Diamond producers De Beers, a unit of miner Anglo American (AAL.L), and Botswana’s state-owned Okavango Diamond Company have raised concerns with the Group of Seven (G7) regarding the potential unintended consequences of imposing sanctions on Russian diamonds. The move comes amid fears that the ban could significantly inflate prices in Africa, affecting the diamond industry in the region.
In December, G7 nations announced a direct ban on Russian diamonds effective from January 1, with phased-in restrictions on indirect imports of Russian gems expected from around March 1. Additionally, a new system to trace the origin of diamonds is set to be introduced in September. However, there are lingering questions regarding the logistics of verifying a diamond’s country of origin and where this verification should take place.
Belgium has expressed support for conducting checks in Antwerp, the world’s primary diamond hub. Al Cook, CEO of De Beers, highlighted concerns that African producers could be compelled to send all their diamonds in one direction, potentially leading to an increase in prices for ethical African diamonds.
“We understand and support the need for G7 sanctions on diamonds,” Cook told Reuters during the African Mining Indaba in Cape Town. “What’s really important to us is that any sanctions that are put in place achieve their desired effect without creating terrible side effects.”
Cook emphasized the importance of ensuring that any sanctions do not inadvertently harm African producers. De Beers proposed that African producers should be allowed to certify their own diamonds as non-Russian, citing the robust certification processes in Namibia, South Africa, and Botswana.
Currently, De Beers utilizes blockchain technology through Tracr, a database of transactions shared across a network of computers, to track its production. This system ensures transparency and traceability in the diamond supply chain.
Similarly, Botswana’s Okavango Diamond Company underscored the necessity of avoiding unintended consequences that could regress the progress made by the African diamond industry. Mmetla Masire, Managing Director of Botswana ODC, emphasized the importance of considering the broader implications of sanctions and urged caution in their implementation.
India, home to 90% of the world’s diamond-cutting and polishing industry, has also expressed concerns about the incoming ban on Russian diamonds. Sources revealed that India has urged the G7 countries to delay the ban, citing unclear rules regarding the tracing of gem origins.
As discussions continue regarding the imposition of sanctions on Russian diamonds, stakeholders are emphasizing the need for careful consideration to avoid adverse effects on the global diamond trade, particularly in Africa.
