Jewellery World Magazine - April 2022

Alrosa
RUSSIAN DIAMONDS
Is the jewellery industry doing enough?
As Russia’s devastating war on Ukraine drags on, the question of Russian diamonds
becomes a legal and moral quandary for everyone in the supply chain.
Almost all Russian diamonds come from
Alrosa. The company produces the majority of
the world’s rough diamond and 90 percent of
Russia’s rough. It is responsible for 28 percent
of global supply. The miner is one-third owned
by the Russian Federation. Another third is
controlled by regional governments such as
the Russian republic of Yakutia where many of
its mines are located.
Alrosa’s corporate leadership has close ties
to the Kremlin. The company and its chief
executive, Sergei Ivanov, were personally
targeted by US sanctions. Ivanov’s father,
Sergei Borisovich Ivanov, is one of Russian
president Vladimir Putin’s closest allies and
was formerly a KGB colonel general, a Russian
minister of defence and a Putin chief of
staff. Alrosa is a major source of income for
its state-owned shareholder. The company
reported sales of $4.16 billion in 2021 with
Alrosa CEO Sergei Ivanov
a net profit of 91 billion rubles (AUD $1.2
billion).
Blood diamonds
And literally overnight, the Russian gems have
become conflict diamonds.
Christine Villegas,
director of the
Mines to Markets
program at Pact, a
development NGO,
says that Russian
diamonds do not
fit the narrowest
industry definition
Alrosa
of ‘conflict diamond’ and worries that some
players in governments and the industry will
continue to trade based on this ‘loophole’.
The Kimberley Process (KP) says the phrase
refers to diamonds which are used to fund
rebel groups — not, specifically, nations that
invade other sovereign nations — but they
clearly fit the spirit of the term, says Villegas.
“They’re funding an armed conflict against
a peaceful neighbour, by a state actor,” she
said. “These things take time to settle on new
definitions. But the silence is striking – and it’s
hard not to presume it’s because much of the
industry is hoping that this goes away or it’s
forgotten.”
Many major industry groups have not yet
issued statements on whether responsible
buyers should continue buying Russian
diamonds.
Sanctions
On 11 March, US president Joe Biden issued
an executive order restricting the import of
Russian diamonds into the US. A day later, a
clarification was issued. The ban was limited to
the US importation of Russian rough diamonds
and diamonds polished in Russia. The order
placed no restrictions on the US importation
of polished diamonds sourced from Russian
rough but polished outside Russia.
Key industry figures, such as Martin Rapaport,
founder of RapNet, believe this will do nothing
to halt the flow of Russian gems.
“The sanctions – unless they deepen – are
not going to affect the normal business,” he
said, in a presentation to the industry. This is
because the vast majority of Russian stones
are exported rough. Most will then progress
through the system to India, which cuts and
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jewellery world - April 2022