EU adds Russia’s largest diamond maker to sanctions list over Ukraine war

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The EU has added Russia’s Alrosa, the world’s largest diamond-mining company by output and its chief executive Pavel Marinichev to its sanctions list in response to Moscow’s ongoing war in Ukraine.

The designation announced on Wednesday is part of a G7 ban on imports of Russian diamonds that came into effect on January 1. The ban exempts Russian diamonds processed in third countries — but the exemption will be phased out by September 1 this year.

By listing Alrosa and its chief, the EU seeks “to deprive Russia of this important revenue source”, EU foreign policy chief Josep Borrell wrote on the social media platform X. 

Under the sanctions, any assets of Marinichev and Alrosa held in the EU will be frozen and he will be banned from travelling to Europe. The company has already been subject to similar sanctions in the US since April 2022. The US also implemented a unilateral ban on Russian diamonds in March 2022.

The EU has struggled to adopt an import ban on diamonds over the past year given Belgium’s fear that it would lose its position as a major trading hub for the valuable stones.

Alrosa has not immediately replied to a comment request.

The full-scale invasion of Ukraine has drastically overhauled the global diamond industry, with Russian stones flowing largely to the Chinese market after big western jewellery companies boycotted its gems.

Controlled by the Russian state, Alrosa made $1.9bn of revenue in the first half of 2023, in line with results for the first half of the previous year, but profits were reportedly down 35 per cent year on year in the first half of 2023.

Alrosa is engaged in mining in Yakutia, a sparsely populated republic in Russia’s east, and the north-western Arkhangelsk region. The company’s main shareholders are the Russian Federation and regional administrations, while about 30 per cent of its shares are in free float.

The Kremlin has downplayed the impact of EU sanctions on its diamond industry. “I do not believe that the possibilities to circumvent these sanctions do not exist. They exist and they would be used,” Kremlin spokesperson Dmitry Peskov said in December.

Despite export restrictions, Alrosa had maintained prewar production levels and mined 34.6mn carats of diamonds in 2023, down 3 per cent year on year, Marinichev said in December.

About 30 per cent of the diamonds mined by Alrosa are industrial-grade, while the remaining 70 per cent are used for jewellery production.