Natural Diamonds Face Pressure from Lab-Grown Alternatives

Natural Diamonds Face Pressure from Lab-Grown Alternatives

Synthetic gems are transforming the $89 billion global diamond jewellery market

While sparkling with equal brilliance, there exist fundamental disparities: naturally mined gems, aged over a billion years, contrast with lab-forged counterparts, which are newer and cost less than half the price. Synthetic gems are reshaping the $89 billion global diamond jewellery market, particularly in Surat, the western Indian city responsible for cutting and polishing 90 percent of the world's diamonds.

Within Smit Patel's immaculate laboratory, technicians immerse crystal diamond "seed" slices into reactors simulating immense subterranean pressure. "After witnessing it firsthand, customers are convinced. I firmly believe this represents the future," asserts Patel, director of Greenlab Diamonds, continuing his family's three-generation legacy in diamonds.

From seed to polished jewel, Patel's team crafts a diamond nearly indistinguishable from a mined gem in less than eight weeks. "It's the identical product, with identical chemical composition and optical properties," Patel affirms. Between 2019 and 2022, India's exports of lab-grown diamonds tripled in value, with export volumes rising by 25% between April and October 2023, a substantial increase from the previous year.

Reactors in labs like Patel's infuse carbon-containing gases into the mix, fostering crystal growth through heat and pressure. Subsequently, rough diamonds undergo design, cutting, and polishing processes by hundreds of workers at another facility.

According to industry analyst Paul Zimnisky, the global market share of lab-grown gems surged from 3.5% in 2018 to 18.5% in 2023, expected to surpass 20% this year, exacerbating existing pressures on an industry grappling with geopolitical turmoil and subdued demand.

While machine-made diamonds emerged in the 1950s, recent technological advancements have rendered the process commercially viable only in the past decade. Advocates highlight the lower carbon footprint of lab-grown gems, although concerns linger regarding the energy-intensive production process. Patel emphasizes his lab's utilization of solar energy, yet acknowledges others drawing power from carbon-heavy sources. Moreover, while the Kimberley Process ensures conflict-free natural diamonds, lab producers assert their facilities guarantee ethical sourcing.

These environmental and ethical claims have contributed to the popularity of lab-grown stones, particularly in engagement rings, with 36% of diamond engagement rings sold in the US utilizing lab-grown gems by February 2023. Facilitating this shift are numerous companies in China and India, both prominent producers of synthetic stones.

Indian lab diamond exporters witnessed a 42% year-on-year increase in carat exports between April and October 2023, contrasting with a 25% drop in natural diamond exports over the same period. Despite natural diamond sales surging during the pandemic, demand waned upon economic reopening, leaving top companies burdened with excessive inventory.

In response to the plummeting prices and oversupply, India's natural diamond industry initiated a rare voluntary import ban on rough diamonds in October, striving to recalibrate amidst adverse market conditions. Despite challenges encountered by the lab-grown industry, falling prices are expected to stimulate demand, driving its continued growth and evolution. Ultimately, as customers gravitate towards more affordable and ethically sourced options, lab-grown diamonds are poised to maintain their ascent in the global jewellery market, embodying a modern and conscientious approach to luxury adornment.

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