RJC has provided that – and if it’s not the RJC, what takes its place?”

Brooks-Rubin had spoken out earlier in March to criticise the lack of action or transparency on Russian diamonds, saying the council’s action against Alrosa had been “insufficient”. He said decisions about boycotting diamond-producing countries were complex, with millions of international jobs and livelihoods depending on the flow of diamonds.

“If 30-40% of the supply chain is off the market, then that affects everybody. That affects prices, that affects the supply chain, that affects every entity in the entire industry.” He said the council needed to be clear and transparent about the challenges it faced.

Source: theguardian

De Beers returns diamond sights to Gaborone as travel opens up

De Beers Rough Diamond

De Beers is bringing its sales activities back to Botswana’s capital Gaborone, it said on Thursday, almost two years after the Covid-19 pandemic forced them to be held in cities including Antwerp and Dubai.

The Anglo American subsidiary had moved its pre-sale viewings – a marketing exercise to showcase its new batch of diamonds – from Botswana in May 2020 when travel restrictions to curb the pandemic prevented its international customers from flying to the Southern African country.

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Customers from across the world fly ten times a year to participate in week-long diamond sales, known as sights, in Botswana, which accounts for 90% of the company’s total annual sales.

“From March, we are bringing back the sights to Gaborone and we look forward to meeting again as an industry after a long time,” De Beers Executive Vice-President Diamond Trading Paul Rowley told a press briefing.

“We will of course maintain some flexibility for some customers who will still not be able to come to Botswana.”

The return is expected to bring in valuable foreign exchange to Botswana, which had lost out additional earnings from travel, hospitality and ancillary services, even though sales income still came to the country.

The majority of diamond mining in the country is done by Debswana, a company jointly held by De Beers and the Botswana government, which sells 75% of the diamonds mined to De Beers. The remaining 25% of the diamonds is sold to state-owned Okavango Diamond Company.

Apart from the large business delegations who visit the country ten times a year, the pre-sale viewings are known to attract more than 100 high net worth diamond magnates who spend heavily in the country.

Source: mining.com

US Bans Imports of Russian Diamonds

Rough diamonds

US President Joe Biden has issued an executive order prohibiting the import of “nonindustrial” diamonds originating in Russia.

The measures, which the White House announced on Friday, follow Russia’s continued war in Ukraine and build on earlier US sanctions outlawing debt and equity transactions with Alrosa and its CEO, Sergey Ivanov. Those previous rulings did not constitute an outright ban on shipping Russian goods into America.

The latest order will affect goods from Russian miner Alrosa, which supplies around 30% of global rough supply by volume. Biden has also prohibited the export of luxury goods from the US to Russia.

On the same day, Signet Jewelers — an Alrosa contract client — announced it had “suspended business interaction with Russian-owned entities since the beginning of the invasion.” The Gemological Institute of America (GIA) has stopped taking submissions of Russian products for its Diamond Origin Report service, and has also paused all transactions with laboratory submissions from sanctioned entities.

Meanwhile, Alrosa has delayed publication of its monthly sales data until further notice. The company was unavailable for comment at press time on Sunday.

Source: Diamonds.net

Surging Diamond Demand Helps Botswana Trader Post Record Sales

Botswana Diamond Mine

Botswana’s state-run diamond trader reported record revenue last year with sales surging almost five fold after U.S. imports recovered from a Covid-19 induced slowdown.

Okavango Diamond Company sold $963 million of rough diamonds last year, said Dennis Tlaang, a company spokesman. The revenue was the most since the company began operations in 2012, he said.

“The demand for natural rough diamonds remained strong throughout 2021 driven primarily by positive market sentiment in key markets such as the United States,” Tlaang said.

Sales may rise further this year after De Beers, the world’s biggest producer of the stones, pushed through one of its most aggressive diamond price increases in recent years. Okavango also got higher than normal prices in the sole auction it held this year, Tlaang said.

De Beers Implements Big Diamond Price Hike as Demand Runs Hot. A Buying Frenzy in Cheap and Tiny Diamonds Sends Prices Soaring. Diamond Sold for $12 Million in Cryptocurrency at Sotheby’s. “We believe this is a good indicator of the market dynamics of 2022, at least for the first half of the year,” he said. “The company will continue to drive customer participation by marketing its rough diamond assortment in key markets such as Antwerp and Dubai.”

Under a 2011 agreement between De Beers and the government of Botswana, Okavango purchases 25% of the nation’s annual production for independent marketing, while the balance is sold through the De Beers’ trading network.

Source: bloomberg

Rough Shortages Could Last 10 Years, Bain Says

The current shortfall in rough production will likely continue for up to a decade, while both demand and prices will remain strong, according to Bain & Company.

Output fell 20% to 111 million carats in 2020 as the coronavirus pandemic forced companies to shut deposits, Bain said Monday in “The Global Diamond Industry 2021-22,” the latest edition of its annual report on the sector. Production increased 4.5% to 116 million carats in 2021, when mines reopened. However, solid demand for diamond jewelry depleted resources, as did the closure of Rio Tinto’s Argyle mine in Australia, which accounted for 11 million carats a year.

“Demand was so strong, production levels had to be supplemented by inventory,” Bain partner Olya Linde told Rapaport News. “We have not seen such strong demand for a long time. Actually, I have not seen such a big boom in all my time in the industry. Going forward, it’s not that easy to just add production. So, while demand will continue to remain strong, the ability for players to increase production in the short term is very limited.”

Miners’ “technical” inventories — goods that have been extracted but are not yet ready for sale — fell to an all-time low of 29 million carats in 2021, Linde claimed.

Over the next five years, rough output is expected to grow between 1% and 2% annually, reaching just over 122 million carats by the end of 2022 — still 10% to 15% below pre-pandemic levels.

Rising jewelry demand

In 2021, demand for diamond jewelry rose 29% globally and 38% in the US, well above pre-pandemic figures. China, the second-largest market, showed similar growth, Linde noted.

“At the end of the consumer holiday season and coming into the new year, there is still a lot of interest and demand,” she explained. “Even in 2022, we can expect that demand will continue, probably not at the same level of recovery, but it will definitely be robust enough. Although we don’t have a crystal ball, and don’t know how prices will behave for sure, given that supply is limited, it sets a foundation to support very healthy price growth across categories.”

Lack of new supply

The dearth of new mines coming online as others go offline or approach their end of life is also contributing to the gloomy production forecast. While exploration is underway in Botswana, Angola, Australia and Canada, the only project that will significantly add to output in the near term is the Luaxe mine in Angola, Linde said.

“We do not expect production to recover to 139 million carats [seen in 2019] in the next five years, for sure, and even not in the next 10 years, honestly, unless there will be a major unexpected discovery that could be brought up to production fairly quickly,” she noted. “We have to remember not only do we have a very limited number of new projects, but existing mines also have declining production levels.”

Filling the hole

While availability will decrease across most categories, it is unlikely lab-grown diamonds will cover the natural-diamond shortfall, as they are doing well in their own, separate category, Linde said.

Growth in synthetics over the past year was likely supported by both a decrease in prices, as well as higher transaction volumes, she explained.

“I don’t believe that one category is taking market share away from the other,” she added. “If you look at last year, if the market is operating purely on substitution, you would be hard pressed to really say where all this demand is coming from. In the US, it far outgrew pre-pandemic levels. What that suggests to me is that there are additional consumers that are coming to make lab-grown diamond purchases that we have not seen before in the diamond sector.”

Source: Diamonds.net

BlueRock Concerned over Cash-Flow Shortage

Rough from the Kareevlei mine

BlueRock Diamonds is in talks to receive financial help after operations at its Kareevlei mine in South Africa paused due to a possible safety breach.

“The suspension has impacted near-term cash-flow expectations, exacerbated by the fact that there is no planned diamond tender in Kimberley [in South Africa] in December,” BlueRock said last week. “The company is assessing how best to meet its working capital needs over this period.”

The miner is considering funding its December production through its existing relationship with Delgatto Diamond Finance, it explained.

While mining is on hold, meaning BlueRock cannot source any new production, it is currently processing ore stocks that built up before the rainy season began, management noted. The company still expects to meet its outlook of 22,000 to 26,000 carats for the full year, but believes output will be toward the lower end of that.

Last week, the Department of Mineral Resources and Energy (DMRE) visited the site and issued a notice under Section 54 of the Mine Health and Safety Act, which enables inspectors to call for the suspension of mine operations if they identify possible danger.

“The company remains in discussion with the DMRE in relation to the issues raised regarding BlueRock’s mining activities that remain suspended, and hopes to resolve these in the near future,” BlueRock added.

Source: diamonds.net

Lucapa Sales Surge in Buoyant Market

Lucapa Diamond Company

Lucapa Diamond Company’s revenue rose in the third quarter amid strong demand and an increase in sales volume.

Sales from the miner’s Lulo deposit in Angola and Mothae in Lesotho soared 86% to $8.6 million for the three months ending September 30, it said last week. Sales volume jumped 57% to 15,690 carats, outweighing a 14% drop in the average price to $995 per carat.

“The market for diamonds continued to be buoyant in a constrained rough-supply environment,” said Lucapa managing director Stephen Wetherall. “As a result, we have upgraded our full-year guidance.”

Production from Lulo increased 1% year on year during the quarter to 9,444 carats, with the miner recovering 83 diamonds above 10.8 carats. The largest of those was a 94-carat, D-color, type IIa white stone. Lucapa also unearthed several fancy-pink diamonds during the quarter, it noted.

Output from Mothae came to 9,567 carats, with 60 diamonds weighing more than 10.8 carats. The Australia-based miner recovered a 51-carat stone, along with a number of fancy-light pinks and yellows. Lucapa did not produce any rough from Mothae during the same period last year, as the site was on care and maintenance due to Covid-19-related regulations in Lesotho.

Lucapa has made progress toward satisfying the conditions for its acquisition of the Merlin mine in Australia. It believes the final outstanding conditions will be dealt with in the fourth quarter.

The company upgraded its guidance for the full year due to the strong demand. It expects revenue to be between AUD 66 million ($48.9 million) and AUD 71 million ($52.6 million), compared to the AUD 50 million ($37 million) to AUD 56 million ($41.5 million) it forecast in May.

The miner is also conducting exploration at the Brooking lamproite project in Australia and the Orapa site in Botswana.

Image: A selection of rough white, pink and yellow diamonds sold during the quarter.

Source: Diamonds.net

Letšeng Yields Two Diamonds over 100ct.

245-carat rough

Gem Diamonds has unearthed two large rough stones from its Letšeng mine in Lesotho, marking the fourth and fifth diamonds from the deposit over 100 carats this year.

The stones — weighing 245 and 102 carats — are high-quality, white, type II diamonds, the miner said Monday. The company found both stones on the same day.

The recoveries follow that of two diamonds weighing 370 and 254 carats in May. The company also discovered a 146.9-carat rough in January.

Output of large stones has been sluggish in the first half of the year as Gem Diamonds mined lower-value areas of the deposit, it explained. In the first six months of the year, the company unearthed three 100-carat-plus diamonds, compared to seven in the same period of 2020. Last year, Gem Diamonds recovered 13 stones greater than 100 carats by September 30, and 16 for the full year.

Source: Diamonds.net

Crater of Diamonds visitor finds 4.38 carat yellow diamond

4.38 carat rough yellow diamond

A California woman visiting the Crater of Diamonds State Park in Arkansas found a 4.38 carat yellow diamond after less than an hour of searching.

Arkansas State Parks said Noreen Wredberg of Granite Bay was visiting the park with her husband on Thursday and had been looking for gems in an open field for about 40 minutes when she spotted something shiny on the surface.


“I didn’t know it was a diamond then, but it was clean and shiny, so I picked it up,” Wredberg recalled.

Wredberg’s husband, Michael, took her find to the Diamond Discovery Center, where it was identified as a 4.38 carat yellow diamond.

“When I first saw this diamond under the microscope, I thought, ‘Wow, what a beautiful shape and color,'” Park Superintendent Caleb Howell said. “Mrs. Wredberg’s diamond weighs more than four carats and is about the size of a jellybean, with a pear shape and a lemonade yellow color.”

Officials said Wredberg’s discovery is the largest diamond found at the park since October 2020.

Wredberg said she hasn’t yet decided whether to have the diamond cut or to leave it as is.

“I don’t even know what it’s worth yet. It’s all new to me,” she said.

Source: upi.com

Officials Face Fraud Charges over Missing Diamonds

A diamond held by dop is polished on rotating automatic cast iron lap

Four government officials have been arrested in South Africa, following the disappearance of rough gems bought for a diamond cutting course.

The suspects, all employees at the Department of Economic Development and Tourism, were detained last Wednesday by the Hawks, the force that specializes in corruption and economic crime. They all face fraud charges.
Back in 2010 the European Union donated over $440,000 to fund a mining qualification course –  which included cutting and polishing – for 40 students at the Kimberley Diamonds International Jewellery Academy (KIDJA), Northern Cape.
In July 2021 a random audit inspection discovered that rough gems bought for training purposes had disappeared.
They were reportedly purchased from a private entity without the necessary licenses.
Four suspects, aged 47 to 66, are due to appear at Kimberley Magistrates’ Court.

Source: IDEX