When Steve Richards, a gemologist trained to identify grades of precious jewels, was considering a Christmas present for his wife, he settled on a pair of diamond earrings.
These diamonds, however, were not formed deep in the Earth over millions, or billions, of years, and brought to the surface through volcanic eruptions. They were grown in a lab over a matter of weeks, and bought for a fraction of the price.
“They [look] identical to mined diamonds in every way; they have the same physical properties as they are both carbon,” said Richards, from Australian Diamond Wholesale Brokers.
“I’m a gemologist and a diamond technologist and I’ve been doing it for 30 years and if you put one next to the other I wouldn’t have a freakin’ clue which is lab grown.
“I wouldn’t buy mined diamonds again; you’re wasting your money.”
Price collapse
Natural diamond prices have collapsed to the lowest levels this century, according to Bank of America research, prompting widespread production cuts and mine closures.
The price of some diamond weights – carats – have almost halved from the high prices struck three years ago after the early pandemic spending splurge subsided.
Even the world’s dominant diamond producer, De Beers, was forced to make rare price cuts late last year of between 10% and 15%.
Advocates of natural diamonds concede the industry is in turmoil, as a cost-of-living crisis, subdued demand from the traditionally reliable Chinese market, and the rise of synthetics upend the sector.
The question now is whether the decline in demand for natural diamonds is terminal.
David Kellie, chief executive of the Natural Diamond Council (NDC), says that as synthetic diamonds flood the market, consumers will place more value on the mined variety.
“There’s capacity in the factories now for you to say, ‘I want to place an order for however many thousands of lab grown diamonds’,” says Kellie.
“Jewellery is the one thing that you wear on your body every day for a lifetime and having that diamond in that engagement ring is something you want to feel really good about.
“You’ll probably leave it to your heirs because it has value and that’s not something people would associate with lab-grown diamonds.”
The NDC receives funding from mining companies and other trade partners.
Lab-grown diamonds, many of which are produced in China and India, sell to consumers for about one quarter of the price of mined diamonds, although that contains a significant mark-up for the retailer.
Market participants told Guardian Australia that a one-carat natural diamond, triple excellent – excellent cut, excellent polish and excellent symmetry – wholesales for about $3,500. A lab-grown equivalent wholesales for about $250, or one-fourteenth the price.
after newsletter promotion
The shipping costs for a synthetic diamond can sometimes exceed the price of the gemstone itself.
Consumers are, however, generally paying more for gold jewellery given there has been a sharp rise in the price of the precious metal.
Market ructions
The sector is splintering, with the all-important bridal market increasingly turning to lab-grown diamonds, especially among younger generations grappling with high living costs.
Many synthetic buyers also cite ethical issues over natural diamonds; while the sector says it addresses “conflict diamond” concerns through its certification scheme.
Advocates of natural diamonds point out that lab-grown diamonds take significant energy to produce, and that not all factories are connected to renewable resources, leaving many labs to draw from a fossil fuel-powered grid.
Diamonds physicist John Chapman says the future of the natural diamond market comes down to marketing, given the identical qualities of the product.
“The industry is putting more money into marketing but to what extent that will be successful is another matter,” said Chapman, from Perth-based Gemetrix, which uses specialised equipment to distinguish natural, synthetic and colour-treated diamonds.
“Will someone be prepared to pay more if they know a diamond comes from Australia or Canada or wherever when what consumers are really interested in is what’s the best bang for their buck?”
While most jewellers have jumped into the lab-grown market, some very high-end brands, like Rolex, are showing loyalty to the natural variety.
But there are also examples of luxury products now using synthetic diamonds, with Swiss watchmaker Breitling recently swapping out natural for lab-grown diamonds for its hour markers.
Richards says his broking business has recorded a dramatic change in demand after exclusively dealing in mined diamonds for most of his career.
“Five years ago, 100% of the diamonds my company handled were mined; now that’s gone down to 20%,” he says.
“People can now get a beautiful ring with a lab-grown diamond and then spend the extra money on a holiday, or, in a cost-of-living crisis, their groceries.”
Article by:Source – Jonathan Barrett Senior business reporter
