How the West convinced Russia’s diamond competitors to join it

Koen Verhelst - Hopes of keeping Russian diamonds out of the West have gotten a huge boost as two of Moscow’s major competitors — Botswana and Angola — take clear steps to strengthen their cooperation with the European Union and Group of Seven of Western democracies.Diamonds from Russia have been sanctioned by the G7 and the EU as of earlier this year, to reduce Russian income as it wages its war against Ukraine. But a system for traceability and transparency was needed to make sure a Western ban would not just result in Russian diamonds appearing on Western jewelry through the opaque trading networks that are so common in the diamond industry.Russia is the world’s largest diamond producer by volume and supplied around one-third of diamonds that were shipped via the Belgian hub of Antwerp before the sanctions took effect.In 2021, Belgium imported €1.8 billion worth of Russian stones, which went down to €1.4 billion the year after, once Russia had started its full-scale invasion.Tracing, however, would be virtually impossible if relying only on the importing side of the value chain. This is why the G7 is talking to major diamond producers like Botswana, Namibia and Angola to join origin certifying of their domestic production. Inside the G7, only Canada produces the stones naturally.BotswanaBotswana — the second-biggest producer after Russia — agreed recently to start certifying rough diamonds exiting the country from its mines. The export verification point will open as soon as possible next year with a blueprint coming from the Antwerp World Diamond Centre (AWDC), which has been certifying incoming shipments.“We have a lot of practical but also policy experience on how to do this,” Karen Rentmeesters, CEO of the AWDC told Politico. “The intention is to get it set up in the first quarter.” The AWDC is the association that oversees the diamond trade in Antwerp and represents the sector to the outside world.The verification will give the diamond shipment a number, which will travel with the stones along the value chain. This should prevent them from getting mixed in with Russian diamonds in a trade hub like Dubai or a polishing center like the Indian city of Surat.Country’s storyBotswana’s recently elected president Duma Boko told Politico he wants the diamonds to tell his country’s story. “Botswana diamonds are unique in terms of the scale of change that they have brought to the country and the impact they’ve had on people’s lives,” he said in an interview, referring to the relatively high incomes in his country and the peaceful transition of power that brought him into office after nearly six decades of rule by a rival party.“Consumers want more than just exquisite and luxurious diamonds. They seek to uncover the human rights narrative woven into each stone,” he told a diamond conference in Antwerp recently.Another major step Boko wants to take soon is signing a new deal with mining company De Beers. His government owns a stake in it and the new contract is meant to funnel more stones into Botswana’s diamond company, giving the country more control over its exports on the revenue side as well.AngolaThe G7 and EU are also talking to Namibia and Angola to set up a similar office to verify their production. Angola is particularly interesting as it sits on what might well be the world’s largest reserves — it could even dethrone Russia as the largest producer once it starts developing those deposits.But, until last week, there was one problem to start verifying in Angola: Russia was present in Angola’s diamond mining industry. Alrosa, the Kremlin-owned mining company, had a 41% stake in a joint venture with its Angolan counterpart. Opening a verification point in Angola could mean Alrosa-produced diamonds would still end up on the G7 markets.Luanda took an important step recently when it announced that an Omani investment fund would buy Alrosa’s stake.The sanctions were “affecting Angola’s credibility in the international diamond market,” the country’s mineral resources minister Diamantino Azevedo said.Partnership on sanctionsFor the West, the steps by the Botswanan and Angolan governments show an important lesson: Gaborone and Luanda are unlikely to adopt the full breadth of sanctions on Moscow. Recognising and upholding their interests in the diamond industry — and making sure the banning of stones from Russia doesn’t mean their production is at risk — are far more effective arguments to foster cooperation.The potential for enabling Botswana’s agency is huge. So far, diamond miners like De Beers ship rough stones out of the producing countries as quickly as possible. They then often are intentionally mixed with diamonds from other countries, meaning it’s much harder — if not impossible — to establish how much each producer earns.For Botswana, 63% of its exports were diamonds in 2023, based on data from Statistics Botswana. Even for oil-rich Angola the stones made up nearly 10% of exports in 2023, according to OEC, a trade data monitor.With traceability, Botswana’s democratic, conflict-free and non-Russian diamonds might well fetch a higher price from top jewelers soon. It paves the way for baking origin marketing into an industry that has long struggled with transparency and often also stalled any efforts in that direction. - Politico

How the West convinced Russia’s diamond competitors to join it

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Namibian Sun 2024-12-26

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How the West convinced Russia’s diamond competitors to join it

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Namibian Sun 2024-12-26

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