Are Lab-grown diamonds changing future of diamond market?

Lab-grown diamonds
[Image courtesy: Arden Jewelers]

Since 1950s, Lab-grown diamonds have been used as super material for various industrial applications including semiconductors and renewable energy. Over time, with advancing technology they have recently reached gem-quality levels and are now being used in jewelry. Today there is absolutely no difference between a Lab-grown diamond and a mined diamond.

The constant increase in demand of Lab-grown diamonds over the past few years has given rise to many diamond-growing ‘greenhouses’. One such start-up, with an aim to increase the market share of Lab-grown diamonds is Diamond Foundry based in San Francisco.

Commenting on Lab-grown diamonds, Chief Executive of Diamond Foundry, Martin Roscheisen says, “Growing diamonds of these pristine colors, that high degree of purity, is actually very hard. Each of these diamonds is unique. They have their own growth patterns. No two diamonds we produce are alike, pretty much exactly like mined diamonds. Some people think it takes 2 billion years for a mined diamond to form on earth. In truth, it’s about the same formation speed — a week or two. They are just stuck in the soil for many years.”

Diamond Foundry is backed by Hollywood actor Leonardo DiCaprio and a dozen Silicon Valley billionaires like Twitter founder Evan Williams, Facebook co-founder Andrew McCollum, former eBay President Jeff Skoll et al. The company recently acquired a Los Angeles-based jewelry brand – Vria and Oro, owned by Vanessa Stofenmacher, a Forbes 30 under 30 honoree, and made her Creative Director of the company.

Increasing awareness about unethical practices, resulting in Blood diamonds, and environmental harm that mined diamonds cause are some of the reasons behind rising demand of Lab-grown diamonds. According to The International Grown Diamond Association (IGDA), there is 1.5 billion times more carbon emission during diamond extraction than growing it in a lab. About 57,000 grams of carbon per carat is emitted while mining against only 0.028 gram per carat in case of Lab-grown diamonds.

Increasing demand of Lab-grown diamonds coupled with exhausting mines has also prompted world’s largest diamond miners, ALROSA and De Beers to consider gradually entering into Lab-grown diamond market as a long-term game plan. De Beers has in fact, through its group company Element Six, already began production of Lab-grown diamonds, however supposedly only for industrial & scientific purposes for the moment.

Currently, Lab-grown diamond market stands at USD 16.2 billion and is anticipated to grow to USD 27.6 billion by 2023. However, this amounts to a very small increase in Lab-grown diamonds’ share in global diamond market. Besides, most of Lab-grown diamonds will continue to be used for industrial applications.

According to a 2016 Consumerist Poll, only 6.6% consumers will pay a premium for mined diamonds over Lab-grown diamonds. With a forecast by Bain & Company that the rough diamond sales would decline in value by 1-2% annually through 2020, and increasing demand in end-user applications owing to lower prices, Lab-grown diamonds may show a substantial increase in the coming years.

In a time when many of the traditional jewelry retailers are shutting down, Lab-grown diamond retailer Brilliant Earth, which used to sell only online, is now expanding its omni-channel plan, with opening of 3 new jewelry showrooms in San Deigo, Washington D.C. and Denver in 2017.

 

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