In a recent analysis published on his website, industry analyst Edahn Golan examines the seismic shifts reverberating through the diamond industry following the unexpected mid-December announcements of G7 sanctions on Russian diamonds.
Golan begins by examining the G7 sanctions, unraveling their implications and providing insights into what is currently known about these measures. He then moves on to analyze several aspects, including Antwerp’s diamond volume challenges, the fate of mixed origin parcels, technological challenges, and more.
From Antwerp to Tech Concerns
Golan claims that Antwerp faces the daunting task of managing a volume comparable to that of 2021, which saw the import of 90 million carats of rough diamonds. Despite the realistic assessment of volume, Golan says, critics express concerns about the additional workload associated with scanning and documenting goods on a new system, notably the G7 Certification Scheme, yet to be developed.
Golan also discusses another notable provision in the sanctions – namely, the implication of a ban on rough diamond parcels with mixed origins, a practice integral to the Kimberley Process. This move aims to prevent the laundering of Russian goods, but questions arise about its impact on the diamond industry’s conventional practices.
Next, Golan discusses the uncertainties surrounding the G7 Certification Scheme, including the duration for system development, the learning curve for Diamond Office staff, and potential delays leading to bottlenecks in the supply chain.
When discussing tech concerns, Golan claims that, as that the technological framework for the traceability system is yet unknown, the emphasis should be on “a traceability system that is foolproof and difficult to fool.” While a blockchain network is in progress, Golan says, the industry questions the readiness of companies to collectively supply and connect all components in time.
Another concern regards the fate of non-documented diamonds not of Russian origin. Independent diamond diggers in sub-Saharan Africa, contributing significantly to local economies, face uncertainties about their future access to the approved G7 stream.
Golan then goes on to discuss other issues the G7 sanctions present, offers alternative solutions, and discusses the concern (or hope) that the G7 ban will end demand for Russian diamonds, offering his own theory of the matter.
Read the full analysis here.
