The Indian government is facing calls to adopt US guidelines to distinguish lab growns from natural diamonds.
The 10,000-member GJEPC (Gems and Jewellery Export Promotion Council) says there is widespread confusion in the way diamonds are marketed and advertised.
It says India should adopt the US Federal Trade Commission (FTC) guidelines, which say there must be a “clear and conspicuous” indicating that a diamond is man-made.
They also say the term “diamond” without qualification can only be used to refer to a natural, mined diamond.
And lab growns cannot be described as “real,” “genuine,” “natural,” or “precious” without additional qualifying language.
The GJEPC has written to India’s Department of Consumer Affairs calling for strict rules to differentiate between natural and lab grown.
“The absence of standardised guidelines on diamond terminology leads to ambiguity,” it says.
“And there are no mandatory disclosure requirements to indicate whether a diamond is lab-grown or natural to the consumer.”
The American Gem Society (AGS) will present panel discussions on lab grown diamond pricing and supply, advances in lab grown identification and the art of natural diamond storytelling.
The three-hour Confluence is an online-only event, featuring three pre-recorded sessions, designed to allow the speakers to take part in a live chat Q&A.
The event is scheduled for 25 September and will be accessible to non-AGS members for a $150 fee. The sessions will remain available, on demand, until 31 December.
The Importance of Diamond Screening: Challenges, Techniques, and Resources covers the latest screening technologies and their limitations, providing guidance on using gemological instruments for verification.
Laboratory-Grown Diamonds: Pricing, Supply, and Disclosure explores the complexities of the lab grown diamond market, including pricing dynamics and the importance of transparency.
And The Incredible Story of Natural Diamonds delves into the geological history and mining processes of natural diamonds, featuring insights from experts at GIA , which is sponsoring the event.
AGS is a nonprofit trade association representing a select group of jewelers, independent appraisers, and suppliers in the jewelry industry.
Since early 2022, the price of polished natural diamonds has fallen approximately 40% and the industry is being buffeted by negative economic headwinds, an excess of mine supply and too much stock in the cutting centres. However, there is one statistic that cannot be ignored: around 50% of Diamond Engagement Rings purchased in the United States now contain a Lab Grown Diamond (LGD). Is this just another cyclical downturn or are we in the middle of a major structural change?
Diamonds were once the preserve of royalty and the uber-wealthy, but the diamond market has evolved over the past 80 years into more of a mass market product with democratisation of the diamond consumer. Since the late 1970s most polished diamonds below 5 carats were priced against the 4 ‘C’s’ (carat, clarity, colour and cut), which led to standardised pricing in the form of polished diamond pricing lists. Up until the turn of the century these lists were primarily available in the wholesale market, but the arrival of internet pricing soon gave the consumer access to that same standardised pricing. In a world where everyone knows the price of everything, branding is the only differentiator. Without a differentiator, commoditised products end up selling for the lowest price.
It was why one of the questions that De Beers tried to answer when it changed its business model 25 years ago was: “How do you take a necessity (the diamond) priced like a commodity and market it as a luxury priced like a brand?”
Unfortunately, that question remains unanswered. The industry did create hundreds of so-called ‘brands’; origin, cut, settings, etc; the problem was that very few of them were real “brands”. If something does not sell at a premium, it’s not a brand, and most natural diamonds sell at a discount, yet the more that the industry was unable to achieve a premium, the more it becomes fixated with talking about the “product” when the luxury world has spent the last 25 years talking about “values”.
The challenge for most jewellers is not making a sale, it is making a reasonable margin. Ask a jeweller what they are selling and if they reply “VS1, G-H colour, loose polished, 1-caraters” then the most relevant word in their business will be “discounting”, because what they are selling is a commoditised version of “crystallised carbon.” There is no differentiator.
The LGD industry realised that to succeed it simply needed to persuade consumers that natural diamonds and LGDs were the same – “optically, physically and chemically”, but to also position them as “slightly cheaper”. They could then ride on the back of 80 years of De Beers diamond advertising differentiate themselves by claiming that LGDs were “conflict free”.
A larger “ethical” LGD for the same money as a natural diamond or pay less for the same size, created a money printing machine for everyone involved. And it’s no surprise that LGDs real success has been in the United States, because historically America has always been a “discount market”, and “larger for less” plays to that tune.
If all you want in a diamond is the sparkle, then they are in essence the same. Except there is a very real difference between the two, which is why some LGD executives insist on calling natural diamonds “earth mined” diamonds, because “natural” is exactly what differentiates them. The story of their age, rarity, origin; their social and economic contribution but above all, their “social purpose”. It was the failure of the natural diamond industry to tell that story which opened the door to LGDs.
When LGD production exploded, wholesale prices collapsed to around a 95% to 98% discount to their natural diamond equivalent. Prices vary according to quality, but anecdotal evidence suggests that today in the wholesale market, it is possible to buy a single polished LGD for $150 a carat, buy in volume and its possible to pay as low as $80 a carat.
Many retailers have also dropped their LGD prices, but by no means as far, and even pricing LGD at a 20-40% discount to their natural diamond equivalent can still leave a very significant margin. Pandora will sell you a 1-carat LGD ring for $1,950. Helzberg Jewellers (a Warren Buffet company) will sell you a similar LGD for $1,999. It’s very likely that some in the LGD industry are making a gross margin of 200%, some much more for a product that Signet Jewellers sensibly cautiones it customers “Their relative abundance may not ensure the value will hold over time”.
Whatever happens to future LGD retail prices, the category has got itself into the American consumer psyche and that won’t easily change, although there are also two sides to this story. I heard of a jeweller who was recently asked by a HNWI to make a replica of her 8-carat natural diamond ring so she could wear it travelling. The original ring cost $500,000 but he sourced an equivalent LGD for $5,000, and apparently she was absolutely thrilled with it. The question is, will she buy natural again? On the other hand, if in the future a consumer could buy (for example) a 2-carat LGD engagement ring for below $200, how pleased would their fiancé be to receive it – Walmart recently had a 2-carat LGD ring for sale for only $257. How romantic!
The US bridal market (size over quality) is dominated by larger, lower quality diamonds. Since similar sized LGDs are cheaper (or you get a much better quality LGD), either that market disappears, or demand only reappears aner prices have fallen sharply (already happened). It is also likely that LGDs will replace small, lower quality natural diamonds in fashion jewellery – as they may replace the smaller stones in high-end pieces of natural diamond jewellery. Diamond mining companies whose profitability rely on these categories of diamonds probably need to find a new value proposition, or their days may be numbered.
For those in the natural diamond industry who can adapt, there is huge potential. For those that don’t, as the saying goes, “Kodak never saw it coming either”.
Except Kodak did see it coming; they just didn’t know what to do about it. Kodak was killed off by digital photography which ironically, they invented, patented, but didn’t know how to exploit it, so they franchised the technology and made a fortune until their patents expired, and then went bust. Have LGDs done the same to natural diamonds? “No”, the opposite; their success is forcing a complacent industry to change. Have they changed the paradigm? “Completely”.
Namibia is one of Africa’s top five diamond exporters, right behind Angola, Botswana, and South Africa. In 2022, the country exported more than $940 million worth of diamonds.
The world’s demand for natural diamonds has bounced back from a slump during the COVID-19 pandemic, with Namibia’s largest marine dining company, Debmarine, reporting a sales increase of 83% in 2022 from the previous year.
Still, Debmarine CEO Willy Mertens is worried about competition from synthetic diamonds, sector of the business that could cost many Namibians their jobs.
Though trained jewelers can tell the difference between lab-grown and natural diamonds, there’s nothing obvious to distinguish lab-grown diamonds from natural ones.
The Modern Mining publication recently said that in 2022, lab-grown diamond jewelry surpassed 10% of the market of global jewelry sales for the first time. The publication said artificial diamond sales are forecast to continue growing at an annual double-digit percentage rate in coming years.
Namibia, where workers extracted 2.1 million carats in diamonds in 2022, is embarking on a campaign to tout natural diamonds as environmentally sound and holding greater value for the money.
“We’ve seen in the past couple of years that lab-grown diamonds, or synthetics as you call them, have sort of infiltrated the natural diamond market,” said Mertens. ” … people were first marketing them as real diamonds and we’ve done a lot of work around trying to differentiate them.”
One of the challenges of marketing Namibian natural diamonds is the environmental impact that diamonds have on the landscape.
Mertens said Debmarine invests a significant amount of its profits into environmental rehabilitation and restoration of landscapes and the seabed damaged by mining.
“The restoration of the seabed actually happens naturally as the waves move,” Mertens said. “So what we are doing is that we are monitoring that, and what we do is we mine out a specific area and we leave an area next to it vacant, and over time we monitor how the area where we have recovered diamonds looks like compared to the one that was not touched and we’ve seen that it takes about three to 10 years maximum for that to completely restore. By completely restoring, mean about 70% of the organisms have returned to that place. On the land, it is sand that we are moving and what we do now is that we are using that same sand to keep the sea walls in tact.”
Mertens recently paid a courtesy call on Namibian President Nangolo Mbumba, to introduce the De Beers global ambassador for natural diamonds, Hollywood actor Lupita Nyong’o, and talk to the president about challenges facing Namibia’s diamond industry.
De Beers Natural Diamonds Global Ambassador Lupita Nyong’o, left, Namibia President Nangolo Mbumba, center, and Debmarine CEO Willy Mertens in Windhoek, Namibia, July 19, 2024. (Vitalio Angula/VOA) De Beers Natural Diamonds Global Ambassador Lupita Nyong’o, left, Namibia President Nangolo Mbumba, center, and Debmarine CEO Willy Mertens in Windhoek, Namibia, July 19, 2024. (Vitalio Angula/VOA) President Mbumba lamented a proposal for the Kimberley process — the process meant to screen out so-called “conflict diamonds” from entering the international market — to begin certifying all diamonds in Antwerp, Belgium.
The Group of Seven largest economies said that is an effort to prevent Russian diamonds from being sold abroad.
Mbumba said the measure would hurt African diamond producers.
“Recently, the decision was made by the G7 countries to route all rough and polished diamonds destined for G7 countries via Belgium,” said Mbumba. “This decision poses a serious risk and threat to our economies, especially the economies of Angola, Botswana and Namibia by increasing the cost as well as curtailing freedom of trade for our countries’ products.”
Namibia’s president said he and his counterparts from Angola and Botswana have written a letter to the G7 to ask them to halt their plans.
According to Botswana’s central bank data, sales of rough diamonds at Debswana Diamond Company fell by 49.2%, amounting to $1.29 billion compared to $2.54 billion in the same period last year.
In local currency, sales of rough diamonds decreased by 47.3% to 17.555 billion pula compared to the same period last year.
This decline in sales is a major blow to the South African nation, which derives 30%-40% of its revenue, 75% of its foreign exchange earnings, and a third of its national output from sales of rough diamonds.
The report highlighted the downturn in the global diamond market as the primary reason for this sharp decline.
In response to the weak consumer demand, Anglo American cut its diamond production by 19% in the first six months of the year.
The report highlighted the downturn in the global diamond market as the primary reason for this sharp decline.
Botswana derives 30%-40% of its revenue, 75% of its foreign exchange earnings, and a third of its national output from sales of rough diamonds.
The Debswana Diamond Company is a joint venture between the government of Botswana and Anglo American Plc’s De Beers. Anglo American Plc’s De Beers sells 75% of its output to De Beers, while the balance is taken up by the state-owned Okavango Diamond Company.
Despite the current economic challenges, Botswana and De Beers signed a ten-year diamond sales agreement in June.
This deal will gradually see the share of Debswana’s output sold by the state-owned company increase from 25% to 30% before it goes up to 40% in five years and eventually 50% by the end of the new contract.
According to the key points in the agreement, this strategic move aims to boost Botswana’s revenue from its diamond resources.
According to Vantage Market Research the Global Lab Grown Diamonds Market Size is expected to reach a value of USD 27.2 Billion in 2023. The Lab Grown Diamonds Market is projected to showcase a CAGR of 9.1% from 2024 to 2032 and is estimated to be valued at USD 59.5 Billion by 2032.
The lab-grown diamonds market has emerged as a formidable force within the diamond industry, captivating consumers with its ethical and sustainable approach to creating stunning gemstones. Unlike mined diamonds, which are extracted from the earth through an environmentally impactful process, lab-grown diamonds are meticulously crafted in controlled laboratory environments.
This innovative technology replicates the natural diamond formation process, resulting in stones with the same physical, chemical, and optical properties as their mined counterparts. The burgeoning lab-grown diamond market is fueled by a confluence of factors, including rising environmental consciousness, evolving consumer preferences, technological advancements, and increasing disposable incomes.
