Diamonds are forever, they say. But some of them are on hold for right now.
President Joe Biden has issued an executive order against Russia, banning the country from importing its diamonds, as well as its seafood, luxury goods and alcoholic beverages.
The ban was part of a larger series of sanctions against Russia, meant to deter President Vladimir Putin’s ongoing invasion of Ukraine.
Biden’s ban specifically targets the Russian diamond syndicate Alrosa, which is partly owned by the Russian government and is responsible for 90% of Russia’s diamond mining industry.
It also supplies 28% of the world’s diamonds, according to CNN. Last year it supplied 32.4 million carats of diamonds.
Jewelers Vigilance Committee (JVC), a non-profit advocacy group for the U.S. jewelry industry, has advised its members to immediately halt any transactions with Alrosa.
What Will This Means For The World’s Diamond Supply?
Restricting Russia’s access to the U.S. market will limit the country’s ability to fund the invasion of Ukraine.
A previous set of sanctions kicked Russia’s banks off of the international banking system SWIFT, which immediately made it difficult to purchase diamonds from the country, but this new measure goes even further.
U.S. businesses can no longer import Russian diamonds, which means they will have to rely on outsourcing Canadian, African, Brazilian and Australian diamonds.
As a result of the sanctions, shipments of diamonds are expected to be delayed by three to six months.
India accounts for 90% of the world’s diamond cutting and polishing, and will immediately be hit with a reduced supply, as companies can no longer purchase diamonds from Russia and send them to India to be prepared.
This reduction in supply is coming as the demand for diamonds has greatly increased in the past few years. During the pandemic, people had more money because of stimulus checks and were able to grow their savings, since they weren’t able to travel or indulge in other leisure activities.
Plenty of people decided to spend their new savings on diamonds, as sales jumped 29% last year and 11% in 2020.
There has also been a pent-up demand for wedding rings, as many people put off wedding ceremonies during the pandemic. The Wedding Report estimates there will be 2.5 million weddings this year, the most in the US since 1984.
So with an increase in demand and a decrease in supply, diamond prices are naturally expected to rise soon, starting in the middle of the year when businesses begin stocking up for holiday sales.
Some analysts are predicting a double-digit price increase, or anywhere between 15% to 25%, according to Quartz, as well as an increase in diamonds that are grown in a laboratory.
Lab-grown diamonds have been a growth sector for the jewelry industry in recent years, as concerns about “blood diamonds,” or diamonds mined in a war zone to fund conflict, have led many consumers to look for an alternative. Nearly 70% of millennials have considered buying a lab-grown diamond.
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Lab Grown Diamonds Could See A Boost
Even before Biden made it official, plenty of companies in the diamond business were cutting ties with Russia to show support for Ukraine.
The jewelry retailer Brilliant Earth tweeted that it has removed all Russian-mined diamonds from its website, noting, “We hope for a peaceful and swift resolution in Ukraine.”
Signet Jewelers (SIG), one of the largest diamond jewelry companies in the world, has also suspended all business with Russia, and also donated $1 million to the Red Cross Ukraine humanitarian relief efforts, according to its Twitter account.
Signet has the jewelry stores Zales, Jared, Kay Jewelers and Diamonds Direct in its corporate portfolio.
