2024-02-17 00:11:20
Despite EU and G7 sanctions that impose restrictions on the import of Russian diamonds, the measures could actually be more damaging. Mines in Africa are particularly affected.
According to the German jewelry and watch industry, the import ban on Russian diamonds misses the mark and tends to harm others. Last but not least, sales are likely to fall.
“We fear a price increase due to significantly increased costs in the supply chain, especially for non-Russian diamonds,” said the general manager of the Federal Association of Jewelry, Watches, Silverware and Related Industries (BVSU) based in Pforzheim, Guido Grohmann, on Friday. “The damage to our industry will be significantly greater than to the Russian diamond trade.”
Mines in Africa more affected than Russia
Both the European Union (EU) and the group of large industrial nations (G7) want to restrict Russian income from diamond exports in response to Russia’s war of aggression in Ukraine and have imposed sanctions. “The little we know about the implementation plans gives rise to fears that those really affected by the sanctions are not in Russia, but at the mines in Africa and among the grinders and traders in India and other places in the world,” explained Grohmann.
According to BVSU, the current plan of sanctions will not be able to effectively hit the Russian diamond trade, industry experts worldwide agree. The EU Commission recently estimated Russia’s income from the sale of diamonds at around four billion euros per year.
From the perspective of industry experts, this sum is at least 50 percent too high, according to the statement. “Since the EU and G7 sanctions will only apply to goods weighing 0.5 carats or more in the final stage and the Russian company Alrosa is particularly known for its small goods, the sanctions will only affect a fraction of the Russian production volume.”
Losses in sales for 2024 are imminent
Due to expected bureaucratic hurdles and the so far unclear implementation of the measures, the industry is expecting sales losses for 2024. “The war in Ukraine, the ongoing fighting in Gaza and the dissatisfaction in our own country about the government’s self-discovery process are clouding the prospects worry-free and economically successful year,” it continued.
In a survey, around four out of ten member companies said they expected sales to develop less favorably this year. Only in larger companies do a small proportion (eight percent) assume a more favorable trend.
Moderate inventory reduction in retail
With a view to the past year, the BVSU referred to figures from the jewelers trade association that were published at the Inhorgenta jewelry trade fair in Munich. The overall market for jewelry and watches in Germany maintained the strong level of the previous year in 2023, with sales increasing by 0.3 percent to 5.32 billion euros.
The share of jewelry amounts to 4.07 billion euros. The plus in retail is offset by a slight minus in industry. This indicates a moderate reduction in inventories in retail.