Wealthy Russians are increasingly turning to investment-grade diamonds, with purchases of polished stones rising by 60% last year, according to VTB, the country’s second-largest bank. This surge in demand is attributed to the government’s decision to abolish VAT on diamond purchases, which has made gemstones a more attractive investment option.

Oksana Semenenko, vice president at VTB and head of its private banking division, explained that the rarity and uniqueness of diamonds make them especially appealing during times of rising financial market instability and tighter investment restrictions. Many affluent clients are now incorporating alternative investments, including diamonds, into their portfolios, typically allocating 5-10% of their assets to these tangible assets for diversification.

This shift comes amid increasing sanctions from the G7 and restrictions on Russian currency, which have impacted Russian diamond exports. In response, Alrosa, the state-run diamond mining giant, is turning to alternative markets to sell its goods. The company’s Diamond Exclusive program focuses on polishing its largest and highest-quality diamonds, particularly stones of 3 carats or more, to be sold directly to investors through partnerships with VTB and other financial institutions.

Australian mining company Newfield Resources is on track to bring in a new partner for its Tongo diamond deposit in Sierra Leone. Newfield has entered into a non-binding term sheet with ACA Resources, another Australian-based miner, to oversee the mine’s operations.

If the deal is finalized before June, ACA will assume control of all mining activities at Tongo, charging Newfield a fee per carat of diamonds produced. Both companies are committed to making the Tongo mine a long-term, sustainable producer of high-quality diamonds in Sierra Leone.

Newfield acquired the Tongo mine in March 2018 for $23.6 million through its purchase of London-based Stellar Diamonds. Prior to Newfield’s acquisition, the mine was owned by Israeli businessman Beny Steinmetz, through Koidu Holdings, where he held a controlling stake.

In May 2022, the first diamond sales from Tongo, totaling 5,200 carats, earned an average price of $262 per carat. Since then, Newfield has invested $80 million into the mine, including the construction of 2 kilometers of underground infrastructure. The mine is expected to have an eight-year life, with peak annual diamond production estimated at 260,000 carats by the fifth year of operations.

Rio Tinto’s diamond revenue for 2024 fell by 37% to $279 million, largely driven by difficulties at its Diavik mine in Canada and the broader downturn in the diamond market. The company reported a loss of $127 million for the diamond segment, a sharp contrast to the previous year’s underlying earnings of $26 million. Despite the tough market conditions, Rio Tinto reaffirmed its focus on responsible sourcing and operational efficiency as key priorities moving forward.

The year was further marked by a tragic incident at the Diavik mine, where several team members were among the victims of a plane crash in January. This added to the operational challenges faced by the company during an already difficult period. Despite these setbacks, Rio Tinto has emphasized its commitment to managing the operation responsibly and efficiently, as it navigates the ongoing industry challenges.

With a challenging market outlook and operational difficulties, Rio Tinto continues to focus on adapting to market conditions while upholding its dedication to sustainable and ethical practices in diamond mining.