The E.U. Just Banned Imports From the World’s Largest Diamond Mining Company

The ongoing conflict in Ukraine continues to negatively impact Russia, with the newest blow regarding diamond trading. Europe enforced a G7 ban on importing Russian diamonds on January 1. Consequently, the EU included Alrosa, the biggest diamond mining entity globally, and its CEO Pavel Marinichev to its sanction list, addressing Russia's warfare activities in Ukraine. The group's objective is to eliminate a vital source of revenue for Russia, EU's foreign policy chief Josep Borrell argued in a post on X (previously known as Twitter).

For now, Russian diamonds processed in third-party nations will be exempt, but this allowance will lapse by September 1. With these sanctions in place, Marinichev and any assets of Alrosa within the EU will be frozen. Marinichev is further prohibited from entering Europe, according to the Financial Times. Conversely, Alrosa has felt the brunt of similar sanctions in the US, which executed a unilateral ban on Russia's diamonds effective from March 2022.

Alrosa, a Russia-controlled enterprise, made a profit of $1.9 billion in 2023's first half; yet, the profits have reportedly dropped by 35 percent on the yearly basis. The uproar in Ukraine has dramatically altered the worldwide diamond industry. For instance, major western jewelers' boycott against their gems resulted in Russian stones faltering in the Chinese market. Nevertheless, statements from the Kremlin have downplayed the impact of EU sanctions on their diamond industry.

Dmitry Peskov, a Kremlin spokesperson, highlighted the existence and expected utilization of strategies to bypass these sanctions. Alrosa is renowned for diamond mining activities in the sparse regions of the eastern Yakutia and the northwestern Arkhangelsk in Russia. The Russian Federation and regional administrations are noted to be its primary holders, with another 30 percent of its shares reportedly being available in free float.

Despite the imposition of export restrictions, Alrosa managed to sustain its production levels from before the war, generating 34.6 million carats of diamonds in 2023. This figure, however, was three percent below the previous year. The EU reportedly imported Russian diamonds totaling about $1.5 billion in value during 2022, notes the statistics office in Europe.

The introduction of an import ban on diamonds was a challenging decision for the EU, considering Belgium's concerns about potentially losing its status as a significant diamond trading hub. However, these fears were finally sidelined, and the ban is now in force. Demetrius Simms, a digital writer at Robb Report, began their career in public relations before transitioning to freelance writing in 2020. Their work is now featured in lifestyle and culture publications.