Diamond prices rise due to sanctions against Russian company ALROSA

Diamond prices are on the rise as sanctions against one of the world’s two mining giants spread through the supply chain. In the past, the industry could turn to giant De Beers for extra gems when supply was tight, but not this time.

According to Bloomberg, citing sources, the price of a small rough diamond has jumped about 20% since early March. Reason: Diamond cutters and dealers are scrambling to source the stones after the United States imposed sanctions on De Beers’ Russian rival Alrosa, which accounts for around a third of global production.

For much of modern diamond history, there has been a situation where De Beers could have tapped into its vast reserves, or simply tapped into hidden mining power. Just over 20 years ago, his vaults in London held stocks of diamonds worth up to $5 billion.

Those days are long gone. The company has only working reserves and its mines are operating at full capacity. The likelihood of a significant increase in supplies until 2024, when the expansion of the flagship mine in South Africa is complete, is unlikely.

De Beers also produces relatively few diamonds of the specialty type that Alrosa specializes in: small, inexpensive gemstones that surround a larger stone in the center or are used in low-end jewelry such as Walmart or Costco.

For many in the industry, this means growing shortages unless ALROSA and its commercial buyers find a workaround.

ALROSA canceled its last sale in April and is unlikely to sell large volumes again this month, sources said. It is unclear when the company will be able to sell normally again, they said, even as the company, banks and buyers seek solutions.

ALROSA’s press department declined to comment. The license from the US Treasury Department, which allowed him to enter into agreements with the company, expired on May 7.

Although the famous American jewelers Tiffany & Co. and Signet Jewelers Ltd. announced that they would stop buying new diamonds mined in Russia, retailers in countries such as China, India and the Middle East did not follow suit.

This dynamic raises fears that diamonds from Russia will be presented as diamonds of other origins.

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