【Brussels, Be】EU Imposes Sanctions on Russian Diamond Imports… What Impact Will It Have on the Global Jewelry Industry?

The European Union (EU) is taking additional measures to pressure Russia, which invaded Ukraine, by banning imports of Russian diamonds. The aim is to prevent Russia’s massive diamond sales revenue from being used for the war costs in Ukraine. Analysis suggests that such measures will impact not only Russia but also the global diamond market.
According to Reuters and other sources on the 15th (local time), the EU executive body on that day proposed new sanctions measures to member states, including a ban on imports of Russian diamonds and liquefied petroleum gas (LPG), and strengthening the price cap on Russian oil.
Regarding gemstones in particular, the plan includes implementing a ban on direct imports of Russian diamonds from January 1 next year and a traceability mechanism to prevent imports of Russian gems processed in third countries. The goal is to ban imports of profitable diamonds, as well as goods and technologies that could strengthen Russia’s industrial capacity. For this purpose, coordination with major G7 countries, including the United States, is expected.
Russia is known to earn over $4 billion (approximately 5.2 trillion won) annually from diamond exports.

Russia is the world’s largest exporter of rough diamonds by production volume, with one-third of the global diamond supply coming from hundreds of mines beneath the Siberian permafrost. According to a survey, out of a total global diamond production of 119.96 million carats last year, 41.9 million carats were produced in Russia. This is a significantly larger amount than the production of Botswana (24.5 million carats), the largest diamond producer on the African continent.

The reason the EU is belatedly taking up the import sanctions on Russian diamonds, which the US has been implementing since last April, was to protect the Belgian port city of Antwerp. The EU was aware that a significant portion of the profits from the diamond industry were flowing into the Kremlin but had delayed sanctions due to concerns about the damage that sanctions on Russian diamonds would inflict on Europe’s, and particularly Belgium’s, jewelry industry.

The city of Antwerp, Belgium, known as the world’s diamond capital, has been the center of diamond trade since the 15th century. Over 80% of the rough diamonds mined worldwide are traded there, and before the war, a quarter of those were of Russian origin.
After the outbreak of the war, as pressure to ban imports of Russian rough diamonds increased, companies that had been trading Russian diamonds on a large scale have already closed their doors.
There is also analysis that this measure will threaten small and medium-sized enterprises that find it difficult to meet the diamond sanction requirements, ultimately benefiting large diamond corporations like De Beers.

There are also forecasts that the ban on imports of Russian rough diamonds will affect India’s gem-cutting industry.
90% of the world’s diamond supply is transported abroad for polishing and processing, regardless of the mining location. Most of this is moved to India, and a reduction in rough diamond supply could threaten the livelihoods and jobs of approximately 500,000 workers employed in India’s diamond industry.
The Indian government has expressed concern about these ripple effects while strengthening countermeasures, such as making large-scale investments in synthetic diamond manufacturing.

Given the nature of the diamond market, where it is difficult to trace the origin of the rough stones used in the final product, there are voices questioning the effectiveness of this measure, citing the high possibility of Russian rough diamonds entering through bypass routes.

EU ambassadors are scheduled to discuss the sanctions draft proposed by the executive body on the 17th. Since unanimous approval from all 27 EU countries is required for this measure to be implemented, it is expected that several weeks will be needed for a final agreement.