Synthetic diamonds reshape the industry

The big diamond miners have become rattled by the growth of synthetic diamonds, at the same time as the price for natural stones is in decline.


(Image credit: 2019 Max Mumby/Indigo)

In her first official engagement of the year Meghan Markle (pictured) wore diamond earrings that were "notable not for their sparkle but for their origin", says Henry Sanderson in the Financial Times. They were grown in a laboratory rather than mined from the earth. Mainly sold in the US, synthetic diamonds tap into a "growing backlash against... blood diamonds" to fund wars, says Rachel Millard in The Times.

The big miners have become rattled by the growth of synthetics, "particularly over the last decade, as the quality of stones has improved and manufacturing costshave started to fall," Paul Zimnisky, an independent diamond industry analyst,told The New York Times.

As they cost less to makethey tend to be cheaper than mined diamonds.In addition, therise in synthetic stones coincides with a forecast decline in the supply of natural diamonds available.

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According to some estimates, the world's 50 commercial mines could shrink to 14 by 2040. There hasn't been a major discovery of a diamond field for 20 years. To make matters worse for traditional miners, they have been grappling with stable or declining prices for natural stones thanks to an oversupply over the past few years, notes Sanderson just as synthetics threaten to become "a significantdrag on natural rough diamond demand growth", according to UBS analysts.The upshot? Synthetic diamonds, which now make up 2% of the market's supply, could comprise 10% of it by 2030, according to Citibank. The industry's response to this major structural shift has been to get in on the action. De Beers, the world's largest producer (it controls 30% of the word's supply of mined stones) is credited with creating much of the diamond industry with its 1940s "A Diamond is Forever" marketing campaign.

But it has joined in the synthetic rush. It has launched "Lightbox", a label selling "low-budget gems with mass-market appeal," notes Vanessa Friedman in The New York Times. Expect others to follow, Patrick Evans of Canadian miner Dominion Diamonds told The Times. As natural diamonds become rarer and thus more and more expensive, the absence of synthetic alternatives would "kill the mass market".

Marina has a PhD in globalisation and the media from the London School of Economics, where she worked as a teaching assistant on the MSc Global Media. In 2014 she was invited to be a visiting scholar at Columbia University's sociology department in New York.

She has written for the Economists’ Intelligent Life magazine, the Financial Times, the Times Literary Supplement, and Standpoint magazine in the UK; the New York Observer in the US; and die Bild and Frankfurter Rundschau in Germany. She is trilingual and lives in London.