26 Sep 2022
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Sustainability of the International Diamond Trade
Journey from War & Sanctions to Lab Grown & KP
By: Diamond World News Service
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May 4 2022 5:03PM
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Reference: 26304  

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Two months into the violent decree that Russia has wrought against Ukraine and still there is no sign of remission! Almost 21% - 30% percent of the total diamonds in the world are sourced from Russia; Alrosa has been the single most influential corporate supplier of rough raw material to the diamond world.

US, UK, Europe have banned trade with Russia while UAE, India and China are closely waiting and watching. The war has disrupted global peace as well as divided the international gems and jewellery industry for and against the aggressor. War has strong implications on supply chain, logistics, processes

that are sustainability related, aligned to standardization processes like KP and penalties laid by countries contribute heavily to a historic market selloff situation. Kamakshi VF takes us through the Russia-Ukraine face-off and sketches the implications of war on diamond sustainability.

Russia’s insecurity at not being able to feel “safe, develop and exist” apparently got Russian President Vladimir Putin to attack its culturally modern and westleaning-neighbour, Ukraine to create a greatly violent war – the biggest after the Second World War. With almost 30% of the world’s diamonds originating from Russian mines, the country is the world’s number one source of diamonds where the vast global supply chain sources its basic raw material. Since the time the unprecedented attacks started the global market comprising buyers, traders, diamond companies, industry associations, regulatory bodies, jewellers, all of these and many more were unsure of taking a stand about buying and selling diamonds of Russian origin. There was a deafening silence from every state, country, sector, as this was an unwanted and unpleasant situation not only for Ukraine but also for the business. No one took a stand against the violence nor Russia, as massive business was at stake with many businesses dependent upon the state-controlled diamond sector for sizable supply of raw material. The global diamond industry was blamed for keeping silent.

US, UK & Europe Diamond Industry Reacts to the War

The international diamond sector took a stand on the issue of the war with two sets of prohibitive actions. US Secretary of State, Anthony Blinken, identified Russian miner Alrosa as a State-owned Enterprise and “the world’s largest diamond mining company, which supplies 90% of Russia’s rough diamonds,” thus revenue earned by this company would ultimately go to the state which funds the military. This was the first executive order issued on the first day of the Russian invasion in Ukraine. Sergei Sergeevich Ivanov, CEO of Alsora too was heavily sanctioned by the US Treasury department, as his father Sergey B Ivanov is one of the closest officials of President Putin. All properties belonging to Alrosa were frozen and to be reported to the Office of Foreign Assets Control of the Treasury Department. Organizations owned, directly or indirectly, by 50% or more, by one or more blocked persons were also banned. Every transaction by a citizen of the United States or within the States, transiting included, that involve any property or interests in property of the designate or blocked persons too were prohibited. Many countries in the west have described Russian supplies as ‘conflict diamonds,’ due to the companies’ supposed association with highly ranking government officials. In the second official set of sanctions by the US on Russia, imposed about a fortnight after the first set, import of “nonindustrial diamonds” was prohibited

United Kingdom’s sanctions on Russia are elaborate and encompass sanctions on whole sectors of the Russian economy, like trade and transport, railways, strategic banks and business elites included. In all 65 sanctions have been announced by Liz Truss, Foreign Secretary, UK with restrictions targeting over 1000 individuals, especially those aiding the war against Ukraine like the Wagner group and imposed asset bans, travel restrictions, transport sanctions and the like. Sanctions have been imposed on Alrosa and six other banks. Intending to stop the funding machine for fuelling the war, the Foreign Secretary, Truss has said, “These oligarchs, businesses and hired thugs are complicit in the murder of innocent civilians and it is right that they pay the price. Putin should be under no illusions – we are united with our allies and will keep tightening the screw on the Russian economy to help ensure he fails in Ukraine. There will be no letup.” Infact, the country with its allies is working towards excluding Russia from the SWIFT financial system.

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