MOSCOW (Reuters) -Russia will regularly buy diamonds from sanctions-hit producer Alrosa through a state fund, the finance ministry said on Thursday, a move that suggests Western restrictions on Russia's diamond exports may be having some impact.
The EU and Group of Seven (G7) countries agreed to ban direct imports of Russian diamonds to their markets as of Jan. 1, before phasing in a full ban on Russian-origin stones via third countries from March 1 because of Moscow's actions in Ukraine.
Deputy Finance Minister Alexei Moiseev shrugged off the impact of those sanctions in January, saying he did not expect the state to purchase diamonds mined by Alrosa.
But in March, state-owned precious metals and gems repository Gokhran purchased a first batch of Alrosa's diamonds, the ministry said on Thursday.
"Specific amounts and volumes will not be announced due to the sanctions restrictions imposed on Alrosa. Purchases will be made on a regular basis," the ministry said, adding that it plans to sell the diamonds bought by Gokhran depending on market conditions.
The United States imposed sanctions on Alrosa, the world's largest producer of rough diamonds by volume with 30% of the market, in 2022. EU sanctions followed this year.
Finance Minister Anton Siluanov said there was a possibility of Gokhran's purchasing Alrosa diamonds in 2022, but he said the fund was generally more focused on purchases of precious metals from Russian domestic producers than diamonds.
Gokhran bought diamonds worth $1 billion from Alrosa during years of weak demand caused by the global financial crisis in 2008-2009.
Alrosa, which competes with Anglo American (JO:AGLJ) unit De Beers, stopped publishing sales data after Russia launched what it calls a "special military operation" in Ukraine.
In 2021, its major customers included Belgium, India and the United Arab Emirates. India was the largest buyer of Russian diamonds in 2023, customs figures accessed through Trade Data Monitor show, with significant supplies also going to Belgium, Hong Kong and Armenia.
Alrosa's 2023 output fell by 2.8% year on year to 34.6 million carats, while revenue increased 9.3% to 322.6 billion roubles ($3.49 billion).
($1 = 92.3230 roubles)