Export of diamonds in 2022 fell by 24%, production increased by 4%

The Kimberley Process has disclosed data on the production and export of rough diamonds in Russia in 2022. Production increased by 4%, while exports fell by 24%. ALROSA explains the decline in exports by the high results of 2021, when companies sold the stocks accumulated during the crisis years. Other major producers, including Botswana and Canada, also cut exports.

In 2022, Russia reduced the export of rough diamonds by 24%, to 36.7 million carats, against the background of an increase in production by 7%, to 41.9 million carats, follows from the published statistics of the Kimberley Process (KP). Despite a significant drop in physical volumes of Russian diamond exports, its value in 2022 amounted to $3.8 billion, which is only 4% less than in 2021. Last year, diamond prices rose due to concerns about the availability of Russian stones.

The main objective of the Kimberley Process is to combat the entry of “blood” diamonds into the market, illegally mined and directed to finance regional conflicts and international terrorist groups. To do this, the countries that are members of the KP exchange data on the production, import and export of diamonds.

ALROSA, which accounts for more than 97% of diamond production in Russia, is under US and UK sanctions. These countries have also banned the import of Russian diamonds.

However, Western countries are consumers of the final product – jewelry, and the largest buyers of rough diamonds are cutting centers – India, Belgium and Israel.

Belgium, where Antwerp, one of the centers of the world diamond trade, is located, although it is a member of the EU, until recently did not support sanctions against Russian diamonds.

ALROSA told Kommersant that the decline in sales in 2022 was expected due to the high base of 2021, when there was an increased demand for diamonds in the world. It was associated primarily with the rapid recovery in jewelry sales in key markets after a difficult 2020, when all mining companies had to reduce sales due to covid restrictions. In 2020, against the background of the COVID-19 crisis, when the diamond market almost stopped, ALROSA reduced production by 22%, to 30 million carats, while sales fell by 4%, to 32.1 million carats. During 2021, diamond companies sold almost all of their accumulated diamond stocks during the pandemic, which ensured particularly high sales volumes.

In addition to Russia, other major manufacturers also reduced exports in 2022. So, Botswana reduced exports by 36% to 27 million carats, Canada — by 7.7%, up to 16.2 million carats, Democratic Republic of the Congo — by 8.6%, to 11.5 million carats. Decreased exports from world trade centers. Export from EU fell by 29% to 75 million carats, Israel — by 15%, up to 6.3 million carats, UAE — by 14%, to 89 million carats. According to KP, diamond imports in Indiawhere cutting is carried out, in 2022 decreased by 17%, to 142.9 million carats, however, due to rising prices, the cost of imports is higher than in 2021 – $18.8 billion against $17.8 billion.

Alfa Bank’s Boris Krasnozhenov estimates that global gem-quality diamond production in 2021 has dropped to 120 million carats from 150 million carats before the pandemic, while demand for jewelry has grown to over $80 billion from $70 billion in the mid-2010s. .

With such a deficit, the growth in diamond prices, which amounted to at least 25% in 2022, was partly offset by the presence of stocks accumulated by cutters during the crisis years of 2019-2020.

“But, according to our estimates, the stock factor in the cutting sector will completely disappear by next year, and then the high demand for jewelry – mainly from China and India – will be balanced by rising prices for gem-quality diamonds,” the analyst said.

Evgeny Zainullin