The Biden administration banned Russian diamond imports, strengthening sanctions made against mining giant Alrosa earlier this month.
Around 30% of the world's rough diamonds come from Russia, 90% of which are mined by Alrosa.
Here's how the sanctions have impacted the diamond industry so far.
If you're in the market for an engagement ring, odds are you've seen your fair share of Russian diamonds.
Approximately 30% of the total volume of diamonds produced worldwide come from Russian mines, 90% of which are owned by the state-backed diamond mining giant Alrosa, according to the US Treasury.
The Biden administration banned imports of Russian diamonds, seafood, and vodka on March 11, strengthening sanctions to economically punish the country for its invasion of Ukraine. The effort came after the US previously sanctioned Alrosa and its oligarch CEO Sergei Ivanov earlier this month.
But the sanctions of Alrosa and Ivanov — described as "unprecedented" and "severe" by the Treasury — caused no immediate issues to the global diamond trade, The World Diamond Council previously told Insider.
That's because the Alrosa sanctions only went so far to prohibit debt and equity transactions, meaning at the time it was still entirely legal for US companies to purchase and sell Russia-mined diamonds — that is, until now.
Still, many companies and shoppers were already boycotting Russian diamonds regardless, as the industry braced itself for complications and price hikes. Here's a look at where the industry stands.
Companies and consumers protest against Russian diamonds
Two days after the Alrosa sanctions were announced, online jewelry company Brilliant Earth, which says it only sells "ethically sourced" diamonds, removed all Russian-mined diamonds from its website. It appeared to be the first and only major US diamond retailer to do so.
"Taking this proactive step was the right thing to do, as a company and for our industry," Beth Gerstein, co-founder and CEO of Brilliant Earth, told Insider earlier this month. "We stand with the people of Ukraine and hope for a peaceful and swift resolution. We hope others in our industry will join us."
The non-profit trade association Jewelers of America said on March 1 that it "strongly advises its members to take measures to stop buying or selling diamonds, precious metals and/or precious gemstones of Russian or Belorussian origin," citing "serious ethical, reputational and legal risks."
Speaking before the March 11 sanctions, Furchtgott-Roth said jewelry companies would likely face similar pressure from shoppers to stop selling Russian diamonds. However, she added that boycotts on the individual level would require shoppers knowing where a finished diamond was originally mined.
Diamond industry analyst Paul Zimnisky previously told Insider that he had seen anecdotal evidence of non-Russian diamonds selling at above-market value due to the conflict.
"If consumers protest buying Russian diamonds I think it would definitely reverberate through the supply chain," he said, adding that almost three-quarters of consumer diamond demand comes from western countries and Japan. "At the end of the day, I think the consumer is ultimately going to determine where this goes."
US sanctions could lead to diamond shortages and price hikes down the line
While the Alrosa sanctions didn't directly disturb the global diamond trade, the added sanctions — paired with larger economic impact from Russia's invasion of Ukraine — could lead to shortages and price hikes down the line.
US and EU sanctions targeting Russia's financial infrastructure are making any kind of transaction with Russian companies difficult, which have recently been made even harder by the suspension of FedEx, UPS, and DHL services to and from the country.
For so-called diamond "manufacturers" that purchase and then polish rough diamonds (the majority of which are located in India), that could mean weeks of shipment delays and the risk of frozen funds.
Depending on how long the restrictions stay in place, this could snowball into a shortage of rough diamonds and cause product price hikes around the world, Zimnisky said.
"It will be at least three to four months before the rough diamonds being bought today end up with polished diamond wholesalers and retailers," Zimnisky told Insider. "The longer this plays out, the more complicated and problematic it becomes for the industry."
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