Editor’s Note
This article examines the complex dynamics of global diamond trade under sanctions, highlighting a significant increase in Russian diamond flows to India despite a concurrent drop in revenue for Russia’s Alrosa. It underscores the challenges of enforcing restrictions in a highly interconnected market.
Russian diamond flows to India increased by more than 22% in the first half of the year. However, this did not prevent the revenues of the Russian giant Alrosa from declining compared to last year.
Since last March, diamonds originating from Russia and sold by third countries have been under sanctions. Those transiting through India, the country where more than 85 to 90% of the stones are polished, are primarily affected. In theory, they can no longer enter G7 countries once cut, but the measure has clearly not deterred Indian buyers who have taken advantage of low prices to multiply transactions. A good deal, unless the market declines.
Even without price changes, these diamonds are expected to be more complicated to export once cut. Small stones below 0.5 carats are not banned in G7 countries, but others are.
Outside the G7, India can hope to sell its production in China, Cambodia, Vietnam, or even Turkey. But the G7 still represents two-thirds of buyers of cut stones, and some exporters are said not to have given up on selling their diamonds there.
The United States is not the most demanding, and that’s good since North America is the primary market for diamonds.
On paper, the increase in Indian purchases this year is good news for Alrosa, whose profit fell by 15% last year. But this may not be enough to replenish the coffers of the Russian company this year: current diamond prices caused Alrosa to lose 15.2% of revenue in the first half of the year compared to 2023, despite increased sales.
The Russian giant is not alone in suffering from prices. Debswana, the joint venture between Anglo-Americans and the Botswanan state, saw its sales fall by nearly 50% during the first half of the year. Several miners have also postponed or canceled sales auctions planned for the autumn, preferring to focus on maintaining prices rather than selling larger volumes at low prices. This is the case for Rio Tinto as well as Okavango Diamond Company, the Botswanan public company.
Since summer, prices have stabilized. The industry is now watching for a rebound in the American market, which could materialize during the end-of-year holidays.
