The landscape of the diamond industry is poised for significant transformations in 2024, catalyzed by the imposition of fresh sanctions on Russia. The Group of Seven (G7) nations—Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States—have jointly declared sanctions aimed at curbing Russia’s capacity to finance its unlawful conflict. These sanctions carry specific implications for the diamond sector, mandating companies to substantiate the non-Russian origin of their diamonds for sale within G7 countries.
The focus of these sanctions is on Russia’s diamond industry, acknowledged for its substantial contribution to the country’s governmental revenue, directly supporting the ongoing conflict in Ukraine. Notably, Alrosa, the world’s leading producer of rough diamonds, holds a 33% ownership stake by the Russian Federation. The overarching objective of the sanctions is to diminish Russia’s revenue from the diamond sector, thereby limiting resources available for the war effort against Ukraine.
While the United States had previously instituted a ban on diamond imports from Russia, the European Union (EU) had postponed similar restrictions, expressing concerns about potential disadvantages for Antwerp in its competition with other trading hubs. However, the EU has now assumed a prominent role in orchestrating diamond sanctions within the G7. This phased strategy includes an immediate prohibition on direct diamond imports from Russia, extending to diamonds above 1 carat sourced from Russian rough but polished in third countries. Effective September 1, the restrictions will encompass lab-grown diamonds, as well as jewelry and watches containing diamonds above 0.50 carats.
A central challenge in enforcing these measures revolves around the verification of diamond origins. Consequently, a mandatory traceability-based verification and certification mechanism for rough diamonds is set to be implemented, with a pilot program scheduled to commence on March 1. The proposed system involves the creation of a digital twin for each rough diamond, accompanied by the issuance of a certificate of origin. This information will be recorded in a centralized blockchain-based ledger, aligning with existing traceability solutions. Prominent industry participants already engaged in traceability programs include De Beers’ Tracr, Everledger, iTraceiT, the Gemological Institute of America (GIA), and Sarine Technologies.
