Lab-grown diamonds are making it big

Since 1945, the London-based De Beers Group of Companies has been cooking-up something in their labs. The international consortium that has made a name for itself in the exploration, mining, trading, and sale of retail and industrial diamonds has finally had its ‘Eureka!’ moment: no longer are jewelry-grade synthetic diamonds a mystery to De Beers, actually it has them embracing new in-roads in an $80 billion industry.

And it seems like Archimedes figured out how to weigh the crown at just the right moment.

Element Six, the company’s synthetic diamond unit, has been making “gem-quality stones for years to help it tell the difference between natural and man-made types and to reassure consumers that they’re buying the real thing,” according to Bloomberg’s Thomas Biesheuvel. But the diamond in the rough, as it were, had always been the elusive jewelry-grade gem. Inarguably at no time has this scientific pursuit been more integral to De Beers’ leverage on the international market than 2018.

De Beers is in the early stages of renegotiating a vital marketing and sales agreement with the government of Botswana. The current agreement represents 75 percent of De Beers’ total annual diamond supply. With this in mind, it’s expected that the South African nation will be at the bargaining table with bigger briefcases and more lawyers this time around – the flimflamming and posturing on both sides will be, without a doubt, worthy of an episode of Mad Men

And the drama has already begun.

De Beers, Biesheuvel reported in late May, has already “had extensive talks with Botswana about the decision to sell man-made diamonds.”

Botswana, it turned out, fully supports De Beers in its pursuits in this matter – and why wouldn’t they?

Gems produced in labs accounted for 4.2 million carats in global diamond sales in 2017 compared to 142 million carats of natural stones. Botswana can rest easy with figures like that. But a shift in the tastes of consumers may be on the horizon.

With personal debt being what it is in North America, many couples see a 1-carat synthetic diamond as a gateway to saving up for a down payment on a home a lot faster. A natural 1-carat diamond goes for USD $8,000. A 1-carat lab-grown diamond: USD $800.

On May 29, De Beers CEO, Bruce Cleaver told the media in no uncertain terms that, “lab-grown are not special, they’re not real, they’re not unique. You can make exactly the same one again and again.”

But in a market where De Beers has instantly set themselves apart as the lowest-cost producer – with the majority of current synthetic diamond producers selling at USD $4,000 a-carat – Cleaver can afford to be glib. “We have the tools, why wouldn’t we do this?”

By David MacDonald