In the past few weeks, there’s been quite a buzz about how lab-grown diamonds are completely disrupting the diamond markets and industry. Uncertainty surrounds how the economy will respond, especially for young buyers, who have already demonstrated disdain for diamonds. Here’s a short sparknotes on what lab-grown diamonds are, how they’re made, benefits and drawbacks, and potential implication on the future of the diamond Goliaths like De Beers.
Diamonds created in laboratories are made of carbon, just like ones created in the ground, so technically, they aren’t “synthetic,” as some argue. They are certifiably 100% real diamond. There are two main methodologies for manufacturing diamonds in a laboratory. The first is high pressure and high temperature (HPHT). Using this method, scientists pressurize and heat large amounts of carbon to create a diamond. The second method, chemical vapor deposition (CVD), involves the scientists creating an environment for carbon to atoms to land on a substrate and form themselves into a diamond.
These lab-grown diamonds have been sold for jewelry and cosmetic purposes, but originally, lab diamonds were created to be used in technology. Semiconductors and drills alike utilize the purity and hardness of the diamond for their performance, and scientists did not want to have to compete for the very limited mined diamond on the market at present.
Many are excited about the prospect of lab-grown diamonds. Lab diamonds are much less expensive for the producer — whereas there’s a huge risk that mining for diamonds won’t yield very much, there’s a very certain return on investment for lab-grown diamonds. On top of the money cost of mining, many have called on some very unsound environmental practices and labor policies that surround mining. To consumers who care about the treatment of the planet and the workers, the prospect of getting diamonds without the damage to the atmosphere and underpayment of labor is a major benefit.
Additionally, the cost for lab-grown diamonds for the consumer is considerably lower than those for mined diamonds. Some estimates put the cost of lab-grown diamonds at about 30-40% of the cost of a mined diamond of the same size. Especially since most diamond experts can’t really tell apart mined and lab-grown diamonds without some pretty serious help from science instruments, many penny-pinching young people are happy to take a “knock-off” for a fraction of the price.
However, there have been some significant concerns and drawbacks to the sudden popularity of the synthetic diamond. Some have noted that in certain examples, lab-grown diamonds are in fact the more costly option, both in terms of what a consumer pays for them and the loss on investment, since mined diamonds tend to appreciate while lab diamonds depreciate.
De Beers in particular has long been fighting to keep counterfeit diamonds off the market due to their penchant to depreciate — one of De Beers’ main selling points has been that diamonds almost always appreciate. Since lab and mined diamonds are impossible to distinguish with the naked eye, De Beers is highly concerned that the proliferation of lab diamonds will undermine consumer confidence, especially in the Chinese and Indian markets, where lab diamonds are expected to comprise nearly 20% of the market by 2020.
As lab-grown diamonds inhabit more and more of the market, mined diamonds will have to shift the message of their advertising and work harder to convince less-affluent young adults that mined diamonds are still the better buy.