Diamond crisis hits Russia as lab prices drop 75%

The collapsed diamond prices are not just thwarting plans by sales industry leader De Beers, they are becoming Russia's latest economic headache.

Early last year, diamonds were Russia's main export business and steadily tightened the list of sanctions in the Western world, including laboratory-grown stones and materials processed in third countries during the war delays in Ukraine.

But the real damage to the Russian diamond industry and its leading producer Alrosa is the same as the industry as the entire industry feels like to mine diamonds at a price of 8%.

The simplest explanation for the price drop is that the diamond market is full of natural and cheap artificial stones.

More complex reasons for the fall include consumer demand fading, as shoppers spend more on other items like electronics and travel, China’s sales fading, and perennial bestsellers, no longer considering diamond engagement rings to be considered a must An indispensable purchase.

The impact on De Beers is 85% owned by Anglo American, a London-listed mining company, can be measured in an inflated inventory of unsold gems at $2 billion worth late last year and severely written off in the century-long value A leader in the diamond industry.

Russia's Alrosa also burned by changes in the diamond market, with his mine production in the Yakutia region of Russia falling 4.6% to 33 million carats, a drop of 2.8% in 2023 slides.

Install inventory

Alrosa's pressure forced the Russian government to continue a diamond purchase program last year to support the industry allocating to the industry on a $1.55 billion budget to buy unsold gems.

A Russian government statement at the time said the funds had been put on hold to ensure that the global crude diamond prices remain stable after the current market is oversupply”.

The questions of these comments, as well as the decision by De Beers to also store diamonds, are likely to last longer than people close to the industry expect.

The horrible reality is that the diamond industry may permanently change the diamond industry due to the production of low-cost, high-quality laboratory materials.

Anglo American, listed as an asset for sale, is part of a necessary bid for acquisitions against mining rivals, was forced to write down $1.6 billion in its shares in Derbils last year to $7.6 billion.

The second written in an ongoing asset barrier review is expected to be in the Anglo Americans' 2024 profit report released next week.

The size of the potential second write is unclear, but given the Financial Times reported last week that it was an analyst at the investment bank Royal Bank of Canada, an investment bank analyst estimates Anglo Americans in the diamonds The 85% stake in the business is only $2.5 billion.

The collapse of the diamond industry may surprise people who work in it, but as the quality of lab-growing gemstones improves, prices drop and buyers (and some experts), people outside have inevitably fallen for several years The difference from mining materials cannot be distinguished.

Botswana wants more beer

For Anglo Americans, it successfully sold coal and platinum assets in its momentum to become a copper and iron ore expert, the challenge was done with De Beers, who made the Botswana government a 15% shareholder.

Currently, diamonds account for 70% of Botswana's export revenue, and mines operated by Debils ranked African countries second in Russia, while in terms of value, thanks to high-quality rough gems extracted from mines such as Orapa and Jwaneng.

Botswana's mining minister Bogolo Kenewendo confirmed last week that her country is interested in getting a larger stake.

The problem is that having more struggling businesses may not be a good idea, as lab-grown diamond makers turn their foothold into a shackle.