De Beers forecasts assume gradual imposition of G7 sanctions against Russian diamonds in 2024

MOSCOW. Sept 21 (Interfax) - New sanctions against Russian rough diamonds might be imposed by the United States and other G7 countries in 2024, diamond giant De Beers said in its Diamond Insight Report 2023.

Sanctions are expected to first be imposed against large stones and then gradually extend to smaller ones, De Beers said.

In light of this, diamond provenance throughout the value chain in key markets will become increasingly important for stakeholders, De Beers said. This factor could potentially increase demand for rough diamonds in the medium and long term, the company said.

Although sanctions against Russian rough diamonds caused various disruptions in payments and logistics in 2022, their shipments to cutting centers largely continued, De Beers said.

The New York Times and Bloomberg reported earlier that G7 countries might announce sanctions in September-October that would go into effect after holiday sales in early 2024. Restrictions will first apply to stones upward of 1 carat and later extend to smaller stones from Russia, the NYT reported, citing Brad Brooks-Rubin, a senior advisor to the U.S. Office of Foreign Assets Control (OFAC).

An embargo, unlike current U.S. sanctions, could affect diamonds cut in other countries. Although Russian diamond miner Alrosa was included in the U.S. Specially Designated Nationals List (SDN List) in the spring of 2022, cut diamonds produced from Russian rough diamonds can freely penetrate the U.S. market after being processed by India's cutting and polishing industry.

Previous attempts to include Alrosa on the European Union's sanctions list were blocked by Belgium, as Antwerp is one of the world's largest diamond trading centers and such sanctions would hurt the interests of the country's diamond industry. In the absence of a tracking mechanism, the diamond trade would simply move outside of the EU, Belgian officials argued.

In order to restrict trading of Russian diamonds, the G7 is discussing the creation of a system to globally track rough diamond sales.

De Beers estimated that Alrosa produced 15 million-17 million carats in the first half of 2023, about the same as or more than the 15 million carats it mined in the same period of 2021. Alrosa did not disclose first-half production results last year.

Alrosa reported in May that it produced 35.5 million carats of diamonds in 2022, 10% more than a year earlier. The company did not give a forecast for this year, but at the end of 2022 then Alrosa head Sergei Ivanov said the company might mine 34 million-35 million carats in 2023.

In its report, De Beers also summarizes data on the scale and anticipated launch dates of major Alrosa mining projects. The Luaxe deposit in Angola, in which Alrosa is participating with Angolan company Endiama through Catoca Mining and directly, is expected to reach planned annual production of 8 million carats by 2027. The Maiskaya pipe should reach output of 2 million carats per year by 2025 and the Vodorazdelnye Galechniki alluvial deposit is expected to reach 1 million carats per year by 2026. The project to restore the Mir mine is expected to add 3 million carats per year starting in 2032.