EU Sanctions Against Russia Trigger Diamond Rush

De Beers is investing $1 billion to extend the life of its Jwaneng mine in Botswana

Following the European Union’s decision to ban Russian diamonds mined by Alrosa, the largest producer on the planet, the global diamond industry will have to work creatively to find new supply sources. This will certainly be a difficult task, as the Russian giant Alrosa produces a third of all diamonds, and this is a very complex source of gems that is almost impossible to replace.

“The global supply of natural diamonds is declining,” said Al Cook, chief executive of global South African diamond giant De Beers. So not to be left behind, De Beers has announced a massive $1 billion investment to “extend the life of its Jwaneng mine in Botswana.”

“This investment in the Jwaneng underground project will create new added value for investors and is consistent with our strategy of prioritizing investment in projects of the highest quality,” said Al Cook, according to whom the investment has already been approved by the British company Anglo American and the government of Botswana, the joint owners of the local Debswana Diamond Company, who will control the Jwaneng mine that will be converted into an underground mine.

According to a Debswana Diamond Co. spokesman, the investment will extend the useful life of the mine by eleven years from 2024.

Speaking about new sanctions against Russia, De Beers emphasized that expenses of this volume are necessary because “long-term supplies of rough diamonds to world markets will be reduced.” The new sanctions established a ban from January 1 this year on “the import, purchase, or transfer of natural and synthetic diamonds and diamond jewelry from Russia.” This measure also applies to diamonds mined in Russia, exported from Russia, or in transit from the country. Subsequently, starting in September 2024, Russian diamonds processed in other countries will be banned, primarily in India, which cuts and polishes 90% of the world’s rough diamonds. To guarantee international control, G7 member countries “must establish a reliable traceability system and adopt certification mechanisms.”

The Alrosa diamond company is controlled by the Russian Federation (33%) and the Russian North Siberian Republic of Sakha-Yakutia (25%), where its headquarters and richest mines are located. The diamond trade brings in about $4 billion per year to the Kremlin’s coffers. In 2023, Alrosa produced 34.6 million carats of rough diamonds, which is slightly less than 35.6 million carats a year earlier. Demand for rough diamonds has been weak in recent months. India has even asked global manufacturers to reduce sales to “manage inventories.”