Alrosa diamonds rough – The Diamond Certification Laboratory of Australia (DCLA)

Russia hits back at attempts to ‘politicise’ its diamonds

ussia condemned what it called a push to “politicise” its diamonds over the conflict in Ukraine and said attempts to question its compliance with the international diamond certification scheme were “totally unfounded” and “far-fetched”.

The Kimberley Process, a coalition of governments, the diamond industry and civil society responsible for certifying diamonds as conflict-free, is split over a push by Ukraine and others to expand its definition of conflict diamonds to include those funding aggression by states.

The KP Civil Society Coalition (CSC) and some member states sought to discuss whether Russia’s diamonds were helping to fund the war in Ukraine during a KP meeting in Botswana last week.

“The Russian Federation absolutely condemns the orchestrated attempts of CSC, backed by absolute minority of some Western participants, to politicize the work of the Kimberley Process by deliberately distorting or even openly replacing its basic principles,” Russia’s finance ministry said in an emailed statement. It did not specify which principles it felt were being distorted or replaced.

The CSC did not immediately respond to an emailed request for comment.

The KP defines conflict diamonds as those that fund rebel movements seeking to overthrow legitimate governments, a narrow definition that many have sought to widen since the KP was founded in 2003.

Russia, which was KP chair last year, has “championed” work on revising the definition of conflict diamonds for the past five years, the finance ministry said, and it is committed to continuing talks on the definition.

“We therefore call on our opponents to refrain from further speculative accusations, abstain from political demagoguery and concentrate on the substantive work of the KP,” the finance ministry said.

The KP makes all decisions by consensus and the rift over Russia and Ukraine could jeopardise its effectiveness.

Source: miningweekly

Russia Crisis Puts Diamond Marketing in Jeopardy

The Natural Diamond Council (NDC) is facing a massive budget cut in 2023 unless the industry steps in to compensate for the loss of Alrosa’s financial contribution, CEO David Kellie told Rapaport News.

“We’ve probably been impacted more than anybody [by sanctions against Russian diamonds] in as much as Alrosa was almost half of our funding,” Kellie said in an interview on Thursday. “I want people to understand that we are facing this financial shortfall, and it’s up to the industry to figure out whether we want to be successful or not.”

Following Russia’s invasion of Ukraine and subsequent sanctions placed on Alrosa, in March the miner suspended its membership of the NDC, which is mandated to promote natural diamonds on behalf of the industry. The company also stepped down from the NDC board and notified that it would cease all financial contributions.

Alrosa accounted for 45% of the NDC’s $70 million annual budget. De Beers contributes an equal amount, and the remaining members — Lucara Diamond Corp., Arctic Canadian Diamond Company, Petra Diamonds, Rio Tinto and RZM Murowa — make up the rest. India’s Gem and Jewellery Export Promotion Council (GJEPC) also contributes.

The loss of Alrosa’s estimated $31.5 million will not affect the NDC’s 2022 budget since it receives funding in advance of its spending plans, Kellie noted. Rather, it impacts the group’s plans going into 2023, “leaving us with a significant challenge for next year,” he stressed. “We need to resolve this by October time to have visibility as to what our strategy will be for next year.”

Now in his third year as NDC CEO, Kellie is appealing to others in the industry to support the organization and enable it to build on the strong growth experienced last year. The jewelry sector saw double-digit growth in 2021, exceeding pre-pandemic levels, by most reports. The spike in demand also had a positive ripple effect on the rest of the diamond and jewelry market.

“I think we’ve proven what we’re capable of doing since launching the Natural Diamond Council, and the impact of consumer demand on our industry,” he explained. “The last year and a half has demonstrated that the whole value chain is dependent on consumer demand.”

The NDC launched in mid-2020, rebranding from the Diamond Producers Association (DPA) as the body responsible for category marketing and driving consumer interest in diamonds. It shifted from a reliance on one central advertising campaign toward continuous content creation suitable for all platforms, particularly social media.

Now, after Alrosa has withdrawn its funding, the NDC needs more stakeholders from the industry to fill the void, Kellie pointed out. A fraction of revenue from various points in the supply chain would massively change the ability of the NDC to drive consumer demand, he noted.

The organization is still considering how companies can contribute, as well as the general appeal it is making, which would have to align with its legal structures and bylaws. Currently, funding could be via a voluntary contribution by corporations or through retail partners investing in their locality by using the NDC’s marketing assets — an avenue that has grown over the past two years, Kellie said.

He is calling on the industry to demonstrate leadership to drive consumer demand for diamonds.

“It’s a case of how we are going to keep this incredible industry moving forward,” he stressed. “My view remains that we are half the size that we should be if we look at the industry as part of luxury and not as a commodity. I would love to continue to drive this industry forward and to build it to what I believe it should be.”

The NDC is currently shooting its 2022 campaign, which will be unveiled around September, ahead of the holiday season. Kellie declined to confirm whether actress Ana de Armas had signed as ambassador for natural diamonds for a third year.

Source: Diamonds.net

Russia says it may buy diamonds from sanctions-hit Alrosa

Russia may buy an as yet undetermined amount of rough diamonds from sanctions-hit producer Alrosa through its state precious metals and gems repository Gokhran, the country’s Finance Minister Anton Siluanov said on Wednesday.

The United States imposed sanctions on state-controlled Alrosa in April, complicating the Russian company’s operations in the global diamond market, with the aim of cutting off a source of revenue for Russia.

“We do not rule out the possibility of Gokhran purchasing diamonds produced by Alrosa. The amount will be determined later,” Siluanov told reporters.

Gokhran is generally more focused on purchases of precious metals from Russian domestic producers than diamonds, he added.

Alrosa, the world’s largest producer of rough diamonds, was behind about 30% of global output in 2021 and competes with Anglo American unit De Beers.

Its sales, mainly to Belgium, India and the United Arab Emirates, totalled $4.2 billion in 2021.

Gokhran bought diamonds worth $1 billion from Alrosa during years of weak demand caused by the global financial crisis.

Source: Reuters

Alrosa Leaves the Responsible Jewellery Council

Russian miner Alrosa has suspended its membership in the Responsible Jewellery Council (RJC), both organizations announced last week.

The development came just over a month after Russia’s invasion of Ukraine. The RJC board of directors voted to accept Alrosa’s decision, the standards groups said Friday.

Alrosa exited the RJC board in early March, but remained a member of the organization. RJC received criticism for not removing the company: Last week, luxury group Richemont and jeweler Pandora both stood down from the organization in protest, while RJC executive director Iris Van der Veken resigned over the issue.

The organization defended itself, noting that it was waiting for the outcome of a legal review.

“Beginning on March 3, the [RJC] board immediately began a comprehensive, third-party legal review to ensure it had the appropriate authority, within its constitutional documents, to take action,” the RJC statement continued. “The law firm selected — having concluded its own standard conflict of interest assessment — commenced their review of RJC’s governance, the board’s authorities, training modules and many other documents and processes.”

Sanctions by the US and UK governments during February and March complicated the situation and delayed completion of the review, the RJC explained. The board received the final document in the middle of last week.

“Taking any action prior to the delivery of the legal opinion would have exposed the RJC to significant legal risk,” it argued.

Alrosa — in which the Russian government owns a 33% stake — confirmed its suspension, saying it cared for the industry “as much as it cares for its mining communities.”

The company “believes in the diamond industry and the people who work to make it great all over the globe,” the statement continued. “We are one of the major contributors to the sustainable development of this industry. We will continue to uphold our highest standards of responsible business conduct and business ethics that are an integral part of our culture and principles.”

Source: diamonds.net

US Bans Imports of Russian Diamonds

US President Joe Biden has issued an executive order prohibiting the import of “nonindustrial” diamonds originating in Russia.

The measures, which the White House announced on Friday, follow Russia’s continued war in Ukraine and build on earlier US sanctions outlawing debt and equity transactions with Alrosa and its CEO, Sergey Ivanov. Those previous rulings did not constitute an outright ban on shipping Russian goods into America.

The latest order will affect goods from Russian miner Alrosa, which supplies around 30% of global rough supply by volume. Biden has also prohibited the export of luxury goods from the US to Russia.

On the same day, Signet Jewelers — an Alrosa contract client — announced it had “suspended business interaction with Russian-owned entities since the beginning of the invasion.” The Gemological Institute of America (GIA) has stopped taking submissions of Russian products for its Diamond Origin Report service, and has also paused all transactions with laboratory submissions from sanctioned entities.

Meanwhile, Alrosa has delayed publication of its monthly sales data until further notice. The company was unavailable for comment at press time on Sunday.

Source: Diamonds.net

Alrosa Profit Soars as Focus Turns to Sanctions

Alrosa has highlighted concerns about the impact of the US’s punitive measures after reporting its strongest annual earnings in five years.

Revenue jumped 51% to RUB 326.97 billion ($2.99 billion) in 2021 as the diamond market recovered from the previous year’s downturn, the Russian miner reported Wednesday. This drove net profit to RUB 91.32 billion ($834 million), almost triple 2020’s figure of RUB 32.25 billion ($297.3 million).

However, the fallout from Russia’s invasion of Ukraine has become the most pressing issue for the company, with the US imposing sanctions on Alrosa and its CEO, Sergey Ivanov. This blocks American firms from extending credit to the miner. An alliance of Western governments has also excluded several Russian banks from the Swift international payment system.

“These sanctions are preventing the group from obtaining financing from persons and entities connected to US and from effecting payments through sanctioned banks,” Alrosa said in its results statement.

Management said it was continuing to run the business as usual and “service its obligations,” but noted that the impact of the actions was unpredictable.

In the fourth quarter of last year, revenue fell 28% year on year to RUB 70.73 billion ($642.7 million), reflecting an unfavorable comparison with the sharp market rebound a year earlier as well as scarcities of goods for the company to sell. Profit slid 43% to RUB 12.14 billion ($111.1 million).

With rough in short supply globally, Alrosa made a slight increase to its 2022 production plan, forecasting output of 34.3 million carats, compared with earlier guidance of 33 million to 34 million carats.

Source: Diamonds.net

US Places Sanctions on Russian Miner Alrosa

The US has imposed sanctions on Alrosa and its CEO, Sergey S. Ivanov, in response to Russia’s invasion of Ukraine.

The diamond miner is one of 11 entities the Department of the Treasury has identified as being owned by or connected to the Russian government, according to a Thursday statement. The measures restrict American companies’ ability to engage in debt and equity transactions with Alrosa after Russia launched military action in Ukraine last week.

“Effectively, this action bans US businesses and persons from entering into debt transactions longer than 14 days with Alrosa but does not impose the harsher sanctions of an asset freeze and outright prohibition of all business,” the Jewelers Vigilance Committee (JVC), a source of legal guidance for the industry, said in an alert to members. “For the jewelry industry, any open memo agreements previously entered into with terms longer than 14 days should immediately be amended to shorten the terms, and/or closed.”

US companies should also evaluate any current transactions with Alrosa or its stateside affiliate, Alrosa USA, to ensure they do not violate the sanctions, the JVC added. The executive order does not apply to goods acquired from Alrosa or Alrosa USA before February 24, the organization pointed out.

Alrosa, a third of which is owned by the Russian state, is responsible for 90% of Russia’s diamond-mining capacity, the Treasury noted. The sanctions include Ivanov because the US counts him among the “leaders, officials, senior executive officers, or members of the board of directors” of the Russian government, and because he is the son of sanctioned official Sergei B. Ivanov, a close ally of Russian President Vladimir Putin, the statement continued.

“Treasury is taking serious and unprecedented action to deliver swift and severe consequences to the Kremlin and significantly impair their ability to use the Russian economy and financial system to further their malign activity,” said US Treasury Secretary Janet Yellen. “Our actions, taken in coordination with partners and allies, will degrade Russia’s ability to project power and threaten the peace and stability of Europe.”

Alrosa said its interactions with international partners would continue and that it was working to avoid any impact.

“Alrosa is carefully studying new working conditions in connection with the imposed sanctions,” a spokesperson for the miner told Rapaport News Sunday. “We intend to offer all our stakeholders the best possible service. We do our best to fulfil our obligations so that their businesses would continue to operate as usual.”

Source: Diamonds.net

ALROSA Takes Steps to Offer the Market Additional Supplies of Rough Diamonds

In line with its approach of fostering long-term sustainable development of the diamond market, ALROSA gives its customers an opportunity to adjust their diamond purchase schedules under trading sessions.

The demand for rough diamonds in early 2022 as well as in the second half of 2021 was outstripping supply, as cutters were actively buying rough to restock and fulfill the orders placed by jewelers and retailers.

Given the primary importance of a balanced market and the need to meet the real-backed demand, ALROSA offers its long-term customers a new option to adjust supply schedules between trading sessions. As a result, holders of long-term contracts can buy rough diamonds from their allocations ahead of the schedule by shifting booked volumes to an earlier date.

“The first quarter of the year is traditionally a period of active rough diamond purchases, as cutters seek to stock up after a holiday season in retail. The high season of 2021 was one of the most successful ones in the entire history, as we see robust demand from our customers underpinned by real orders. By reaffirming its commitment to a prudent and balanced policy aimed at sustainable progressive growth of the industry, ALROSA offers its customers a new option of adjusting diamond purchase schedules within their allocations by requesting the part of the booked rough diamond volumes to be moved to an earlier date. We believe that this innovation, together with the Gokhran auction slated for late February 2022, will speed up progress in addressing current market deficit. With the same goal in mind, we will hold an additional tender between trading sessions. We will offer the rough diamonds highly sought-after by cutters as soon as these goods leave the work-in-progress,” said Evgeny Agureev.

Long-term contracts for a 3-year period with major jewelry holdings, cutters, traders, and consumers of industrial diamonds make up the core of ALROSA’s sales system and traditionally account for the largest part of the company’s turnover. ALROSA makes special efforts to guarantee responsible business practices across the diamond production chain.

Source: instoremag

Alrosa Raises Rough Prices Again

Alrosa has increased prices for the third consecutive contract sale, fueling concerns about unsustainable growth and tight manufacturing profits.

The adjustments were 4% to 5% on average, with a focus on 1-carat rough and larger, insiders told Rapaport News this week. Prices of that category are now higher than pre-pandemic levels, a customer noted.

Alrosa declined to comment on its “commercial strategy,” but a spokesperson said the Russian miner “assures that prices for its goods follow the real, confirmed demand from the midstream sector.”

The sale, which took place this week, came amid strong rough demand following positive holiday seasons in the US and China. But there were warnings of a slowdown as the quiet season approaches.

“Since the rough market is so strong, everyone accepts the [prices], but it’s becoming a bubble that might explode,” a source cautioned.

Industry members highlighted possible challenges for manufacturers. Rough prices have outpaced polished, they claimed, with the upcoming slow months raising concerns about end demand.

“[The miners have] taken away all the profit margin from the manufacturing pipeline, because…when the polished is ready, the polished market will be slightly weaker than today,” an Alrosa customer explained. “Probably, we will all lose some money, and not even make the costs.”

Alrosa maintained its policy of allowing customers to refuse any unwanted goods — a concession that has been in place since the start of the pandemic.

However, some clients felt compelled to buy to ensure they retain their allocations in the new contract period, which begins April 1, one customer pointed out. Even so, rough sales at the trading session will likely be lower than the $421 million it reported for January and the $361 million it garnered in February, reflecting a drop in the miner’s supply, he added.

De Beers: Less availability

De Beers will also offer limited supply at its sight next week as its reduced production plan for 2021 has affected availability. Sources expect sales of around $400 million, compared with $663 million in January and $550 million in February. The company lowered its full-year production forecast in January because of operational issues at some of its mines.

“We continue to take a prudent approach with our mine plans given the ongoing pandemic and associated uncertainty,” a De Beers spokesperson said Wednesday.

With fewer goods on the table, further price increases by De Beers are unlikely at next week’s sale, a sightholder predicted. The miner already increased prices in December, January and February, reversing a sharp price cut it implemented in August.

“There was a major pushback on the goods last month,” the sightholder commented. “In anything that [produces] pointers and large [polished goods], they went way too far, and everybody said so. There were also refusals. If [prices] go up now, everyone will just leave the goods.”

Source: Diamonds.net

Alrosa’s July diamond sales drop 79%, state help may be on its way

Russian diamond producer Alrosa said on Monday that its rough and polished diamond sales totalled $35.8 million in July, down 79% from a year earlier after the coronavirus pandemic hit demand and the supply chain.

It marked a fourth consecutive month of weak sales as falling demand and supply chain disruptions since March have prompted Alrosa and other producers to reduce output and relax payment terms for clients.

Alrosa’s sales rose from $31.3 million in June but still were only a fraction of the usual sales of the world’s largest producer of rough diamonds. Its sales in July 2019 totalled $170.5 million.

The state-controlled firm has previously said that it was prepared for months of weak sales and that in coming months it will discuss with Russia’s finance ministry whether state precious metals and gems repository Gokhran could buy $0.5 billion-$1 billion of the firm’s rough diamonds.

The finance ministry is yet to take the final decision but is positive about the possibility of such a deal, the Kommersant newspaper reported on Monday, citing an unnamed source at the ministry.

Such a deal would help to improve the situation in the market, as it did in 2008-2009 when Gokhran bought diamonds worth $1 billion from Alrosa during the global financial crisis, the source told Kommersant.

Reporting by Polina Devitt – reuters