What the US ban on Russian diamonds means for buyers
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If you’re looking for a diamond, industry analysts say prices could rise in the near term due to President Biden’s executive order on Friday banning the import of Russian diamonds as well as caviar and vodka in response to the country’s invasion of Ukraine.
It may come as a surprise to some, but Russia is the world’s largest supplier of diamonds by volume, accounting for around a third of the rough diamond market. Almost all Russian diamonds come from the government-backed mining giant Alrosa, which operates mines in the Yakutia region of Siberia. The Russian government owns a 33% stake in the mining company.
Since the United States accounts for about half of global diamond demand, there are likely to be near-term supply shortages, according to diamond industry analyst Paul Zimnisky. “It’s hard to say what this means in the long term because we don’t know how long it will last.”
But not everyone is predicting an immediate price reaction. Industry expert Edahn Golan says demand is not increasing, at least for now. “There is no fear of a shortage or a rush of manufacturers (diamond polishers) to buy or overpay,” says Golan, founder of Edhan Golan Diamond Research & Data Ltd. “While the past two years have seen fantastic growth in demand for diamond jewelry, rising inflation and rising gasoline prices, and recent global issues may impact US consumer demand.
If the last year is any indication, more and more Americans are getting engaged with diamond rings and buying diamond jewelry. In 2021, diamond jewelry sales in the United States recorded record growth, reflecting a 51% increase over the previous year, and sales are expected to cross the $100 billion mark this year.
The biggest question in the minds of consumers is how they know if they are buying a Russian diamond. In recent years, the global diamond industry has dramatically increased supply chain transparency, making it easier for some wholesalers and retailers to identify a stone’s country of origin. When purchasing a Tiffany diamond of 0.18 carats or larger, for example, the retailer provides buyers with the country of origin and the mine that produced it.
Not all diamonds can be traced back to their source, but there are verifiable diamond sources available, says Sara Yood, assistant general counsel for the Jewelers Vigilance Committee. “Consumers should feel empowered to ask questions about their jewelry before buying, just as many U.S. jewelers ask their suppliers questions to ensure they are not violating the ban or sanctions.”
There are many self-regulatory organizations in the industry to help guide consumers and, to some extent, verify a company’s claims. “Major U.S. retailers and wholesalers have strict sourcing practices in place and only deal with responsible suppliers,” Zimnisky says.
If the ban continues long-term, Zimnisky says it will likely spur investment and development of new diamond projects in places like Canada, Brazil and Australia.
Conclusion: The United States still has a strong inventory of diamonds from major mining companies, including De Beers and Rio Tinto, you may need to pay a little more.
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