Recent events are once again bringing the issue of lab-grown diamonds to the top of the industry’s agenda:
– Yet another parcel of undisclosed synthetics was found and detected—this time in Mumbai, involving lower-grade stones.
– A panelist at a Rapaport conference estimated that there are currently $500 million worth of synthetics in the pipeline, and predicted that number will grow to $1 billion by the end of next year.
Some informed sources expressed considerable skepticism to me about those last numbers. Diamonds are a $12 billion industry, so you are conceivably talking about one out of every 10 diamonds by value being synthetics. Recently, De Beers used its melee detector on a wide range of parcels looking for undisclosed synthetics. It didn’t find any.
Secondly, the growing process for diamonds remains unpredictable, expensive, and difficult to replicate on a mass scale. Keep in mind that people have been trying to mass-produce synthetic diamonds for two decades. Someday they’ll master it. But they don’t seem to have done it yet.
That said, it is quite likely some undisclosed synthetics are out there—particularly in the smaller sizes, which usually don’t get sent to labs. And some of these seem to be produced by under-the-radar companies who don’t manufacture a big production but create just enough to cause havoc. It’s time for these companies to identify themselves, properly label their products, and join the mainstream of the industry. If they mislead people, they should face prosecution. Responsible synthetic manufacturers should be urging this on. In the end, these incidents hurt the lab-grown business overall, because the industry won’t embrace a product it’s scared of.
There is nothing wrong with lab-grown diamonds, and they will eventually find a niche in our industry, especially with the supply of new diamonds running out. And they will undoubtedly be competition to the natural sector, as Edahn Golan talked about yesterday:
A number of traders asked this week why a consumer would want to buy a natural diamond if they can buy for less what is perceived as the same product. The answer is simple: the rationale that consumers only buy the low-cost item is false. Some want a simple watch, others a high-end one; some buy a plywood desk for their office, others want oak or marble desks. The list goes on for fashion handbags, cars and even floors—parquet or whole wood planks?
I would add that people still buy natural rubies and emeralds, despite there being synthetic versions of those stones available. However, the difference is that diamonds are a higher-profile product that many people, grooms especially, feel compelled to buy. Possibly because of this, manmade diamonds have received more publicity than synthetic emeralds ever have.
Many consumers will likely see natural diamonds as superior to manmade, if only because they will hold their value longer. So the mined industry has a case to make for itself. The point is: It will have to make it. It hasn’t had to up until now.
Finally, the increasing amount of synthetics drives home the need for two points:
First, natural diamond mining needs to be done as ethically as possible. One of the main selling points of synthetics for consumers—besides the reduced price—is that they are better for the environment, can’t be a “blood” stone, and free of the cartel stigma. (And yes, I know, the cartel is old news. But not everyone knows that.)
One could argue that diamond mining, when it helps poor countries, is morally superior to something produced in a laboratory. But the industry does not make things easier for itself when certain actors embrace diamonds from morally dubious sources and stymie attempts at cleaner supply chains. Just as undisclosed synthetics hurt that industry, every time we read about problems in a diamond mine that hurts the natural industry overall, and might as well be an advertisement for synthetic diamonds. It’s time the industry gets far more serious about ethical sourcing, and stops sacrificing short-term gain for what will be a serious long-term problem.
Second, industry players need to get better control of their supply chains. That will eventually mean establishing chains of custody. Most of the CoC schemes weren’t meant to address this issue of synthetics, but it certainly drives home why they are needed. Traders in the future will need to know the source of their diamonds, including whether or not they were grown in a lab.
For now, though, it seems industry people are panicking prematurely. We have no idea when the synthetic diamond era will truly be upon us—just that someday it will. And maybe it’s time we get better prepared for it.