In a recent development, the Gem and Jewellery Export Promotion Council (GJEPC) has suspended deals with Russian miner Alrosa, a move that is set to impact Surat, India's diamond hub. This decision may exacerbate job instability in the city, which has already been grappling with a spate of suicides.
The backdrop to this move is the G7's impending mandate on polished diamond sale certificates, aimed at barring Russian-mined diamonds from global markets. This comes amid the ongoing Russia-Ukraine conflict. The situation is further complicated by a report from Ukraine's National Agency on Corruption Prevention (NACP), which presents hurdles in implementing the Kimberley Process Certification, an international standard that prevents conflict diamonds from entering the mainstream rough diamond market.
Adding another layer to this complex scenario are technologies such as the Gemological Institute of America's (GIA's) source verification service. These services are designed to trace and verify the origin of diamonds, thus playing a crucial role in enforcing international regulations like the Kimberley Process.
The dynamics between diamond giants Alrosa, De Beers, and Rio Tinto (NYSE:RIO) also significantly affect the situation. These companies have a substantial influence over global diamond supply and pricing. It's worth noting that Alrosa's market capitalization stands at 359.42M USD with a P/E ratio of 9.61 as per InvestingPro data. While the company has been trading at a low earnings multiple, it suffers from weak gross profit margins, as noted by InvestingPro Tips.
Meanwhile, the Diamond Polishers Union in Surat is grappling with these evolving market conditions. The union represents thousands of workers in the city's diamond polishing industry, whose livelihoods are directly impacted by these changes.
A noteworthy development amidst this turmoil is the emergence of lab-grown diamonds (LGDs). These synthetic diamonds offer an alternative to mined diamonds and are gaining traction in various markets. According to InvestingPro Tips, Alrosa does not pay a dividend to shareholders, which could potentially make these lab-grown diamonds an appealing investment opportunity.
However, the future of Surat's diamond industry and its workforce in the long run is uncertain, especially with the current geopolitical tensions and market dynamics. For more detailed insights and additional tips on Alrosa, one can refer to InvestingPro.
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