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Almost Everyone Else Is Still Selling Russian Diamonds. Why Aren't We?

Updated: Nov 9, 2022


Firstly, we want to assure you that our current diamond sourcing policy does not affect you the customer whatsoever. In fact, the current geo-political situation actually affords you some tertiary benefits in terms of potentially higher than normal resale values of any diamond jewellery and/or investment diamonds that your purchase from us as the supply vs demand issue works in your favour. Despite our own higher buy rates for diamonds on the global market (because by excluding the Russian options we shoulder some higher costs at source), we have not and we will not be increasing our own prices (which are already the very best on the market and that will remain so).

To underpin this blog article, We Love Diamonds have also released a document on our position on Russian diamonds which you can view/download here. It's important for you to generally understand the overall global diamond market in general to place everything in context since it has a direct (and indeed sometimes positive) effect on the value of your own diamonds and diamond jewellery. Global diamond reserves are continually being depleted parallel to big increases in global demand and this creates a major shortfall in supply versus ever-growing diamond demand. De Beers for example have controlled a huge portion of the global diamond market since 1888 and they recently stated that diamond supply has already peaked. De Beers claim that there are just 20 to 50 years of stable supply remaining (unless major new diamond mines are discovered). Consequently, it’s highly probable that the diamond price per carat will continue to spiral upwards for natural diamonds. The conflict in Ukraine has a bearing on this although not as much as it should given how diamond sanctions really aren't working as we will cover below.

So what is the situation in regard to Russian diamonds? You may have heard the term ‘Russian Cut Diamond’ and this is simply a diamond which has specifically been mined and cut in Russia.

As diamond experts, We Love Diamonds know full well that it's not too hard to discriminate against Russian diamonds if you really want to, especially at the top of the industry anyway. Ignorance is simply not a valid excuse yet this is precisely what many players in the UK, Europe, USA and Asia are doing every day. To us that’s not just ignorance - it’s outright market manipulation, greed and tacit support for the Russian regime and it’s all being done in return for dark profits. Let us be empirically clear, Russia has the largest diamond reserves in the world. Russia’s contribution to global diamond supply in 2020 was 23 million carats of gem-quality cut diamonds and that represented around 30% of global supply. Russian owned mining company Alrosa are the world’s largest diamond producer by volume and they are responsible for 90% of Russia’s overall diamond production and a staggering 28% of overall global diamond supply. They are directly and overtly supported by the Putin regime who own a 33% stake in them. Hitting them where it hurts matters to Russia. Diamonds are, notionally, in dwindling global supply so their availability should have been dramatically exasperated by the geo-political situation and sanctions. But there are just too many vested interests from countless cartels, big brands, autocrats, lobbyists, politicos and indeed apologists who have enormous influence. The truth is that the much-publicised squeeze on Russian diamonds really hasn’t happened to any large extent and this is a consequence of indifference, ineptitude, insatiability and intent.

Are there international sanctions on Russian diamonds? Yes but they are being easily navigated around by Russia as we’ll come onto. Alrosa for example was placed on the sanctions list by USA and UK and corporate and individual levels due to the Ukraine conflict. It’s actually surprisingly hard to tell if the UK has completely banned Russian diamonds but it has definitely increased the import tariff on them, for what little that’s worth. Staggeringly though, the European Union (EU) has specifically excluded diamonds in all their sanctions against Russia and they have again just doubled down on that criminal decision by continuing to allow their unrestricted sale across Europe. We Love Diamonds condemned this then and we condemn it now because in doing so, the EU has given Russia and Alrosa free reign to continue to sell their goods into one of their biggest markets - the big diamond barons in Antwerp and elsewhere across Europe. In fact, Alrosa puts 33% of its entire output through Antwerp - a third of their clients are based there who collectively spend around $1.8m a year with them. We would like to stress at this point that we completely excuse De Beers Group from any aspersions in this area since every diamond that The De Beers Group discover and sell, at least white diamonds above 0.2 carats, come from their own mines in Botswana, Namibia, South Africa or Canada and they are in fact Alrosa’s biggest competitor. De Beers are pre-disposed by design to never buy Russian diamonds regardless of the war in Ukraine.

So why hasn't Russian been hit hard by these sanctions? Despite all the Western government bluster, Russia has quietly and insidiously revived their diamond exports to almost pre-war levels despite all the hyperbole of sanctions from the international community. Those sanctions were positioned as being so biting that global supply was forecast to have been squeezed and cut by about >25% in line with the sheer scale of Russia’s contribution to overall diamond supply worldwide. But it turns out they're less biting than they are slightly gnawing. There are many ways around sanctions for Russia (where they even exist) and we’ll give you just a few examples of how this is possible.

Firstly, Russia is still legally able to buy diamonds at wholesale prices from companies like Alrosa using Gokhran which is the Russian State Fund of Precious Metals and Precious Stones (and operated by the Russian Ministry of Finance). This means they can effectively buy diamonds from themselves. Why would they do this? Simple - Gokhran are legally able to sell diamonds internationally on behalf of the Russian government and this helps completely circumvent Russian diamond mining operations and the Putin regime being otherwise hindered by pesky sanctions. Gokhran previously purchased and subsequently sat on $1 billion of uncut diamonds from Alrosa so they’re really not short on supply. This was done to underpin the Russian diamond industry and ensure global prices remained artificially high by limiting supply to help mitigate the effect of diamond prices being reduced by demand. Thanks to the blatant and embarrassing lack of sanctions from the EU then, if we don’t want to buy Russian diamonds from the big diamonds barons, we all have to rely on the ‘honesty’ of these cartels regarding provenance. When it comes to provenance, one would think that the otherwise excellent “Kimberley Process” would help us in the area but sadly it really doesn’t. The mandate of the Kimberley Process is designed to eliminate conflict diamonds at source. It’s an elaborate international framework that requires all rough natural diamonds which cross international borders to be accompanied by government issued “KP Certificates”. These certificates must state how the “Country of Origin” is not using what any sane person would commonly refer to as a “blood diamond.” However, rough diamonds from different countries are being intentionally blended together with Russian diamonds for trading purposes as they are then determined as being of “Mixed Origin”. Every day, Russian diamonds are being mixed with diamonds from other countries to specifically circumvent the Kimberley Process. The usual suspects in Antwerp and elsewhere can then all later claim, with plausible deniability, that there were no Russian diamonds in any given purchase, at least “not to their knowledge” and certainly not in the blinkered eyes of international law. On the subject of Belgium, their Prime Minister (Alexander De Croo) was in Antwerp recently vocalising his vociferous support for their diamond industry and he argued, strongly, that diamond sanctions would hurt Europe more than it would hurt Russia. We can thus see where his priorities lie! Parallel, many of his diplomats helped to successfully lobby the EU not to impose sanctions. A spokesperson for the 'Antwerp World Diamond Center' bizarrely argued that Belgium should continue dealing with Russia so as not to reward Dubai with the business instead! Let's not forget that Belgium has historical form for this - it was the Belgians who successfully lobbied the EU to lift diamond sanctions on Zimbabwe and that proved to be a real financial boon for the despot Robert Mugabe. We could probably write a whole blog on the so-called Belgian Diamond Club (which was a secret group designed infiltrate the Belgian Parliament and leverage it to their ends in terms of diamonds and overall trade policy) and their overall chequered history in relation to corruption, blood diamonds and placing profits over human rights. We believe that buyers will always do the right thing and that sustainability and ethics are, rightfully, key purchase drivers. If so then those buyers will ultimately vote with their feet so let's see whether the market starts to shift away from Antwerp towards those with more progressive commercial positions.

Other sneaky workarounds employed along these lines include Russia having many of their exported diamonds simply reclassified in highly dubious territories like India. What they do here is export rough diamonds to somewhere like China for the first stages of polishing and they then later sent them to somewhere like India for them to all be laser cut, faceted and polished. This means that can claim that they have been “substantially transformed” which means that, legally, the “Country of Origin” can then be classified as India (or Israel or anywhere else they choose to do this switcheroo in). Indian diamonds are actually a laughable concept as India has no diamond mining operations or reserves to speak of... These are just some of the many, many cynical workarounds being proactively flexed by the Russians and also by many of the vendors and household brands that are known to you. While you may expect these big brands to act with honour they often just don’t and blind eyes are being turned every day by governments and brands in the UK, EU, USA and elsewhere.


Why does this all even matter?

Russian diamonds are most definitely the new blood diamonds. While everyone else (including most/all of the high street jewellery brands and other major online providers) either simply say nothing on this subject or, worse, obfuscate and make excuses and exceptions - Russian diamonds are financing violent conflict in Ukraine. These diamonds are financing death and destruction. Diamonds are one of the few commodities that Russia can flex globally and the funds derived from these diamonds are paying for their aggression. Not only is this causing deaths it’s actually completely preventable and that makes it doubly tragic. Where does We Love Diamonds stand & what are we doing?

We have no problem with the Russian people but we do completely stand against Russian diamonds and are against the so called special military operation in Ukraine. Unlike most brands in our industry though from familiar high street jewellers to major online providers (to their eternal shame and chagrin), We Love Diamonds have been completely clear from the get-go on where we stand as a brand in terms of Russian mined and Russian cut diamonds. To be fair, there are some major worldwide brands who have come out against using Russian diamonds including Tiffany & Co, Chopard, Cartier and Signet. Pandora entirely use/sell fake lab diamonds anyway but they did at least state that they will not buy any "materials" of Russian origin so we guess that's at least one tick in their favour.

Unlike others, this is a subject that we openly talk about and one which we do not shy away from having a stated position on. We want to educate consumers about this subject and help them make ethical decisions about their diamond jewellery. Although we are not a political business, as people we made an immediate commitment to not use Russian diamonds either now or for the foreseeable future. This has been our stated position since hostilities commenced. In fact, we were and probably still are the first and only major diamond jewellery retailer in Europe to openly declare that we do not and absolutely will not be using any Russian diamonds. Period. We go to extraordinary lengths to check the provenance of all our diamonds and if there is even any remote doubt that a diamond is of Russian origin then we feel that this means there’s no doubt and it simply won’t get bought, sold, or used by us. This is a non-negotiable position.

We believe that no matter how flimsy or non-existent sanctions are which are designed to halt the flow of Russian gems to the west, every brand has a personal choice to make. We’ve made our choice because we think it really matters, especially to the people of Ukraine. We are absolutely against those who are proactively circumventing sanctions and contravening what we consider to be basic human ethics and, for what it’s worth, we will continue to publicly call them out. We have a genuine social conscience as a business and that extends to many other profound areas including lab/fake/artificial diamonds, plated jewellery, inflated pricing and much more. We try and will continue to try our level best in this area.

For balance, it's indeed fair to say that, like many other diamantaires, we may have diamonds in stock that have historical Russian provenance from the pre-war era but they will clearly have been bought and paid for well before any of these recent events unfolded. Nobody would expect us to destroy any stock and to never sell them in the future since the financial transactions involved were all concluded well before the war in Ukraine. However, for many brands, their financial exposure in this area is leading them to make bad ethical decisions and they are still using Russian diamonds without regard for anything but profit. Looking towards the future, we would hope that the whole industry finally embargos Russian diamonds (or gets forced to) and that they stop making excuses and cynical workarounds for continuing to use them as it’s just plain wrong.

Summary:

While global diamond supply has been diminished to an extent where it does start to begin to affect us commercially, we don’t and will not allow it to affect our clients who we believe all have a social conscience as strong as ours. Not everything is about profit. We are utterly against fake lab-diamonds, we're against all conflict diamonds, we loathe worthless plated jewellery and we're certainly against endorsing or using Russian diamonds during the current situation. We genuinely hope things change for the better on a humanitarian level. We're proud of our market leading stance and we'd like to do even more even if it’s just continued education and thought leadership in this area. We just wish all the high street retailers and household diamond brands who are seemingly doing nothing or even exactly the opposite would step up too...


Feel free to message us on info@welovediamonds.co.uk or call us on 0800 987 7100 if this is something you'd like to discuss further and don't forget that you can download/read our position document on this here. If you need any more good reasons to choose We Love Diamonds then please have a look at our page on why you are always better off buying from us here.

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