De Beers expects tighter Russian sanctions soon
Mbongeni Mguni | Monday April 10, 2023 06:00
While the United States and a number of its allies sanctioned Russian rough diamonds last March, various data sets show that these continue to trade in the global industry as their origin changes once they are “significantly transformed” through polishing in Russo-neutral centres such as India.
Producers such as De Beers have stepped up their traceability and provenance systems, allowing retailers such as Tiffany’s to block Russian-origin jewellery. However, the existing technology has limitations both in terms of the sheer volume of polished stones being traded, as well as the fact that Russia’s diamonds are mainly the smaller variety. Russia is the world’s biggest diamond producer by volume, while Botswana is the biggest by value.
Last Friday, De Beers’ executive vice president for diamond trading, Paul Rowley, revealed that the diamond group had held meetings with top US State Department officials and others, and expected tighter measures to be unveiled soon.
De Beers believes the tighter sanctions could be announced as early as June at the annual JCK show in Las Vegas, the largest grouping of the diamond sector’s various value chain players.
Rowley stressed that the recent discussions the group has held in the US were focused on ensuring that any further steps against Russian rough diamonds do not inadvertently affect production from countries such as Botswana or trade in areas that are not under sanction.
“There’s an understanding, to be fair, in discussions that we had in New York last week and with some colleagues later in Washington as well, that the US does understand the risk of unintended consequences,” Rowley told local journalists in a quarterly update. “It’s a real risk and no one wants to do that. They know that in India, there are over one million people employed in the diamond industry and they know that obviously, lives would literally be destroyed if this were to be upheaved. “What they don’t want is to be financing a war as the US or as G7 citizens.”
He added: “They don’t want to be the ones purchasing a product that could help produce weapons and so forth and we are of course in support of ending that war and sanctions as they help that. “The ‘how’ is really important to us as well due to the unintended consequences on ourselves and the countries where diamonds are very important to the economies there, like Botswana.”
Rowley said US officials were talking to the industry broadly, including major players such as the Gem and Jewel Council of India, and it was important for the industry to collaborate and understand how it could support the planned action while avoiding disruption to its own pipelines and industry.
“Rest assured that there will be next steps and if they go too quickly or too broad, it could impact all of us. “How customs will implement any increase or force of sanctions all need to be understood because we don’t want to have a hiccup where products can’t be imported into our biggest market (the US). “And they are aware of the importance of diamonds to Botswana, to Namibia, and to the people, the lives that could be impacted unintentionally. “It’s a sensitive area that we need to monitor and work closely on,” he said.
In separate meetings held in Kasane and Gaborone last year, Russia and its allies in the Kimberley Process blocked the anti-conflict diamonds watchdog from discussing any sanctions on Moscow for its invasion of Ukraine.
Sanctions taken at the Kimberley Process level would have compelled Russo-neutral diamond centres such as India to reject Moscow’s rough diamonds.