Armenia is exporting a record quantity of diamonds when compared to past years.

The country’s Customs Service reports that diamonds rank third in Armenia’s exports. Since a relatively small volume of diamonds is processed (reprocessed) in Armenia, it can be concluded that this is simply a re-export of diamonds. The local market does not get significant benefits from it.

Armenia’s top exports in the first half of 2023 were passenger cars (US$311 million), gold ($281 million), and diamonds ($240 million).

Some 3.7 million carats of diamonds, worth $487 million, were exported from Armenia in the first ten months of 2023, double the amount in the same period last year. This volume of diamonds is a ten-year record.

Armenian diamond manufacturers usually import raw material from abroad, then process and export the product. Since last year, last year, most of the exported diamonds were simply re-exported. Only 141 thousand carats were processed in Armenia, mainly to meet local demand.

"We either bring the raw diamonds from abroad, or we buy them from large importers. The big ones mostly export without processing, but they can import cheaper. It is more profitable to buy from them," says a local jeweler-diamond maker Hetq spoke to.

Since the raw diamonds are from abroad, imports have also risen. In January-October of this year, 2.7 million carats of diamonds were imported into Armenia, 1.9 times more than the same period last year. The value of imported diamonds was $453 million, an increase of 51%.

Yerevan-based economist Aghasi Tavadyan says diamonds re-exported from Armenia come from Russia and are sent to the United Arab Emirates (UAE). 

“In 2022, quite a lot of money flowed out of Russia, and part of it ended up in Armenia. A significant part of those sums was sent for the purpose of gold and diamond trade. That money was exchanged between Russia and the UAE through Armenia," the economist notes.

After the war that started in Ukraine in 2022, Russia, which is under Western sanctions, has circumvented the sanctions in various ways. Armenia has become one of the transit countries for goods imported from Europe and the U.S and exported to Russia.

If in the case of machinery and cars, Western-made goods come to Armenia and are re-sent to Russia. In the case of diamonds and gold, the scheme is the opposite. They are imported from Russia to Armenia and then sent out, from here, mostly to the UAE. Even those countries that have not imposed sanctions on Russia try to work with Russia through intermediary countries in order not to mar relations with Western countries.  

Thus, the large volume of diamond exports does not mean that the Armenian diamond industry is flourishing. As mentioned above, only 141 thousand carats of diamonds were processed in Armenia in the first ten months of this year. According to the Armenia’s Statistical Committee, compared to January-October 2022, the volume of processed diamonds in Armenia increased by 24.8%.

Armenia’s Diamond Exporters

The three largest companies exporting diamonds from Armenia in the first ten months of this year are ADM Diamonds, VDI Diamonds and Dimex Capital.

The first two are among the three largest importers as well. The third is Arevakn LLC.

Armenia’s doesn’t disclose how much each company imported and exported, arguing it’s a commercial secret.

Armenian PM Nikol Pashinyan and other government officials attended the opening of the ADM Diamonds factory. Marineh and Asparik Baghikyan, owners of the company, are close friends of Civil Contract faction MP and businessman Khachatur Sukiasyan.

The couple’s son, Artak Baghikyan, spoke at the opening of the factory and was introduced as the factory’s director.

In April 2021, Hetq revealed that ADM Diamonds imported diamonds under the name of an affiliated company, Karabra, and falsified their value, thus avoiding customs duty of seventeen million drams.

VDI Diamonds LLC, was registered in April 2022 and is wholly owned by Russian citizen Vitkhalbhai Ramani. He is the founder of DDK, a well-known diamond-maker in Russia.

Ramani is also the head and owner of other Russian companies working in the diamond industry. He has no participation in any other company registered in Armenia.

Dimex Capital, has been in the Armenian jewelry and diamond industry market for ten years. The sole owner, according to Armenia’s State Registry, is Yerevan resident.

Arevakn LLC, founded in 2000, has been active in the Armenia-Belgium diamond trade. It’s owned by Belgian citizen Robert Tasche.

Armenia Mainly Imports Diamonds from Russia, Hong Kong

Diamond is mostly imported from Russia and Hong Kong, exported to the UAE

Of the 2.7 million carats imported by Armenia in the first ten months of this year, 1.2 million (44%) came from Russia and 32% from Hong Kong. Smaller numbers came from the UAE and Belarus.

The UAE is the largest buyer of diamonds exported from Armenia.  

In addition to the fact that the increase in the volume of re-exports does not imply the development of the local diamond industry, it also doesn’t significantly impact Armenia’s state budget. This is because most of the diamonds are imported from Russia. Since Armenia is a member of the Eurasian Economic Union (EAEU), along with Russia and three other post-Soviet states, no additional taxes or customs duties are charged. Exports are also exempt from additional fees.

Of the 3.7 million carats of diamonds exported from Armenia in January-October 2022, 3.2 million carats or 86% were exported to the UAE. 424,000 carats went to Russia. 

Top photo: Artak Baghikyan (ADM Diamonds Facebook page)