Alrosa, the Russian diamond producer, has suspended its supply of rough diamonds for the months of September and October, following a request from India’s Gems and Jewellery Export Promotion Council (GJEPC). The move is intended to prevent a supply glut in the global market and bolster diamond prices, which have been weakened by low demand. Vipul Shah, the chair of GJEPC, explained that the trade body had raised concerns about issues affecting the diamond trade with several international mining companies earlier this month.
Shah also disclosed that the GJEPC had been in communication with De Beers, the world’s leading diamond producer and a subsidiary of Anglo American, which had pledged to offer “complete flexibility to all their clients.” De Beers has stated that it will continue to adopt a responsible approach to rough diamond sales, supplying according to demand and focusing on additional supply flexibility. This includes allowing for purchase deferrals and buybacks.
Alrosa, which has been hit by sanctions, declined to comment on the suspension of supply. However, the move comes at a time when the Group of Seven (G7) countries is expected to announce an import ban on Russian diamonds in the coming weeks, as part of efforts to further restrict Russia’s ability to finance the conflict in Ukraine. This potential ban has the potential to significantly impact the global diamond supply chain, but its success will largely depend on India. The country’s diamond industry employs millions of people who cut and polish 90% of the world’s diamonds.
India’s gems and jewellery exports have already fallen by nearly 4.4% between April and August this year, according to government data released last week. This decline is attributed to muted demand for polished diamonds from countries such as the United States and China.
It remains uncertain whether the two-month halt in rough diamond supply will sufficiently prevent overstocking, particularly given the upcoming shutdown of manufacturing centers in India during the Diwali festival in November. However, the move is seen as a necessary step to address the current challenges facing the diamond industry and ensure stability in the global market.
More detail via Reuters here… ( Image via Reuters )