The recent JCK Las Vegas jewellery show witnessed a significant announcement from De Beers’ CEO Al Cook. The company, renowned for its natural diamonds, declared a strategic shift away from producing lab-grown diamonds (LGDs) for jewellery, pivoting instead to their industrial applications.
Strategic Shift
De Beers has spent the last six years exploring the LGD jewellery market through its Lightbox brand. However, after careful evaluation, the company concluded that the economics of LGDs for jewellery do not justify continued investment. Al Cook emphasized, “As the value of lab-grown diamonds continues to fall, their focus increasingly shifts to lower-priced fashion jewellery rather than the meaningful pieces people buy to celebrate the key moments in life.”
The company plans to draw a clear distinction between lab-grown and natural diamonds in the jewellery market. This decision aligns with their broader strategy to capitalize on the technological potential of synthetic diamonds. “We see the main long-term opportunities for synthetic diamonds, as they are known in the tech space, being in a range of exciting technology applications due to the extreme physical properties that make them ideal for use in high-value applications like 6G technology, semiconductors, and quantum computing,” Cook explained.
Focus on Industrial Applications
De Beers' subsidiary, Element Six, which has been at the forefront of producing LGDs using chemical vapor deposition (CVD) technology for Lightbox, will now shift its focus entirely to industrial uses. As the cost of synthetic diamonds continues to decrease, new opportunities for their application in advanced technologies emerge. Element Six is currently involved in a research collaboration with Amazon Web Services to explore the use of LGDs in quantum computing and is working with the Department of Defense on advanced military communication and electronics applications.
Consolidation and Cost Efficiency
To support this strategic shift, De Beers will centralize Element Six’s production from three facilities into its state-of-the-art $94 million plant in Portland, Oregon. “This starts with concentrating all our resources in a single world-class CVD hub,” said Cook. Additionally, the company aims to streamline other corporate operations to achieve over $100 million in annual cost savings.
Economic Rationale
The decision to exit the LGD jewellery market is underscored by stark economic realities. According to Edahn Golan Tenoris data, LGD prices have fallen dramatically – a 34% decline in wholesale prices and a 25% drop at retail from January 2020 to April 2024 for two-carat stones. In contrast, natural diamond prices are projected to rise by 3% to 5% compound annual growth rate (CAGR) through 2032 due to tightening supply.
Future Outlook
De Beers’ decision is part of its broader Origins strategic plan, which aims to boost EBITA growth to just under $1.5 billion by 2028, up from under $100 million in 2023. By focusing on natural diamonds and leveraging the technological advantages of synthetic diamonds, De Beers is positioning itself to lead in both the jewellery and industrial markets.
This strategic pivot underscores De Beers’ commitment to innovation and market leadership. By realigning its resources and expertise, the company is set to redefine the role of diamonds in both traditional and emerging markets.
