Rapaport reported: “On February 24, 2022, the US Office of Foreign Assets Control (OFAC) added Alrosa to a list of menu-based sanctions and added its CEO, Sergey S. Ivanov, to its Specially Designated Nationals (SDN) list, with higher levels of restrictions.” The US government has imposed this specific sanction on Alrosa because it is 33% owned by the Russian government, and 33% owned by the local government of the Russian republic which houses its mines. Alrosa is the biggest diamond producer in the world by volume, and in 2021 saw a yield of $4.2 billion. The company represents 28% of global diamond production, and in 2021 increased its output by 2.5million carats. These statistics serve to give the closest possible understanding of the amount of money which the global diamond industry is directly contributing to the Russian government per annum through purchasing Alrosa diamonds.
The Antwerp World Diamond Centre (AWDC) is alleged to have asked Belgian ministers to push for sparing the diamond sector from EU sanctions against Russia. In anticipation of the sanctions, speaking just hours before Russian troops invaded Ukraine, AWDC spokesman Tom Neys told the Belgian newspaper Gazet van Antwerpen: "sanctions can have a significant impact on the diamond business. […] It is a blow that should hurt Russia but there is a chance that we do more damage to ourselves. The Russians can easily trade their diamonds with non-EU countries." Reuters also reports that: “India is exploring ways to set up a rupee payment mechanism for trade with Russia to soften the blow on New Delhi of Western sanctions imposed on Russia after its invasion of Ukraine, government and banking sources said.”
The Jewelers Vigilance Committee is the only official body from the jewellery and / or diamond industries who has made a public comment regarding Alrosa, the financially motivated trade sanctions against Russia, or boycotting their state owned companies as a deterrent for war (the Natural Diamond Council lists 14 ‘International and Country-Specific Bodies in the Natural Diamond Industry’ here.) The JVC focused on advice for companies and individuals who have previously been or are continuing to purchase Alrosa diamonds, recommending businesses: “hold on to records showing the date Russian-origin goods were acquired and pass along this information to customers if they ask. […] any open memo agreements with terms longer than 14 days should be amended to shorten the terms and/or closed,” and US businesses should “evaluate the status of any transactions and work to ensure that their transactions do not violate the sanctions.”
JCK News Director Rob Bates explains the futility of the Kimberly Process in this situation: “It is also highly unlikely that the Kimberley Process (KP) would get involved here […] given the KP has a very specific and limited definition of conflict diamonds that pertains only to rebel forces. Even some of the broader definitions being bandied about make clear that the KP covers only diamond-related human rights issues and conflict, and diamonds aren’t a factor in the Ukraine conflict. Finally, the KP needs absolute consensus to take action, which is unlikely when talking about Russia.”
Even BP has made a stand against Russian state-owned companies. The Washington Post, among others, reported: “British oil giant BP said Sunday that it is “exiting” its $14 billion stake in Russian oil giant Rosneft over Moscow’s invasion of Ukraine in one of the biggest signs yet that the Western business world is cutting ties over the Kremlin’s invasion of Ukraine. BP, which reportedly came under pressure from the British government to sever the Rosneft relationship, also said its current and former chief executives — Bernard Looney and Bob Dudley — have resigned from the Russian company’s board “with immediate effect.”
Though the Russian government and state owned companies have a much smaller like-for-like stake in the fashion industry than the diamond industry, Imran Amed MBE (founder and editor-in-chief of The Business of Fashion) called for the industry to “close their Russian shops and decline to ship products to Russia from online stores. As Russia only represents 3% of the global luxury fashion market, this would be a largely symbolic move, but it would still show commitment to a strong moral position.” Editor of The Financial Times’ How to Spend It Jo Ellison shared Amed’s call to the industry, adding that “fashion should take the example set by the football industry. Close the stores. Cut off access to luxury goods.”
Diamond industry leaders and bodies however have remained publicly silent on trading with Alrosa and its financial and political relationship with the war being waged in the Ukraine, though Martin Rapaport is scheduled to host a webinar addressing the diamond trade titled: ‘Politics, Economics, and Diamond Prices: Dealing Diamonds Amid a New World Order’ on March 7th. In the void created by this silence, commentators, journalists and ethical practice advocates are the loudest voices to be found, often condemning the industry on social media. Editor and jewellery writer Annabel Davidson referred in her Instagram post to “the deafening silence from the diamond industry on Russian diamonds.”
Yianni Melas a.k.a @gemexplorer is an artisanal gemstone mining expert with a lifetime of in-person, hands on experience in the field. Notably, he went on hunger strike to protest De Grisogono in 2017. Commenting on a post related to the war in Ukraine, he shared: “[…] We must also be a part of action with regards to the Russian diamonds that funded and will continue to fund it. Our Russian friends at ALROSA will always remain friends because they are not the ones that declared this war on their brothers and sisters. But if we remain silent and allow the diamonds of Russia to be associated with this human rights crime, then the diamond industry will suffer because of our silence for profit vs the welfare of what will be, over a million displaced families, thousands dead and thousands of war crime atrocities already taking place. And if diamonds suffer, the jewelry industry as a whole will consequently suffer. The solution to that isn't Europe boycotting the diamonds so that Antwerp suffers but the KP makes it a crime to trade anywhere including Dubai, NY and Mumbai. Our industry sadly is corrupt so anyone claiming the diamonds will affect jobs is misinformed. The rough diamonds will be bought by someone in our industry who doesn't care about ethics. But the message we make as an industry will be powerful especially against Lab grown diamonds who will feast on the fact our industry did nothing to stop their sales from funding the death of Ukrainian children. Every mining company needs to support Ukraine by putting pressure on the KP Chair in Botswana to stop the trade of Russian diamonds.”
For Forbes, Pamela Danziger explores the potential consequences of the industry’s reaction to the conflict and these sanctions. Like Melas, Danziger points to the obvious opportunity for lab grown diamond brands to seize upon the narrative of the diamond industry being complicit in human rights violations by continuing to trade Russian diamonds (Alrosa is estimated to produce 90-95% of Russian diamonds, and accounts for approximately 40% of diamonds sold by US retailers.)
Bain’s ‘Brilliant Under Pressure: The Global Diamond Industry 2020–21’ report states: “[since Covid-19] Sustainability and social consumerism became more influential to purchase decisions, and the pandemic heightened attention to global health and safety concerns. Regarding diamond jewelry, social impact is the top sustainability concern for US consumers; in China and India, consumers care most about environmental preservation, conflict-free supply chains, and carbon footprint. […] Going forward, industry players should integrate ambitious environmental, social, and governance (ESG) targets in their asset plans and internal incentive schemes to demonstrate their commitment. They should also communicate their progress to society.”
Consumer distrust in claims of ethical sourcing, transparency and social responsibility could likely be deepened by an absence of a collective, industry-wide stance on this war and its perpetrators. Without official statements from companies and bodies associated with Alrosa, a gap is left which detractors or any kind of opposition can and will fill with their own messaging. It seems undeniable that an inefficient or completely absent response to this crisis could cause long term, lasting damage to the industry as a whole. How long until consumers learn en masse about Alrosa, its stakeholders and its penetration in Western markets, and are refusing to buy their diamonds? And how many consumers who learn about this will interpret this as an implicitly corrupt industry and turn off diamond buying altogether?