Group of Seven (G7) measures to restrict Russian diamonds may cause irreparable harm to the entire diamond industry, said the World Federation of Diamond Bourses (WFDB) ahead of the March 1 start of the G7 ban on Russian diamonds processed in third countries.

In a letter sent to G7 and European Union (EU) government representatives on February 28, WFDB detailed the challenges of the G7 restrictions on diamonds of Russian origin and their impact on the non-Russian diamond industry. 

The letter was also signed by World Diamond Council President Feriel Zerouki, Gem & Jewellery Export Promotion Council Chairman Vipul Shah and International Diamond Manufacturers Association President Ronnie Vanderlinden. The WFDB is likewise encouraging presidents and members of diamond bourses as well as members from all sectors of the diamond trade to add their names to the document.

On January 1, 2024, a G7 ban on imports of non-industrial diamonds that are mined, processed or produced in Russia came into effect. Further phased restrictions on Russian diamonds processed in third countries will start on March 1. 

On February 8, the US confirmed the prohibition, from March 1, of diamonds of 1 carat and greater that have been “mined, produced or manufactured wholly or in part in the Russian Federation, notwithstanding that such diamonds have been substantially transformed outside of the Russian Federation.”

WFDB President Yoram Dvash said, “With the current legislation enacted by the G7 countries, the WFDB has been working hard to find a consensus within the industry regarding the situation we find ourselves in. Sanctions should work in the right direction, punishing the intended party and not the entire industry." 

Implementation

Noting that the trade needed clarity of process to secure business, the WFDB said that only the EU has shared limited details on enforcement. 

Moreover, the EU’s “one import node” that requires all non-Russian rough diamonds to be shipped to Antwerp for certification would place the non-Russian diamond industry at a greater disadvantage, the WFDB said. 

The cost of shipping the diamonds to Belgium along with related expenses would result in substantial increases in diamond prices for G7 consumers, making Russian diamonds “far more desirable as they would be more accessible.”

According to WFDB, forcing participants to send their rough to Belgium first in order to sell polished diamonds in G7 markets would restrict the trade of non-Russian diamonds while forcing “a functioning trans-global trade into one centralised point that would create bottle necks in supply and give unwarranted power and advantage to one participant at the detriment of all others.”

In addition, establishing a new production regime for polished diamonds and diamond jewellery in less than six months means many industrial processes in the diamond manufacturing pipeline need to shut down, the trade body continued.

The WFDB letter also enumerated workable solutions to register, certify and track rough diamonds and subsequent polished stones, among other proposals.

Dvash said, “The G7 must understand that the direction they have chosen will cause great damage to the world diamond industry. We hope that the concerns we are voicing will convince the G7 governments that an alternative solution must be found.”

Trade reaction

Shreyans Dholakia, brand custodian of Shree Ramkrishna Exports Pvt Ltd (SRK), said he supported the WFDB solution to allow governments to certify diamond origins, among others. 

“The G7 proposal to send all rough for G7 markets to Belgium for certification would be an enormous logistical challenge. Just imagine the quantities of diamonds this would involve. As an industry, we are not yet prepared to undertake such a gigantic task,” explained Dholakia, adding that SRK has already had effective traceability programmes for years. 

Hari Krishna Exports Pvt Ltd has also been operating its own traceability programme since 2008, according to CEO Brijesh Dholakia.

“We also launched our My Diamond Story programme in 2010, which traces the origin of our diamonds. So diamond manufacturers like us are ready to offer credible tracking solutions as we have been providing these to our clients all along,” he said.