De Beers, long associated with the glamour of natural diamonds, is now grappling with a fading shine. The rise of lab-grown diamonds, which have gained popularity among millennial and Gen Z consumers in India and worldwide from the US to China poses a significant challenge.
Lab-grown diamonds offer several advantages: they are 60-75% more affordable than natural diamonds, and as mass production increases, prices continue to drop. Moreover, they share the same chemical composition as natural diamonds and are visually indistinguishable to the naked eye.
Police in Surat, India, are investigating an alleged switch, in which a “buyer” replaced a 10.08-carat natural diamond, valued at $545,000, with a near-worthless lab grown replica.
The “buyer” examined the heart-shaped D / VVS2 stone and its GIA certificate, agreed terms and put down a $12,000 down payment to secure the purchase.
He left, saying he needed to withdraw money – and has not been seen since.
The owner of the diamond soon realized he’d been left with a lab grown replica of identical shape, color and weight, but worth less than $2,000.
Police say they are pursuing the “buyer” and at least two accomplices, according to a report in the Economic Times.
Declining profits for lab grown diamonds could push retailers into a natural diamond pivot, said Paul Zimnisky, an independent diamond industry analyst.
Last week Zimnisky spoke to Kitco Mining.
The diamond market has been in a tough spot due to declining sales. In September Petra Diamonds reported full-year revenue declined 44%. In February Lucara Diamond announced full year revenue was down 16%, adding that the diamond market is a “volatile environment with market challenges coming from multiple areas.” Storied diamond company De Beers is being sold off by parent Anglo American, which is restructuring after rebuffing a takeover by BHP.
Demographics and growing market share by lab grown diamonds are part of the challenge, said Zimnisky, but exclusivity and rarity of natural diamonds could end up helping. Innovations in production have led jewelers to cut the costs of lab grown diamonds. That may lead jewelers to pivot and prioritize selling natural diamonds over lab grown, said Zimnisky.
“The catalyst could be declining profitability of selling lab grown diamonds, ” said Z. “[That] could incentivize retailers to really push natural diamonds again. That has the potential to be a very positive development for natural diamond industry.”
De Beers Group announced late last week that it will be suspending production of diamonds for jewelry at its Lightbox factory in Gresham, Oregon, pivoting instead to industrial diamonds for technology applications.
The company made the announcement Friday, in the midst of the Las Vegas jewelry trade shows.
The lab-grown pivot is part of a broader new strategy called “Origins,” which is designed to grow desire for natural diamonds while cutting costs.
In an interview with National Jeweler on Friday, De Beers CEO Al Cook elaborated on the decision, including on the future of Lightbox, the lab-grown diamond jewelry brand De Beers launched six years ago.
“Element Six used to produce diamonds because they were hard and they could be used industrially,” he said. “Now, with the price of synthetic diamonds coming down, it opens up this amazing set of technological activities. We’re in partnership with … a number of high-tech companies looking at how you use diamonds as components in the digital era.
“That bit for us is really exciting. And that’s where the future of synthetic diamonds lies for us.”
Despite the transition at the factory, Cook said Lightbox will continue as a brand, drawing upon existing stock for the immediate future.
“At the moment, we’ve got a lot of stones available to Lightbox. Production will continue for a few months to ensure that they’ve got a stock of beautiful lab-grown diamond stones they can sell.”
After Lightbox depletes its existing stock, “we’ll see where the brand goes and we’ll see what happens,” Cook said. “I think it’s too early to say.”
De Beers announced the launch of the Lightbox lab-grown diamond brand during the Las Vegas shows in 2018.
At first, De Beers was growing the diamonds for Lightbox at its Element Six facility in the United Kingdom.
In October 2020, it opened its $94 million Lightbox factory in Gresham, a Portland suburb.
In an attempt to control the direction of the lab-grown diamond market, De Beers set an $800/carat price structure for the line.
It also marketed Lightbox as jewelry for less-special special occasions, like Sweet 16s or graduations, not milestones like engagements or anniversaries, which, it posits, should be celebrated with natural diamonds.
Since the line’s launch six years ago, lab-grown diamond prices have dropped precipitously. Lightbox cut its prices by as much as 40 percent last month.
Cook said De Beers expects the trend to continue.
“For a lot of retailers out there, the incentive to sell natural [diamonds] and the incentive to sell lab-grown are reversed. There was a period of time, a year-plus ago, when retailers got more of a margin sometimes from selling lab-grown diamonds.
“They were cheap to manufacture, and they could be sold as near-equivalents to natural diamonds. We didn’t do that in De Beers Group. We made very clear through Lightbox that these were two entirely different propositions,” he said.
“Not everyone followed our approach. It is now very clear that for all the retailers I can speak to here at JCK, the margin you get by selling a natural diamond is far greater than the margin that you get by selling a lab-grown diamond. It’s also clear that the gap is going to grow rather than shrink. We expect the price of lab-grown diamonds to go down and down, to continue collapsing.”
As it transitions production at the Lightbox factory in Gresham, De Beers announced Friday that it also will be consolidating its Element Six chemical vapor deposition (CVD) diamond-growing facilities, going from three factories to the one factory in Oregon.
The American Gem Trade Association announced that, starting at Tucson next year, exhibitors will not be allowed to sell lab-grown diamonds or colored gemstones at the AGTA GemFair.
National Jeweler received a news release on AGTA’s decision via email Wednesday morning. The release also was posted on the AGTA website, though it had been removed by Wednesday evening.
AGTA CEO John W. Ford Sr. said the news release was “pulled by error,” and would be reposted today.
According to the release, AGTA’s new rule bans the display of loose gemstones or jewelry “comprising non-natural gemstones, ones that are man-made, synthetic, or lab grown.”
AGTA said its dealers can still sell lab-grown gems if they are disclosed, but only natural gems can be made available for purchase at GemFair.
The association said it enacted the ban to “thwart potential confusion,” confusion it sees happening in the lab-grown diamond industry and fears will affect the colored gemstone industry, even though lab-grown colored stones have been around for more than a century.
When asked what led to the belief that confusion was occurring, or could occur, in the colored gemstone market, Ford said in an email to National Jeweler, “Look no further than the chaos created by synthetics in the diamond industry … Our action is also in response to considerable concerns voiced by AGTA membership in relation to the adverse effects that synthetics could also potentially cause in the colored gemstone industry.”
While the AGTA’s decision has made headlines, it does not seem poised to have a big impact on AGTA GemFair exhibitors, few of whom sell lab-grown gemstones anyway.
In his email, Ford said out of the 260 exhibitors of loose or set gemstones at the 2024 AGTA GemFair Tucson, only two list that they sell synthetic gemstones in the AGTA Source Directory.
“Since sending out over (260) 2025 AGTA GemFair Tucson renewals, we’ve had an overwhelmingly positive response from the vast majority of our exhibitors, greatly outweighing any negative responses,” he said.
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In its news release, AGTA also noted that lab-grown gemstones lack the value inherent to natural gemstones, which are rare and sometimes inimitable.
“AGTA felt that it needed to be crystal clear to buyers that when they attend an AGTA show, they know that they are only shopping mined natural gems from the earth,” said Kimberly Collins, AGTA board president and owner of Kimberly Collins Colored Gems.
“AGTA dealers pride themselves in sourcing superior gems that are rare, beautiful, and natural.”
AGTA also notes that “synthetic gems are not minerals.”
The association said it recognizes two definitions of the word “mineral”—that of the British Geological Survey, defining a mineral as “a naturally occurring substance with distinctive chemical and physical properties, composition, and atomic structure” and that of the U.S. Geological Survey, which defines a mineral as a “naturally occurring inorganic element or compound having an orderly internal structure and characteristic chemical composition, crystal form, and physical properties.”
“The definitions are essentially the same, but the keyword in both that is important is use of the word ‘natural,’” said AGTA board member John Bradshaw.
“It’s important to indicate that synthetic gems are not considered minerals, because minerals are natural, and synthetics are not.”
Ads for synthetic diamond jewellery have been banned after the UK company behind them, Skydiamond, did not make it clear they were not real.
Even though the strapline of the newspaper advert was the “world’s first and only diamond made entirely from the sky” and a social media ad said “love is… a diamond gift made from the sky”, there were complaints from the National Diamond Association.
The advertising regulator upheld the complaints and concluded that the ads were misleading and said they could not appear again in the same form, including on the company’s website without, better explanation.
Skydiamond, the trading name for The Sky Mining Company Ltd, was told by the Advertising Standards Authority not to use the terms “diamonds”, “diamonds made entirely from the sky” and “Skydiamond”, and not to describe its synthetic products “without a clear and prominent qualifier”.
The firm was told by the ASA that it must use terms such as ‘synthetic’, ‘laboratory-grown’ or ‘laboratory-created’, “or another way of clearly and prominently conveying the same meaning to consumers” and were not to use the claim “real diamonds” to describe synthetic diamonds.
Sky Mining said both the ads and extensive information and graphics on its website set out that their diamonds were manufactured in a laboratory, with detailed information on the production process on its website.
The company said the very brand was built on the premise that their diamonds did not come from the earth and do not have the negative environmental impacts associated with diamond mining, with all components required sourced from the sky: atmospheric carbon dioxide (as a source of carbon), rainwater (as a source of hydrogen) and renewable energy from solar and wind power.
As explained on the company’s website, Skydiamonds are made from carbon dioxide and hydrogen extracted and produced using proven industrial processes and combined to form methane in a biological process, with methane fed into chemical vapour deposition machines in which diamonds developed at a high temperature over 14 days.
It says for every carat of Skydiamond produced, greenhouse gas emissions are reduced by 99.79% compared to mined diamonds, and that compared to growing diamonds in a laboratory, mined diamonds produce 4,383 times more waste, use 2.14 times the energy and 6.8 times as much water.
The ASA acknowledged that further information on the Sky Mining manufacturing process appeared on About Us pages of the website among other pages.
“However, in the absence of a clearly worded and prominent qualification such as ‘synthetic’, ‘laboratory-created’ or ‘laboratory-grown’, or another way of clearly and prominently communicating the same meaning, we considered it was still ambiguous as to whether the diamonds were synthetic or not,” the regulator said.
Brilliant Earth’s sales grew 4% year on year to $124.3 million in the fourth quarter amid a record number of orders.
The 18% increase in individual orders offset a 12% decline in the average value per sale during the three months that ended December 31, the retailer said last week. Net profit for the period fell 69% to $1.9 million.
Engagement rings were one of the top sellers for the company, with demand for those above $10,000 increasing year-on-year in the fourth quarter, Brilliant Earth CEO Beth Gerstein said last week in an earnings call, transcribed by Seeking Alpha. The average sales price for engagement rings was up 4% year-on-year during the three months.
Additionally, new campaigns featuring celebrities and influencers brought in consumers. The launch of Brilliant Earth’s Sol collection, in partnership with Emmy-nominated actress Camilla Morrone, proved popular, with productivity “far outpacing” that of prior collection launches, Gerstein explained. The company’s new lab-grown Capture collection, made with synthetic diamonds manufactured using 100% renewable energy, also “resonated strongly” with consumers, it said.
For the full-year, sales rose 1.5% to $446.4 million, while net profit dropped 75% to $4.7 million.
Brilliant Earth expects sales for the first quarter of 2024 to reach between $96.5 million and $98.5 million, ranging from a decrease of 1% to growth of 1%, chief financial officer Jeff Kuo noted on the earnings call. For the full year, net sales are anticipated to rise 2% to 5% to between $455 million and $469 million.
Gemological Science International (GSI) has issued a warning to the trade after coming across a “notable increase” in jewelry set with pink, yellow and brown lab-grown diamonds posing as natural.
The jewels, which have been submitted to the lab for grading, often contain synthetic stones mixed in with natural colored diamonds, Debbie Mazar, president and cofounder of GSI, explained Tuesday. Many of the undisclosed synthetics were type IIa, with a single nitrogen atom, and ranged in size from melee to 1 carat.
Additionally, some of the lab-grown diamonds were intentionally cut to mimic natural ones, GSI noted. The GSI observed several with fractures, pinpoint clouds, polish-overs and distinct brown grain lines, features found in natural diamonds, which would potentially enable the fraudulent stones to pass standard gemological evaluation, GSI said.
“The challenge arises as most jewelry-screening equipment in the market is designed to screen white, near-colorless diamonds,” Azar explained.
The advanced technology in diamond growth is contributing to increased success by growers in replicating natural diamonds more and more, GSI added.
GSI’s warning comes on the heels of several from other labs. In December, Italian grading lab Gem-Tech cautioned that it had encountered a number of lab-grown stones circulating bearing fraudulent inscriptions from the Gemological Institute of America (GIA) for natural stones. Last month, the International Gemological Institute (IGI) examined a 6.01-carat lab-grown with a GIA laser inscription for a similarly cut natural, while the GIA reported it was taking steps to combat the recent influx of lab-growns bearing fraudulent inscriptions from the lab by offering same-day report verification.
The International Gemological Institute’s laboratory in Tel Aviv recently detected a 6-carat lab-grown diamond that someone apparently was hoping to pass off as a natural stone.
The 6.01-carat, pear-shaped synthetic diamond was fraudulently inscribed with the Gemological Institute of America report number for a G-color natural diamond of the same size and shape, but with a few key differences, IGI said in a news release issued Tuesday.
First, the lab said, photoluminescence (PL) spectroscopy, which is now widely used by grading labs to separate natural diamonds from lab-grown stones and to identify diamond treatments, shows a wavelength peak of 737 nanometers in the diamond (see chart below).
This is an indicator that the diamond was grown in a factory using the chemical vapor deposition process.
IGI photoluminescence spectra The photoluminescence spectra for the 6.01-carat lab-grown diamond recently examined by the International Gemological Institute
Second, when examined under a microscope, IGI graders saw a carbon inclusion where the feather was indicated on the clarity plotting diagram in the GIA report.
They also noticed a cloud inclusion, resulting in IGI giving the lab-grown diamond a lower clarity grade than VVS1, the clarity grade of the natural diamond.
Lastly, there was a discrepancy between the depth of the diamond IGI examined and the depth noted on the GIA report.
“Everyone in our industry must be vigilant,” said IGI CEO Tehmasp Printer, who took over as head of the lab in October after Roland Lorie retired.
“As attempted fraud increases, the need for ongoing verification is a necessary step to protect consumers from purchasing misrepresented gems and jewelry.”
Lab growns and natural diamonds will coexist in the future, says Vipul Shah, chairman of the Gems and Jewellery Export Promotion Council (GJEPC).
He was speaking at the IIJS Signature, which opened in Mumbai on Friday (5 January 2024).
“With natural diamonds, there is an aspiration, whereas lab-grown diamonds are for affordability, and for fun and fashion,” he said.
“So, it’s a completely different segment … It is not going to be that one is going to take over the other,” he said.
He noted that the supply of natural diamonds would reduce over time, with no new mines due to open and some deposits reaching the end of their lives.
He said the lab grown and natural consumer bases would complement each other.
“Natural diamonds are for those who have a desire for diamonds and they’re getting diamonds,” he said.
“Also, if you are looking for investment, you will choose natural diamonds. So, the idea is that once first-time buyers start with lab-grown diamonds, they will aspire to buy natural diamonds.”
