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Photo courtesy of the De Beers Group.



The invasion of Russian forces into the neighboring country of Ukraine on February 24, 2022, and the furious international reaction it has evoked, including the imposition of severe economic sanctions and the closing of European airspace to Russian airlines, has thrust the diamond industry into a state of confusion. This is because Russian diamond producer Alrosa, which is 33 percent owned by the country’s federal government, is responsible for about 28 percent of global rough diamond supply in terms of value, with sales totaling $3.98 billion in 2021.

The initial sets of sanctions against Russian entities announced immediately following the invasion, and in particular those being imposed by the U.S. government, have fallen short of a blanket ban on purchases of rough diamonds from Alrosa, but the mining company has been targeted both directly and indirectly, and its CEO has been personally sanctioned. The risk and consequences for members of the industry doing business with Alrosa are not yet clear at this stage.

On the same day that Russian forces entered the Ukraine, U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) the imposed a set of expansive economic measures, in partnership with allies and partners, targeting the core infrastructure of the Russian financial system. They included all of Russia’s largest financial institutions and the ability of state-owned and private entities to raise capital, encompassing nearly 80 percent of all banking assets in the country.

It also extended debt and equity prohibitions against 13 major state-owned and private entities, among them Alrosa, which OFAC described as “the world’s largest diamond mining company, responsible for 90 percent of Russia’s diamond mining capacity, which accounts for 28 percent globally.”

On February 27, the European Union, United States and their allies agreed to cut off a number of Russian banks from the main international SWIFT payment system, as well as to freeze the assets of Russia’s central bank, limiting the country’s ability to access its overseas reserves.

Based in Belgium, SWIFT, or the “Society for Worldwide Interbank Financial Telecommunication,” is a secure messaging system that facilitates transactions between more than 11,000 banks and financial institutions across the globe. The affected banks in Russia were not immediately named, but a German government official said they would include “all those already sanctioned by the international community, as well as other institutions, if necessary.”

The only country to have been previously sanctioned from using the SWIFT system was Iran, and that move resulted in its losing 30 percent of its foreign trade.

Sergei Sergeevich Ivanov, ALROSA CEO, a target of U.S. sanctions.


OFAC also announced that it would be blocking the assets of Sergei Sergeevich Ivanov, the current CEO of Alrosa and a board member of Gazprombank, Russia’s third-largest financial institution, which is closely affiliated with the energy sector.

Classified as a Specially Designated National (SDN) by OFAC, the current sanction against Ivanov means that he is barred from doing business in the United States or with any U.S. citizens, and any U.S. assets will be seized.

The Alrosa CEO is the son of Sergei Borisovich Ivanov, who currently is the Special Presidential Representative for Environmental Protection, Ecology, and Transport, and reportedly one of Russian President’s Valadimir Putin’s closest allies. The father previously served as the Chief of Staff of Putin’s Executive Office, was a Deputy Prime Minister, Defense Minister of Russia, and is a permanent member of the Security Council of the Russian Federation.

Before becoming Alrosa CEO, the younger Ivanov served as a senior vice-president of Russia’s largest lender, Sberbank, which holds about a third of all bank assets in Russia and is majority-owned by the federal government. Within 30 days, OFAC will require all U.S. financial institutions to close any Sberbank correspondent or payable-through accounts, and will reject any future transactions involving Sberbank or its foreign financial institution subsidiaries.


In a statement to its customers released on February 27, Alrosa insisted that its day-to-day operations will not be disrupted, and settlements with foreign partners will continue as usual. This, it said is because there are no restrictions on the company’s transactions in dollars, euros or other currencies.

In an apparent reference to the Russian financial institutions that have been cut off from the international system, Alrosa pointed out in its statement that that it has a diverse range of banking partners, allowing it to operate normally without delays.

Regarding the debt and equity prohibitions imposed upon it by OFAC, Alrosa said its general debt level is low, with no short-term obligations, and the first significant down payment only due in 2024. The company currently has no immediate plans to raise additional capital on the financial markets, statement said, noting that the sanctions do not affect any of its public debt issued previously.

Rough Diamonds from Alrosa.

The Alrosa statement also discounted the significance of its CEO being included in the sanctions list, saying that Ivanov has never had any assets in the United States.

“To sum up, we run our business as usual, and we have all the necessary resources to ensure normal operation in the current circumstances,” the Alrosa statement declared. “We intend to fulfill all our obligations to our clients in any part of the world. We encourage our partners and industry colleagues to support the global diamond trade and to preserve the integrity of the diamond pipeline that has never been as strong as it is today.”