What will be the value of synthetic diamonds?
20 June 2019 /
Now that diamonds can be made in laboratories, what will happen to their exclusivity and value?
Technology made widely available in the last couple of decades allows diamond manufacturers to grow authentic diamonds in a lab setting. Identical to mined diamonds in terms of aesthetic and chemical properties, the availability of real diamonds for approximately 30 to 40 percent less than the cost of mined diamonds has big diamond-mining companies worried — and for good reason!
Not only do these lab-made diamonds possess identical carbon atom structures and optical properties, they are also an eco-friendly alternative to “blood diamonds”. Not all diamonds plucked from the Earth are considered “blood” diamonds, but a large percentage of them come from war-stricken areas under harsh, often forced, labor conditions — and their profits have been used to fuel wars and conflict for years.
What is the big concern? The diamond industry has marketed Earth-plucked diamonds as rare and highly-exclusive — which is not actually the truth — rather just a clever marketing tactic that’s been used for more than half a century.
What will happen to the value and exclusivity of mined diamonds now that real diamonds can be lab-grown? We examine this question in depth, by taking a look at the differences between man-made diamonds, simulated diamonds, and mined diamonds; the processes used to grow real diamonds in a lab; the history of the diamond industry; and the implications of the widespread availability of lab diamonds in the market.
Synthetic diamonds are not simulated, or fake diamonds
First and foremost, one thing needs to be clear. Synthetic, or lab-grown diamonds are not, I repeat, are not the same as imitation or simulated diamonds. For some reason, man-made diamonds sometimes get wrongly lumped into the category of diamond simulants, which are stones that resemble diamonds. These fake diamonds have been around and used in jewelry for centuries. The most well-known of these imposters is probably Cubic Zirconia.
A far cry from simulated diamonds, lab-grown diamonds are real diamonds. These diamonds are identical in terms of color, shape, form, chemical makeup, and appearance to mined diamonds. In fact, even diamond experts are unable to tell the difference between a diamond plucked from the Earth and a diamond grown in a laboratory without the assistance of a special machine used to test the origin of a diamond.
One way to remember this important distinction is a short little pun on words:
- Synthetic = Authentic
- Simulated = Imitated
What are the differences between the processes used to create diamonds in laboratories and the Earth’s diamond-creation process?
Mined diamonds are created over millions of years under the ground through the combined effects of high pressures and high temperatures that naturally occur deep within the Earth’s mantle. However, diamonds created in a laboratory can be grown in as little as six to ten weeks! It doesn’t take a rocket scientist to realize that the time it takes to create each type of diamond is a major difference and could affect the value and scarcity of diamonds.
The following two processes are the only ones currently being used by diamond manufacturers (a couple other methods do exist that, but they are not as effective and not used in the commercial synthetic-diamond industry, yet):
- High-Pressure-High-Temperature (HPHT) — This is the method we use at Heart In Diamond to create diamonds from the ashes of a loved one or hair from anyone, including pets. How do we create diamonds from organic matter? By using a chemical process, pure carbon is extracted from the sample of hair or ashes, which is used to create the diamond. An advanced HPHT machine recreates an environment similar to the one found deep within the mantle of the Earth where diamonds are formed naturally. The sample of carbon is combined with a diamond-growing foundation and then placed inside of this machine. Once inside, the carbon is exposed to temperatures in excess of 2000o Celsius and pressures in excess of 60,000 atmospheres. The application of such conditions grows the carbon atoms into the crystalline matrix — that is a diamond — in as little as six to 12 weeks.
- Carbon Vapor Deposition (CVD) — This process involves placing a small “seed” diamond inside a vacuum chamber, and blasting fragments with heat, chemicals, and gases that simulate the natural process. Slowly, the carbon deposits from the chemicals accumulate on the diamond “seed”. The carbon grows by copying the crystal structures of the diamond. This process takes an average of six to ten weeks.
Regardless of which process is used to grow the diamond, once that stage is complete, it is sent to be cut and polished by the same experts that work with mined diamonds. Also, no matter which process is used, once it is underway, the manufacturers have little control over the development, making laboratory diamonds as unique as those found in nature. With regard to chemical, optical, and physical characteristics — the laboratory diamonds are indistinguishable from mined diamonds, to the naked eye.
Cultured diamonds are considered to be purer than their Earth-grown counterparts. In fact, the most-experienced scientists can produce a diamond that is less than one atom in a trillion impure.
What is the history of the diamond trade industry?
Until the 1940s, diamonds weren’t considered special. Then, diamond-industry monster De Beers (who owned the majority of all diamond mines at that time), undertook their famous marketing campaign, “Diamonds are Forever” according to an article in the New York Times.
It was during this campaign that De Beers restricted the supply to keep the price and desirability high. This caused many Americans to buy them in engagement rings as they symbolized everlasting love. Strategic marketing paid off and the demand for diamonds boomed as a result.
The effect of being able to increase the price of a good and increase the demand at the same time is called the Veblen pricing effect. Diamonds are now perceived as scarce.
How is the $80 billion industry reacting to the availability of man-made diamonds in the market?
What are the advantages of buying lab-grown diamonds?
The world is moving on and machine-made diamonds could be viewed as the “space age” of the industry. With cultivated diamonds, the options are greatly increased from colors to shapes, providing ample opportunity to personalize an authentic diamond. Celebrities such as Leonardo DiCaprio, are investing in this industry which makes it of interest to other people (read more about DiCaprio’s investment in the full article from CNN).
One reason people love lab diamonds is because they have less of an environmental impact than mining does. Films like “Blood Diamond” changed people’s opinions about diamonds because they exposed how the money from diamond mining was being channeled into wars in Africa. Hence, why Leonardo DiCaprio made his investment so that Americans do not have to feel guilty about buying and wearing diamonds.
Widespread use of lab-grown diamond technology means that diamonds can be produced right here in the U.S. without the impacts on the environment and humanity that mining has. This makes them a great choice for the eco-friendly consumer.
Additionally, the cost. The price of a lab diamond that is equally-sized and exhibits the same color, clarity, and cut of a mined diamond can be half the price! This is leading a number of retailers in the U.S. to keep them in stock.
How the mined-diamond industry is affected by the influx of synthetic diamonds
Considering the advantages of lab-grown diamonds, the mined-diamond industry is obviously fighting hard, blocking the development path of those diamonds being created in laboratories. For example, the Federal Trade Commission has been asked to consider permitting “cultured” to be added in front of man-made versions, as opposed to “lab-created,” or “laboratory-grown”. If a diamond is referred to as synthetic, it is less likely to be sold. However, if it is called “cultured”, this will increase the interest.
Many predict that the wholesale price of laboratory-created diamonds will fall as the technology improves and demand increases. Currently, only ten percent of the diamond market is made up of cultured diamonds, but sales are steadily increasing. Many people have expressed a desire to have a mined diamond over a lab diamond. However, some in the trade feel it is only a matter of time, as above-ground diamonds have not had sufficient marketing or exposure yet. A recent article in Forbes Magazine predicts that sales will increase from the $150 million current revenue value to $1 billion by 2020, which outpaces mined diamonds.
Committing to a lab-grown diamond is a personal choice
The choice of whether to buy a mined diamond or a lab diamond is very personal. Mined diamonds remain a popular choice for many, but consumers should be aware of the environmental and humanitarian impact associated with them.
Morals need to be balanced with the consumer’s budget in mind, which is why lab-grown diamonds appeal to a growing number of people. Because of their advantages, with consistent quality marketing and the removal of any stigmas by educating the public, the future will likely see less mined diamonds and their value and sense of scarcity will undoubtedly take a hit. However, considering the fact that lab diamonds are a fraction of the cost, their value and price point will not likely change anytime soon.