Following the EUs recent ban on Russias largest diamond producer Alrosa, the global diamond industry faces significant challenges and must seek new supply sources. Alrosa accounts for one-third of global diamond production, and this sudden supply disruption makes it nearly impossible to find immediate alternatives.

This situation has forced global diamond giants like South Africas De Beers to take action. De Beers CEO Al Cook stated that in response to the reduction in global natural diamond supply, the company announced a historic $1 billion investment. These funds will be used to extend the operational life of Botswanas Jwaneng mine, one of the worlds richest diamond mines.

Al Cook emphasized that the investment in the Jwaneng underground project will create new added value and aligns with De Beers strategy of investing in the highest-quality projects. The UK and Botswana governments have also approved this investment. Representatives from Debswana Diamond Company noted that this investment will extend the Jwaneng mines lifespan by 11 years starting from 2024.

The EUs sanctions on Russia have had a profound impact on the global diamond market. The new sanctions prohibit the import, purchase, or transfer of natural and synthetic diamonds and diamond jewelry from Russia. This will affect diamonds mined, exported, or transited through Russia. Starting September 2024, the sale of Russian diamonds processed in other countries will be banned, with India being the most affected, as it cuts and polishes 90% of the worlds rough diamonds.

To effectively control the international market, G7 member states need to establish robust traceability systems and certification mechanisms. Alrosa, jointly owned by the Russian Federation and the Sakha-Yakutia Republic, is one of Russias important economic sources, generating approximately $4 billion annually for the Kremlin. In 2023, Alrosa mined 34.6 million carats of rough diamonds.

Global demand for rough diamonds has been sluggish in recent months, with India even requesting global manufacturers to reduce sales to manage inventory. These changes indicate that the global diamond market is poised for significant transformation, and industry players must find new strategies to address upcoming challenges.

Background:G7 announces new sanctions on Russian diamonds to be implemented next year