As any follower of this blog or the Hull Loan System facebook page knows, diamonds gown in a laboratory have improved in size and quality enough to be used in jewelry and are making inroads into the retail jewelry sector. Some retailers, such as Wedding Day, have started stocking and selling lab grown diamonds almost exclusively marketing them as eco-friendly. They are also cheaper than diamonds mined in nature and could potentially become much cheaper as mass production techniques improve. Currently, lab grown (aka Synthetic) diamonds sell for about 50% of the price of a diamond mined in nature. A one carat round synthetic diamond sells for about $4000 compared to $8000 for a comparable, naturally mined diamond.
Global mined diamond production last year was about 142 million carats, compared to about 4.2 million carats of lab grown production. That’s only 3% of the market but it is up from 1.5% just a few years ago. Everybody in the trade is anxious about the effect that lab grown diamonds will have and the diamond mining companies are some of the most vocal critics and opponents of them. Debeers chief executive, Bruce Cleaver, says that synthetic diamonds are “not special, they’re not real, they’re not unique. You can make exactly the same one again and again.”
Debeers has always said that it would not sell synthetic diamonds, but get this: They are very good at making them. Debeers has been growing diamonds in the lab for decades, both for industrial purposes and also for research purposes: to understand the differences between diamonds made in nature and those made in the lab so that they have the means to reassure customers they are buying the real thing.
On May 29th, Debeers reversed itself and announced that it will begin to sell synthetic diamonds produced in the company’s Element Six facility. This decision reflects how serious Debeers regards the threat of synthetic diamonds moving into the retail jewelry sector. Debeers announced they will sell their one carat round synthetic diamonds for $800, compared to the current market price of $4000 for synthetic and $8000 for naturally mined. They also announced that their synthetic diamonds will not be graded since “they don’t deserve to be graded”. Clearly, Debeers strategy is to disparage the product and undercut it’s value so much as to make it not a substitute for a naturally mined diamond. At the same time, they intend to create a small profitable business in it own right trying to transform the market for synthetic diamonds into a small, niche, better than costume jewelry but not directly competing with naturally mined diamonds.