Armenia is making efforts to secure long-term partnerships with African producers of rough diamonds to ensure a stable supply for its diamond processing industry. The strategic outreach – spearheaded by the Ministry of Economy – comes amid a sharp drop in Armenia’s imports and exports of precious stones and metals in early 2025, and mounting pressure to diversify away from sanctioned Russian supplies.

During recent high-level talks at the AIM Congress in the United Arab Emirates, Armenian Minister of Economy Gevorg Papoyan held meetings with officials from Angola and the Democratic Republic of the Congo (DRC), two of Africa’s most important diamond-producing countries. The discussions focused on building stable, transparent and long-term supply chains.

At a meeting with his Congolese counterpart, Deputy Prime Minister Ghislain Nyembo Mbwiza, Papoyan said the Armenian side is particularly interested in discussing the possibilities of creating sustainable and predictable supply routes, the possibilities of signing an intergovernmental agreement, which will provide a framework for long-term cooperation between the two countries’ diamond makers, a Facebook post from the Armenian economy ministry said.

"We are not looking for a short-term profit, but a stable and mutually beneficial partnership based on trust and common value," said Papoyan.

Also during his trip to the UAE, Papoyan met with Ruy Angola’s Minister of Industry and Trade Miguens de Oliveira. According to Papoyan, up to 1.5mn carats of untreated diamonds can be imported from Angola and processed in Armenia annually, the ministry said.

The flurry of diplomatic activity comes as Armenia’s trade in diamonds, which surged in recent years, appears to be stalling. In 2024, diamonds were among the top five imported goods, with a total value of $500.9mn, up 6.4% year on year, accounting to an economy ministry report. However, data from Armenia’s national statistics agency, Armstat, shows a dramatic reversal in early 2025, with precious stone and metal imports plunging by 86.7% y/y in January and February, and exports down 82.1%.

Soviet past

Armenia itself does not produce any rough diamonds. The country’s industry is entirely reliant on imported stones. Despite this, when Armenia was part of the Soviet Union it emerged as a regional diamond cutting hub with flagship plants like Shoghakn and Lori in Nor Hachn. At its height, Armenia ranked among the world’s most respected diamond processing areas. But the post-independence years brought turbulence. The early 2000s saw a sharp downturn amid global competition and market liberalisation.

Now, government-backed efforts are seeking to reverse that decline through diversification and modernisation.

Central to this strategy is Hay-Almast, a state enterprise launched in 2021 to centralise the purchase of rough diamonds, primarily from Russia. Until recently, much of Armenia’s supply was secured via deals with Russian diamond giant Alrosa. But with EU sanctions imposed on Alrosa and its management in 2024, Armenia’s dependence on Russian stones has become a geopolitical liability.

In response, Hay-Almast is broadening its procurement efforts, actively negotiating with suppliers from Europe, the US and now Africa.

Foreign investment

Foreign investors have taken notice of Armenia’s ambitions. In August 2023, India’s KGK Diamonds Pte Ltd, one of the world’s top diamond processors, opened a new facility in Abovyan, Armenia. The 3,600-square-metre factory, expected to employ around 400 workers, is part of a broader trend of foreign investment into Armenia’s cutting and polishing sector.

“The plant will employ about 400 people, half of whom are from India, and the rest are local specialists,” Deputy Economy Minister Narek Teryan said when the plant opened, as reported by ARKA. Training programmes are already underway to build a skilled Armenian workforce.

“This means that, in general, we can return to previous historical indicators. I would like to note that Armenia was one of the leading countries in the world in terms of diamond processing,” Teryan added.

KGK, which controls 8% of the global diamond market, operates across mining, processing and retail in over a dozen countries.

Sanctions risks

Armenia’s growing role in the global diamond trade has not come without controversy. Since 2022, the country has become an important transit point for Russian diamonds – many of which are re-exported to the United Arab Emirates. According to an investigation by Armenian news outlet Hetq, companies such as Hay-Almast, ADM Diamonds and VDA Diamonds have been key conduits in this opaque trade network.

While Armenia maintains that it no longer imports from sanctioned entities, the risk of secondary sanctions looms large. Much of the Russian-origin supply is funnelled through private companies with murky ownership ties, complicating enforcement efforts.

In a 2024 report by JAM News, economist Aghasi Tavadyan is quoted as saying that estimates that around 70% of Armenia’s diamond exports are actually re-exports, based on the amount that were imported into Armenia and exported during the same month. 

“For example, if it is imported from the Russian Federation but not returned to the Russian Federation, but re-exported from Armenia to a third country without any processing, in our case mainly to the UAE. When calculated according to this method, the re-export of diamonds is about 70%,” Tavadyan told JAM News. 

Market fluctuations 

Meanwhile, global diamond demand is undergoing a structural shift, with prices now at multiyear lows following a pandemic-era surge. According to a recent McKinsey & Company report, the diamond industry is at an inflection point, facing a confluence of challenges that have sharply altered its demand dynamics. During the COVID-19 pandemic, disrupted supply chains and postponed weddings created pent-up demand, while consumers splurged on self-gifting, driving prices higher. However, as traditional buying cycles have resumed, prices have collapsed under new market pressures. 

Foremost among these is the rise of lab-grown diamonds (LGDs), which offer consumers a more affordable and increasingly accepted alternative to natural stones. The rapid success of LGDs has defied industry expectations and significantly undermined natural diamond prices. At the same time, consumers are placing greater emphasis on environmental, social and governance (ESG) factors, demanding transparent sourcing practices. Geopolitical tensions and sanctions on Russian diamonds, a key supply source, have further complicated the landscape.

With limited growth in natural diamond supply and shifting consumer values, McKinsey argues that proactive strategic responses across the value chain are essential. Companies must innovate, embrace traceability and rethink how they connect with the next generation of diamond buyers to ensure the industry’s long-term stability.

For Armenia, that means expanding its local cutting industry, maintaining compliance with shifting sanctions regimes, and proving that it can add value to the supply chain. Finding new partners in Africa and attracting new investments from global players in the diamond industry are steps towards that goal.