G7 countries – the United States, Canada, France, Italy, Germany, the United Kingdom, and Japan, are on the verge of mandating certificates for the sale of polished diamonds to ensure that diamonds mined by Russian state mining company Alrosa do not reach the market. This comes following their decision to impose russian diamond sanctions.
Currently, Alrosa supplies 30% of the rough diamonds (hand in hand with De Beers, who holds a similar market share) globally and is the critical source for India, which imports, cuts, and polishes 80-90% of the world’s roughs.
This move aims to cut off all external funding to Russia’s war on Ukraine. The sanctions imposed by the US and European nations on Russia, and consequently on Alrosa, Russia’s largest diamond miner, will impact the growth of the Indian diamond polishing industry.
The G7’s decision on russian diamond sactions has far-reaching implications for the Indian diamond industry and consumers worldwide. After request from gems and jewelry industry apex body, GJEPC, Alrosa has suspended supply of rough for Spetember and October, which is expected to squeeze the job market in Surat further.
The economic sanctions against Russian mining company Alrosa by the US, EU, and UK have led to a significant shortage of rough diamond products in India, impacting more than one million people who work in India’s diamond processing industry, leading to 28 suicides recently.
The allegations brought to the fore the complex and layered process of the diamond’s journey from a mine to the retail market. It is estimated that a diamond bounces through multiple hands across multiple countries before reaching the retail shop.
It is stipulated that these new sanctions would come into effect only in January, after the all-important holiday retail season. Jewelry shoppers can expect to see prices rise if the market sees a shortage of non-Russian diamonds after more sanctions are imposed. Still, experts are predicting that the hike in prices will come softly rather than suddenly.
The process of credibly verifying the source of the diamond is a long-drawn one and fraught with complications. One that G7 leaders are trying to overcome by placing the exact terms of tracking and tracing the stones.