According to some surprising media reports, Russian state-owned ALROSA, world’s largest diamond miner, is exploring opportunities to venture into Lab-grown diamond sector. Detailed plan and further steps for the same are expected to be finalized within next one year. Rinat Gizatulin, Vice President – ALROSA, said while talking to Izvestia Daily, “Before we start producing synthetic stones, we need to understand the prospects of this business and explain the need to work in this direction to shareholders,” According to Rinat, Lab-grown diamonds market has been on the radar of ALROSA’s think tank, which analyses diamond market conditions and possible threats to mined diamond industry happening due to development in technology. Since, the idea of venturing into Lab-grown diamonds is still in process, possible investment and production estimates are not known yet. It is not clear whether ALROSA is planning to venture into Lab-grown diamonds on its own or through some form of partnership with one of the 3 existing Lab-grown diamond producers based in Russia. By next year, the company will present its plan for Lab-grown diamond market for shareholder approval.
Element Six is one of the leading Lab-grown diamond producer. However, very few know that Element Six is a member of De Beers group of companies. It generally tends to avoid making noise about its progress on Lab-grown diamonds and related science and technology, especially when the parent pushes hard to promote diamond’s emotional value. Interestingly while entering Lab-grown diamond market, Swarovski was in talks with Element Six for sourcing Lab-grown diamonds. Though the talks fell through, the fact that Element Six sat at the table with Swarovski reveals the long-held suspicion and ultimate game plan of De Beers to eventually enter the gems and jewelry segment through Element Six.
There are multifold reasons why diamond miners like ALROSA and De Beers may be considering Lab-grown diamonds. First, mined diamonds are exhausting faster, mines are turning underground and cost of exploration and mining has risen significantly. Second, Lab-grown diamonds are penetrating the market with increased uptake and new-age customers are taking them up with gusto for its ethical, conflict-free, environment friendly and cost benefits. Third, traditional mined diamond business has been struggling across the pipeline since some time now. Lab-grown diamonds offer the industry a way of risk mitigation. From a long-term perspective, it only makes sense for diamond miners to enter the Lab-grown diamond business.
However, some industry experts and analysts doubt that ALROSA will be interested in starting production of Lab-grown diamonds as an independent business because rough diamond production is highly profitable for the company at the moment.