De Beers is to start diamond exploration in Angola later this year after signing two mineral investment contracts with the Angolan government but the secretive group is giving little away on the details of the agreements.
De Beers announced today that the two licences covering prospects in the north-east of the country are for the “award and exercise of mineral rights covering all stages of diamond resource development from exploration to mining and span a period of 35 years.”
But the group does not specify its shareholding in the new developments which are joint ventures with Endiama – the Angolan government’s state-owned diamond company.
In a statement De Beers said only that “De Beers Group will hold a substantial majority in the new companies, with Endiama having the ability to incrementally increase its equity share over time in line with certain conditions outlined in the shareholder agreements, albeit with De Beers Group maintaining a substantial majority.”
By contrast, when Rio Tinto announced it was returning to Angola in October last year it specified that it would hold a 75% stake in the first phase of any mine developed with Endiama holding 25% but that the contract left open the possibility of Endiama increasing its holding to 49%.
De Beers’ return to Angola represents a breakthrough for the country following the regulatory and policy changes made by the government of President Joao Lourenco who replaced former president Jose Eduardo dos Santos in 2017.
Angola is arguably the most prospective country in the world in which to look for a major new diamond deposit but De Beers and most other diamond explorers left the country in the early 2000’s.
That was because of the repressive business conditions imposed by Dos Santos. These included a ban on any foreign company owning a majority interest in the diamond projects it was developing.
De Beers CEO Bruce Cleaver commented that, “Angola has worked hard in recent years to create a stable and attractive investment environment and we are pleased to be returning to active exploration in the country.
“Angola remains highly prospective and we look forward to being part of this next stage in the development of Angola’s diamond sector.”
Exports of rough diamonds from Russia’s state-owned Alrosa mines have resumed to India, although tensions remain high over such consignments.
Many Western nations are seeking to shut down Russia’s diamond trade with India by calling Russian diamonds conflict diamonds, or blood diamonds.
Critics such as Cristina Villegas, director of the Mines to Markets program at Pact, a development NGO, was quoted by the India-phobic London based Guardian as saying: “These are objectively conflict diamonds: they’re funding an armed conflict against a peaceful neighbour, by a state actor.” Villegas was silent about the flood of cash going to Russia by oil and gas purchases from European countries.
Analysts expect that the June meeting of the global diamond industry scheduled for Gaborone will not result in a broad sanctioning of the precious stones produced in Russia. Still, that has not stopped the United States from pushing harder, writes Staff Writer, MBONGENI MGUNI When the world’s diamond producers, their biggest customers, civil society groups monitoring the industry and others, meet in Gaborone in June to discuss issues affecting the image of the precious stones, Russia will be the proverbial elephant in the room.
The world’s biggest producer of rough diamonds by volume is due to enter the third month of its invasion of Ukraine next week, with recent mounting claims of civilian casualties and atrocities, including the discovery of mass graves.
The Kimberley Process, which groups the producers, markets, civil society and in fact accounts for 99.9% of the global diamond trade, meets in Gaborone between June 20 and 24, as Botswana is chairing the group for this year. The Kimberley Process (KP) was established nearly 20 years ago to clean up the diamond industry by certifying that all trade does not involve conflict or ‘blood diamonds’.
Conflict or blood diamonds have generally been taken to mean stones mined for the purpose of funding rebel group campaigns against legitimate governments, a definition that has meant the KP’s focus has been on war-torn Africa.
The debate within the KP to expand the definition to include vices such as human rights violations has been ongoing for years, but Russia’s bloody invasion of Ukraine has raised the urgent question of what constitutes conflict or blood diamonds. Those monitoring the KP don’t expect any sudden changes to the definition in June.
Hans Merket, a researcher at International Peace Information Service, which is a KP member, explains.
“Following several failed reform attempts, the Kimberley Process still looks at conflict through a 20-year-old lens,” Merket wrote in a report last week.
“This narrow definition has over the years led the KP to ignore various cases where public or private security forces, and not rebels, were inflicting violence and conflict to control diamond mining areas.
“It is therefore highly unlikely that the KP would consider action on a matter that differs even more from a scenario where rebels control diamond mines.”
He adds: “Decision-making in the KP is based on consensus, implying that no votes are cast and decisions are only taken if none of the 56 participants expresses disagreement.
“Even if Russia would in this case not be allowed to participate in decision-making, KP membership includes various countries that are unlikely to support KP scrutiny of Russian diamonds, such as China, the United Arab Emirates and India.”
But are diamonds actually funding Russia’s war effort?
Merket points out the linkages. Russia’s diamond mining is led by a mega-corp known as Alrosa. The Russian government owns 33% shares in Alrosa and, according to Merket, the group’s CEO, Sergej Sergejevitsj Ivanov, is not only part of Vladimir Putin’s inner circle but was also one of the first oligarchs targeted US sanctions.
“The Russian Federation shares in Alrosa’s profits,” writes Merket. “In 2021 this profit amounted to $1.1 billion (and) in Putin’s own words this ‘gives serious revenues to the federal and regional budget’. Alrosa has also reportedly directly funded the military previously, with reports that the group has paid significant amounts over the years to “increase the combat readiness of Russian submarines”.
According to Merket, newsletters from Alrosa indeed reveal that group engaged in a sponsorship agreement with the B-871 combat submarine in 1997, committing to “maintain the ship in a combat-ready condition”. Russia does not only generate revenues from diamonds as a shareholder but also directly buys and sells diamond production from Alrosa to manage global supply and pricing.
Last year, according to Merket, the state-run minerals trader known as Gokhran held six auctions garnering $225 million. Diamonds are particularly important for Moscow, given that existing sanctions have largely driven Russia out of the global financial system. The precious stones are an increasingly important source of foreign currency for Russia, whose major revenue earners such as gas and oil have been squeezed out of the market.
The US and its partners in the West quickly realised the importance of diamonds in the arsenal of sanctions against Russia, imposing numerous measures from February.
However, because Russian diamonds can still be traded through ‘sympathetic’ or neutral markets such as India and China, it is at the Kimberley Process where the flows to Moscow can be effectively plugged. And the US is focussing its efforts on lobbying KP partners, even if sanctions from the organisation would be unprecedented.
“We are engaged very proactively with partner nations and allies thinking about appropriate actions that could be taken in this respect,” Joshua Mater, senior sanctions coordinator in the US Department of State told Mmegi.
Mater was briefing a Foreign Press Centre virtual press tour on corruption, which ended recently. He explained that the US understood the limitations under the KP.
“The Kimberley Process itself is a multi-lateral body, which is consensus-based decision-making. “And of course, Russia is a member of that multi-lateral body.
“So, decisions that are coming out of that pursuant to sanctions or other types of deterrent regulations can often be extremely challenging to get adopted within the context of that organisation itself.
“But I think all members do recognise the importance and issue of the situation, especially in Ukraine, that’s ongoing right now.”
Mater added: “It may not be within the Kimberley Process itself, but it may be within other sanctions tools and other tools that are available to the US government that can get after these particular industries.”
The US State Department is also facing pressure from within the country over the Russian diamonds.
A group of 11 members of Congress recently wrote to the department demanding tougher action against Russian diamonds. Specifically, the congresspeople want a tightening of the existing sanctions so that they cover polished diamonds which have their origin in Russia.
At present, the US sanctions only cover Russian rough diamonds, meaning these can still be sold into centres such as Dubai, India and China for polishing before being sold forward to the US market.
“As it stands at this time, a diamond can be mined by an Alrosa subsidiary, polished or cut in India or another country, and sold to the United States without any prohibition, making a profit for the Russian government,” the politicians wrote.
“The February 24 sanctions that listed Alrosa only blocked debt and equity transactions, making a small dent in Russia’s oversized stake in the global diamond trade.
“Although an important initial step, along with the designation of Alrosa’s CEO, these have yet to impede trade and revenues that eventually reach the Kremlin.”
Experts have said broadening the scope of the US’s diamonds to include the polished variety would help squeeze Russia, but that would require the cooperation of diamond manufacturers and retailers in ‘Russo-sympathetic’ or neutral countries such as India and China.
The US has other arrows in its quiver against Russian diamonds, but many are limited and have significant loopholes.
“If diamonds are being mined or sold under circumstances that violate laws that could be prosecuted in the United States like money laundering with a corruption object, it may be possible for us to take action against the profits that are earned through the sales, whether by Ukrainians, Russians or others,” Mary Butler, chief of the US Justice Department’s Money Laundering and Asset Recovery Section (International) told Mmegi.
“And so, I don’t want to eliminate the possibility that the corruption itself linked to the mining or sale of diamonds couldn’t be addressed.
“At the same time, a failure to abide by the Kimberley Process outcomes is probably not a basis for a US law violation.”
The US also is able to impose criminal sanctions for violations or evasion of sanctions. People who assist support financially, or with services the evasion of sanctions can face criminal liability in the United States that can lead to forfeiture. The US is also able to use civil confiscation as a basis to forfeit assets linked to sanctions evasion.
The network of laws however falls shy of preventing Russia from reaping the benefits of its diamond trade, particularly the lucrative foreign currency inflows that come with it.
The complications mean the KP remains the most appropriate platform for the world to make a decision on stopping diamonds from funding Russia’s war effort.
While Merket does not expect the KP to make any meaningful move on Russia when it meets in June, the Gaborone meeting could set off some cataclysmic events within the organisation.
“While many in the KP may want to ignore the matter, the Russian diamond controversy will considerably impact the process,” the researcher says.
“The geopolitical crisis and the opposing views on how the KP should deal with it will exacerbate the stalemate that has been hindering progress since the KP’s inception.
“It can also plunge the KP into an existential crisis, with a risk of implosion.”
According to Merket, increased friction within the KP is already emerging “as Russia chairs two of the six KP working bodies, both of which carry considerable political and strategic clout”. The KP, long accustomed to acting against smaller, African members, whose conflict diamonds comprise a small percentage of the global trade, is suddenly faced with tough decisions on a major producer responsible for a third of global supply.
“The fact that Russian diamonds present one-third of the global diamond supply may lead an increasing number of KP participants as well as civil society and industry observers to question whether they can continue being part of – and invest considerable time and resources in – a process that entrusts and legitimises this flow with KP conflict-free certificates,” Merket.
The US and other Western parties fired initial salvos at the Russians at the KP level, during a recent engagement hosted by the United Nations in New York.
More sparks are expected in Gaborone, but for now, the host nation and chairperson, are not taking a stand on the matter.
Diamond Hub coordinator, Jacob Thamage, who is effectively handling Botswana’s chairmanship of the KP, has reportedly told the KP Civil Society Coalition that any move or debate on Russia would have to be moved by a participant.
The global diamond industry reaches its moment of truth in Gaborone in June.
One of the world’s largest yellow diamonds weighing 205.7 ct and known as the Red Cross Diamond is to be auctioned by Christie’s London.
The fancy intense yellow, cushion-shaped stone has a pavilion distinctively faceted in the shape of a Maltese cross.
The original rough gem was recovered by De Beers, in South Africa, in 1901 and was sold in 1918 in aid of the British Red Cross Society and the Order of St John.
It raised $13,000 equivalent to $780,000 in today’s money when it was sold at Christie’s London to the famous London firm S.J. Phillips.
It was sold again in November 1973, achieving CHF 1.8 million at Christie’s Geneva and returned to private ownership.
The diamond will again be offered for sale at Christie’s London on 11 May, with an undisclosed part of the sale revenue to be donated to the International Committee of the Red Cross.
We have asked Christie’s for the estimate, which is available “on request”.
Graff Unveils 50-Carat D Flawless Diamond At Palm Beach Boutique
Graffs 50 Carat D Flawless Oval Cut Diamond
A 50.08 carat D Flawless oval diamond is the centerpiece of an exhibition of gems and high jewelry by Graff, which opens today at Graff’s Palm Beach boutique.
Graff, in a statement, says it is the largest D Flawless diamond in 20 years to be unveiled by the high jewelry brand. It is available for view by appointment. It serves as the major attraction of a high jewelry exhibition titled, “Graffabulous,” that includes a number of high jewelry creations by Graff showcasing high quality diamonds, emeralds, rubies and sapphires.
The unnamed 50.08 carat D Flawless diamond hails from a mine in Lesotho, a landlocked kingdom encircled by South Africa. The gem measures more than 30 x 20mm with exceptional brilliance and fire, according to Graff. Graded by the GIA as having excellent polish and symmetry, its remarkable size, combined with perfect color and clarity, it is among the line of important diamonds that Graff has acquired over the decades.
Elevating the occasion even further, the new owner of this historic diamond will be given the opportunity to name it before the stone is added to Graff’s timeline of famous gems.
The oval cut is an exquisite shape that combines the renowned radiance of a round brilliant cut diamond with a curved, elongated silhouette. The proportions of an oval cut are key to its beauty, with the 50.08 carat D Flawless oval diamond displaying the most sought after combination of an excellent cut, with a perfectly symmetrical silhouette and a length-to-width balance, the company says.
The Graffabulous exhibition consists of pieces from Graff’s 2022 high jewelry collection and advertising campaign of the same name. It comprises 80 pieces of one of a kind high jewelry with more than 3,600 carats of diamonds, emeralds, rubies and sapphires. Necklaces and rings feature prominently in the collection.
Jennifer Lopez and Ben Affleck have got engaged for the second time
After rekindling their highly publicised relationship last year, the Hollywood power couple are taking another shot at tying the knot.
Lopez sparked rumours of an engagement when she was spotted wearing a massive diamond ring last week, and has since confirmed the news of the year with her recent On The JLo newsletter.
In the video in her newsletter, J.Lo showed off her sparkler, which is believed to be an 8.5 carat natural green diamond! It’s estimated to be worth a whopping $10 million!
So, why green? Well, it turns out it’s her lucky colour.
8.5 carat natural green diamond
“I always say the colour green is my lucky colour….Maybe you can remember a certain green dress. I’ve realised there are many moments in my life where amazing things happened when I was wearing green,” she wrote.
When Affleck first proposed to Lopez back in 2002, he did so with a Harry Winston 6.1 carat pink diamond ring, which J.Lo said was “the most magnificent thing I’ve ever seen.”
Alrosa, the world’s top diamond producer by output, has been hit by fresh sanctions imposed by the US Department of the Treasury’s Office of Foreign Assets Control (OFAC).
The OFAC announced late on Thursday it had placed Alrosa on the Specially Designated Nationals (SDN) list, which effectively kicks a sanctioned company out of the US banking system and bans its trade with Americans.
The measure against the Russian state-owned diamond miner seeks to cut off additional sources of revenue for Moscow, the government agency said.
It also affects any entities in which Alrosa has a 50% interest or more, either directly or indirectly.
The company’s customers well as other counterparties must stop all dealings with the state-controlled Russian miner by May 7, Treasury said.
Shares in the company collapsed on the news, closing nearly 13% lower on Friday trading in Moscow.
Alrosa and its chief executive Sergei S. Ivanov were included in the first wave of restrictions announced by Washington, which restricted the company’s ability to raise new debt and equity in the US.
“These actions, taken with the Department of State and in coordination with our allies and partners, reflect our continued effort to restrict the Kremlin’s access to assets, resources, and sectors of the economy that are essential to supplying and financing Putin’s brutality,” Treasury said in the statement.
The European Union and the UK have also imposed sanctions on the miner following Russia’s invasion of Ukraine.
Diamonds are one of Russia’s top ten non-energy exports by value, with exports in 2021 totalling over $4.5 billion, it noted.
Alrosa is responsible for 90% of Russia’s diamond output and 28% of global supply, with 32.4 million carats produced in 2021 and sales topping $4 billion thanks mainly to consumer demand from the US.
Loopholes Experts have noted the sanctions against the miner carry a significant loophole. Russia’s rough diamonds are sent to another country — usually India — where they are polished and cut, which makes them the product of that nation in the global market.
Another issue is that diamonds of various origins are often mixed once polished, which can make it more difficult for companies that independently vow to stop buying Russian goods.
The Responsible Jewellery Council (RJC), the leading standards organization of the global jewellery and watch industry, took steps into that direction in early April and suspended Alrosa’s membership.
“Fundamentally, we remain focused on RJC’s purpose, which is to ensure all jewellery is responsibly sourced,” the group’s char David Bouffard said in the statement.
World’s top diamond miner Alrosa hit by US sanctions The main markets for Alrosa, which employs about 32,000 people, are the US and Asia (Photo: Dmitry Amelkin, Transformation Director of Alrosa’s Polishing Division. Courtesy of Alrosa | Twitter. ) US-based jewellers Tiffany & Co. and Signet Jewelers said in March they would no longer buy new diamonds mined in Russia.
Alrosa withdrew in March from the Natural Diamond Council (NDC), a market alliance of the world’s leading producers of precious stones. By doing so, the company not only stepped down from the board, but it also cut all financial contributions.
The Mirny, Sakha-based miner also has a 41% stake in Angolan diamond production firm Catoca, which is not affected by the latest US sanctions given the OFAC.
While the full effects of the sanctions on the already undersupplied global rough diamonds market are not yet clear, the Antwerp World Diamond Centre (AWDC) has said there was a chance the restrictions could prove counterproductive.
“It is a blow that should hurt Russia but there is a chance that we do more damage to ourselves,” spokesman Tom Neys told Belgian newspaper Gazet van Antwerpen. “The Russians can easily trade their diamonds with non-EU countries and outside the US.”
The diamond jewelry industry is going into the year with diamond supply at historically low levels, estimated by Bain & Company at 29 million carats in 2021. “Upstream inventories declined ~40%, driven by high demand and slow production recovery, and are near the minimal technical level,”
