De Beers, the world’s largest diamond producer, has raised the price of small diamonds again due to sanctions against Alrosa, a Russian competitor which causes a global shortage problem and the Covid-19 pandemic .
Prices for these diamonds have risen sharply since early April, when Alrosa was hit by U.S. sanctions because of Russia’s invasion of Ukraine.
The diamond jewelry industry is entering a year of record-low diamond supply, with Bain & Company projecting 29 million carats in 2021.
Jewelers report that De Beers will raise prices in Botswana by 5% to 7% this week. Previously, the company had already increased prices by 23% in just one year.
Anglo American is raising prices for its first sales this year by about 8%, with a massive 20% increase, hurting the small crude as demand reaches pre-pandemic levels.
Diamonds are among Russia’s top ten non-energy exports. In 2021, exports amounted to more than $4.5 billion. And the country produces about one-third of the world’s diamond supply.
The sanctions imposed on Alrosa affect retail chains such as Costco and Walmart, as many of the lower-end diamonds are supplied to them. De Beers, on the other hand, produces high-end diamonds. This leads to a further shortage in the lower price segment.
Prices for rough diamonds were raised during 2021 to recover from the first year of the pandemic, when the industry was on the brink of stagnation.
De Beers currently only has working stockpiles, and it is unlikely that the company will have any additional stockpiles before 2024, when the expansion of the Venetia mine in South Africa is completed.
Upstream inventories have fallen by around 40% due to high demand and the slow recovery in production.