Showing posts with label ALROSA Rough Diamonds. Show all posts
Showing posts with label ALROSA Rough Diamonds. Show all posts

Tuesday, 26 November 2024

Diamond miners face turning point amid weak prices

Diamond miners face turning point amid weak prices

The diamond industry, once a symbol of timeless stability, finds itself in a state of flux as prices for natural diamonds hit multiyear lows, driven by a mix of evolving consumer preferences, geopolitical upheaval, and the meteoric rise of lab-grown diamonds (LGDs), a new study shows. 

The reversal of fortunes that followed a surge during the covid-19 pandemic has left industry stakeholders grappling with how to adapt to ensure long-term sustainability, consultancy McKinsey & Company says in its latest report.

During the pandemic, diamond prices rose unexpectedly. Supply chain disruptions and the delay of weddings initially dampened sales, but many consumers stuck at home turned to diamonds as a form of self-care. This led to an unanticipated spike in demand and a sharp rise in prices. 

The post-pandemic market has painted a very different picture. As traditional engagement and marriage cycles return and supply chains normalize, prices have tumbled amid changing market dynamics, McKinsey & Co. says.

Ten years ago, young customers were an important segment of the overall demand for precious stones. Today, they seek more affordable and ethical alternatives.

With prices up to 80% lower than mined diamonds, LGDs have swiftly carved out a substantial share of the market, challenging traditional producers, the report shows.

Shifting customer values

Increased awareness of environmental, social, and governance (ESG) issues has also driven consumers to demand greater transparency and sustainability in diamond sourcing. Many buyers now insist on proof that their diamonds were mined under fair conditions with minimal environmental impact. This shift is particularly pronounced among younger generations, who are reshaping the jewelry market with their purchasing power and values.

Generation Z is leading a wave of change, favouring ethical and customizable products over traditional offerings. Younger buyers are more likely to seek out jewelry that aligns with their values, including fair labor practices and sustainability.

Many are turning to digital platforms for their purchases, with online fine jewelry sales growing significantly. In 2021, the average online purchase of diamond jewellery in the US was $2,204, compared to $2,994 in physical stores, signalling a growing comfort with digital transactions for high-value items.

The trend of self-purchasing is another key shift. Rather than waiting for significant life events like engagements or weddings, many consumers are now buying fine jewelry for themselves.

Industry actors Beers Group and Signet Jewelers launched in October their “Worth the Wait” campaign, aimed at reigniting demand for mined diamonds from youngsters, particularly amid “zillennials”, the microgeneration born between 1993 and 1998.

Geopolitical and gov’t factors

Adding to the industry’s challenges are geopolitical tensions. Sanctions targeting Russian diamonds have disrupted the global supply chain, particularly for larger stones. Russia’s Alrosa, once the world’s top diamond producer by output, has been heavily sanctioned by the US and the European Union, creating regional dislocations. 

McKinsey & Company warns that, by March 2025, these restrictions will tighten further, targeting stones of 0.5 carats and above, exacerbating supply chain issues.

The upheaval comes at a time when natural-diamond production is already constrained. Growth in supply is expected to remain sluggish, with an annual increase of just 1–2% through 2027, far below historical trends. Major mining companies are grappling with depleting resources, forcing them to shift from open-pit mining to more expensive underground operations. Companies like De Beers have invested billions to extend the life of their mines, but these efforts are costly and time-consuming.

Government intervention is also reshaping the industry. In diamond-rich regions, including Botswana, public authorities are taking larger stakes in mining operations, emphasizing the need for transparent and sustainable practices. 

Despite the challenges, there are opportunities for companies willing to adapt, the consultancy says. Producers can diversify their offerings by incorporating LGDs or recycled diamonds into their portfolios. They can also emphasize the unique, intrinsic value of natural diamonds, appealing to consumers who value rarity and tradition. Investments in sustainability and digital commerce are likely to pay dividends, as consumers increasingly demand ethical and seamless shopping experiences.

The consultants conclude that by embracing innovation and aligning with shifting consumer values, the industry may find a way to shine brightly once more.

Source: Mining.com

Monday, 18 November 2024

KP Votes to End Ban on CAR Diamonds

The Kimberley Process voted to allow rough diamond exports from the Central African Republic (CAR) after imposing a ban in 2013 as a civil war raged.

The Kimberley Process voted to allow rough diamond exports from the Central African Republic (CAR) after imposing a ban in 2013 as a civil war raged.

The Seleka, a coalition of predominantly Muslim rebel groups, toppled the government in a conflict, reportedly funded by conflict diamonds, that saw widespread killings, rapes, and destruction of villages.

The country – one of the world’s poorest – still faces significant challenges in establishing lasting peace and stability, although the government and its Russian mercenary allies have since pushed rebel groups out of major towns.

The KP, at its plenary in the UAE last Friday (15 November), voted to re-admit CAR as a full member, in light of what it described as “an improving security situation”.

Diamond exports have, until now, been outlawed from the so-called red zones – representing two thirds of his country’s diamond mining areas. They will now be allowed. 

Legal exports, from CAR’s green zones, totaled just under $8m in 2020, the latest year for which KP has figures – 50,433 carats for an average $142 per carat.

Rufin Benam-Beltoungou, CAR’s minister of mines and geology spoke of his “joy and satisfaction” over the full lifting of the rough export ban.

UAE’s Kimberley Process chair, Ahmed Bin Sulayem, travelled to CAR and had pushed extensively for the KP to initiate a review mission to fast-track the country’s reintegration.

Source: DCLA

PS: Plain to see that the Kimberley Process is a political tool and not a safegaurd for the diamond industry.

Sunday, 20 October 2024

Russia’s finance ministry considering new diamond purchases from Alrosa in 2025

Russia's Finance Ministry is considering new purchases of rough diamonds from Alrosa for the State

Russia’s Finance Ministry is considering new purchases of rough diamonds from Alrosa for the State Precious Metals and Gemstones Repository (Gokhran) in 2025, Deputy Finance Minister Alexei Moiseyev told reporters on the sidelines of the Moscow Financial Forum.

“We are considering this possibility,” Moiseyev said in response to possibly resuming purchases. “In order to allow Alrosa the opportunity to be calm and not feel obliged to sell on the market in order to maintain its liquidity position. Because the market looks alarming.”

The government could use budgetary allocations for precious metals and stones to purchase rough diamonds. The purchase limit is planned at 51.5 billion rubles for next year, Moiseyev said.

It became known in March that Alrosa and the Finance Ministry had concluded an agreement to buy out part of the raw materials produced in 2024 and completed a transaction for the first consignment of rough diamonds. There have been no reports since then regarding Alrosa purchasing diamonds from Gokhran.

“There are no plans for this year, though we are considering the possibility for next year,” Moiseyev said. “In general, this is all confidential, so we may not announce it.”

Monday, 9 September 2024

Russia Increases Rough Exports to India

Rough diamonds imported from Russia to India

Russian exports of rough diamonds to India increased by well over a fifth, to 4.1m carats, during the first six months of the G7 sanctions.

Total sales were up by 22.23 per cent for January to June 2024, according to the Indian Ministry of Commerce and Industry. But revenue fell by 15.22 per cent, as prices keep declining, from $614m to $520m.

Russian exports for June alone were 347,620 carats, an increase of almost 32 per cent on the same month last year.

The G7 and EU nations imposed sanctions on all Russian diamonds of 1.0-cts and above, regardless of where they were cut and polished, from 1 January. The threshold was lowered to 0.50-cts and above from 1 September.

Rough diamonds imported from Russia to India can only be sold to markets beyond the G7 and EU.

India’s diamond industry has been calling on the government to allow direct payments to Russia so it can more easily buy sanctioned goods.

Source: DCLA

Monday, 26 August 2024

US Lifts Ban on Grandfathered Diamonds Amid New Sanctions on Russian Gems

diamond jewellery and loose rough gem-quality diamonds

The Office of Foreign Assets Control (OFAC) has issued new licenses under the Russian Harmful Foreign Activities Sanctions Regulations, allowing for the sale of diamond jewellery and loose gem-quality diamonds imported before recent sanctions were implemented. This significant policy shift permits goods that were previously prohibited to re-enter the market.

Under the new guidelines, diamond jewellery purchased before March 1, 2024, as well as loose diamonds of 1 carat or larger bought before that date, and those of at least 0.50 carats purchased before September 1, 2024, can now be sold. The relaxation for loose diamonds will remain in effect until September 1, 2025.

However, starting September 1, 2024, the next phase of G7 diamond sanctions will impose restrictions on all goods of 0.50 carats or above from Russia, regardless of where they are cut and polished. This phase of sanctions is set to take effect next Sunday, despite substantial opposition from various industry stakeholders.

In response, the Jewelers Vigilance Committee has reported that the United States is considering supporting a delay in the implementation of these sanctions. This potential delay, which aligns with the European Union’s proposed extension to March 1, 2025, aims to provide additional time to resolve the intricacies of the sanctions and their impact on the diamond trade.

Source: DCLA

Sunday, 14 April 2024

Antwerp World Diamond Centre CEO resigns amid Russia diamond sanctions


Antwerp World Diamond Centre CEO resigns amid Russia diamond sanctions

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.

Source: DCLA

Sunday, 3 March 2024

US to Require Self-Certification for Russian Diamond Ban


US to Require Self-Certification for Russian Diamond Ban

The US and the UK will require importers of polished diamonds weighing 1 carat and above to apply a “self-certification” declaring the stones are not of Russian origin, while the UK will also expect documentary proof in some cases.

The new US guidelines are a follow-up to last month’s directive by the US Office of Foreign Assets Control (OFAC) implementing tighter restrictions on loose Russian diamonds and those set into jewelry that had been in part or fully manufactured or “substantially transformed” in another country. The rules address a loophole that had been in place since the US first imposed sanctions in March 2022.

The US Customs and Border Protection released an update to the bans beginning March 1, calling for importers to upload a PDF on official company letterhead, it said last week. For nonindustrial diamonds, the self-certification should state: “I certify that the nonindustrial diamonds in this shipment were not mined, extracted, produced, or manufactured wholly or in part in the Russian Federation, notwithstanding whether such diamonds have been substantially transformed into other products outside of the Russian Federation.”

Those bringing in diamond jewelry or unsorted diamonds should submit a document saying: “I certify that the diamond jewelry and unsorted diamonds in this shipment are not of Russian Federation origin or were not exported from the Russian Federation.”

The UK government’s Department for Business and Trade has followed suit, noting that supplier declaration of compliance with the sanctions “may be acceptable,” but that “traders should be prepared to provide documentation to demonstrate evidence of a stone’s supply chain.” That evidence can include the original Kimberley Process (KP) certificate issued when shipped from the diamond’s origin country, an invoice, a certificate of origin issued by a chamber of commerce, or a diamond origin report. The government also distributed rules for diamonds manufactured in another country that were outside of Russia before March 1.

Last week, the London Diamond Bourse (LDB) held an emergency meeting to discuss the ban due to the “absence of clarity and guidance…as to how we might conform with the restrictions…in terms of paperwork and provenance” before the March 1 launch, it said. The exchange noted it was in an “invidious” position and felt its members and the greater trade should avoid importing polished loose diamonds above 1 carat until there is “less ambiguous guidance.” The bourse may put out updated guidance following the release of the new rules.

While neither the US or the UK has given a timeline as to how long these guidelines will be in effect, it’s likely the less restrictive rules will only be valid during the “sunrise period,” which ends August 31 and allows importers time to become accustomed to the new measures. The European Union has stated that it would accept documentation proving non-Russian origin during the initial timeframe but will expect all stones passing through Antwerp to be placed on a traceability system beginning September 1. At that point, restrictions in all Group of Seven (G7) nations — Canada, France, Germany, Italy, Japan, the US and the UK, as well as the EU — will expand to include diamonds weighing more than 0.50 carats.

For its part, Canada also produced a statement noting it would comply with the March 1 curbs against indirect imports of Russian-origin diamonds.

“Canada has been at the forefront of imposing economic barriers on the Putin regime,” said Mélanie Joly, the country’s minister of foreign affairs. “Along with our allies and partners, we have imposed severe sanctions on the Russian regime, and we will continue to do so to hold [Russian President Vladimir] Putin and his enablers to account.”

The current self-certification rules are likely to provide a temporary solution to concerns industry groups voiced over a proposal that all diamonds would be funneled through Antwerp for screening and certification prior to arriving at their destination countries, a move the organizations feared would harm the rest of the industry.

On Saturday, India’s Gem and Jewellery Export Promotion Council (GJEPC) sent a message to members urging them to “review guidelines meticulously,” and “exercise utmost caution when dispatching shipments to G7 countries.” The council also advised exporters to “maintain meticulous records of all documents of import and purchase.” A large portion of the world’s rough is manufactured in the country before making its way to consumer nations.

“It is crucial to emphasize that while some of the G7 countries/EU have already issued guidelines to their importers, a few are still in the process of finalizing theirs,” the GJEPC said. “We believe even the issued ones are initial guidelines and are subject to changes [and] updates during the course of time.”

Source: DCLA

Thursday, 29 February 2024

Alrosa Sales Rise Despite Sanctions


Alrosa Sales Rise Despite Sanctions

Alrosa’s revenue rose in 2023 as the Russian diamond miner continued to sell despite sanctions.

Sales increased 9% to RUB 322.57 billion ($3.55 billion) for the year, the company reported Wednesday. However, net profit fell 15% to RUB 85.18 billion ($939.3 million).

Alrosa and its diamonds have been the subject of sanctions by the US and other Western countries since Russia’s war in Ukraine began in February 2022. Major markets including India and China still permit imports of Russian diamonds. On March 1, the US will introduce stricter measures banning the import of 1-carat and larger stones of Russian origin, even if they went through manufacturing in a third country.

The miner’s announcement was its second full results statement since March 2022. On both occasions, it withheld information on the destination of its sales, which usually shows Belgium, the United Arab Emirates (UAE) and India to be the largest buyers.

Last week, De Beers reported a 36% drop in 2023 revenue for a total of $4.27 billion, with the diamond unit recording a net impairment of $1.56 billion, reflecting a weaker demand outlook.

Source: DCLA

Wednesday, 28 February 2024

Russia diamond producer Alrosa’s annual net USD profit drops


Russia diamond producer Alrosa’s annual net USD profit drops

Russia’s sanctions-hit diamond producer Alrosa, opens new tab on Wednesday reported 2023 net profit of $925 million, down 15.2% from the previous year, Turnover was up 9.2% at 322.6 billion roubles.


Group of Seven leaders agreed in December to ban non-industrial diamonds from Russia by January, and Russian diamonds sold by third countries from March.


The European Union added Alrosa, Russia’s biggest diamond producer, to its sanctions list in January as part of punitive measures it has imposed on Moscow over the war in Ukraine.

Wednesday, 14 February 2024

Russian Diamond Ban Will Have “Sunrise Period”

Russian Diamond Ban Will Have “Sunrise Period”

The G7’s sanctions on Russian-mined polished diamonds, set to go into effect March 1, will have a six-month “sunrise period” to let the industry adjust to the new rules, according to a statement from the U.S. Embassy in Botswana.

The ban will initially apply to polished diamonds at least one carat in weight, then expand in September to a half-carat and larger.

To verify the diamond’s provenance, the G7 will establish a new certification system based in Belgium. From March through August, G7 certification will be recommended; as of Sept. 1, it will be required.

G7 leaders committed in February, May and December 2023 to work collectively to reduce the revenue Russia uses to finance its illegal war against Ukraine that is derived from its diamond trade. The December G7 statement included the following language:
We will introduce import restrictions on non-industrial diamonds, mined, processed, or produced in Russia, by January 1, 2024, followed by further phased restrictions on the import of Russian diamonds processed in third countries targeting March 1, 2024. To further the effectiveness of these measures, those G7 members who are major importers of rough diamonds will establish a robust traceability-based verification and certification mechanism for rough diamonds within the G7 by September 1, 2024, and we will continue to consult with partners, including producing and manufacturing countries on its design and implementation. We will continue consultations among G7 members and with other partners including producing countries as well as manufacturing countries for comprehensive controls for diamonds produced and processed in third countries on measures for traceability.
Russia is the world’s largest rough diamond producer by volume and a significant global diamond exporter (> US $3.8 billion in exports in 2022). Its state-owned diamond mining conglomerate, Alrosa, accounts for 95% of Russian diamond production and is the largest diamond producer in the world by volume and second largest by value.
Approach

A “direct ban” on Russian imports (direct flows of non-industrial diamond goods exported directly from Russia to a G7 country) is in place by all G7 members as of January 1, 2024.
Specific measures and timelines are being developed to prevent indirect flows of non-industrial diamonds mined in or (for certain G7 partners) transited through Russia. This includes diamonds which are exported, processed and/or polished, in a third country and afterwards imported by a G7 member.
To avoid unintended negative consequences and undue burden on other diamond industry stakeholders, the G7 is consulting key partners, including producing and manufacturing countries, as well as industry, on proposed controls and traceability measures for diamonds produced and processed in third countries. This consultation will continue with virtual meetings and possible future in-person visits.
Through phased-in implementation, the indirect ban of Russian diamonds from G7 markets is expected to begin on March 1, 2024, with the banning of non-industrial natural diamonds mined in Russia sized 1.0 carat and larger.
The G7 is targeting September 1, 2024 to extend the indirect ban to all non-industrial natural diamonds mined in Russia sized 0.5 carats and larger.
To further the effectiveness of these measures, the December G7 statement indicates that those G7 members who are major importers of rough diamonds will establish a robust traceability-based verification and certification mechanism, detailed further below. This is envisaged to be fully operational by September 1, 2024.
From March 1, 2024, it will be encouraged to identify all non-Russian diamonds above one carat entering a G7 country through this traceability mechanism.
During a “sunrise period” from March 1, 2024 to August 31, 2024 documentary supply chain evidence will also be accepted by G7 countries, ahead of full operationalization of the traceability mechanism. Further details will be made available ahead of March 1st.
From September 1, 2024, use of the traceability mechanism will be required for import into the G7, for diamonds sized 0.5 carats and larger. In this context, traceability will be expected to begin at the point of the first export, rather than the mine-site, though we encourage mine-level traceability where possible.

Options are being considered with respect to how to treat existing stocks of diamonds (grandfathered diamonds) and jewelry.
A G7 technical working group, led by the European Commission, has been established to continue consultations and provide recommendations on the way forward. Governments and industry stakeholders are encouraged to engage with the technical group, with the understanding that ultimate decisions concerning the import requirements for G7 countries are taken consistent with respective national systems.
Traceability mechanism detail

To ensure the provenance of diamonds entering G7 countries, a certified traceability mechanism known as “G7 Certification” will be recommended as of March 1, 2024, and required as of September 1, 2024.
G7 Certification will verify and certify the provenance of rough diamonds from the point of first export through the use of a central import hub in Belgium during the period when the traceability mechanism system is tested. Thereafter, other credible options to the single node can be considered. Diamonds will then carry this verification throughout the supply chain, including through polishing, processing and manufacturing. This will enable stones to be checked at the point of import into the G7, ensuring their non-Russian provenance.
G7 Certification will work by using and expanding on existing tracing technologies and controls.
Diamond producers and manufacturers, throughout the supply chain, will need to incorporate validated traceability solutions into their operations. The G7 will determine and communicate standards that solution(s) will need to meet to qualify for G7 Certification.
These third-party traceability solutions will then communicate key data points, including provenance information, with a secure, independent Distributed Ledger.
To ensure the system is viable and credible, this information will be complemented by a physical check on rough diamonds, in Belgium. This check provides the G7 certificate, based on a high level of assurance, which will be carried onwards through the supply chain. This approach is needed to ensure that verification and certification is completed in a node where no Russian diamonds can be present given legal requirements that have been put in place.
Belgium is developing the details for the way this system will function. The G7 will coordinate with Belgium during this phase to ensure the system is functional and presents minimal additional costs and delays.
As noted, once this system is in place, tested, and perfected, the G7 will consider additional options and approaches beyond the central G7 import hub in Belgium.
We expect to implement mitigating measures for beneficiation (polishing in the mining country). Export of the polished, beneficiated goods to the G7 countries may be direct if appropriate measures are put in place to ensure non-contamination of Russian diamonds.
This system will provide traders, manufacturers, retailers and ultimately customers with the highest assurances of the non-Russian provenance of their diamonds in accordance with the G7 measures. Greater data intelligence and controls will also significantly enhance the overall levels of traceability in the diamond industry.

Source: DCLA

Monday, 29 January 2024

Diamond Industry Gears Up for Tighter Controls


Diamond Industry Gears Up for Tighter Controls

The diamond industry is bracing for significant change in 2024.

New sanctions on Russia will fast-track the adoption of traceability programs across the supply chain. Should they wish to sell those diamonds into the Group of Seven (G7) countries, companies will have to prove their goods were sourced from non-Russian production.

On December 6, the G7 — comprising Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States — announced its latest sanctions, aimed at “limiting Russia’s ability to fund its illegal war,” the joint statement read.

Diamonds featured prominently in this round of measures, perhaps because the group had delayed a policy decision on how to handle Russia’s diamond supply until then — nearly two years after the war in Ukraine began on February 24, 2022.

Initial sanctions targeted Russia’s oil and gas industry as well as restricting its banking system and the transfer of funds, while touching on diamonds in an ambiguous way.

Still, diamonds contribute to Russia’s government revenue and therefore to the war effort, causing the sector to be entangled in the sanctions discussion.

The Russian Federation owns a 33% stake in mining company Alrosa, the world’s largest producer of rough diamonds by volume. The company generated rough sales of $4 billion from 45.5 million carats in 2021, the last prewar publication of its earnings.

“The goal of this effort remains centered on reducing revenue that Russia earns from diamonds, which fuels Moscow’s war machine against Ukraine,” the European Commission (EC) stressed in a separate statement, which provided additional details about the sanctions.

Sanctions in place
The sanctions will replace existing measures some countries implemented earlier.

The US banned imports of diamonds from Russia in March 2022, but left a loophole allowing for polished stones transformed from Russian rough in third countries. The European Union delayed implementing any restrictions out of concern such measures would place Belgium at a disadvantage in its competition with Dubai — as well as Mumbai and Tel Aviv — for market share as the premier rough-trading center. The United Arab Emirates (UAE), India and Israel have not implemented any restrictions on Russian-origin diamonds, though they export goods to those countries with a ban in place.

An EU-only import ban would not have been efficient, the EC added in its explainer. “It would have meant the death of Antwerp,” said an official who requested anonymity. “What is on the table is the survival of Antwerp.”

Consequently, the EU has been the driving force for a fully coordinated approach and timeline within the G7, the European Commission emphasized.

That effort sees the group phase in various levels of diamond sanctions.

The first stage, which took effect on January 1, banned direct imports of diamonds from Russia. On March 1, the sanctions will be extended to diamonds above 1 carat that were sourced from Russian rough but polished in a third country, addressing the loophole that existed in the original US sanctions. Finally, beginning September 1, the restrictions will include lab-grown diamonds, jewelry, and watches containing diamonds above 0.50 carats.

Traceability component
The big challenge lies in how to verify that a diamond is not of Russian origin. To that end, the group will establish a “robust traceability-based verification and certification mechanism for rough diamonds,” which will be mandatory from September 1, the EC said in its statement. A pilot program for the system will begin on March 1, it added.

The idea is to create a digital twin of the real diamond in its rough state and to issue a certificate of the diamond’s origin, the commission explained. It is unclear whether that certificate will be a physical printout — as customs officials are used to — or only digital, noted another European official.

The identifying information and certificate will be entered into a stand-alone blockchain-based ledger, which will be inter-operational with several existing solutions facilitating the traceability mechanism, an EC spokesperson explained in an email.

In other words, there will be a centralized blockchain that will be fed with information from traceability service providers.

“This allows the diamond to be traced through the production process and can be presented at the time of importation of the finished diamond,” the spokesperson said.

The commission did not clarify by press time the criteria service providers will have to meet to contribute to the G7 system, or what information will be uploaded to the centralized ledger. Companies with diamond-related traceability programs include De Beers’ Tracr, Everledger, iTraceiT, the Gemological Institute of America (GIA), and Sarine Technologies.

Industry concerns
The certification of goods registered on the ledger will be done in Belgium, with some exceptions being considered, an official noted.

As the only producer country among the G7 nations, Canada may be given the option to certify its own production, the official said. It is also understood that rough earmarked for beneficiation — polishing in the country of mined origin — will be exempt from passing through Belgium to be G7-certified.

De Beers is waiting for clarification on several points, most importantly whether its practice of mixing supply from its mines in Botswana, Canada, Namibia, and South Africa — known as aggregation — will be affected.

“We await clarity on how the new import requirements will be implemented in practice and will urge a sensible and practical approach to implementation that recognizes the fundamental importance of aggregation in delivering value for diamond businesses and producer countries, as well as the significance of beneficiation,” a company spokesperson said.

De Beers’ assortments will still have to be certified in Belgium, but it will be an exception in that these goods will be the only “mixed origin” ones that will be allowed, the official noted.

Yoram Dvash, president of the World Federation of Diamond Bourses (WFDB), urged the G7 to include other centers in the registration process.

It is possible to create “a more efficient and effective mechanism” by allowing other major rough diamond centers such as Dubai, Mumbai, and Tel Aviv, as well as producing countries, to conduct the inspection and registration of goods, Dvash stressed in a statement immediately following the G7 announcement.

The Industry’s Russia Crisis: Formulating Sanctions

Ready for volume
Among the concerns expressed have been whether Antwerp can handle the large volumes that are expected to accompany the new mechanism. One representative estimated the system would not result in higher volumes than those with which the Antwerp Diamond Office has dealt in the past. That official referenced 2021 as a comparative base, when Belgium imported 68.1 million carats of rough valued at EUR 6.49 billion ($7.1 billion), and exports reached 90.7 million carats worth EUR 7.48 billion ($8.18 billion), according to data the National Bank of Belgium published.

Before the war in Ukraine, Belgium was the largest buyer of Russian rough, importing 27.1 million carats worth EUR 1.57 billion ($1.72 billion) in 2021 — 24% of its total rough imports by value and 40% by volume (see graph). Excluding the Russian goods will mean Antwerp won’t see a significant spike compared to 2021, the official noted. Belgium’s imports of rough from Russia declined 19% in 2022 and have slumped 76% year on year to just EUR 285.1 million ($311.7 million) in the first nine months of 2023, the National Bank of Belgium data showed.

The bigger question is whether the traceability programs can handle such volumes. To date, adoption within the trade has been minimal and largely driven by retail jewelry brands that require thorough source verification.

“We continue to accelerate development of Tracr and engage with the wider industry as we await further details so that Tracr can support the industry’s needs as best as possible,” a De Beers spokesperson said. “However, we also acknowledge that even Tracr, the world’s most advanced diamond traceability platform, does not yet have the breadth of coverage that would be required to meet the G7 objectives in the stated time frames.”

Sarine recently unveiled its Autoscan Plus system, which it claims can scan 1,000 stones per hour for its Diamond Journey traceability program. Autoscan Plus was built for scale and developed as a smaller, cheaper solution, Sarine CEO David Block said.

Extra cost
The Antwerp World Diamond Centre (AWDC), the local trade body that incorporates both government and industry elements and oversees operations of the Diamond Office, is reportedly expanding its capabilities to handle the extra volume.

Still, many in the trade are skeptical whether the industry is ready to implement a digital traceability solution at such a scale. “The government fell for false promises regarding how to work and implement the system,” said one dealer. “Even if it is possible, it will be expensive.”

Early critics of the system have expressed concern about the additional cost of certification and of potential double shipping to Belgium.

“Having only one point for registration and inspection will impose additional costs of time and money to the diamond trade,” the WFDB said. It will lengthen the cycle of trading and getting goods to market, added another dealer.

Vipul Shah, chairman of India’s Gem & Jewellery Export Promotion Council (GJEPC), expects the move will impact the cost of raw materials for local manufacturers. “We are coordinating with the World Diamond Council [WDC] to mitigate such disruption and cost impact,” he said in an email.

Members of the trade cautioned that the cost of certification may even make Russian goods more attractive, while the market bifurcates to a two-tier system.

De Beers said it wants to understand how risks such as the creation of a potential supply bottle neck and additional costs will be managed if the G7 intends to limit the points of admission of rough diamonds into G7 nations. “We advocate for a solution that facilitates the trade of our diamonds into G7 countries, rather than restricting them,” the De Beers spokesperson stressed.

The EC responded that the cost for certification is expected to be negligible, “especially considering the price of diamonds,” according to its spokesperson. “The fee will be cost-bearing, not designed to generate profits.”

As for the double shipping, officials expect the goods will simply pass through Belgium as the main gateway — instead of other centers — before being sent for manufacturing. The extra shipping cost will likely apply for rough designated for tender sale in other rough-diamond locations such as Dubai and Tel Aviv.

Demand for Diamond Traceability Spikes

Artisanal and cottage industry


While the registration of rough will be overseen by the AWDC at the Diamond Office, it is a government-led mechanism, Rapaport understands. That means that it would be required at the point of export, which is significant when dealing with the artisanal mining sector.

So, if the artisanal miner sells his goods to a buyer in the location of mining, it will be up to the buyer to send the goods to Belgium for registration, an official explained.

Trade bodies, along with De Beers, echoed the WDC’s mantra that “no one should be left behind,” expressing concern that artisanal miners will be at a disadvantage under the new system.

“If such a solution is intended to be fully technological, this would be to the detriment of African producers, artisanal miners and the wider industry, with significant risk of unintended consequences,” the De Beers spokesperson added.

Artisanal and small-scale miners, who typically don’t have access to technology, should be able to send their rough into any cutting center to be registered and certified, trade members wrote in a draft letter being prepared for presentation to the G7, which Rapaport saw.

Similarly, the Indian industry is urging the G7 to take into consideration the interests of small and medium enterprises for whom the adoption of technology to track their polished diamonds might be out of reach at this stage. These marginal diamond units support millions of livelihoods, the GJEPC’s Shah stressed.

EU officials expect the program may even help formalize the artisanal mining sector and motivate investment in that segment — such as among G7 government bodies with an interest to make the traceability mechanism work.


Time to engage


But the system will require extensive engagement with the trade in the next few months to make it work. The industry has many questions and concerns, as communications from the WFDB, GJEPC, De Beers and others revealed. Some queries, such as what to do with existing inventory in the market, require urgent attention.

“I call upon the G7 countries to engage with the industry organizations in order to reach a more equitable and balanced mechanism,” Dvash stressed.

The G7 pledged to continue consultations among its members and with other partners, including producing countries as well as manufacturing countries, “for comprehensive controls for diamonds produced and processed in third countries on measures for traceability.”

It would be surprising if such discussions led to a complete overhaul of the planned system, as the industry might desire. As one trader admitted, the G7 is intent on its implementation, while the US and the EU will use the banks to enforce the sanctions — blocking payments within the pipeline in cases of noncompliance.

The governments charged with developing and implementing the system appear confident they’ve reached the optimal solution.

“This strengthened approach will provide certainty to our citizens and consumers that they are not purchasing Russian diamonds,” the EC spokesperson stressed. “It will also deliver stronger transparency to producers, including in countries with artisanal production. This will positively impact both earnings from diamonds and producers’ story and brand throughout the supply chain.”

It will take a lot of convincing for the trade to adopt such sentiment fully before the traceability pilot program goes into effect on March 1. It seems, at this stage, they’ll have little choice.

Source: DCLA

Wednesday, 3 January 2024

EU Sanctions Russia's Largest Diamond Producer Alrosa


EU Sanctions Russia’s Largest Diamond Producer Alrosa

The European Union on Wednesday imposed sanctions on Russia’s state-run diamond giant Alrosa and its CEO as part of a ban on imports of the precious stones over the Ukraine war.

The EU in December agreed to prohibit diamonds exported from Russia as it tightens sanctions to further sap the Kremlin’s coffers.

The 27-nation bloc added Alrosa, the world’s largest diamond mining company, and its chief executive Pavel Marinychev to a blacklist subject to a visa ban and asset freeze in the EU.

The EU said the company — which accounts for 90% of Russia’s diamond production — “constitutes an important part of an economic sector that is providing substantial revenue to the government.”

Russia’s diamond exports totaled around $4 billion in 2022.

The EU’s ban went into force on Jan. 1, targeting natural and synthetic diamonds exported from Russia.

A prohibition on Russian diamonds processed in third countries will be phased in by September.

The EU ban came after months of painstaking negotiations with G7 countries to set up a system to trace Russian diamonds.

Belgium, which is home to the world’s largest diamond trading hub, insisted the system needed to be put in place to make any embargo effective.

The EU has so far imposed 12 rounds of sanctions on Moscow since Russian President Vladimir Putin launched the full-scale invasion of Ukraine in February 2022.

Source: DCLA

Sunday, 10 September 2023

Alrosa says mines largest gem-quality diamond in Russia in a decade


Alrosa says mines largest gem-quality diamond in Russia in a decade

Sanctions-hit Alrosa, the world’s biggest diamond-producing company, said on Sunday it has mined the largest gem-quality diamond in Russia in the past decade.

The 390.7-carat diamond was mined at one of the company’s mines in the Republic of Sakha, Alrosa said in a statement. The region, commonly known as Yakutia, lies in Russia’s Far East along the Arctic Ocean.

“The found diamond is a light crystal of an irregular shape, bordered by a yellow-brown halo – a combination of mass, shape and colour that is unique today,” Alrosa said.

The company mined the largest gem-quality diamond in Russia in 2013, weighing 401 carats, Alrosa said.

The world’s largest gem-quality diamond ever mined – the 3,106-carat Cullinan stone – was recovered in South Africa in 1905.

Alrosa was last year placed under sanctions by the United States, which cut it off from its banking system and banned direct sales to the US market after Russia invaded Ukraine.

Last month the company reported a rise of 0.2% in revenue for the first half of the year but said net profit fell 35% year-on-year to 55.6 billion roubles.

Source: DCLA

Wednesday, 22 March 2023

Diamond Importers Might Have to Declare Russian Origin

Polished diamonds

Polished diamonds

G7 countries could oblige companies to affirm that their imported polished diamonds are not of Russian provenance, according to the US’s top sanctions official.

Leaders of the bloc will meet at a summit in mid-May and are looking to have a plan in place by then, according to a member alert the Jewelers Vigilance Committee (JVC) released Tuesday summarizing remarks by Ambassador James O’Brien, who heads the US’s Office of Sanctions Coordination.

“There could be a required declaration that finished diamonds imported to the US and other G7 markets were not originally mined in Russia or other kinds of restrictions that apply to polished diamonds,” O’Brien said, according to the note. “The aim is to ensure this is phased in at a time and flow that will accommodate the work of the industry.”

O’Brien made his comments at last week’s annual JVC luncheon, where he was the guest speaker. The summary contained a mix of direct and paraphrased quotes, wrote JVC president and general counsel Tiffany Stevens.

The G7 includes the US, as well as Canada, France, Germany, Italy, Japan and the UK. The European Union is known as its “eighth member.”

Alrosa, in which the Kremlin holds a stake, “is deeply rooted to the power structure within Russia, and our government wants to make sure its revenue is not available for them to raid,” O’Brien explained. The state is seeking sources of funds to keep the war in Ukraine going, he added.

Important issues to tackle include how long to wait for Russian diamonds that are currently in the market to exit the system, the sizes of stones to which sanctions would apply, and how enforcement will work, the ambassador pointed out. “Having thoughts on these questions that can contribute to a framework in time for the mid-May meeting is a goal of the US government,” he said.

He also said that the US wanted to make sure Burma — also known as Myanmar — didn’t help Russia. The Asian country has been subject to various US sanctions since a military takeover in 2021.

“Russia is going to its allies and asking them to give back military equipment,” the official said, according to the JVC summary. “Burma supports Russia, so the government also wants to make sure Burma is restricted in its sources of revenue, so it doesn’t help Russia as well. This includes ensuring the regime does not earn money from the sale of rubies and other gemstones.”

Source: Diamonds.net

Tuesday, 7 March 2023

US, EU engage diamond industry on Russian diamonds

Russian diamonds

Russian diamonds

State Department and European Commission Engage Diamond Industry to Discuss Next Steps on Russian Diamonds

Today, Ambassador James O’Brien joined Deputy Director General and Chief Trade Enforcement Officer Denis Redonnet of the European Commission to discuss with the U.S. and European offices of leading diamond retailers, manufacturers, laboratories, and industry trade associations the importance of the diamond industry’s engagement on future Russia-related import measures, including on polished diamonds, as noted in the recent G7 Leaders’ Statement.

Russia continues to earn billions of dollars from the diamond trade, and the discussion centered on the most effective and impactful ways to disrupt that revenue stream.

The United States and European Union remain committed to imposing economic consequences on Russia for its unprovoked war in Ukraine.

Source: DCLA

Sunday, 12 February 2023

Angola considers dual listing for diamond mining firm Endiama

          Angola diamond mining

                        Angola diamond mining

Angola is aiming for a dual listing for state-owned diamond miner Endiama, reported Reuters citing Angola Mines Minister.

The country initially plans an initial public offering for a stake between 5% and 10% in the company on the Angolan stock exchange, following which it will seek a secondary foreign listing.

This move forms part of the OPEC member country’s efforts to reform and privatise the economy, including a partial listing of national oil company Sonangol.

Russian diamond mining company Alrosa has a joint venture with Endiama in Angola.

Following Russia’s invasion of Ukraine last year, sanctions were imposed by Western nations on several companies, including Alrosa, subsequently impacting Endiama’s operations.

Angola Minister of Mineral Resources, Oil and Gas Diamantino Azevedo told the news agency on the sidelines of a mining conference in Cape Town: “Sanctions are there and there is some impact.”

Azevedo said the government is considering measures required to avoid impacts on diamond production.

The minister noted that the government, however, could go ahead with an initial public offering for Endiama following its restructuring.

Azevedo said: “Our goal is (to list) till 30% but will start maybe with five or 10%.”

According to Endiama’s document at the mining conference, the firm’s production was about 8.75 million carats for 2022.

Between 2022 and 2027, Endiama intends to more than double its diamond production to 17.5 million carats.

In September 2022, Bloomberg News reported that Angola was looking to sell its 30% stake in Sonangol within the next five years.

SOurce: mining-technology

Tuesday, 17 January 2023

Alrosa Finds 2 Huge Diamonds at Udachnaya on the Same Day

Alrosa Finds 2 Huge Diamonds at Udachnaya on the Same Day  Two large high-quality diamonds – each larger than 50 carats – were unearthed in Yakutia on December 2, 2022, Bankers Day, “when Russian bankers celebrated their professional holiday,” according to Rough & Polished.  The two stones were extracted at Processing Plant No. 12 from the ore mined at the Udachnaya diamond pipe. One weighs over 67 carats, while the second diamond, a type IIa, weighs more than 52 carats,  Dmitry Amelkin, Alrosa’s Strategy Director, commented: “Finding two of these rare gem-quality diamonds on one and the same day is a unique coincidence. It is symbolic that this happened precisely on the Udachnaya diamond pipe, which has been accompanied by good luck since its discovery […]”.  diamond mining trucks Russia Credit: Alrosa

Two large high-quality diamonds – each larger than 50 carats – were unearthed in Yakutia on December 2, 2022, Bankers Day, “when Russian bankers celebrated their professional holiday,” according to Rough & Polished.

The two stones were extracted at Processing Plant No. 12 from the ore mined at the Udachnaya diamond pipe. One weighs over 67 carats, while the second diamond, a type IIa, weighs more than 52 carats,

Dmitry Amelkin, Alrosa’s Strategy Director, commented: “Finding two of these rare gem-quality diamonds on one and the same day is a unique coincidence. It is symbolic that this happened precisely on the Udachnaya diamond pipe, which has been accompanied by good luck since its discovery 

Credit: Alrosa

Tiffany Buys Back Titanic Watch for Record $1.97m

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