The UK government recently announced a slew of new sanctions against Russian industries directly benefiting Putin’s regime, along with the billionaire oligarchs who help keep him in power. The world’s largest diamond producer, Alrosa, is included in the new UK sanctions.
Entities included in the sanctions will have their assets in the UK frozen, meaning no citizen or UK-based company can do business with them.
Alrosa, headquartered in Mirny, Russia has a market capitalization of £4.69 billion (approximately US $6.11 billion). Last year Alrosa reported US $4.17 billion in revenue from the sale of an estimated 45.5 million carats of diamonds worldwide. The US and European Union levied multiple sanctions on Alrosa in the past several weeks; however, US sanctions do not currently make it illegal to sell or purchase diamonds from Alrosa.
According to publicly available documents, the Russian government owns 33% of Alrosa, with the Russian Republic of Sakha owning another 33%, with the remaining falling under public ownership — making it a direct tool for Putin’s war in Ukraine.
While several major diamond retailers have ceased purchasing Alrosa diamonds while the war in Ukraine continues, Alrosa is still able to collect revenue due to the lack of a comprehensive banding together of consumers, businesses, and governments against the trade of its diamond supply.
This may push consumers further towards diamonds grown in a laboratory, so-called “lab grown diamonds.” The global market value of lab grown diamonds in 2020 was US$19.3 billion. Some estimated predict it could reach a staggering US$49.9 billion by 2030.
While industry experts disagree on the long-term effects of current sanctions and Putin’s war in Ukraine on the diamond industry, if consumers turn toward lab-grown diamonds due to avoid purchasing Alrosa diamonds, a dramatic shift could occur in the industry that not many currently project.
IGS recently spoke to Alexander Weindling, co-founder and CEO of lab grown diamond company Clean Origin, about the potential for lab grown diamonds to eliminate conflict diamonds. He wants Clean Origin to show uncertain consumers that there is an alternative to mined diamonds. “Now you [consumer] have a choice. Do whatever you think is right. Do what sits well with your conscience, and with your wallet,” he said.