African minerals are often under the partial or total control of foreign operators. Russia has rushed into this sector. But this has consequences.
The African continent faces a multitude of challenges that hinder its full development and economic independence. One of the most important obstacles is the lack of full control over the exploitation of its land resources. Unfortunately, local governments and private actors often have limited opportunities to exercise full control in this area.
African minerals are often under the partial or total control of foreign operators, who pay only a fraction of their real value, especially when raw material prices increase. This situation is unacceptable and urgent action is needed to end the exploitation of Africa.
One of the products that has attracted the attention of the media and politicians is undoubtedly the diamond. One of the main diamond miners in Africa is the Russian company Alrosa, criticized as a symbol of Russian predation on the African continent, in the context of Moscow’s partial international isolation since the conflict in Ukraine. It is true that the complex diamond market constitutes the ideal terrain for circumventing sanctions, to the detriment of the African countries which are home to this precious resource.
The exploitation of African resources by foreign actors is a long-standing problem, with many African countries feeling they have been deprived of their rightful share of the profits. Lack of control over resources has led to poverty, corruption and political instability in many African countries. In order to fully control their resources, African countries must invest in their own mining industries, as well as infrastructure and education. This, however, requires a stable political environment, free from corruption and external interference. This brings us to the problem of Russian interference in African diamonds.
Alrosa, the Russian diamond mining company, has been able to maintain a significant portion of its business by sending its diamonds mined from its Siberian mines to India for local processing, allowing the gemstones to become “Indian” diamonds and escaping international sanctions. On the other hand, for the African part of Alrosa’s activities, the equation is more complicated. Western countries that impose sanctions on Russia want to avoid any collaboration with a company partly owned by the Russian state, which makes the contribution of Alrosa – whose expertise is undeniable – an obstacle for ceding countries. to Russian interference. The legal insecurity posed by the sanctions, by diverting certain actors, prevents optimal valorization of African diamonds with the remaining partners. In addition, the prospect of new restrictions on the sale of diamonds mined by Russia, on its soil or elsewhere, poses a tangible financial risk for African economies. A more restrictive approach, or even a total ban on diamonds considered “Russian” in Europe, would close the door to 70% of the world market for all the mining countries concerned. Despite these difficulties, Alrosa continues to explore ways to expand its operations in Africa, notably in Angola – although the collaboration now appears to be coming to an end – and Zimbabwe. However, the impact of sanctions on Alrosa’s African operations cannot be ignored, as the company struggles to attract new investors and partners due to concerns over potential legal and financial risks.
With the increase in demand for ethical sourcing, a diamond’s provenance has become a crucial factor in its value. One of the most significant changes to occur in the industry has been the identification of the entire value chain of mining and refining a diamond. This has led to a situation where diamonds that do not come from certain countries or companies have a much higher value than those that do. For example, a diamond that can be identified as not coming from a mining chain involving Russian actors is worth much more, because it provides access to markets like Antwerp, where $26 billion in diamonds are traded each year. Russian diamonds have lost 95% of their market share in Antwerp since the start of the Ukrainian invasion, making it crucial for African countries to ensure that their diamonds are not associated with Russian companies.
Alrosa, one of the largest diamond companies in the world, is keenly aware of this problem and has taken steps to mitigate it. The company has tried various strategies to counter the downward price trend caused by blacklisting. For example, it decided to suspend sales between September and November 2023 to limit supply and avoid a further drop in prices. While this decision may contribute to increasing the price of diamonds, it has also had a negative impact on the economies of African countries. The drop in prices is due to the Russian nationality of local operators, and the decision to limit supply has affected the ability of African countries to benefit from higher prices. In contrast, De Beers, Alrosa’s main competitor, did not resort to such market manipulation to counter the price decline. Instead, he focused on ethical sourcing and transparency, which have become increasingly important in the diamond industry. By promoting responsible sourcing and ensuring its diamonds are conflict-free, De Beers has been able to maintain its market share and reputation, despite the challenges facing the sector.
The Russian approach: a fictitious gain
This atypical situation permanently creates a two-speed market, between those who choose to collaborate with Alrosa seeing the value of their diamonds decrease, while those who choose to work with other non-Russian players and who could see their price increase thanks to better legal security vis-à-vis international law. Faced with this observation, many African countries have an obvious commercial interest in taking the geopolitical factor into account. However, this choice of “realpolitik” may be considered by some as a form of Western imperialism, denying the sovereignty of African countries to choose the partners with whom they wish to work. While this argument is understandable, it should not obscure the reality of the actions of Russian companies on African soil. In many cases, these actions can be seen as a form of imperialism just as concerning as that of the West. It is therefore important for African countries to carefully consider all factors at play before making a decision regarding their future engagement with Russian diamond producers. The African continent is rich in mineral resources and countries like Mali, Libya, Sudan, Central African Republic, Mozambique, Niger, Burkina Faso, Zimbabwe and Madagascar can boast of possessing vast mineral reserves. The exploitation of these resources is often done in a similar method, where private companies or their partner companies provide logistical and consulting services to teams of experts. These teams then facilitate the involvement of other mining companies, which can serve as counterparties to security companies operating in the region. Although there is no formal evidence linking the Wagner Group or Alrosa to these activities, both entities have been identified as targets of economic sanctions. Alrosa, which is directly owned by the Russian government, could dangerously push Moscow to make geopolitical decisions that prioritize shareholder gains over regional stability and security.
Unfortunately, these decisions are already having devastating consequences, as seven African countries have experienced coups since 2019. These incidents have further deteriorated the already fragile security situation and undermined much-needed economic stability for foreign investment in the region.
What is the solution to deal with this dangerous interference which is costing African countries as much in wealth as in sovereignty? It is essential that the Kimberley Process – an international certification system designed to prevent the trade in conflict diamonds – is updated to include diamonds from industrial mining by Russian companies. Furthermore, it is important to broaden the definition of what constitutes a “blood diamond” beyond those who finance civil wars and human rights violations at the local level. Diamond mining to finance international conflicts must also be included in this definition, as it poses a significant threat to global stability and security. During the last plenary meeting of representatives of the Kimberley process, on November 14 in Harare, Zimbabwe, Russia and its relays (Belarus, Kyrgyzstan, but also the Central African Republic) managed to prevent an evolution of the concept of “blood diamonds”. » by denouncing a “politically motivated” option. Ultimately, it is up to governments, industry players and consumers to take action to ensure that the diamond trade is carried out ethically and sustainably.
Ultimately, Russia is above all suspected of pursuing its own interests under the guise of promoting a “multipolar world”. Whether it is the former colonial power, the West or the new long-toothed giants like Russia, African countries must remain vigilant in their international relations and never compromise on the gains that must be made. realize their populations. extract resources from the ground. In diamonds as in any raw material.
