Jewellery World Magazine - April 2022

polishes 90 percent of the world’s diamonds,
meaning polished diamonds can be imported
to the US as an Indian product, not a Russian
one.
Government officials in India have received
promises from Russia that the sanctions
will not affect the flow of rough. Colin Shah,
chairman of the Indian government’s Gem and
Jewellery Export Promotion Council, told the
India’s Economic Times that “Alrosa has assured
us that they are running their business as usual
... They will be fulfilling all their obligations to
their clients in any part of the world,” he said.
As for other governments around the world,
the EU and the G7 (US, UK, France, Canada,
Italy, Japan and Germany) have all indicated
that tougher sanctions would be imposed on
Russia, including the prohibition of jewellery
and diamonds.
Australia has also announced sanctions which
will affect Russian mining companies and the
dealings of 33 Russian oligarchs and prominent
businesses. The Australian ban focuses mainly
on fuel and energy products and makes no
mention of diamonds.
But will they be enough?
The various sanctions do not prevent Russia
from selling its diamonds. In fact, a report on
the Rapaport website confirmed that an Alrosa
auction took place in mid-March and, despite
the Russian banking system being excluded
from the international money transfer system
Swift, the diamonds were paid for via banks in
the United Arab Emirates and Italy.
The Russian state,
independently
of the company
Alrosa, has
an enormous
stockpile of
diamonds known
as the Gokhran.
Historically,
Russia has used
the Gokhran
to regulate the
market, buying up
excess and selling during shortages.
“They have, since the 1990s, been purchasing
diamonds in order to manage the pricing,”
says Dr Hans Merket, a conflict diamonds
researcher at Belgium institute IPIS.
The Russian government holds periodic
diamond auctions from the state stockpile with
six such auctions occurring in the first half of
2021. Industry watchers have estimated that
revenue from just one of those sales reached
$140 million.
“It’s a state secret, how much diamond is in
that stock,” Merket says. “If they would start
selling those diamonds, that could be an
important source of revenue.”
So, even sanctions targeted at Alrosa will do
little to regulate the flow of Russian stones.
Letting business and the market
decide
With governments declining to draw the legal
and moral lines against Russian diamonds,
the issue will be left to individual companies,
industry bodies to decide. And, perhaps,
pressure from the general public. But Alrosa
remains a key source of diamonds for many of
the world’s largest jewellers.
In the week after Russia’s invasion of Ukraine,
Alrosa deleted its list of customers — usually
proudly and prominently displayed — from its
website. Archived versions of the list show over
50 companies with long-term contracts with
Alrosa including US giants Signet Jewellers,
Tiffany & Co. as well as Chow Tai Fook, Chow
Sang Sang, KGK and many companies from
India, Belgium and Israel.
At time of writing, only Signet Jewellers had
issued a clear indication on its position on
Russian diamonds. In a memo to suppliers the
company stated that it had “halted all trade in
precious metals and diamonds that originate
from such sanctioned Russian sources, and
you are therefore requested to stop supplying
the same to Signet even though the country(s)
in which you operate may not have imposed
sanctions on Russian precious metals and
diamonds”.
Luxury jeweller Tiffany & Co. faces a moral
decision after it recently began disclosing the
country of origin for its engagement rings,
citing the importance of responsible sourcing.
Its manufacturing arm currently buys stones
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jewellery world - April 2022