Have lab-grown diamonds changed the diamond industry forever?

around 50% of Diamond Engagement Rings purchased in the United States now contain a Lab Grown Diamond

Kodak never saw it coming either.

Since early 2022, the price of polished natural diamonds has fallen approximately 40% and the industry is being buffeted by negative economic headwinds, an excess of mine supply and too much stock in the cutting centres. However, there is one statistic that cannot be ignored: around 50% of Diamond Engagement Rings purchased in the United States now contain a Lab Grown Diamond (LGD). Is this just another cyclical downturn or are we in the middle of a major structural change?

Diamonds were once the preserve of royalty and the uber-wealthy, but the diamond market has evolved over the past 80 years into more of a mass market product with democratisation of the diamond consumer. Since the late 1970s most polished diamonds below 5 carats were priced against the 4 ‘C’s’ (carat, clarity, colour and cut), which led to standardised pricing in the form of polished diamond pricing lists. Up until the turn of the century these lists were primarily available in the wholesale market, but the arrival of internet pricing soon gave the consumer access to that same standardised pricing. In a world where everyone knows the price of everything, branding is the only differentiator. Without a differentiator, commoditised products end up selling for the lowest price.

It was why one of the questions that De Beers tried to answer when it changed its business model 25 years ago was: “How do you take a necessity (the diamond) priced like a commodity and market it as a luxury priced like a brand?”

Unfortunately, that question remains unanswered. The industry did create hundreds of so-called ‘brands’; origin, cut, settings, etc; the problem was that very few of them were real “brands”. If something does not sell at a premium, it’s not a brand, and most natural diamonds sell at a discount, yet the more that the industry was unable to achieve a premium, the more it becomes fixated with talking about the “product” when the luxury world has spent the last 25 years talking about “values”.

The challenge for most jewellers is not making a sale, it is making a reasonable margin. Ask a jeweller what they are selling and if they reply “VS1, G-H colour, loose polished, 1-caraters” then the most relevant word in their business will be “discounting”, because what they are selling is a commoditised version of “crystallised carbon.” There is no differentiator.

The LGD industry realised that to succeed it simply needed to persuade consumers that natural diamonds and LGDs were the same – “optically, physically and chemically”, but to also position them as “slightly cheaper”. They could then ride on the back of 80 years of De Beers diamond advertising differentiate themselves by claiming that LGDs were “conflict free”.

A larger “ethical” LGD for the same money as a natural diamond or pay less for the same size, created a money printing machine for everyone involved. And it’s no surprise that LGDs real success has been in the United States, because historically America has always been a “discount market”, and “larger for less” plays to that tune.

If all you want in a diamond is the sparkle, then they are in essence the same. Except there is a very real difference between the two, which is why some LGD executives insist on calling natural diamonds “earth mined” diamonds, because “natural” is exactly what differentiates them. The story of their age, rarity, origin; their social and economic contribution but above all, their “social purpose”. It was the failure of the natural diamond industry to tell that story which opened the door to LGDs.

When LGD production exploded, wholesale prices collapsed to around a 95% to 98% discount to their natural diamond equivalent. Prices vary according to quality, but anecdotal evidence suggests that today in the wholesale market, it is possible to buy a single polished LGD for $150 a carat, buy in volume and its possible to pay as low as $80 a carat.

Many retailers have also dropped their LGD prices, but by no means as far, and even pricing LGD at a 20-40% discount to their natural diamond equivalent can still leave a very significant margin. Pandora will sell you a 1-carat LGD ring for $1,950. Helzberg Jewellers (a Warren Buffet company) will sell you a similar LGD for $1,999. It’s very likely that some in the LGD industry are making a gross margin of 200%, some much more for a product that Signet Jewellers sensibly cautiones it customers “Their relative abundance may not ensure the value will hold over time”.

Whatever happens to future LGD retail prices, the category has got itself into the American consumer psyche and that won’t easily change, although there are also two sides to this story. I heard of a jeweller who was recently asked by a HNWI to make a replica of her 8-carat natural diamond ring so she could wear it travelling. The original ring cost $500,000 but he sourced an equivalent LGD for $5,000, and apparently she was absolutely thrilled with it. The question is, will she buy natural again? On the other hand, if in the future a consumer could buy (for example) a 2-carat LGD engagement ring for below $200, how pleased would their fiancé be to receive it – Walmart recently had a 2-carat LGD ring for sale for only $257. How romantic!

The US bridal market (size over quality) is dominated by larger, lower quality diamonds. Since similar sized LGDs are cheaper (or you get a much better quality LGD), either that market disappears, or demand only reappears aner prices have fallen sharply (already happened). It is also likely that LGDs will replace small, lower quality natural diamonds in fashion jewellery – as they may replace the smaller stones in high-end pieces of natural diamond jewellery. Diamond mining companies whose profitability rely on these categories of diamonds probably need to find a new value proposition, or their days may be numbered.

For those in the natural diamond industry who can adapt, there is huge potential. For those that don’t, as the saying goes, “Kodak never saw it coming either”.

Except Kodak did see it coming; they just didn’t know what to do about it. Kodak was killed off by digital photography which ironically, they invented, patented, but didn’t know how to exploit it, so they franchised the technology and made a fortune until their patents expired, and then went bust. Have LGDs done the same to natural diamonds? “No”, the opposite; their success is forcing a complacent industry to change. Have they changed the paradigm? “Completely”.

Source: intellinews

Hong Kong Busts $64M Diamond Scam

Hong Kong authorities have arrested four people suspected of running a money-laundering syndicate that falsely declared synthetic diamonds as natural.

The operation, which authorities codenamed “Gem Crusher,” was the first money-laundering case using transnational diamond trading the Hong Kong Customs and Excise Department has detected, the government organization said Thursday.

On December 19 and 20, customs raided eight premises across multiple areas in Hong Kong, including residential and business locations. So far, authorities have frozen HKD 8.2 million ($1.1 million) in assets belonging to those in custody.

Hong Kong customs officials were alerted to the scheme earlier this year and launched a financial investigation, exchanging information with authorities in India, the department explained.

Members of the crime syndicate had established diamond-trading companies in both Hong Kong and India. Throughout 2021, the syndicate exported low-value lab-grown diamonds from Hong Kong to India with fictitious declarations presenting them as high-value naturals.

The purpose was to “transfer significant amounts of suspicious funds from India to Hong Kong,” authorities alleged. The suspects laundered around HKD 500 million ($64 million), the department claimed.

During the raid, customs seized a “large quantity of suspected synthetic diamonds, a small quantity of natural diamonds, about HKD 1 million [$128,055] in cash, a number of mobile phones, computers, company [seals], checkbooks, bank cards, bank documents and trading documents” from the four suspects, authorities said.

The four men — believed to be the “masterminds, ring leaders and members” of the syndicate — were arrested on suspicion of “dealing with property known or reasonably believed to represent proceeds of an indictable offense.”

The investigation is ongoing, and further arrests cannot be ruled out, customs noted.

Souce: Diamonds.net

GIA Spots Natural-Synthetic Hybrid Diamond

GIA CVD synthetic diamond

The Gemological Institute of America (GIA) has discovered a synthetic layer that improved the weight and color of a natural diamond, and has warned that the phenomenon may be happening more often.

The cushion modified brilliant, 0.64-carat stone contained about 0.10 carats of chemical vapor deposition (CVD) diamond, the GIA estimated in a lab note last week. The lab-grown layer was greyish-blue, in contrast to the natural section’s yellowish color, giving the combined stone a fancy-greyish-greenish-blue appearance.

This was not the first time a stone of this type has turned up at the GIA: In 2017, it reported on a 0.33-carat, fancy-blue diamond that featured a CVD overgrowth similar to this one.

“With the second of these composites seen at GIA, this could be a new type of product entering the market,” research associate Troy Ardon and analytics technician Garrett McElhenny wrote in the note, which the GIA published in the Spring 2019 issue of its quarterly scientific journal, Gems & Gemology. “The resulting color was likely the main motivation for growing the CVD layer on top of the natural diamond, though the extra weight gained could also be a factor.”

The stone’s unusual nature came to light after testing indicated it had features of both type Ia and type IIb diamonds — a rare combination. It appeared to have absorbed both nitrogen — a feature of type Ia diamonds that gives yellow color — and boron, which is present in type IIb stones and can turn them blue. “Mixed-type diamonds always call for additional scrutiny,” Ardon and McElhenny explained.

The pavilion — the section from the girdle to the bottom — showed natural growth features during fluorescence testing with DiamondView, a De Beers machine for identifying synthetics. However, the crown displayed characteristics of CVD, proving that manufacturers had grown CVD diamond over a natural base. Using computer modeling, the research team was able to calculate the weight of the synthetic part as approximately one-tenth of a carat.

The stone was well disguised: Numerous readings of its photoluminescence showed no indication of any synthetic origin, despite the fact that such tests are usually effective at revealing CVD. This may be because the lab-grown layer was so thin, the note pointed out.

“Natural diamonds with synthetic diamond grown on the surface require extra scrutiny due to the presence of natural-looking features, both spectroscopic and gemological,” the authors continued. “Careful inspection still reveals the presence of synthetic indicators, which expose the true nature of the diamond.”

Source: diamonds.net

HRD Antwerp Grades ‘World’s First Wearable CVD All Diamond Ring’

CVD Diamond Ring

HRD Antwerp has graded what it says is the world’s first ring that is entirely made from a lab-grown diamond made by Dutch Diamond Technologies (DD).

‘Project D’, DD’s name for the ring, took a year to manufacture and was created in honor of the company’s 10th anniversary, HRD said.

“The ring was made from a large piece of a 155-carat rough CVD lab-grown diamond which was polished using laser cutting and traditional techniques into a ring which has 133 facets, compared to 57 for a standard brilliant cut,” HRD said. “The ring has a total weight of 3,865 carats. It wasn’t until 2017 that it became technically possible to grow large enough monocrystalline lab-grown diamond plates.

“This is not the first ring to be created from a single diamond. In 2011, Shawish, a Swiss jeweler, unveiled the world’s first wearable ring made from a single crystal of natural diamond. Additionally, another lab-grown ‘all diamond’ ring, called (RED), was conceived by the Diamond Foundry, but as far as we are aware, the production phase has not yet started.”

Ton Janssen, CEO of Dutch Diamond Technologies, said: “For our 10th anniversary we wanted to create something stunning that would highlight our innovative and high-tech techniques. I think we’ve more than succeeded with the one-off ‘Project D’ ring. It’s a true “European” ring: grown in Germany, cut in the Netherlands and graded by HRD Antwerp in Belgium. HRD Antwerp has a well-earned reputation for delivering a perfect grading system thanks to their sophisticated equipment and dedicated team.”

The quality and carat weight of CVD synthetic diamonds has increased significantly over the last 10 years, taking up to 5 weeks to grow a diamond plate of this exceptional size in a laboratory. Growing a diamond with the CVD process requires a heated mixture of hydrocarbon gas and hydrogen in a vacuum chamber at very low pressure and elevated temperatures (900-1200°), he explained.

“DD might be relatively new to cut diamonds for the jewelry market, but they have created an impressive ring for their 10th anniversary,” said Michel Janssens, CEO of HRD Antwerp. The outstanding cutting and polishing work has resulted in a brilliant light reflection which emphasizes the beauty of the ring.”

HRD Antwerp has thoroughly analyzed the ring and delivered the following grading results: clarity VVS2, color E, Fluorescence Nil, Polish very good and Symmetry excellent. A lab-grown diamond grading report is easily distinguishable from a natural diamond grading report by its green color cover, the lab added.

Source: idexonline.com

Synthetic Diamond

Synthetic Diamond Man-made versions of the diamonds found in the earth

A synthetic diamond (also known as a lab-grown diamond, man-made diamond, or cultured diamond) is a diamond that is created through artificial processes in a laboratory rather than being formed naturally over millions or billions of years in the Earth’s crust. Despite their man-made origins, synthetic diamonds have the same chemical composition, physical properties, and optical characteristics as natural diamonds, making them a true diamond in every sense. However, the main difference is that they are created in a controlled environment in a much shorter time frame, often just a few days or weeks.

How Synthetic Diamonds Are Made:
There are two primary methods used to produce synthetic diamonds:

High Pressure High Temperature (HPHT): The HPHT method simulates the intense pressure and temperature conditions that occur deep within the Earth, where natural diamonds form. In this process, carbon is subjected to pressures of around 1.5 million psi and temperatures of 1,500°C (2,732°F). The carbon is then placed in a chamber with a metal catalyst, which helps the carbon crystallise into diamond. The HPHT method is often used for producing gem-quality diamonds and is also used to create diamonds for industrial purposes.

Chemical Vapor Deposition (CVD): The CVD method involves using gaseous hydrocarbons (like methane) to create a plasma (an ionised gas) that breaks the bonds of the molecules in the gas, allowing the carbon atoms to slowly deposit layer by layer on a substrate (a small diamond seed). Over time, the carbon atoms arrange themselves into the crystal structure of a diamond. This process is carried out in a vacuum chamber at lower pressures and temperatures compared to HPHT. CVD diamonds can be grown to large sizes and are often used for high-quality gem diamonds as well as industrial applications.

Properties of Synthetic Diamonds:
Chemical Composition: Synthetic diamonds are composed of the same material as natural diamonds: pure carbon. The atoms of carbon are arranged in a specific crystal lattice structure, which gives diamonds their famous hardness and brilliance. Synthetic diamonds are made from high-purity carbon and undergo similar processes of crystallisation, resulting in diamonds with the same chemical bonds and rigid lattice structure as natural diamonds.

Hardness: Synthetic diamonds are just as hard as natural diamonds. They score 10 on the Mohs scale of hardness, the highest possible rating. This makes them incredibly durable and resistant to scratches, just like their natural counterparts.

Appearance: Lab-grown diamonds have the same optical properties as natural diamonds, including their brilliance, fire, and scintillation. This means they will sparkle and shine in the same way when exposed to light. Since they are chemically identical to natural diamonds, their appearance is indistinguishable to the naked eye. Advanced gemological testing is often required to differentiate between natural and synthetic diamonds.

Cost: One of the biggest differences between synthetic diamonds and natural diamonds is their price. Due to the shorter production time and technological advancements in the manufacturing process, synthetic diamonds typically cost significantly less than natural diamonds of the same size and quality. This price difference makes synthetic diamonds an attractive option for those seeking a diamond at a more affordable price point.

Environmental and Ethical Considerations:
Environmental Impact: Synthetic diamonds have a much lower environmental impact compared to natural diamonds. The mining of natural diamonds can be destructive to the environment, involving large-scale operations that disturb ecosystems and generate waste. In contrast, lab-grown diamonds have a much smaller carbon footprint, as they do not require the large-scale excavation of land or the energy-intensive processes associated with diamond mining.

Ethical Sourcing: Synthetic diamonds also offer a more ethical alternative to natural diamonds. The diamond mining industry has faced criticism over the years for issues related to human rights violations, including child labour and exploitation in conflict zones, known as “blood diamonds”. Synthetic diamonds, however, are produced in controlled laboratory settings where workers are paid fairly and the production process is transparent, making them a more ethical choice for those concerned with the origins of their jewellery.

Types of Synthetic Diamonds:
Gem-Quality Synthetic Diamonds: These diamonds are created for use in fine jewellery and have the same quality and appearance as natural diamonds. They can be cut into various shapes, including round, princess, emerald, oval, and more. Gem-quality synthetic diamonds are graded using the same criteria as natural diamonds, such as carat weight, colour, clarity, and cut.

Industrial Synthetic Diamonds: These diamonds are typically smaller, lower-quality diamonds that are used for industrial applications, such as cutting, grinding, and drilling. Industrial synthetic diamonds are produced in larger quantities and are not necessarily intended for use in jewellery. They are valued primarily for their hardness and durability, which makes them ideal for heavy-duty tools and machinery.

Distinguishing Between Synthetic and Natural Diamonds:
While synthetic diamonds are physically identical to natural diamonds, they can still be differentiated using advanced technology:

Inclusions: Synthetic diamonds may contain inclusions that are different from those found in natural diamonds. For example, synthetic diamonds grown using the CVD process often have distinctive inclusions, such as gas bubbles or metallic inclusions, which can be detected by a gemologist.
Growth Patterns: Under microscopic examination, the growth patterns of synthetic diamonds can be identified. HPHT diamonds, for instance, may display distinctive growth patterns in their crystal structure.
Spectroscopic Testing: Laboratory tests, such as infrared spectroscopy or ultraviolet-visible spectroscopy, can be used to determine whether a diamond is synthetic or natural.

Synthetic diamonds offer a cost-effective, ethical, and environmentally friendly alternative to natural diamonds. Created using advanced technology in a laboratory, these diamonds possess the same chemical structure and visual properties as their natural counterparts. Whether for fine jewellery or industrial uses, synthetic diamonds provide an option that caters to a growing market of consumers looking for diamonds at a lower price point, while still enjoying the beauty and durability of this remarkable gemstone.