European Union bans import of diamonds from the world's largest company

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Alrosa, a Russian diamond-selling company, has been added to the sanctions list due to the war in Ukraine...

The G7 ban on importing Russian diamonds took effect on January 1st in Europe. The world's largest diamond mining company, Alrosa, and its CEO Pavel Marinichev have also been added to the European Union's sanctions list in response to the Russian military intervention. Through a post on X (formerly Twitter), EU foreign policy chief Josep Borrell claims that the group seeks to "deprive Russia of this significant source of income." The ban does not include Russian diamonds processed in third countries, but these exemptions will be gradually phased out by September 1st.

According to the sanctions, Marinichev's assets and those of Alrosa located in the European Union will be frozen. He is also now banned from traveling to Europe, as reported by the Financial Times. Alrosa has faced similar sanctions in the USA since April 2022, which include a unilateral ban on Russian diamonds effective from March 2022. The Russia-managed company earned $1.9 billion in the first half of 2023, but profits are reportedly down 35 percent compared to the previous year.

The global diamond industry has been reshaped by the invasion of Ukraine. According to experts, Russian gemstones have found a place in the Chinese market after major Western jewelers boycotted its gems. However, the Kremlin is quoted as downplaying the impact of sanctions on its diamond industry. "I do not believe there are no possibilities for circumventing these sanctions," Kremlin spokesman Dmitry Peskov said in December. "There are and they will be used."

Alrosa is known for its diamond mining activities in Yakutia, a sparsely populated republic in eastern Russia, and the northwestern Arkhangelsk region. Its main shareholders are the Russian Federation and regional administrations. Another 30 percent of its shares are reportedly in free circulation. Despite export restrictions, the business maintained pre-war production levels in 2023, mining 34.6 million carats of diamonds, which is three percent less compared to the previous year.

The EU imported about $1.5 billion worth of Russian diamonds in 2022, according to the European Statistical Office. Reports indicate that the European Union was working on a ban on importing Russian diamonds last year, but that proposal did not fare well in Belgium, as the country feared losing its leading position as a major trading center for these gems. Evidently, the Belgians overcame their fear, and the ban has come into effect.

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