Reported by Sarah Kent

What do the new sanctions do?

Though the US and UK banned direct imports of rough diamonds from Russia shortly after the war began, stones cut and polished elsewhere in the world had remained fair game — until now.

But as of the start of January, EU and G7 countries have banned the direct purchase of non-industrial diamonds from Russia. This move will be followed by further restrictions on the import of Russian diamonds processed in third countries starting in March. And come September, diamonds sold within the powerful group of countries will need to adhere to a certification scheme to verify where they came from. In Europe, jewelry and watches containing diamonds will be included too.

In other words, even if stones are sent halfway around the world for cutting and polishing, if they originated in Russia they’ll be banned from markets in Europe and the G7. And the industry will need to figure out how to prove it.

What does this mean for the diamond industry?

The new sanctions will dramatically accelerate efforts to build traceability into the diamond industry, in a way that will restructure supply chains that stretch around the world.

Big businesses have been preparing for the change. LVMH-owned Tiffany and Richemont both said they stopped sourcing Russian stones shortly after the war in Ukraine broke out. Dimexon has segregated its supply chain to ensure Russian stones don’t reach Western clients, tracking each transaction and relying on direct commercial relationships with mining companies to demonstrate the origin of each package of stones.

These changes have market ramifications too. Russia accounts for roughly one third of the world’s diamond supply, but while Russian stones will likely still end up sparkling in engagement rings, necklaces and tennis bracelets bought by consumers in places outside of the new sanctions regime, the countries that will adhere to the diamond ban account for nearly three quarters of global jewelry demand, according to Zimnisky.

“In the medium- to longer-term, there will be times the industry runs into supply shortages because of this,” he said.

Read full report: https://amp.cnn.com/cnn/2024/01/22/style/eu-sanctions-russia-diamonds-jewelry-bof/index.html