Lab-grown diamonds put natural gems under pressure

Sparkling diamonds have the same sparkle, but there are key differences: naturally mined gems are more than a billion years old, while lab-grown stones are newer and cost less than half as much.

Man-made gems are reshaping the $89 billion global diamond jewelry market, especially in the western Indian city of Surat, where 90 percent of the world’s diamonds are cut and polished.

In Summit Patel’s sparkling lab, technicians drop crystal diamond “seed” pieces into reactors that simulate extreme pressure underground.

“Once the customer sees it for themselves, they are sold. I believe this is the future,” said Patel, director of GreenLab Diamonds and the third generation of his family to deal in diamonds.

From seeds to ring-ready jewelry, his team takes less than eight weeks to produce a diamond that is virtually indistinguishable from a mined gem.

“It’s the same product, it’s the same chemistry, it’s the same optical properties,” Patel said.

Gas, heat, pressure

According to the latest industry data, the value of exports of lab-grown diamonds from India tripled between 2019 and 2022, while the volume of exports increased by 25% between April and October 2023, which It was 15 percent in the same period a year ago.

“We have grown the volume by 400 percent year-on-year,” Patel told AFP.

In labs like Patel’s, reactors are pumped full of carbon-containing gases such as methane and crystals grow under heat and pressure.

The rough diamonds are then transported to another facility where hundreds of workers design, cut and polish the stones.

gave Global market share New York-based industry analyst Paul Zeminsky told AFP that the value of lab-grown gems rose from 3.5 percent in 2018 to 18.5 percent in 2023, and is likely to exceed 20 percent this year. will be done

This has put pressure on an industry already reeling from geopolitical turmoil and falling demand.

‘Clean’ stone

Machine-cut diamonds were first produced in the early 1950s, but it was less than a decade ago that technological leaps made making them commercially viable.

Producers boast that their gems come at a low carbon cost, though there are questions about whether the energy-intensive process is any better for the environment.

Patel said his lab uses solar energy From the local grid, although other carbon-heavy sources suck electricity.

And while mined gem sellers say “conflict diamonds” from war zones are kept off the market by the international Kimberley Process certification scheme, lab producers say their facilities guarantee a clean record. are

Such environmental and humanitarian claims have helped make lab-grown stones a popular choice for engagement rings.

In February 2023, 17 percent of diamond rings sold in the United States, the world’s largest consumer of natural stones, used lab-grown gems, according to industry analyst Edhan Gulen.

According to Golan’s assessment, it is now 36 percent.

This is made possible in part by hundreds of companies in China and India, both of which are the largest producers of man-made stones.

‘severe storm’

According to India’s Gem and Jewelery Export Promotion Council (GJEPC), Indian lab diamond producers exported 4.04 million carats between April and October 2023, up 42% year-on-year.

In contrast, natural diamond companies in India reported a decline of more than 25 percent to 11.3 million carats during the same period.

While sales of natural diamonds surged during the COVID-19 pandemic as affluent buyers sought to lighten the lockdown with luxury purchases, demand waned when economies reopened.

Top companies were left with expensive surplus stock.

Ajesh Mehta of D Navichandra Exports, whose group is one of the authorized buyers, or “site holders”, of global diamond giant De Beers Group, said it was the worst slump in his 30-year career.

“It’s a completely different kind of lack of demand,” Mehta told AFP. “Everything came together like a perfect storm.”

In addition to competition from laboratory-grown competitors, other factors include affordability. Economic development Oversupply and sanctions against all major US and Chinese markets as well as Russian rough-cut diamonds.

India’s natural diamond industry was forced to impose an unusual voluntary import ban on rough diamonds in October.

“We had to hit the reset button,” Mehta said. “Otherwise people will panic.”

At least five Indian watchers told AFP that De Beers Group cut prices by between 10 and 25 percent for different categories of diamonds in its first sale of the year, as buyers returned after the US holiday season. Used to stock.

‘No Monopoly’

The lab-grown industry also faces its own problems.

According to Golan’s analysis, supply is skyrocketing and prices have plummeted, with wholesale prices falling 58 percent in 2023 alone.

Retailers in Surat told AFP that the price of a carat of low-quality polished stones has fallen from $2,400 in 2022 to just over $1,000 in 2023.

WD Lab Grown Diamonds, the second-largest U.S. producer of man-made stones, filed for bankruptcy in October.

But Patel says falling prices will increase demand.

“We knew that prices would come down, because there is no monopoly in this industry,” he said.

Customers at a jewelery showroom in Mumbai, India’s commercial capital, seemed to agree.

“A mined diamond would be five times more expensive,” said 29-year-old Lekha Prabhakar.

“If you want something you want to wear every day…a lab-grown diamond works. I really like it.”

© 2024 AFP