Focus on



Rough diamonds produced by Alrosa, Russia’s dominant rough diamond mining company that currently is subject to both U.S. and U.K sanctions.



It’s fair to state that the sanctions regime placed on Russian mainly by Western countries, as a result of a its invasion of Ukraine, will neither succeed nor fail as a result of pressure exerted on Alrosa, Russia’s state-controlled but only one-third owned diamond mining company, which prior to February 24 was the world’s largest supplier of rough diamonds.

In all of 2021, sales by Alrosa of rough and polished diamonds totaled $4.17 billion, including proceeds from rough diamond sales of $3.98 billion, and polished diamond sales of $192 million.

In contrast, in April 2022 alone, according to Reuters, Russia expects to earn $9.6 billion more than what it had originally forecast from energy sales, because of oil prices driven higher as a result of investor jitteriness in the commodity market, mainly because of the war in Ukraine. The country’s oil and gas revenues are currently estimated to be $1.1 billion per day, meaning that they surpass Alrosa’s annual sales in a little more than half a week.

What could be the decisive factor in the Russian sanctions would be a decision by the Europeans, and more specifically by Germany, to end the westward flow of natural gas from Russia. But that is unlikely to happen in the immediate future, meaning that at present Russia will continue to get the cash its needs to conduct the war.

Alrosa can do little to keep the Russian war effort going or to stop it, but it will attract public attention. Two countries in particular will decide whether its goods continue flowing, and neither is European. The first is the United States and the second India.

Russia’s Zapolyarnoye natural gas field at  Novy Urengoy. Carbon-based fuel exports exceed in just four days all the sales of Russian diamonds over the course of a typical calendar year-


While the first round of sanctions announced soon after the February 24 by the United States Treasury Department had been vague when pertaining to Alrosa, prohibiting 14-days debt and equity transactions but leaving it legal for U.S. companies to purchase and sell diamonds mined in Russia, the second round was considerably more decisive.

On April 7, 2022, the U.S. Office of Foreign Assets added Alrosa to its Specially-Designated Nationals list, meaning that all U.S. transactions with or benefiting Alrosa were fully blocked. Additionally, all entities owned 50 percent or more directly or indirectly by Alrosa were also blocked, even if not specifically named.

According to the Jewelers Vigilance Committee, the American association that is the U.S. industry’s primary legal authority, in practical terms, if a U.S. business had not already stopped doing direct business with Alrosa due to the previous sanction limitations, it absolutely had to stop doing so. 

Furthermore, any U.S. business that had goods or funds in-house that Alrosa may have an ongoing interest in, such as due to a memo/consignment agreement or other contract, could discover that its assets are now frozen.

More ominously for companies outside the United States, JVC said that any U.S. business that has an ownership interest in or relationship with a foreign company that is still doing business with Alrosa, or is owned by a foreign company with an Alrosa relationship, may now be at risk for having assets blocked.

“The safest course of action for all U.S. businesses is to tell all suppliers that they will no longer purchase any goods that originated from Alrosa,” JVC advised.


India, which is the country where the overwhelming majority of Russian mined diamonds have been and polished, had deliberately following an opaque policy where the continuing supply of Russian goods are concerned.

“We get only rough diamonds from Russia — it is our work that turns them into gems that are exported for people to buy,” said Nanubhai Vekariya, President of the Surat Diamond Association, to Al Jazeera, in article published April 11, four days after the new sanctions package was announced. “We haven’t faced any challenge yet, and don’t expect to struggle in the future either.”

But it may be a show of bravado, because, short of the thus far unlikely step by the Indian government to introduce its own set of matching sanctions, the Indian industry is still likely to act cautiously so as not to jeopardize its position in the United States, its largest single client country.

An underground tunnel at Alrosa’s International mine in Yakutia.

That could take a while to play out, but even today the value of trade between the Russian and Indian diamond industries is limited because most Indian banks have stopped transactions with Russian counterparts, sanctioned by the United States, United Kingdom and European Union.

The same is true in Israel, which to date also technically does not explicitly prohibit purchases from Alrosa. There, too, trade with Russia has been stymied because the reluctance of the banks and secured transportation companies to move funds and goods to and from the rough diamond producing country.