Editor’s Note
This article examines the G7’s new sanctions targeting Russian diamonds, a key measure aimed at cutting off revenue streams funding the war in Ukraine. The piece explores how these sanctions are accelerating a major shift toward full supply-chain traceability within the global diamond industry.
The diamond industry is set to undergo a radical transformation this year. Nearly two years after the start of the war in Ukraine, G7 member countries announced a new series of sanctions against Russia last December, with diamonds featuring prominently in these measures. The goal: to ensure that the conflict against Ukraine cannot be fueled by revenues from the sale of Russian diamonds in the future. The Russian Federation indeed holds a 33% stake in the mining company Alrosa, which produces tens of millions of carats annually.
These sanctions will replace measures already implemented in several countries. The United States, for instance, banned imports of diamonds from Russia in March 2022 while still allowing stones cut in India from Russian rough. The European Union, on the other hand, pointed out that Antwerp (the historic center of the diamond trade in Europe) could be disadvantaged compared to Dubai, Mumbai, and Tel Aviv, which had not implemented any restrictions. This time, the EU and the G7 have adopted a common position: starting March 1, sanctions will apply to all Russian diamonds over one carat, even when they have been cut or polished in a third country. From September 1, these restrictions will also apply to synthetic diamonds and natural diamonds over 0.5 carats set in watches and jewelry.
How can the origin of a diamond be known? That is the entire challenge. The European Union advocates for a verification and certification mechanism based on the traceability of rough diamonds. Specifically, this involves creating a digital twin of the diamond in its rough state and issuing a certificate of origin for the stone. This information will be recorded in a secure, decentralized registry based on blockchain. All diamonds will have to transit through Belgium to receive their certification, which, according to traders and other industry professionals, will be no small feat, as this potential bottleneck is expected to lengthen the product exchange and delivery cycle in the market.
Several traceability platforms exist and are fully operational, developed by De Beers (Tracr system) or Sarine Technologies (Autoscan Plus system).
A De Beers spokesperson, cited by Rapaport, however, highlights the difficulties that the G7’s objectives will undoubtedly raise if such a significant volume of stones is to be certified digitally within the given deadlines.
These are difficulties that major jewelry names are sweeping aside. Boucheron uses the diamond traceability system developed in partnership with Sarine Technologies for its Étoile de Paris collection launched in 2022. An interactive digital platform invites customers to trace the journey of their precious stone at every stage of its lifecycle. The jeweler also uses the EPL (Environmental Profile and Loss) decision-support tool developed by the Kering Group to measure the environmental impact of different stages of the value chain and translate it into monetary value to better understand the real societal cost of production.
To underscore its primacy in the luxury universe, Louis Vuitton has largely anticipated the need for transparency demanded not only by our times but also by our institutions by revealing an ambitious system as part of the launch of its LV Diamonds collection. This collection highlights stones that benefit not only from an exclusive cut (the LV Monogram Star which gives the diamond the shape of a Monogram flower) but also from a digital certificate using technology developed by the Aura Blockchain Consortium. An unbeatable system since it already meets, in every respect, the requirements of the G7 and the European Commission.