Despite various sanctions being imposed on Russia and Alrosa, the country’s largest diamond producer, the industry is increasingly being divided.
According to Bloomberg News, a small number of diamond traders are snapping up large volumes at lucrative terms.
While many major jewellery houses and large jewellery chain stores refuse to buy Alrosa product following the Russian war on Ukraine, news reports indicate that large orders are still being filled.
“The secretive sale of Russian diamonds, worth hundreds of millions of dollars every month, is fracturing the global trade that stretches from cutting factories in Mumbai to luxury stores on New York’s Fifth Avenue. But buyers who are snapping up large volumes at lucrative terms, getting to pick and choose the diamonds they need while others stay away,” Bloomberg reports.
The deals are happening in the background, “even for the famously secretive diamond world”.
While the secret trade is going on, Politico is reporting that Alroa’s diamonds are “on Europe’s radar once again — as is Belgium’s fraught role in the industry. Despite six rounds of sweeping European Union sanctions against Moscow, Russian diamonds have remained a shining absence from the embargo list.”
It is reported that the omission is due in part to Belgium’s major role in the diamond industry: “Antwerp has, for generations, served as the main hub for diamonds arriving in Europe — including from Russia”.
However, there is a suggestion that the omission might be about to change given Russia’s president Vladimir Putin has pledged to ramp up its military campaign in Ukraine.
Politico reported that the latest threats could see the Europe Union “accelerate work on a new sanctions package. And several diplomats said Belgium’s hesitance about a Russian diamond ban is increasingly untenable.
“Publicly, Belgium has pledged not to block diamond sanctions. It has also expressed concerns that such a move may harm EU economies more than Russia’s purse. Privately, Belgian diplomats have successfully lobbied EU officials to keep the precious stones off the sanctions list, according to numerous diplomats familiar with the sanctions discussions.”
However, should Belgium politicians finally take meaningful action, it could mean little given that, according to Bloomberg, Alrosa’s sales now equate to more than $US250 million a month.
This figure is “currently only about $50 to $100 million a month below pre-war levels, according to people familiar with the matter.”
Background reading: More sanctions on Russia; loophole hounds diamond export ban
It has been widely reported that Indian diamond manufacturers are still acquiring the great majority of Russian rough.
“There is no indication that any sales have breached sanctions or laws. But there is still a widespread unease about the implications of dealing in Russian goods, said the people. The deals are being done quietly — even by the closed-doors standards of the famously secretive diamond world — and Alrosa has stopped publishing any information on its sales or financial performance,” the Bloomberg articles state.
The Indian city of Surat – around 300 kilometres north of Mumbai – is responsible for more than 90 per cent of the cutting and polishing of the global supply.
Jeweller has previously reported that the disruption to the supply of rough diamonds caused by the ongoing sanctions against Russian mining giant Alrosa has led to much shorter workweeks and the closure of several cut and polish factories in India.
In May, around 250,000 Indian workers were placed on unpaid leave for two weeks.
Many European and Middle Eastern banks have stopped the US dollar financing of Alrosa diamonds, which has resulted in Indian banks filling the void.
“A few Indian banks that have become more comfortable in recent months with how to facilitate transactions in other currencies, primarily euros and rupees.
“In one sign of ongoing wariness, IndusInd Bank, one of the biggest financiers of India’s diamond buyers, has been requiring customers in those deals to sign waivers acknowledging they’re responsible if any transactions are frozen, according to people familiar with the situation,” Bloomberg reports.
More reading:
Belgium’s diamonds lose shine amid Russia sanctions talk
Diamond supply worsens as Indian factories close
More sanctions on Russia; loophole hounds diamond export ban
Economic sanctions on Russia seen to impact diamond trade
Russian Diamonds Are Quietly Flowing Again After Sanctions Chaos
Russia’s Secret Gem Sales Are Dividing the Diamond World
