Russian govt to implement export duty of 8% on rough diamonds as of Sept 1

MOSCOW. June 22 (Interfax) - The Russian government has implemented an export duty of 8% of the customs value on rough diamonds weighing between 0.45 carats and 10.8 carats, as well as special-size diamonds (over 10.8 carats), and the corresponding instruction was signed on June 12 and published on the official portal of legal acts.

The duty enters into effect on September 1, 2026.

The rationale behind the duty is to support the domestic diamond cutting industry, which, following the abolition of the diamond duty in 2016 under the WTO agreement, lost its competitive advantage and began to lose expertise. The initiative to develop measures to support the cutting industry came from the governor of the Arkhangelsk Region and was supported by the governor of the Sakha Republic (Yakutia), Deputy Finance Minister Alexei Moiseyev previously said.

Moiseyev said that the duty would be implemented under a "lenient scheme". Only stones that are cost-effective to cut in Russia will be taxed.

The export duty on rough diamonds was 6.5% until 2016. Assuming the duty is set at the same level now, it could reduce Alrosa's EBITDA by up to 20% for 2026, according to Akhmed Aliyev of T-Investments.

Duties could worsen the situation for Alrosa, which exports approximately 90% of production. Alrosa had to restructure its distribution system, logistics, and payments after being added to the U.S. sanctions list in the spring of 2022. The next challenge was the embargo imposed in early 2024 on Russian rough and polished diamonds imported into G7 countries. Owing to the sanctions, Alrosa is rerouting trade flows, Alrosa CEO Pavel Marinychev said. This is happening amid a protracted crisis in the diamond market that is caused by a decline in jewelry purchases in China and increased competition between natural and lab-grown diamonds. Although Alrosa representatives express hope for a rapid normalization in inventory levels and market recovery, the situation only worsened last year owing to the imposition of U.S. tariffs on goods from India, the world's largest diamond producer.