U.S. sanctions on Russia’s giant diamond miner are causing chaos through the industry, leaving traders and manufacturers hunting for workarounds to keep tapping one of the world’s main sources of precious gems.
Buyers across the big trading centers in Antwerp and Dubai and manufacturing hubs in India have spent the past two weeks consulting lawyers to determine what the U.S. sanctions on Alrosa PJSC mean and how they can continue to buy, according to people familiar with the matter. In the meanwhile, diamonds have stopped flowing from Russian mines to Surat -- the world’s diamond-cutting epicenter -- because Indian banks are unable or unwilling to process payments.
A delegation from Alrosa visited India earlier this week and held meetings with customers and trade groups to discuss how to facilitate sales, people familiar with the matter said. The disruption is already being felt in diamond prices, as the cost of the smaller stones that Alrosa specializes in has started to rise in the past week.
Alrosa is effectively state controlled: the federal government owns 33% and another 25% is held by local authorities. Losing its supply over a longer period would be seismic for the diamond world -- the company accounts for about a third of global supply of rough stones, about the same level as De Beers, which had a monopoly until the start of this century.