Signet shocks diamond trade with refusal to buy Russian gems

US-based Signet Jewelers Ltd. sent shockwaves through the global diamond trade, telling suppliers it would no longer buy stones mined in Russia, the world’s biggest source of gems.

In diamond hubs from the Belgian port-city of Antwerp to Mumbai and Dubai, diamonds from different countries are routinely mixed together at almost every stage of cutting, polishing and trading. 

Signet’s decision is the latest example of companies going beyond the sanctions imposed by governments as Russia’s invasion of Ukraine raises concerns about a consumer backlash. Russia vies with Botswana as the world’s biggest diamond producer, supplying almost a third of all stones by volume. The U.S. is easily the industry’s most important market, accounting for about half of all sales.

Signet has gone much further than U.S. President Joe Biden. In a decree last week, the US President announced a ban on the import of Russian diamonds and while that initially caught the industry off guard, the small print showed the ban only impacted rough diamonds.

Very few rough diamonds are shipped to the U.S. Most end up in India — via trading hubs in Belgium and Dubai — where they are cut, polished and set in jewelry before being shipped around the world. Those goods were not impacted by Biden’s decree.

Signet’s Chief Executive Officer Gina Drosos said the majority of Signet’s diamonds by value come from southern Africa, Australia and Canada. The company hasn’t seen a significant impact on the price of diamonds originating in those countries since Russia’s invasion of Ukraine, she said.

While less well known than De Beers, Russia’s Alrosa PJSC produces about the same amount of gems as the iconic diamond company that had a monopoly until the start of this century.

The company said its ban applies to goods purchased after 24 February, the date Russia invaded Ukraine. The diamond industry has a long supply chain, with many months between buying rough stones to finally handing over finished goods to retailers. The impact of Signet’s move will likely have ripple effects across the industry. More than a million people work in India’s diamond manufacturing industry and mining the stones is crucial to the economies of countries such as Botswana and Lesotho.

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