Deputy Finance Minister: Russia to impose diamond export duties this year

Show summary Hide summary

• 🔥 Quick Facts
• Russia’s Diamond Sector Under Pressure: Years of Sanctions Impact
• Export Duties Strategy: Protecting Domestic Cutting Expertise
• Market Context and Production Decline
• Broader Implications for Diamond Markets and the Cutting Industry
• What Does This Mean for Global Diamond Supply and Prices Going Forward?
  • Sources

Russia announced plans to introduce diamond export duties in 2026 following pressure on its domestic diamond-cutting industry from sanctions. Deputy Finance Minister Alexei Moiseev revealed the government’s strategy to retain cutting expertise as major producers face a prolonged market downturn. The duties would target stones deemed cost-effective for domestic processing, representing a significant policy shift for a nation that exported $2.62 billion worth of diamonds in 2024.

Russia’s Diamond Sector Under Pressure: Years of Sanctions Impact

The Russian diamond industry has faced relentless headwinds since 2022, when U.S. sanctions targeted Alrosa, the state-owned mining giant responsible for roughly 90% of Russia’s diamond production. In January 2024, G7 nations escalated enforcement by banning direct imports of rough and polished Russian diamonds, effectively cutting the country from major global markets. These measures were designed to disrupt export revenues estimated at over $4 billion annually and reduce federal budget contributions.

Despite the sanctions regime, Alrosa continued exporting through third-country channels, though volumes compressed significantly. The company reduced output by 10% in 2025 to 29.8 million carats and projects a further decline to 25-26 million carats in 2026, signaling the toll of international restrictions and reduced market access.

Export Duties Strategy: Protecting Domestic Cutting Expertise

Deputy Finance Minister Moiseev framed the proposed tariff system as a defensive measure against skill erosion. “If we wait a little longer, we will simply lose the diamond-cutting expertise we still have,” he stated, highlighting concern that prolonged market disruption threatens industrial competency. The strategy targets a “lenient” export tariff applied only to diamonds deemed cost-effective for Russian processing, meaning smaller stones or those requiring specialized techniques.

The finance ministry is negotiating implementation details with Alrosa, which will determine which grades of diamonds face export restrictions. By raising the cost of exporting uncut stones, Moscow aims to incentivize domestic cutting operations, preserving the technical workforce and equipment that would otherwise migrate to competitors like India (which processes 80% of the world’s polished diamonds) or other processing hubs.

Market Context and Production Decline

Metric	2024 Baseline	2025 Actual	2026 Forecast
Alrosa Production (M carats)	33.1	29.8	25-26
Year-over-Year Change	Baseline	-10%	-13% to -15%
Export Value (2024 basis)	$2.62 billion	2.0-2.2B (est.)	1.8-2.0B (est.)
Key Constraint	Sanctions beginning	G7 import bans	Full sanctions regime

The production trajectory reflects the cumulative impact of sanctions. While Alrosa maintained export capacity through intermediaries, profit margins eroded due to mandatory discounts needed to place stones with buyers avoiding sanctions-scrutiny. The company’s 2025 cut of 10% acknowledged commercial reality, and forecasts for 2026 suggest further pressure unless market sentiment shifts.

“The finance ministry saw no need to buy diamonds from Alrosa for state repository holdings at this time, reflecting cautious optimism about market stabilization despite ongoing sanctions constraints.”

— Summary of Deputy Finance Minister Moiseev’s statement, May 19, 2026

Broader Implications for Diamond Markets and the Cutting Industry

Export duties represent an unconventional response to sanctions-driven market disruption. Rather than competing directly for shrinking export volumes, Russia seeks to retain value-added processing domestically. However, effectiveness depends on competitive cost structures—Russian cutting wages are rising while Indian processors maintain labor cost advantages. The policy signals Moscow’s acceptance that global rough-diamond markets will remain closed, pivoting instead toward domestic downstream positioning.

The move also reflects confidence that international pressure, while constraining exports, has stabilized at a level allowing continued Alrosa viability. Moiseev noted that “things aren’t so bad” and the ministry observed “signs of market stabilisation,” suggesting Moscow believes further sanctions escalation is unlikely in the near term. Additionally, Russia avoids placing new state purchases of diamonds into Gokhran (the official repository), indicating preference for budget conservation over strategic stockpiling.

What Does This Mean for Global Diamond Supply and Prices Going Forward?

The announcement underscores Russia’s involuntary exit from mainstream global diamond trade. With G7 sanctions firmly entrenched and EU regulations tightening through 2026, Russian supply will increasingly route through untracked or lower-scrutiny channels, or reduce output further. Export duties on domestic-destined stones may marginally support Russian cutting jobs, but cannot offset the ~$2-3 billion annual revenue loss from international sanctions.

For global consumers, stabilized Russian supply (even at lower volumes) suggests diamond availability won’t tighten dramatically in 2026. Botswana, Canada, and Australia remain reliable sources, while lab-grown diamonds capture growing market share. The real risk lies in Russia dumping inventory through opaque channels to fund domestic needs, which could suppress prices and complicate supply-chain transparency efforts that major retailers are implementing.

Sources

• Reuters/AOL (May 19, 2026) – Deputy Finance Minister statement on diamond export duties
• Kimberley Process CEOs – 2024 Russian diamond export volume and value data
• AWDC (Antwerp World Diamond Centre) – EU sanctions timeline and implementation details
• OFAC (U.S. Treasury) – Sanctions history and import restrictions
• Alrosa official guidance – 2025 production figures and 2026 forecasts