Russian Diamond Flow To India Stops As US Sanctions Cause Gem Chaos 

Do you own diamonds? It could be time to call up the local jeweler and reassess them. Here’s why: 

Earlier this month, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Russian diamond miner Alrosa PJSC, removing a third of the global supply of rough stones. 

Bloomberg reports rough stones have stopped flowing from Russian mines to Surat, India, the mecca of diamond cutting and polishing. 

Industry experts say traders and manufacturers are searching for workarounds as Indian banks are unwilling or unable to process payments with Alrosa due to OFAC’s sanctions. 

Alrosa sent top officials earlier this week to Surat to speak with customers and trade groups about future sales. 

For some context, Alrosa accounts for 33% of the global supply of rough stones, about the same as De Beers. OFAC’s sanctions against Russia have been seismic for the worldwide diamond industry as supply tightens, sending prices of the rock sky-high. 

The Diamond Index via International Diamond Exchange (IDEX) surged 36% in the last two years. 

Those experts also said Alrosa’s upcoming sale of rough stones was canceled because banks could not process payments. The Russian miner holds only ten sales each year. 

Meanwhile, discontent is growing among G-20 members that not all will stop buying Russian stones. Retailers in China, India, and the Middle East plan to continue buying despite OFAC’s sanctions. 

We noted earlier this week that not all BRICs have bowed to U.S. pressure to stop purchasing Russian goods. It lends credibility to an emerging multi-polar world.

Industry experts said Alrosa’s meeting could result in a bilateral (rupees for rubles) payment structure for the uncut gems. Again, this could be another example of the birth of the emerging Bretton Woods III system, recently popularized by Credit Suisse strategist Zoltan Pozsar. 

The disruptions around Russian diamonds will persist as supply tightens, only making the prices of the stone even more unaffordable. Then there are lab-grown diamonds, a cheaper alternative to the real thing.