The Diamond – The Journey of Power, Wealth, and Love

The diamond. Centuries this crystalline form of pure carbon was the object of passion of humankind and it represented indissoluble love, great riches and invincible power. The path of a diamond is an epic around the world as seen in the sparkling displays of jewelers in New York and Antwerp and even on the crowns of European monarchs. This journey will start in few particular, usually distant, places on the earth.

It is a crucial question that emerges in the minds of investors, jewelry lovers and others not only interested to know but also the rest of the world: Which is the largest diamond-producing country in the world?

The solution is a story of gigantic proportions, geologic luck, and geo-economic and geo-political importance. The point is not the amount of carats taken off the ground, but their price, the technological wonders needed to find them, and how the country can strategically control this valuable commodity.

In this ultimate guide we shall take a nosedive into the undisputed diamond giant in the world: The Russian Federation. We are going to go further than a mere statement to discuss how, where, and why it is dominant. We will travel to the frozen depths of Siberia, examine the corporate giant which appoints the course of the stones, and decipher the sophisticated questions and the perspectives of the future of the most influential player of the world diamond industry.

Executive Summary: The Reigning Champion

And before we go into the detail of it, we had better entrench the main facts.

• Country: Russian Federation

• Status: Largest Diamond Producer by Volume (Carats) in the World and Home to the largest Diamond Reserves.

• Main Exporter: ALROSA Group which controls about 90 percent of Russian output and 25-30 percent of the world rough diamond provision.

• Principal Area: The Republic of Sakha (Yakutia) in Eastern Siberia.

• Scale: Russia is the world leader in terms of rough diamonds production of more than 40 million carats annually, in an average pre-sanction year.

This hegemony is not by chance. It is the product of a peculiar combination of huge geological reserves, industrial policies conducted by the state, and an inexpertial ability to work in one of the harshest environments of the planet.

Learning the Metrics: Production vs. Value

Two major metrics are critical to the world of diamonds, which are important to separate:

Production by Volume (Carats): This is a measure of the total volume of physical quantity of the diamonds mined. The obvious leader in this regards is Russia, which mines more carats on the ground than any other country.

Production by Value (USD): This is the amount of money worth the diamonds mined. In this case Botswana frequently competes or even does better than Russia. Why? Since diamonds of Botswana, and especially the famous Jwaneng mine, are of higher grade and percent of gem quality than the production in Russia.

It comes to mind this way: Russia can produce a greater amount of diamonds whereas Botswana can produce a much high value of diamonds. In order to determine the largest producer we will consider volume and total scale of activity a category in which Russia undeniably prevails.

Chapter 1: The Pillars of Russian Dominance – How Russia Made it to the Top

The status of Russia as the diamond kingpin is based on three pillars.

1. Fortune, Geological: The Siberian Craton

The key to the Russian diamond fortune is the geology of the country. The Eastern Siberia area is on the crust of Siberian Craton, which is one of the oldest and most steady portions of the earth. This geological environment is in a unique position, which allows the formation of kimberlite pipes, the main volcanic pathways acting as conduits of diamonds, therefore, transporting them between the mantle and the crust.

The Soviet Union came to a crossroad with the discovery of diamonds in Yakutia in 1950s. The first of many giant kimberlite pipes to be discovered in the region and unveiling the fact that the Siberian wilderness harbored one of the richest deposits of diamonds in the world, was the Mir (Peace) Mine, which was discovered in 1955.

2. The Corporate Engine: ALROSA

ALROSA (the name is an abbreviation of Almazy RossiiSakha, which translates to Diamonds of RussiaSakha) is not only a mining company, but a national institution. It is the largest diamond mining company in the volume, being a publicly-privately owned partnership with the majority of its shareholders being the Republic of Sakha (Yakutia) and the Russian Federation.

This system provides ALROSA, and by implication, the Russian state with a unique degree of influence on the production of diamonds in the country. The company has a complete chain of pipeline, such as exploration and mining, sorting and sales, which makes it the central nervous system of the global rough diamond market.

3. Expertise in Extreme Engineering

One of the most daunting industrial challenges on the earth is mining of diamonds in Yakutia. The area has some of the most extreme changes in temperature whereby the winters can drop to -50 C ( -58 F ) and even lower. It is permanently frozen to the ground- a permafrost layer that may be more than a kilometer deep.

Russian engineers have been the first to develop specialized methods of working under such conditions.

Conclusion

Finally, the history of Russian diamond production is a miniature of the country itself huge, resource-abundant, strong, technologically developed, but with deep geopolitical tailwinds. The glitter of a Russian diamond will keep aglow, but the journey it makes out of the frozen Siberian soil to the hand of the consumer has been more complicated and politicized now than it has ever been before.