As sanctions in place on Russian diamonds continue to aggravate the global supply gap, Botswana’s mines and energy minister sees the situation worsening for man-made diamonds to fill the void.
Speaking to delegates at a mining conference last month, mines and energy minister Lefoko Moagi said sanctions had driven up prices and that while this could benefit diamond producers such as Botswana, Alrosa’s volume would be difficult to fill.
“We see the 30% deviation it will be left with the prohibition of being blocked by something else that is not natural and for us it will be a challenge,” he said.
The ban, according to Moagi, would likely pave the way for synthetic gems to infiltrate a larger share of the market. Botswana is Africa’s largest producer of natural diamonds.
Jacob Thamage, head of the country’s Diamond Hub, said that apart from the shortage of supplies caused by sanctions and logistical problems resulting from the Russian-Ukrainian conflict, the cost of scaling up mining operations to increase the offer would be very high.
“You don’t want to invest a lot of money to scale up and the war will end the next day,” he said, pointing out that “we also see higher prices pushing consumers towards substitutes like than synthetics and it can cause us problems if we cede the market to unnatural stones.”
Thamage also noted that consumers might avoid natural diamonds given the scarcity situation and cause traceability issues.
“There are growing fears that diamond buyers are starting to treat all natural diamonds as conflict diamonds and are therefore turning to non-natural diamonds,” he added.
Alrosa is the largest diamond mining company in the world. The company produces more than 32 million carats a year, about a third of the world’s supply.
Alrosa is partly owned by the Russian government.
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