Approximately 30% of the total volume of diamonds produced worldwide come from Russian mines, 90% of which are owned by diamond mining giant Alrosa.
In 2021 Alrosa mined 32.4 million carats, making it the largest producer by volume with sales topping $4 billion. The Russian government holds 33 percent stake in the company.
The fact that Alrosa is directly tied to the Russian government poses a problem for it. At the end of the day, who ultimately owns and benefits from a company is extremely important.
The Biden administration banned imports of Russian diamonds on March 11, strengthening sanctions to economically punish the country for its invasion of Ukraine.
The Jewelers Vigilance Committee encourages any U.S. business purchasing diamonds directly from Alrosa, immediately put an end to the transactions. That also means that U.S. businesses previously selling jewelry to or in Russia, should stop doing so.
US and EU sanctions targeting Russia’s financial infrastructure are making any kind of transactions with Russian companies difficult.
While the Alrosa sanctions didn’t directly disturb the global diamond trade, the added sanctions paired with larger economic impact from Russia’s invasion of Ukraine could lead to shortages and price hikes down the line.
Russia is also the third largest gold producer in the world. It is possible that Russia will push its gold through jewelry supply chains since jewelry accounts for nearly 39 percent of global gold demand, second only to gold purchased for investment. It is advised to consider the source of the gold vendors for all worldwide jewelry industry.
Sanctions aside, the biggest impact for the industry could be if the Western consumer becomes reluctant to buy Russian diamonds in protest. For many jewelers, one in three of diamonds they hold in inventory are of Russian origin.