Russia's war against Ukraine has been going on for over a year now, and there are still no sanctions in place in the EU against Russian diamonds. But that could soon change, as Rapaport reports.
In the future, the G7 countries could require companies to prove that their diamonds were not originally mined in Russian mines.
The background to this is that the Russian company Alrosa is the world's largest diamond producer, accounting for around one third of all rough diamonds mined. Since 33% of the company belongs to the Russian Federation, it can be assumed that the revenues from the diamond trade are helping to finance the Russian war of aggression against Ukraine.
Some countries, such as the U.S., have sanctioned Russian diamonds some time ago, but there are certain difficulties in implementation. Rapaport reported back in mid-March on the problem that the principle of "substantial transformation" applies to diamonds. This means that if a rough diamond undergoes substantial transformation in a country other than its country of origin that increases its value, i.e., this includes cutting and polishing, then from now on the country of further processing will be considered the country of origin. A rough diamond originating in Russia that is cut and polished in India can therefore be resold as "made in India" and thus end up in international markets such as the USA. As a result, many companies have difficulty proving to their customers that their diamonds did not originally come from Russia.
In mid-May, the heads of state and government of the G7 countries, which include the EU as the 8th unofficial member, plan to meet for a summit. By then, a plan is already to be worked out on how to prevent diamonds of Russian origin from entering the Western market, according to James O'Brien, head of the U.S. Office of Sanctions Coordination.
Important questions that need to be clarified are, in particular, above which stone size the sanctions should apply, how the measures can be reliably enforced, and how long to wait for Russian diamonds already on the market to disappear from the system.
At DIAVON, we stand for transparency along the entire value chain. We are therefore pleased that the G7 countries want to do something about the trade in Russian diamonds, which is difficult to trace. We hope that targeted measures can be worked out to ensure that no Russian diamonds enter the Western market undetected, thus indirectly helping to finance the Russian war against Ukraine. DIAVON offers with the MANUFAKTURDIAMANTs a 100% conflict-free alternative to the established mined diamonds. In the industry, the 4 C's have long been used to assess the quality of a diamond. However, we are setting new quality standards by committing to 6 C's. These include Cut, Carat, Clarity and Color as well as Climateneutral and Conflictfree. Please read more about our quality standards here.
Sources: Article "The Industry’s Russia Crisis: Formulating Sanctions" in Rapaport from March 16 2023
Article "Diamond Importers Might Have to Declare Russian Origin" in Rapaport from March 22 2023
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