• Thursday, February 22, 2024

Business

India, De Beers seek clarity, flexibility on G7’s Russian diamond ban

A display of diamonds shows coloured, fancy brownish greenish yellow oval diamond, 50,21 carats (C), among other stones at Alrosa Diamond Cutting Division in Moscow on July 3, 2019. – Russian Alrosa gets its diamonds in the permafrost abyssal holes dug with explosives in the permanently frozen ground of Yakutia, an isolated region in East Siberia, the home to the huge diamond deposits that ensure Russia’s supremacy in world production. (Photo by Alexander NEMENOV / AFP) (Photo credit should read ALEXANDER NEMENOV/AFP via Getty Images)

By: Chandrashekar Bhat

INDIA, home to 90 per cent of the world’s diamond cutting and polishing industry, and De Beers, the top global rough diamonds producer by value, are seeking clarity and flexibility from G7 countries in implementing a ban on imports of Russian gems.

The Group of Seven countries on Wednesday (6) announced a direct ban on Russian diamonds starting January 1 followed by phased-in restrictions on indirect imports of Russian gems from around March 1. Russia is the world’s biggest producer of rough diamonds by volume with a 30 per cent share of the market.

The implementation will depend heavily on India, which wants to minimise potential disruptions for small diamond firms employing millions of people.

“We are not happy with the announced timeline for implementation of restrictions,” said Vipul Shah, chairman of the Gem Jewellery Export Promotion Council (GJEPC), a leading Indian trade body.

“Recognising the diversity of our industry, we believe there should be more flexibility in these timelines,” he said in a statement.

The G7’s plan has sparked a debate inside the sector as it risks complicating supply chains when demand is under pressure. India’s April-October polished diamond exports are down 29 per cent to $10 billion.

“The G7 is essentially saying it is still a work in progress but here is a framework with a timeline,” diamond analyst Paul Zimnisky said.

But “if Indian companies want to continue doing business with the G7 nations, then they are going to have to do their part,” he added.

The G7 plans to introduce a traceability-based verification for rough diamonds by September, but for now two main questions of the plan remain unsolved: how a diamond’s country of origin should be checked and where it should be done.

Belgium supports the idea of checks in Antwerp, the world’s main diamond hub. Some in the industry are concerned that this would create supply chain bottlenecks, additional costs and hamper African production’s access to the G7 markets.

“It is currently unclear what exactly will be involved at each stage, so we will seek further clarification before being able to consider impacts,” De Beers, a unit of Anglo American, said.

“If the intent is to apply a purely technological certification system and to channel all rough imports to the G7 through Belgium, this will be to the detriment of responsible African producers, to all those who depend on the artisanal mining sector, and to the wider industry,” De Beers added.

Russian state-controlled diamond producer Alrosa declined to comment.

(Reuters)

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