There is demand for diamonds and Russia will turn to other markets, finance minister says regarding sanctions

BEIJING. Dec 19 (Interfax) - Russian diamond producers, faced with sanctions from G7 countries, will divert sales to other markets, Finance Minister Anton Siluanov, who chairs the supervisory board at diamond miner Alrosa , told reporters.

"This is not the first time sanctions have been imposed, and we see the consequences of these sanctions. We will simply redirect sales markets to other regions. I am sure that this will not benefit those who introduced these sanctions," he said.

"The market for rough and polished diamonds is more or less clear. It is quite stable - sometimes it grows, sometimes it falls. The Russian share of this market is significant, we share it approximately half and half with De Beers. There is demand, and we will look for other markets," he said.

The 12th package of sanctions against Russia concerns not just rough diamonds mined in Russia but also polished diamonds produced from Russian rough in third countries and shipped to G7 markets from their new country of origin. A ban on the import into G7 countries of polished diamonds weighing 1 carat or more, cut in third countries from Russian diamonds, will come into force on March 1, 2024

The EU's Belgium has always been the main buyer of Russian rough diamonds. Russian rough diamond exports to Belgium were estimated at 1.8 billion euros in 2021. Overall rough diamond sales have been around 4 billion euros per year.

Direct imports of rough diamonds from Russia to the EU fell more than 80% from July 2022 to April 2023 compared to the same previous period, from 1.6 billion to 300 million euros, the European Commission has said. The drop in diamond imports will be closer to 90% in 2023.

However, this reduction in bilateral flows with the EU does not necessarily mean a similar loss in global revenue for Russia. Diamond trade is being diverted via other countries. Diamonds are processed elsewhere and still find their way back into G7 markets as non-Russian goods. "That is why a ban on Russian diamonds polished in a third country is also necessary," the EC says in clarifications to its new sanctions package.