Tuesday, June 25, 2024

Antwerp Diamond Dealers Grapple with Delays Amid Russian Diamond Ban

Antwerp’s esteemed diamond dealers are contending with protracted and costly delays following the European Union’s enforcement of a ban on Russian-origin diamonds starting from March 1, causing sluggish imports, as revealed in a letter obtained by Reuters.

Dated March 13, the letter highlights concerns over disruptions that threaten to erode the competitive edge of Antwerp’s longstanding diamond trade. Addressed to Belgium’s primary diamond industry body, the Antwerp World Diamond Centre (AWDC), the missive calls for a reassessment of the newly implemented procedures.

Although any impact is expected to be mitigated by sluggish market conditions—characterized by high diamond inventories and plummeting prices—the repercussions of the ban remain palpable. Global diamond analyst Paul Zimnisky noted last month that prices had declined by 25% from their early 2022 peak.

Al Cook, CEO of De Beers’ diamond business under Anglo American, announced plans to curtail production this year in response to surplus supply.

While expressing support for the sanctions imposed by Belgium, the European Union, and the G7 nations on January 1, 2024, the letter, signed by over 100 local firms, underscores the adverse impact of implementing measures aimed at enforcing the sanctions.

“The intention was to prevent the flow of diamonds from sanctioned states, but the reality we face is the severe disruption of our supply chains and alienation from the rest of the global trade,” the letter states.

Belgian government officials, however, have reassured that the delays are temporary and are gradually subsiding.

The EU and G7 nations had agreed to ban direct imports of Russian diamonds to their markets effective January 1, followed by a full prohibition on Russian-origin stones via third countries starting March 1, in response to Moscow’s actions in Ukraine. Additionally, Russia’s state-run Alrosa, one of the leading global diamond producers alongside De Beers, was subjected to sanctions by the EU.

Despite Antwerp retaining its status as the world’s largest diamond hub, with the majority of stones being polished in India, concerns persisted over potential business losses after prominent Western jewellers began shunning Russian stones. Diamond dealers lamented that their shipments, including those directly sourced from African producers, have been detained at customs for over a week.

While the Belgian government officials have assured that pending shipments would be expedited within 24 hours, diamond dealers anticipate further challenges when additional tracing requirements come into effect in September.

The letter warns that these evolving procedures risk jeopardizing Antwerp’s diamond industry, a heritage spanning six centuries, by eroding its competitive advantage rather than significantly impacting sanctioned products.

Ari Epstein, head of AWDC, acknowledged the challenges posed by the new measures and emphasized the organization’s unwavering commitment to compliance with sanctions, stressing that any violation would be treated as a criminal offense by governments and the industry alike.

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