As the prevailing sanctions on Russian diamonds continue to worsen the global supply gap, Botswana’s mining and energy minister sees the situation rife for man-made diamonds to fill the void.
Addressing delegates of a mining conference last month, Mineral and Energy Minister Lefoko Moagi, said that the sanctions drove prices up and while it could benefit diamond producers such as Botswana, the Alrosa volume would be difficult to fill.
“We see the 30 per cent gap that will be left by the ban being plugged by something else that is not natural and for us that will be a challenge,” he said.
The ban, according to Moagi, would likely pave the way for synthetic gems to infiltrate a bigger share of the market. Botswana is Africa’s largest producer of natural diamonds.
Jacob Thamage, head of the country’s Diamond Hub, said that aside from the supply shortage caused by the sanctions and logistical problems that stemmed from the Russia-Ukraine conflict, the cost to ramp up mining operations to increase supply would be very high.
“You don’t want to invest a lot of money to up-scale and then the war ends the next day,” he said, pointing out that, “we also see the higher prices pushing consumers to substitutes such as the synthetics and this can cause problems for us if we cede the market to unnatural stones.”
Thamage also noted that consumers might steer clear of natural diamonds given the shortage situation and cause problems with traceability.
“There is an increased fear that buyers of diamonds will begin to treat all natural diamonds as conflict diamonds and therefore shift to unnatural diamonds,” he added.
Alrosa is the world’s largest diamond mining company. The company produces more than 32 million carats per annum, which is roughly one-third of the world’s supply.
Alrosa is partially owned by the Russian government.