In the first five months of the year, imports of Russian diamonds to Hong Kong increased 18-fold year on year, according to data from Hong Kong’s Statistics Bureau published on its official website on June 30.
Hong Kong has dramatically stepped its imports of diamonds from Russia, purchasing $657.3mn worth of Russian diamonds in the first five months of 2024.
In the period from January to May 2024, Hong Kong’s imports of Russian diamonds soared from $36.5mn a year earlier to $657.3mn. As a result, Russia has become the third-largest supplier of diamonds to Hong Kong, with its share of total diamond imports rising to 12% from just 1% in 2023.
India remains the leading supplier of diamonds to Hong Kong, with imports valued at $2.9bn, followed by Israel with $716.6mn. Notably, both India and Israel, unlike Russia, do not mine diamonds themselves.
The substantial increase in Hong Kong’s diamond imports from Russia highlights a significant shift in the global diamond market. Dubai has also become a major market for the trade in Russian diamonds.
As bne IntelliNews reported, the EU included sanctions on Russian diamond exports as part of the twelfth sanctions package, but due to intensive lobbying by Belgium, where Antwerp is the leading European diamond market and the number-one destination for rough diamonds from Russian miner Alrosa, the sanctions were watered down and will be phased in gradually.
Russian diamond sanctions watered down again
Afraid of losing the diamond business completely to the growing rival markets in Asia and the Middle East, the EU has watered down the restrictions on trading Russian diamonds again last week.
The EU has extended the “sunrise period” for sanctions on Russian diamonds by six months and included an important concession for goods that predate the new rules, according to a statement released by the EU on June 24.
The EU also said the update “fine-tunes” the import ban on Russian diamonds included in the twelfth package and is included as part of the fourteenth sanctions package. Earlier in June, De Beers called for a one-year extension to the sunrise period for the G7 sanctions on Russian diamonds, but it is up to the individual countries to rule on the implementation of the ban.
The mandatory traceability programme for imports of rough and polished natural diamonds will now take effect on March 1, 2025 instead of September 1, 2024. This extension is intended “to allow more time to set up the G7 traceability scheme,” the EU explained reports Rapport.
This decision comes in response to calls from diamond trading powerhouse De Beers and other industry leaders to extend the interim period during which importers can use alternative documentation to prove that diamonds are not of Russian origin. Once this period ends, importers into the EU must use a traceability-based certification scheme to verify imports of diamonds over 0.50 carats.
Additionally, the EU has introduced a “grandfathering” clause to exempt diamonds that were already located in the EU or a third country other than Russia – or were manufactured in a third country – before the new rules were implemented. The EU ban on direct imports of diamonds from Russia began on January 1, 2024, while the ban on goods processed outside Russia started on March 1, 2024.
The EU said that these pre-existing diamonds no longer provide revenue to Russia.
“We are extremely pleased that, after months of intense negotiations, we have succeeded in pushing the needle to allow regularisation of so-called ‘grandfathered stock,’” said the Antwerp World Diamond Centre (AWDC). “Sanctioning these goods and prohibiting their trade would impose an unfair and severe financial burden on diamond companies without significantly impacting Russia’s revenues.”
The extension and concession aim to balance the need for stringent sanctions with the “practical realities of the diamond industry,” providing additional time and clarity for businesses to adapt to the new regulations.
Moreover, temporary imports or exports of jewellery, for example for trade fairs or repairs, will not fall under the ban. In addition, the EU has delayed the prohibition on jewellery incorporating Russian diamonds processed in third countries until the European Council, the EU’s executive arm, “decides to activate” it, the EU statement said.
The US currently has the strictest limits on Russian trade, requiring self-certification for diamonds of 1 carat or lower, falling to 0.50 carats on September 1. Larger diamonds are not covered by the sanctions.
Russia is seeking to strengthen ties with Brazil, India, China, and South Africa and other BRICS countries in response to tighter sanctions on diamonds from the G7 and EU.
Setting an agenda for “equal and fair interaction between the parties involved in all segments of the global diamond trade” was the focus of a roundtable discussion at the St. Petersburg International Economic Forum earlier this month.
Russia currently chairs BRICS (the initial letters of Brazil, Russia, India, China, and South Africa. Later additions are Iran, Egypt, Ethiopia, and the United Arab Emirates).
“The only universal mechanism for regulating the global diamond trade, the Kimberley Process Certification Scheme (KPCS), is being undermined by the attempts of numerous countries to introduce unilateral trade barriers,” said BRICS in a statement. Alrosa CEO Pavel Marinychev said: “New cooperation mechanisms will ensure the stability of the global diamond market and preserve the system of the free global trade of diamond products based on the core principles of the Kimberley Process.”
Russia warned back in November 2023 that sanctions on it diamonds would have a “boomerang” effect – harming the countries that imposed them more than Russia itself.
Nikolayev Aysen, head of Russia’s Yakutia republic, where state-controlled diamond miner Alrosa is based, told the BRICS audience: “Given the illegal unilateral restrictions that certain Western countries have imposed on Russian diamonds, it is crucial for us to support the efforts of ALROSA, which aim to diversify international supply markets. For example, this will make it possible to maintain the sustainable socioeconomic development of Yakutia.”
The US is rethinking restrictions on Russian diamonds after a wave of pushback from the industry and nations heavily involved in the diamond trade, Reuters reported on Monday.
Western countries have placed stiff restrictions on Russia’s diamond trade, with fresh sanctions in December banning the gems throughout the European Union. That’s a step up from the initial sanctions, which previously allowed the trade of Russian diamonds that were polished in other countries.
Diamond traders now need to self-certify that the gems they sell are not of Russian origin. By September, diamond traders in the European Union will need to send diamonds through a certification system in Belgium before selling them.
Those measures have helped crimp Russia’s war revenue, given that the nation is one of the largest producers of diamonds in the world. Yet the US, one of the world’s largest diamond consumers, could pull back on its commitment to implement the latest restrictions, three people familiar with the matter told Reuters.
Two sources said the US had pulled back on working with the G7 to implement the diamond ban and certifying that gems were not of Russian origin. Officials are “there but not engaging” in the discussion, one person said.
A senior White House official told Reuters the US would continue to work with the G7 on the Russian diamond ban, and that it had not changed its mind on the issue, but they noted several obstacles in enforcing the latest restrictions:
“We will want to make sure that we strike the right balance between hurting Russia and making sure that everything is implementable,” the official said.
The government has received pushback from firms and nations heavily involved in the diamond trade. Some African nations and Indian diamond polishers have complained about the latest restrictions, warning that the ban was faulty in its design and could raise problems in the industry. Diamond prices could also rise due to scarcer supply, they warned.
Virginia Drosos, the CEO of Signet, asked the US government to “stand against … the G7 Belgian solution,” according to a letter seen by Reuters.
De Beers, one of the world’s largest diamond miners, said it supported a ban on Russian diamonds but wants diamonds to be verified at the source of production, rather than in Belgium.
“The opportunities for, and likelihood, of Russian diamonds infiltrating the legitimate supply chain are in fact higher when you move further away from the source,” it told Reuters.
Antwerp World Diamond Centre (AWDC) chief executive Ari Epstein resigned unexpectedly on Thursday, the AWDC’s board of directors said in a statement.
A spokesperson for AWDC, Belgium’s main diamond industry group, said on Friday that Epstein, who had been CEO for 13 years, did not wish to communicate about the reason for his sudden departure, but Belgian financial newspaper De Tijd reported that Russian diamond sanctions had been the cause of conflict between the diamond sector and the Belgian government.
AWDC did not say who would replace Epstein as CEO. Epstein did not immediately respond to a request for comment sent via LinkedIn.
Following an EU ban on Russian-origin diamonds that took effect on March 1, rough and polished diamonds have to enter the EU and G7 countries with documentary proof and declarations that the stones are not of Russian origin.
Antwerp’s diamond dealers have said they are facing long and costly delays as a consequence.
Antwerp’s diamond dealers face long and costly delays following an EU ban on Russian-origin diamonds that took effect on March 1 and has slowed imports, they say in a letter seen by Reuters.
The letter, dated March 13, said the disruptions would erode the competitive advantage of the centuries-old Antwerp diamond trade. It was addressed to Belgium’s main diamond industry group, Antwerp World Diamond Centre (AWDC), and requested a review of the new procedures.
Any impact is likely to be reduced by sluggish market conditions. Diamond inventories are high and prices have fallen. Paul Zimnisky, a global diamond analyst, said last month that prices were down 25% from their early 2022 peak.
Al Cook, CEO of mining company Anglo American’s De Beers’ diamond business, has said the miner would reduce production this year in response to surplus supply.
“While we fully support the decisions taken by Belgium, the European Union, and the G7 nations, in regards to the sanctions of January 1st 2024, the implementation of the measures to enforce the sanction has adversely affected all of our operations,” said the letter, signed by over 100 local firms.
“The intention was to prevent the flow of diamonds from sanctioned states, but the reality we face is the severe disruption of our supply chains, and alienation from the rest of the global trade.”
A Belgian government official said the delays were temporary and were easing.
The EU and Group of Seven (G7) countries agreed to ban direct imports of Russian diamonds to their markets as of Jan. 1 and before phasing in a full ban on Russian-origin stones via third countries from March 1 because of Moscow’s war in Ukraine.
Russia’s state-run Alrosa, which together with De Beers is one of the world’s top diamond producers, was also placed under sanctions by the EU.
Diamond hub Antwerp remains the world’s biggest diamond hub though 90% of stones are polished in India. Belgium pushed hard for the G7 to adopt a version of its proposed plan to try to prevent Antwerp from losing more business after major Western jewellers began eschewing Russian stones.
Diamond dealers said their shipments have been held up for over a week at customs even if the gems were straight from African producers.
The Belgian government official said shipments pending would be processed within 24 hours.
“The indirect ban coincided with the Hong Kong Diamond Fair which is an annual peak period… This, in combination with the expected teething problems caused some initial delay in processing of shipments during the first days,” he said.
Diamond dealers say they expect more problems when the additional tracing requirements take effect from September.
“We see the procedures will cause Antwerp to further lose competitive advantage… rather than deal a meaningful blow to any sanctioned products,” the letter said.
“The current trajectory threatens the existence of Antwerp’s diamond industry, a heritage of six centuries.”
The head of the AWDC, Ari Epstein, said the group would soon present the new measures, adding it was “acutely aware of the challenges and disruptions this timing may have caused”.
“Let me be unequivocally clear: the violation of sanctions is criminal in nature and not taken lightly by governments or our organization. Our commitment to compliance… is unwavering and absolute,” Epstein said in a statement.
Source: Dmitry Zhdannikov and Julia Payne mining.com
Alrosa’s revenue rose in 2023 as the Russian diamond miner continued to sell despite sanctions.
Sales increased 9% to RUB 322.57 billion ($3.55 billion) for the year, the company reported Wednesday. However, net profit fell 15% to RUB 85.18 billion ($939.3 million).
Alrosa and its diamonds have been the subject of sanctions by the US and other Western countries since Russia’s war in Ukraine began in February 2022. Major markets including India and China still permit imports of Russian diamonds. On March 1, the US will introduce stricter measures banning the import of 1-carat and larger stones of Russian origin, even if they went through manufacturing in a third country.
The miner’s announcement was its second full results statement since March 2022. On both occasions, it withheld information on the destination of its sales, which usually shows Belgium, the United Arab Emirates (UAE) and India to be the largest buyers.
Last week, De Beers reported a 36% drop in 2023 revenue for a total of $4.27 billion, with the diamond unit recording a net impairment of $1.56 billion, reflecting a weaker demand outlook.
The US Treasury has imposed sanctions against nearly 300 Russian entities in its latest round, including a company specializing in the export of rough and polished diamonds.
The new series of restrictions the Office of Foreign Assets Control (OFAC) has applied marks the two-year anniversary of Russia’s invasion of Ukraine, and is also in response to the death of opposition politician and anti-corruption activist Aleksei Navalny, the Treasury said last week.
OFAC has targeted Almazyuvelirexport, Russia’s state-owned exporter of rough and polished diamonds and precious metals. The company was designated for “operating, or having operated, in the metals and mining sector of the Russian Federation economy,” it added.
Other companies that were banned included financial institutions, the defense industry, companies “providing backdoor support for Russia’s war machine,” and those connected to Navalny’s imprisonment.
The diamond industry is bracing for significant change in 2024.
New sanctions on Russia will fast-track the adoption of traceability programs across the supply chain. Should they wish to sell those diamonds into the Group of Seven (G7) countries, companies will have to prove their goods were sourced from non-Russian production.
On December 6, the G7 — comprising Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States — announced its latest sanctions, aimed at “limiting Russia’s ability to fund its illegal war,” the joint statement read.
Diamonds featured prominently in this round of measures, perhaps because the group had delayed a policy decision on how to handle Russia’s diamond supply until then — nearly two years after the war in Ukraine began on February 24, 2022.
Initial sanctions targeted Russia’s oil and gas industry as well as restricting its banking system and the transfer of funds, while touching on diamonds in an ambiguous way.
Still, diamonds contribute to Russia’s government revenue and therefore to the war effort, causing the sector to be entangled in the sanctions discussion.
The Russian Federation owns a 33% stake in mining company Alrosa, the world’s largest producer of rough diamonds by volume. The company generated rough sales of $4 billion from 45.5 million carats in 2021, the last prewar publication of its earnings.
“The goal of this effort remains centered on reducing revenue that Russia earns from diamonds, which fuels Moscow’s war machine against Ukraine,” the European Commission (EC) stressed in a separate statement, which provided additional details about the sanctions.
Sanctions in place The sanctions will replace existing measures some countries implemented earlier.
The US banned imports of diamonds from Russia in March 2022, but left a loophole allowing for polished stones transformed from Russian rough in third countries. The European Union delayed implementing any restrictions out of concern such measures would place Belgium at a disadvantage in its competition with Dubai — as well as Mumbai and Tel Aviv — for market share as the premier rough-trading center. The United Arab Emirates (UAE), India and Israel have not implemented any restrictions on Russian-origin diamonds, though they export goods to those countries with a ban in place.
An EU-only import ban would not have been efficient, the EC added in its explainer. “It would have meant the death of Antwerp,” said an official who requested anonymity. “What is on the table is the survival of Antwerp.”
Consequently, the EU has been the driving force for a fully coordinated approach and timeline within the G7, the European Commission emphasized.
That effort sees the group phase in various levels of diamond sanctions.
The first stage, which took effect on January 1, banned direct imports of diamonds from Russia. On March 1, the sanctions will be extended to diamonds above 1 carat that were sourced from Russian rough but polished in a third country, addressing the loophole that existed in the original US sanctions. Finally, beginning September 1, the restrictions will include lab-grown diamonds, jewelry, and watches containing diamonds above 0.50 carats.
Traceability component The big challenge lies in how to verify that a diamond is not of Russian origin. To that end, the group will establish a “robust traceability-based verification and certification mechanism for rough diamonds,” which will be mandatory from September 1, the EC said in its statement. A pilot program for the system will begin on March 1, it added.
The idea is to create a digital twin of the real diamond in its rough state and to issue a certificate of the diamond’s origin, the commission explained. It is unclear whether that certificate will be a physical printout — as customs officials are used to — or only digital, noted another European official.
The identifying information and certificate will be entered into a stand-alone blockchain-based ledger, which will be inter-operational with several existing solutions facilitating the traceability mechanism, an EC spokesperson explained in an email.
In other words, there will be a centralized blockchain that will be fed with information from traceability service providers.
“This allows the diamond to be traced through the production process and can be presented at the time of importation of the finished diamond,” the spokesperson said.
The commission did not clarify by press time the criteria service providers will have to meet to contribute to the G7 system, or what information will be uploaded to the centralized ledger. Companies with diamond-related traceability programs include De Beers’ Tracr, Everledger, iTraceiT, the Gemological Institute of America (GIA), and Sarine Technologies.
Industry concerns The certification of goods registered on the ledger will be done in Belgium, with some exceptions being considered, an official noted.
As the only producer country among the G7 nations, Canada may be given the option to certify its own production, the official said. It is also understood that rough earmarked for beneficiation — polishing in the country of mined origin — will be exempt from passing through Belgium to be G7-certified.
De Beers is waiting for clarification on several points, most importantly whether its practice of mixing supply from its mines in Botswana, Canada, Namibia, and South Africa — known as aggregation — will be affected.
“We await clarity on how the new import requirements will be implemented in practice and will urge a sensible and practical approach to implementation that recognizes the fundamental importance of aggregation in delivering value for diamond businesses and producer countries, as well as the significance of beneficiation,” a company spokesperson said.
De Beers’ assortments will still have to be certified in Belgium, but it will be an exception in that these goods will be the only “mixed origin” ones that will be allowed, the official noted.
Yoram Dvash, president of the World Federation of Diamond Bourses (WFDB), urged the G7 to include other centers in the registration process.
It is possible to create “a more efficient and effective mechanism” by allowing other major rough diamond centers such as Dubai, Mumbai, and Tel Aviv, as well as producing countries, to conduct the inspection and registration of goods, Dvash stressed in a statement immediately following the G7 announcement.
The Industry’s Russia Crisis: Formulating Sanctions
Ready for volume Among the concerns expressed have been whether Antwerp can handle the large volumes that are expected to accompany the new mechanism. One representative estimated the system would not result in higher volumes than those with which the Antwerp Diamond Office has dealt in the past. That official referenced 2021 as a comparative base, when Belgium imported 68.1 million carats of rough valued at EUR 6.49 billion ($7.1 billion), and exports reached 90.7 million carats worth EUR 7.48 billion ($8.18 billion), according to data the National Bank of Belgium published.
Before the war in Ukraine, Belgium was the largest buyer of Russian rough, importing 27.1 million carats worth EUR 1.57 billion ($1.72 billion) in 2021 — 24% of its total rough imports by value and 40% by volume (see graph). Excluding the Russian goods will mean Antwerp won’t see a significant spike compared to 2021, the official noted. Belgium’s imports of rough from Russia declined 19% in 2022 and have slumped 76% year on year to just EUR 285.1 million ($311.7 million) in the first nine months of 2023, the National Bank of Belgium data showed.
The bigger question is whether the traceability programs can handle such volumes. To date, adoption within the trade has been minimal and largely driven by retail jewelry brands that require thorough source verification.
“We continue to accelerate development of Tracr and engage with the wider industry as we await further details so that Tracr can support the industry’s needs as best as possible,” a De Beers spokesperson said. “However, we also acknowledge that even Tracr, the world’s most advanced diamond traceability platform, does not yet have the breadth of coverage that would be required to meet the G7 objectives in the stated time frames.”
Sarine recently unveiled its Autoscan Plus system, which it claims can scan 1,000 stones per hour for its Diamond Journey traceability program. Autoscan Plus was built for scale and developed as a smaller, cheaper solution, Sarine CEO David Block said.
Extra cost The Antwerp World Diamond Centre (AWDC), the local trade body that incorporates both government and industry elements and oversees operations of the Diamond Office, is reportedly expanding its capabilities to handle the extra volume.
Still, many in the trade are skeptical whether the industry is ready to implement a digital traceability solution at such a scale. “The government fell for false promises regarding how to work and implement the system,” said one dealer. “Even if it is possible, it will be expensive.”
Early critics of the system have expressed concern about the additional cost of certification and of potential double shipping to Belgium.
“Having only one point for registration and inspection will impose additional costs of time and money to the diamond trade,” the WFDB said. It will lengthen the cycle of trading and getting goods to market, added another dealer.
Vipul Shah, chairman of India’s Gem & Jewellery Export Promotion Council (GJEPC), expects the move will impact the cost of raw materials for local manufacturers. “We are coordinating with the World Diamond Council [WDC] to mitigate such disruption and cost impact,” he said in an email.
Members of the trade cautioned that the cost of certification may even make Russian goods more attractive, while the market bifurcates to a two-tier system.
De Beers said it wants to understand how risks such as the creation of a potential supply bottle neck and additional costs will be managed if the G7 intends to limit the points of admission of rough diamonds into G7 nations. “We advocate for a solution that facilitates the trade of our diamonds into G7 countries, rather than restricting them,” the De Beers spokesperson stressed.
The EC responded that the cost for certification is expected to be negligible, “especially considering the price of diamonds,” according to its spokesperson. “The fee will be cost-bearing, not designed to generate profits.”
As for the double shipping, officials expect the goods will simply pass through Belgium as the main gateway — instead of other centers — before being sent for manufacturing. The extra shipping cost will likely apply for rough designated for tender sale in other rough-diamond locations such as Dubai and Tel Aviv.
Demand for Diamond Traceability Spikes
Artisanal and cottage industry
While the registration of rough will be overseen by the AWDC at the Diamond Office, it is a government-led mechanism, Rapaport understands. That means that it would be required at the point of export, which is significant when dealing with the artisanal mining sector.
So, if the artisanal miner sells his goods to a buyer in the location of mining, it will be up to the buyer to send the goods to Belgium for registration, an official explained.
Trade bodies, along with De Beers, echoed the WDC’s mantra that “no one should be left behind,” expressing concern that artisanal miners will be at a disadvantage under the new system.
“If such a solution is intended to be fully technological, this would be to the detriment of African producers, artisanal miners and the wider industry, with significant risk of unintended consequences,” the De Beers spokesperson added.
Artisanal and small-scale miners, who typically don’t have access to technology, should be able to send their rough into any cutting center to be registered and certified, trade members wrote in a draft letter being prepared for presentation to the G7, which Rapaport saw.
Similarly, the Indian industry is urging the G7 to take into consideration the interests of small and medium enterprises for whom the adoption of technology to track their polished diamonds might be out of reach at this stage. These marginal diamond units support millions of livelihoods, the GJEPC’s Shah stressed.
EU officials expect the program may even help formalize the artisanal mining sector and motivate investment in that segment — such as among G7 government bodies with an interest to make the traceability mechanism work.
Time to engage
But the system will require extensive engagement with the trade in the next few months to make it work. The industry has many questions and concerns, as communications from the WFDB, GJEPC, De Beers and others revealed. Some queries, such as what to do with existing inventory in the market, require urgent attention.
“I call upon the G7 countries to engage with the industry organizations in order to reach a more equitable and balanced mechanism,” Dvash stressed.
The G7 pledged to continue consultations among its members and with other partners, including producing countries as well as manufacturing countries, “for comprehensive controls for diamonds produced and processed in third countries on measures for traceability.”
It would be surprising if such discussions led to a complete overhaul of the planned system, as the industry might desire. As one trader admitted, the G7 is intent on its implementation, while the US and the EU will use the banks to enforce the sanctions — blocking payments within the pipeline in cases of noncompliance.
The governments charged with developing and implementing the system appear confident they’ve reached the optimal solution.
“This strengthened approach will provide certainty to our citizens and consumers that they are not purchasing Russian diamonds,” the EC spokesperson stressed. “It will also deliver stronger transparency to producers, including in countries with artisanal production. This will positively impact both earnings from diamonds and producers’ story and brand throughout the supply chain.”
It will take a lot of convincing for the trade to adopt such sentiment fully before the traceability pilot program goes into effect on March 1. It seems, at this stage, they’ll have little choice.
The US Department of the Treasury has issued sanctions against four companies and an individual in the gold and diamond industries that have provided funding to Russian military organization Wagner Group.
The Central African Republic (CAR), United Arab Emirates (UAE) and Russia-based entities have “engaged in illicit gold dealings” to help Wagner “sustain and expand” its army in Ukraine and Africa, the government office said Tuesday.
“Treasury’s sanctions disrupt key actors in the Wagner Group’s financial network and international structure,” explained Brian Nelson, under secretary of the Treasury for Terrorism and Financial Intelligence. “The Wagner Group funds its brutal operations in part by exploiting natural resources in countries like CAR and Mali.”
The targets include:
Midas Ressources, which holds the rights to the Ndassima gold mine in CAR, and Diamville, a gold and diamond purchasing company that participated in a gold scheme and the shipment of diamonds mined in the African country to help fund Wagner activities. Dubai-based industrial goods distributor Industrial Resources General Trading, which provided support to Wagner leader Yevgeniy Prigozhin by purchasing the diamonds sold by Diamville in exchange for cash to support the military group. Limited Liability Company DM (OOO DM), a Russia-based firm accused of participating in a gold-selling scheme with Diamville. Andrey Ivanov, an executive in the Wagner Group who facilitated weapons deals and mining operations with the government of Mali. The announcement follows Wagner’s attempted rebellion against the Russian government last week. Prigozhin called off the mutiny and went into exile in Belarus.
The sanctions are the latest round against the Wagner Group, which the US has labeled a “significant transnational criminal organization.” Australia, Canada, Japan, the UK and the European Union have also sanctioned the military entity.
G7 countries could oblige companies to affirm that their imported polished diamonds are not of Russian provenance, according to the US’s top sanctions official.
Leaders of the bloc will meet at a summit in mid-May and are looking to have a plan in place by then, according to a member alert the Jewelers Vigilance Committee (JVC) released Tuesday summarizing remarks by Ambassador James O’Brien, who heads the US’s Office of Sanctions Coordination.
“There could be a required declaration that finished diamonds imported to the US and other G7 markets were not originally mined in Russia or other kinds of restrictions that apply to polished diamonds,” O’Brien said, according to the note. “The aim is to ensure this is phased in at a time and flow that will accommodate the work of the industry.”
O’Brien made his comments at last week’s annual JVC luncheon, where he was the guest speaker. The summary contained a mix of direct and paraphrased quotes, wrote JVC president and general counsel Tiffany Stevens.
The G7 includes the US, as well as Canada, France, Germany, Italy, Japan and the UK. The European Union is known as its “eighth member.”
Alrosa, in which the Kremlin holds a stake, “is deeply rooted to the power structure within Russia, and our government wants to make sure its revenue is not available for them to raid,” O’Brien explained. The state is seeking sources of funds to keep the war in Ukraine going, he added.
Important issues to tackle include how long to wait for Russian diamonds that are currently in the market to exit the system, the sizes of stones to which sanctions would apply, and how enforcement will work, the ambassador pointed out. “Having thoughts on these questions that can contribute to a framework in time for the mid-May meeting is a goal of the US government,” he said.
He also said that the US wanted to make sure Burma — also known as Myanmar — didn’t help Russia. The Asian country has been subject to various US sanctions since a military takeover in 2021.
“Russia is going to its allies and asking them to give back military equipment,” the official said, according to the JVC summary. “Burma supports Russia, so the government also wants to make sure Burma is restricted in its sources of revenue, so it doesn’t help Russia as well. This includes ensuring the regime does not earn money from the sale of rubies and other gemstones.”
