Jeweller - April 2022

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DIAMOND FEATURE Russian Ukraine Conflict THE RUSSIAN QUESTION The Ukraine conflict and the resulting sanctions on Russia have had a major impact on the international diamond industry. ROBERT BOUQUET analyses the affect on the distribution pipelines and what’s in store for the jewellery sector. Luminous Diamonds | Alrosa 32 | March 2021
RUS SI A'S PRIDE Alrosa's Record Roughs by ROBERT BOUQUET 242-carats White Diamond February 2021 'The Spectacle' is Alrosa's largest polished white diamond. The 100.94-carat rectangular step-cut diamond was sold at Christie's in May 2021 for US $14.1 million. It seems like only yesterday that I was reporting that the diamond trading centres had kicked-off the year in a bullish mood and that there were significant price increases at the most recent De Beers’ ‘sight’ and that “Alrosa is expected to follow suit”. Over the past two years and during the pandemic I had predicted the diamond industry would recover to much better times as economies revive, consumer spending accelerates and demand for the one product that provides the ultimate expression of love matches the level of emotional response and outpouring that the world understandably feels the need to make after COVID-19. It was only three months ago I concluded that 2022 was going to be exciting. The industry had a lot of opportunity in front of it, mining companies were facing a potential bumper year and the trade must be careful in maintaining margins throughout the pipeline. Even though the diamond industry was facing a rosy period, I also noted that it faced risk on the macroeconomic side, including geopolitical threats between Russia and the West over Ukraine. I also noted seemingly worsening relations between China and the West and increasing energy costs. I concluded by saying: “Hopefully, none of these issues will destabilise the positive momentum of the diamond industry; but these are areas of risk.” Well, there is no doubt that times have changed. The current state of play At the time of writing, the diamond industry is in a confused state. In recent times the rough diamond segment has boomed with continuously rising polished prices, diamond jewellery retail sales surging in the US and recovering in China; marginal diamond miners performing much better against a backdrop of seemingly constantly increasing rough prices. And yet even though we operate in a unique, exciting and often dazzling business, we must always remember that the diamond industry is not immune to external economic and geopolitical pressures. Alrosa is the world’s largest producer of rough diamonds by carats, producing around 32 million carats per annum, which equates to about 30 per cent of the world supply. It has the world’s largest diamond reserves (over 1 billion carats in the ground). The Russian company is expected 236-carats Intense yellow-brown diamond August 2020 191.46-carats White diamond January 2019 "Sputnik V" 100.53-carats Yellow diamond February 2021 "Kyndykan" 91.86-carats Yellow-brown diamond January 2022 "Nijinsky" 27.85-carats Pink diamond September 2017 to stay in ‘pole position’ as the largest producer for many years to come. While there are a number of mining companies operating in Russia, Alrosa produces more than 90 per cent of all diamonds. Alrosa also has diamond mining projects in Angola and exploration development in Zimbabwe, but the current focus is very much on diamonds being exported from Russia. Alrosa is owned 33 per cent by the Russian government, 33 per cent by the Republic of Sakha (in the far east of Russia, where most of the Russian diamonds are mined) with the balance being traded on the Moscow Exchange (Russian stock market). At the end of February, Alrosa’s share price fell to a low of 68.00 rubles ($US0.62) compared with the 12-month high of 150 rubles ($US1.37). Alrosa is the world’s largest producer of rough diamonds by carats, producing around 32 million carats per annum, which equates to about 30 per cent of the world supply. The Russian invasion of Ukraine has created an extremely volatile and unpredictable situation. It’s a situation that is certainly out of the hands of the diamond industry itself. People are dying in Ukraine and for some worrying about the diamond industry may seem trite. At the time of publication, sanctions have been further strengthened against Russian diamond interests. The first step was sanctions imposed on both Alrosa and its CEO. The initial sanctions were designed to reduce Russia’s ability to finance its military operations; in Alrosa’s case specifically to ‘prohibit transactions and dealings by U.S. persons or within the United States in new debt of longer than 14 days maturity and new equity.’ This meant that Alrosa was initially prevented from raising funds over a period of more than 14 days. But what did this mean in practice? It actually meant that the sales of rough could still take place; and sales are still taking place. Some transactions are being made in alternative currencies such as rubles or euros - this was an option that Alrosa had been previously considering offering to its clients anyway. Rough diamonds can be shipped using different methods April 2022 | 33
Page 1 and 2: VOICE OF THE AUSTRALIAN JEWELLERY I
Page 3 and 4: Helping you shine yesterday, today
Page 6 and 7: AUGUST 27 - 29, 2022 ICC Sydney, Da
Page 8 and 9: Diamonds are available in a range o
Page 10 and 11: Concept to Creation YOUR JEWELLERY
Page 12 and 13: Upfront #Instagram hashtags to foll
Page 14 and 15: News Australian Jewellery Fair over
Page 16: News Cartier sues Tiffany & Co. Int
Page 19 and 20: News More EU sanctions on Russia Th
Page 21 and 22: News Mejuri counters Yurman IP infr
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Page 27 and 28: www.centrestone.com.au CENTRESTONE
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Page 31: AARON SEYMOUR Nelumbo Nucifera Ring
Page 35 and 36: Alrosa's gem-quality stones which a
Page 37 and 38: Alrosa named a 91.86-carat yellow-b
Page 39 and 40: TRADE FEATURE Watch Industry Report
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Page 45 and 46: Boccia Titanium Watches AM Imports
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Page 53 and 54: BLACK & WHITE Colour Investigation
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Page 61 and 62: BUSINESS Marketing & PR Prepare you
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Jeweller - April 2022

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