Russian invasion of Ukraine could benefit Canadian diamonds

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L&rsquo Russian invasion of Ukraine could benefit Canadian diamonds

Diamonds

The war in Ukraine has highlighted the dependence of many countries on Russian raw materials such as natural gas or oil. But Moscow has another precious material, diamonds, which allow it to pocket billions each year. As conscientious buyers seek more responsible alternatives, Canadian diamonds may well grow in popularity.

At first glance, nothing distinguishes the Toronto-based Fair Trade Jewelery Company (FTJCo) from any other jewelry store. Rings and earrings adorned with diamonds are elegantly presented to passers-by in its display case. The difference is that here, no Russian diamonds are sold, despite the fact that Russia is the first producer of diamonds in the world.

These diamonds were very connected with the oligarchs and kleptocracy. There have always been issues with [human] rights and we didn't want to be part of that, says Fair Trade Jewelery Company (FTJCo) Managing Director and Head of Production Kesha Frank.

< p class="e-p">The majority of diamonds on the jewelry store's displays are Canadian, recycled or lab-grown diamonds, an offering that is increasingly appealing to Toronto customers, she says.

Everything we make, it's with fair trade materials, so we have to know where they come from, under what conditions they were mined, cut, carved, all that, explains she.

Kesha Frank of Fair Trade Jewelery Company thinks it's important to know the origin of a diamond before buying it.

With nearly 30% of the world's diamond exports mined from Russian permafrost, Russia is the world's largest supplier of these gemstones. Nearly all of its production comes from Russian partly state-owned mining giant Alrosa, whose sales of rough and polished diamonds totaled more than $4 billion in 2021.

Since the start of the conflict in Ukraine, countries such as Canada and the United States have announced sanctions against the Alrosa company and its CEO Sergei Ivanov. Some of the world's greatest jewelers, like Tiffany & Co. and Chopard, meanwhile, have declared that they will no longer buy diamonds mined in Russia, for ethical reasons.

The Diavik Diamond Mine in the Northwest Territories

A situation that could benefit Canada, the world's third largest producer of diamonds, according to Kevin Vantyghem, who has specialized in the sale of Canadian diamonds for fifteen years.

Over the next few years, months, Canadian diamonds are going to be more and more popular. I expect it will be more and more difficult for me to source my supplies due to the increase in demand, explains the vice-president of Vantyghem Diamonds and member of the board of directors of the Association of Canadian jewellers.

He adds that Canada has established the Canadian Diamond Code of Conduct, from the early 2000s, to ensure the authenticity of diamonds designated as such, which allows Canadian diamonds to stand out in the market.

“Canada is one of the only countries, if not the only one, to have traceability systems”

—Kevin Vantyghem, Vice President of Vantyghem Diamonds

Martin Rapaport, chairman of the Rapaport Group, a major diamond brokerage network, however, points out that Russian diamonds still enjoy significant markets, since countries such as India and China have not imposed sanctions against the Russia.

If you are an Indian diamond manufacturer, why stop working with Russian diamonds and send your employees home just because of the United States? asks Martin Rapaport.

Ultimately, I think we're going to see a split in the industry and segregated supply chains; one for Russian diamonds and another for non-Russian diamonds, believes Paul Zimnisky, an analyst of the global diamond industry.

A few months after the start of the war, the United States, Canada as well as Australia, Ukraine, the United Kingdom and the European Union tried to put pressure on the Kimberley Process (KP), a system that aims to eliminate from the world market diamonds that finance armed groups or conflicts, in order to discuss the implications of the Russian invasion of Ukraine in the context of the Kimberley Process.

As long as Russia continues to violate international law and disregard the UN charter, it will not be possible to take full advantage of the Kimberley Process, says Director General of Economic Development at Global Affairs Canada , Cheryl Urban, in a letter to PK President Jacob Thamage.

Soldiers collect the remains of civilians killed during the Russian occupation of Boutcha, northwest of kyiv, April 5, 2022.

Currently the KP defines conflict diamonds as precious stones used to fund rebel movements that seek to destabilize governments.

For Russian diamonds to be officially qualified as conflict diamonds, the definition would therefore have to be broadened. Russia, which is a member of the KP, however opposed the holding of the talks.

One of the things that block is the decision-making mechanism at the level of the Kimberley Process, which is a consensual mechanism. […] In a consensus mechanism, when only one country opposes, automatically, there is no decision taken, deplores the coordinator of the Civil Society Coalition of the Kimberley Process, Michel Yoboué, who supports expanding the definition.

“When you look at the situation in Ukraine, you think whose next turn? »

— Michel Yoboué, coordinator of the Civil Society Coalition of the Kimberley Process

While Canadian diamonds offer an attractive option for conscientious consumers, Kesha Frank points out that the diamond industry, even in Canada, has its share of challenges.

Canadian diamonds are perhaps be fairer than diamonds from Russia, but there are still problems with mining sites. That's just the reality of the industry. There are always going to be environmental impacts, there are always going to be impacts on the communities in which the mine site is located, she said.

As for lab-made diamonds, she points out that their production requires electricity and that many of them come from China, where power plants often run on coal.

With diamonds, there always goes have problems, she said.

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