Alexei Vladimirovich Moiseev – Deputy Minister of Finance
Russia is joining forces with its ally Belarus to promote jewelry exports to China, the UAE, Vietnam, and Southeast Asia, in response to G7 sanctions.
The collaboration was agreed last Friday (4 April) after Russia’s deputy finance minister Alexei Moiseyev (pictured) met Belarus’s finance minister Yury Seliverstov in the Belarus capital, Minsk.
Both sides discussed further developing e-commerce in jewelry made in Belarus and Russia, as well as the mutual recognition of state standard marks.
The two countries are close trade partners and Belarus has been sanctioned for supporting Russia’s invasion of Ukraine.
“A marketplace for the sale of Belarusian and Russian jewelry on foreign markets is planned to be launched in test mode this year, Moiseyev said, according to BelTA, Belarus’s state news agency.
He said the Eurasian Development Bank, founded jointly by Russia and Kazakhstan, was taking part in the collaboration.
Russian diamond producer Alrosa announced Friday that it finished the two year cutting process of the country’s largest ever diamond a 100 carat vivid yellow stone named New Sun.
New Sun was cut from a billion year old 200 carat rough diamond, which was unearthed from an ancient riverbed at the Ebelyakh mine in the Far East republic of Sakha (Yakutia).
Alrosa said 15 of Russia’s top jewelers worked meticulously to “achieve the perfect balance between light, color and the play of shades.”
“Thanks to the highest skill of Russian experts, the diamond has acquired impeccable proportions that accentuate its depth and brightness of its sunny hue,” the company said.
The cutting process marks a “new stage” in the development of the Russian Cut, a gem cutting technique known for its precision and brilliance, Alrosa said.
“New Sun is one of the most significant events in the gemstone industry in recent years, highlighting Russia’s high status in the global diamond industry,” the company said.
Last month, Alrosa announced the temporary suspension of operations at several less profitable sites, reducing annual production by less than 1 million carats. The company still plans to produce 29 million carats of diamonds in 2025.
Alrosa, which is under an EU and G7 import ban, is the world’s largest diamond mining company by volume. It cut production by 2.8% to 34.6 million carats in 2023 and by 4.6% to 33 million carats in 2024.
New rules announced by US Customs and Border Protection (CBP) will require all diamond importers to declare the country of origin of all goods.
The move, to be implemented in April, is aimed at enforcing sanctions on Russian diamonds.
Importers have been required, since last March, to certify that their goods are not Russian, but not to disclose where they are from.
The G7 nations – including the US and EU – imposed a ban on Russian diamonds of 1 carat or more from March 2024 and on goods of 0.5 carats or above from September 2024.
Despite the sanctions, Russia is still thought to be exporting 40 per cent of its diamonds output because they are below the size threshold or industrial quality.
The US Customs and Border Protection (CBP) said in a statement that it plans to start collecting additional data in April on jewelry imports (and seafood) requiring filers to provide the country of mining.
They’ll be required to upload a PDF document on official company letterhead to CBP’s automated commercial environment (ACE) document image system.
The requirement applies to both loose diamonds and jewelry containing diamonds. Jewelry imports without diamonds are exempt.
The carat size threshold is not mentioned in the CBP announcement.
Russia will continue to buy diamonds through a state fund in 2025 in order to support the diamond industry and market, Deputy Finance Minister Alexei Moiseev said on Thursday.
The Russian budget for 2025-2027 has set aside $1.55 billion for the purchase of precious metals and gems, Moiseev said in a statement.
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Russia will continue to ensure “stable global rough diamond prices in the wake of oversupply in the current market,” the same statement said.
State-owned precious metals and gems repository Gokhran resumed buying diamonds from Alrosa in March 2024. Alrosa, under US and EU sanctions, is the world’s largest producer of rough diamonds by volume with 30% of the market.
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
The US and the UK will require importers of polished diamonds weighing 1 carat and above to apply a “self-certification” declaring the stones are not of Russian origin, while the UK will also expect documentary proof in some cases.
The new US guidelines are a follow-up to last month’s directive by the US Office of Foreign Assets Control (OFAC) implementing tighter restrictions on loose Russian diamonds and those set into jewelry that had been in part or fully manufactured or “substantially transformed” in another country. The rules address a loophole that had been in place since the US first imposed sanctions in March 2022.
The US Customs and Border Protection released an update to the bans beginning March 1, calling for importers to upload a PDF on official company letterhead, it said last week. For nonindustrial diamonds, the self-certification should state: “I certify that the nonindustrial diamonds in this shipment were not mined, extracted, produced, or manufactured wholly or in part in the Russian Federation, notwithstanding whether such diamonds have been substantially transformed into other products outside of the Russian Federation.”
Those bringing in diamond jewelry or unsorted diamonds should submit a document saying: “I certify that the diamond jewelry and unsorted diamonds in this shipment are not of Russian Federation origin or were not exported from the Russian Federation.”
The UK government’s Department for Business and Trade has followed suit, noting that supplier declaration of compliance with the sanctions “may be acceptable,” but that “traders should be prepared to provide documentation to demonstrate evidence of a stone’s supply chain.” That evidence can include the original Kimberley Process (KP) certificate issued when shipped from the diamond’s origin country, an invoice, a certificate of origin issued by a chamber of commerce, or a diamond origin report. The government also distributed rules for diamonds manufactured in another country that were outside of Russia before March 1.
Last week, the London Diamond Bourse (LDB) held an emergency meeting to discuss the ban due to the “absence of clarity and guidance…as to how we might conform with the restrictions…in terms of paperwork and provenance” before the March 1 launch, it said. The exchange noted it was in an “invidious” position and felt its members and the greater trade should avoid importing polished loose diamonds above 1 carat until there is “less ambiguous guidance.” The bourse may put out updated guidance following the release of the new rules.
While neither the US or the UK has given a timeline as to how long these guidelines will be in effect, it’s likely the less restrictive rules will only be valid during the “sunrise period,” which ends August 31 and allows importers time to become accustomed to the new measures. The European Union has stated that it would accept documentation proving non-Russian origin during the initial timeframe but will expect all stones passing through Antwerp to be placed on a traceability system beginning September 1. At that point, restrictions in all Group of Seven (G7) nations — Canada, France, Germany, Italy, Japan, the US and the UK, as well as the EU — will expand to include diamonds weighing more than 0.50 carats.
For its part, Canada also produced a statement noting it would comply with the March 1 curbs against indirect imports of Russian-origin diamonds.
“Canada has been at the forefront of imposing economic barriers on the Putin regime,” said Mélanie Joly, the country’s minister of foreign affairs. “Along with our allies and partners, we have imposed severe sanctions on the Russian regime, and we will continue to do so to hold [Russian President Vladimir] Putin and his enablers to account.”
The current self-certification rules are likely to provide a temporary solution to concerns industry groups voiced over a proposal that all diamonds would be funneled through Antwerp for screening and certification prior to arriving at their destination countries, a move the organizations feared would harm the rest of the industry.
On Saturday, India’s Gem and Jewellery Export Promotion Council (GJEPC) sent a message to members urging them to “review guidelines meticulously,” and “exercise utmost caution when dispatching shipments to G7 countries.” The council also advised exporters to “maintain meticulous records of all documents of import and purchase.” A large portion of the world’s rough is manufactured in the country before making its way to consumer nations.
“It is crucial to emphasize that while some of the G7 countries/EU have already issued guidelines to their importers, a few are still in the process of finalizing theirs,” the GJEPC said. “We believe even the issued ones are initial guidelines and are subject to changes [and] updates during the course of time.”
