Russian diamonds remain unscathed amid sanctions

DIAMONDS from Russia will continue to be imported to India where they will be processed and sold to the rest of the world, a top expert has been quoted as saying.

Russia is an important link in the world’s diamond industry supply chain - the country is the largest producer of rough gems with a global market share of 30 per cent, according to a report in the Guardian over the weekend.

While several countries have imposed economic sanctions on Russia, diamonds mined in that country appear to be outside the remit of the sanctions, the report said.

Alrosa, which accounts for more than 95 per cent of Russia’s diamond production and 27 per cent of global diamond extracts, is a state-controlled company - the Russian government and the regional Yakutia administration together hold about two-thirds of its stake.

Last week, the US banned the import of Russian diamonds, but experts feel the action is not enough to stem the flow of gemstones from the Eurasian country because its precious stones do not enter the American markets directly.

Russia mainly exports rough diamonds and India, which processes 90 per cent of the world’s gemstones, is its main direct market.

The US customs allows the import of polished diamonds from India because of the “significant transformation” they undergo during processing.

The European Union - home to major diamond trading hub Antwerp - has not so far banned imports of Russian diamonds, although it has disallowed EU companies from exporting luxury goods worth more than €300 (£250.89) to the country.

Britain has not banned Russian diamond imports.

According to industry stalwart Martin Rapaport, cosmetic sanctions do not affect the normal gems business.

“The flow of diamonds from Russia to India to America will continue unabated. The sanctions are essentially very ineffective. They don’t do anything. This is not going to stop Russian diamonds,” the Rapaport Group chairman told the Guardian.

In the absence of any stringent measures against stopping the flow of Russian gemstones, industry experts believe it is up to individual companies and consumers whether to buy “conflict diamonds” from the country.

But there is also fear that any further sanctions on Russian diamonds will cause collateral damage as such a measure could hit hard the Indian gems industry which employs a large number of skilled workers.

India, which has not explicitly condemned Russian action against Ukraine despite pressure from the West, said Alrosa assured honour its commitments to supply rough diamonds.

“Alrosa has assured that they are running their business as usual ... They will be fulfilling all their obligations to their clients in any part of the world,” the Indian government’s Gem and Jewellery Export Promotion Council chairman Colin Shah told The Economic Times.