While Russia could face more severe sanctions as the situation in East Ukraine remains tense, Morgan Stanley analysts rule out diamonds from any future bans on Russian exports.
In a new research note, Morgan Stanley analysts led by Joel Crane discuss various aspects Russian mineral exports. They point out that Russian state-owned diamond mining giant
ALROSA “is the largest producer of diamonds globally (followed by De Beers) and the second largest in terms of sales,” as can be seen in this chart:
Most of ALROSA’s export market is in Belgium, and so the Russian company’s interaction with Europe and the West is a big part of its activities:
Given this, Morgan Stanley points out that:
“Therefore, full export ban sanctions on exports to Europe and the US would have a very significant impact on global diamond prices and the structure of global auctions. We view this scenario as highly unlikely because the US continues to be the number
one diamond consumer globally and we expect it will stay number one for many years to come.” [emphasis ours]
The U.S. consumes more than a third of the world’s diamonds, and so a more comprehensive ban on Russian exports that would include diamonds, and thus drive up prices, is not something that is likely to happen:
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