Several trade groups have come together to appeal to the Group of Seven (G7), urging them to reassess their plan to ban Russian diamonds, citing potential detrimental effects on the industry.
The US Treasury’s Office of Foreign Assets Control (OFAC) confirmed earlier this month that sanctions on diamonds of 1 carat and above would commence on March 1.
However, no guidance was provided on the implementation process or the necessary procedures for the trade.
The G7, consisting of Canada, France, Germany, Italy, Japan, the UK, the US, and the European Union, oversees these measures.
According to details released by the EU, a proposal has been made to channel all diamonds through Antwerp for screening and certification as non-Russian.
The World Federation of Diamond Bourses (WFDB), along with the World Diamond Council (WDC), India’s Gem and Jewellery Export Promotion Council (GJEPC), and the International Diamond Manufacturers Association (IDMA), argue that this approach would disproportionately harm the broader industry.
Requiring dealers within G7 nations to send their diamonds to Belgium would incur additional costs and time, creating a competitive disadvantage for non-Antwerp-based traders.
Furthermore, it could lead to lower prices for Russian diamonds, making them more attractive to G7 consumers.
The industry groups propose that any certification technology developed within the EU be made available to all non-Russian producer, trading, manufacturing, and consumer countries.
They suggest linking this technology to the existing Kimberley Process (KP) framework, emphasizing the impact on artisanal and small-scale mining (ASM) segments and legitimate local industry beneficiation in African countries.
Moreover, concerns are raised about the lack of clarity regarding preexisting stocks of rough and polished diamonds, secondhand jewelry, and finished products under the impending restrictions.
The letter from the trade groups emphasizes the need to avoid concentrating the diamond trade in one centralized point, which could disrupt supply chains and disadvantage participants.
As the industry seeks to navigate these challenges, collaboration and equitable solutions are essential to mitigate the adverse effects and maintain the integrity of the diamond market.
