In this period, the company sold nearly 5,000 more carats of diamonds, including 11 stones valued at over $1 million each, contributing $29.5 million to its revenue, according to its latest earnings report released on Tuesday.
"The volume of ore processed through our plant increased during H1 2024 due to enhanced plant stability and operational efficiencies, leading to higher diamond recovery and increased sales," a company spokesperson noted. When asked about the impact of lab-grown diamonds, the spokesperson emphasized that Gem Diamonds remains attuned to market developments.
This report arrives at a challenging time for the diamond industry. Prices for rough diamonds have fallen, influenced by factors such as waning consumer spending and the growing appeal of more affordable lab-grown diamonds. The industry has faced significant setbacks, including De Beers, which historically dominated diamond mining. De Beers has seen diamond prices fluctuate as consumers increasingly opt for lab-grown alternatives. Last month, the company announced it would reduce production as it navigates its future post-sale by Anglo-American.
The preference for lab-grown diamonds, especially among younger consumers, is reshaping the market. Lab-grown diamonds now make up nearly a fifth of global diamond sales. Their lower prices, often up to 80% less than natural diamonds, combined with concerns over the ethical sourcing of natural stones, have driven this shift, particularly in an inflationary environment where consumers are seeking value.
Jewellery companies are responding to this trend. Pandora, for instance, shifted to lab-grown diamonds in 2021 and has seen strong business growth. CEO Alex Lacik recently predicted that within the next decade, lab-grown diamonds could surpass natural diamonds in popularity, further challenging the traditional diamond market.
Additionally, there’s a growing interest in alternative gemstones like rubies and sapphires for engagement rings, signalling a broader shift in consumer preferences.
The global market for lab-grown diamonds is projected to reach $59.2 billion by 2032, more than doubling its 2022 value, according to Allied Market Research. As lab-grown diamonds continue to be cut, polished, and sold at a fraction of the cost of natural diamonds, the industry faces a long-term transformation.
While companies like De Beers have experimented with offering both natural and synthetic diamonds, they found that pursuing lab-grown alternatives wasn't economically viable. However, as the production of lab-grown diamonds becomes faster and cheaper, the gap between these and natural diamonds could create new opportunities.
"We’re nearing a pivot point where the profitability of selling lab-grown diamonds is declining compared to the past few years," said Paul Zimnisky, an independent industry analyst, in a July interview with the Financial Times. "This could spark a renewed interest in natural diamonds, as retailers are primarily focused on profitability, not loyalty to a specific type of diamond."
The future remains uncertain for companies like Gem Diamonds, which exclusively mines natural diamonds. Whether the shift towards lab-grown diamonds will ultimately reshape the market or whether natural diamonds will see a resurgence remains to be seen.
