Russia’s ongoing war in Ukraine continues to cost them.
A G7 ban on imports of Russian diamonds came into effect on January 1 in Europe. The world’s largest diamond-mining company, Alrosa, and its chief executive Pavel Marinichev were also added to the European Union’s sanctions list in response to Russia’s military incursion. Via a post on X (formerly Twitter), E.U. foreign policy chief Josep Borrell claims the group seeks to “deprive Russia of this important revenue source.” The ban exempts Russian diamonds processed in third-party countries, but the exemption will be phased out by September 1.
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Under the sanctions, Marinichev and Alrosa’s assets held in the E.U. will be frozen. He is also now banned from traveling to Europe, the Financial Times reports. Alrosa has faced similar sanctions in the U.S. since April 2022, which includes a unilateral ban on Russian diamonds it implemented as of March 2022. The Russia-controlled company made $1.9 billion in the first half of 2023, but profits were reportedly down by 35 percent year over year.
The global diamond industry has been overhauled by the invasion of Ukraine. According to experts, Russian stones have taken up space on the Chinese market after major western jewelers boycotted its gems. But the Kremlin has been quoted downplaying the impact of E.U. sanctions on its diamond industry. “I do not believe that the possibilities to circumvent these sanctions do not exist,” Kremlin spokesperson Dmitry Peskov stated in December. “The exist and they would be used.”
Alrosa is known for its diamond-mining in Yakutia, a sparsely populated republic in Russia’s east and the northwestern Arkhangelsk region. Its main shareholders are the Russian Federation and regional administrations. Another 30 percent of its shares are reportedly in free float. Despite export restrictions, the business maintained prewar production levels and mined 34.6 million carats of diamonds in 2023. That figure is down by three percent year over year.
The E.U. imported about $1.5 billion of Russian diamonds in 2022, according to Europe’s statistics office. An import ban on diamonds over the past year was reportedly a struggle for the E.U. to adopt given Belgium’s fear that it could lose its position as a major trading hub for the stones. But those concerns were set aside and now the ban is in place.
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