Lack of tracing makes sanctions ineffective on diamond market - Alrosa
MOSCOW. April 17 (Interfax) - The absence of a functioning tracing system for rough diamonds makes the sanctions imposed by the G7 countries against Russian products ineffective, said Pyotr Karakchiyev, head of the international cooperation department at mining company Alrosa , said at the Khozaktiv-2025 corporate forum.
In addition, the sanctions have come up against the inability to replace the Russian assortment with rough diamonds from another diamond-mining country.
Karakchiyev said that although the sanctions "force us to come up with new means of interaction," they have not yielded the result desired by those who imposed them. "The sanctions that our adversaries dreamed up were supposed to affect us in a big way but they are not achieving the necessary effect, at least for them," he said.
The main reason the sanctions are ineffective is the absence of a technical solution and verification procedure for determining the origin of diamonds, he said. "Tracing is one of the key conditions that the G7 wanted to bring in to stop Russian gemstones from entering Western markets. This is not working now. There is no technical solution. This, among other things, enables the company to continue to work actively on international markets, and the G7 countries to constantly delay introducing the tracing," he said.
Industry specifics also play a role: a diamond of Russian origin "loses" that origin on its way from the mine to the jewelry store as it mixes with other stones.
U.S. and EU officials often have no understanding of the industry or unified plan for how sanctions should be implemented, Karakchiyev said.
In addition, friendly or outwardly neutral countries are fairly staunch defenders of their own interests and are not implementing G7 sanctions in their jurisdictions, he said. "These are not only trading centers with which we continue to collaborate - Dubai, India and China - but also those who should seemingly benefit from sanctions against Russia, namely the African diamond producers," he said.
The Kimberley Process, in which Russia retained full membership despite G7 proposals to restrict it, "is a universal mechanism regulating international diamond trade and ensures the export of Russian products to open international markets for us," Karakchiyev said.
Alrosa has also received the opportunity to develop free trade in diamond products on the BRICS markets by becoming a participant in the diamond platform within this association, he said. This opportunity is especially important now amid the tariff war, he said.
Regarding the ineffectiveness of sanctions, Karakchiyev cited worsening results for De Beers, "the main rival that was supposed to be the main beneficiary of sanctions against Alrosa." "For them, if these sanctions really work, this means reinstating its monopoly in the key markets of Western countries. But De Beers has been posting losses for the second year, sales fell 25% in 2024, significant stocks and debts have accumulated, and Anglo American has put De Beers up for sale," he said.
In his opinion, this confirms that "domestic rough diamonds and those size and weight categories that the company exports to world markets cannot simply be replaced with rough from another diamond mining country."