Lab-grown diamonds have been making headlines lately.
If you keep a bit of an eye on the celebrity, fashion and jewellery sectors, you might’ve noticed the words ‘lab-grown’ and ‘lab-created’ popping up in relation to diamonds and fashion jewellery.
In the news this year, Leonardo DiCaprio was reported as having a high-profile interest in a diamond manufacturing group called Diamond Foundry. Victoria’s Secret’s models Martha Hunt and Bambi Northwood-Blyth both showcased lab-grown diamond jewellery for Lark & Berry at the 2018 Cannes Film Festival. And De Beers launched a lab-grown jewellery brand called ‘Lightbox’.
And, most importantly for the industry, in June the USA’s Federal Trade Commission (FTC) released new guidelines as to how diamonds can be described. Whether they come out of the ground or out of a laboratory.
Why should you care?
If you’re going to be in the market for a meaningful piece of jewellery in the near future, you need to know what’s going on.
Lab-grown diamonds could be a good option for your engagement ring or other piece of important jewellery as their pricing is already very competitive. (By the way, we also offer recycled and vintage diamonds if you want a mined diamond without the new diamond price tag.)
First though, what are Lab-grown diamonds?
The name pretty much says it all. They are, in fact, diamonds. Essentially they’re optically, physically and chemically identical to their natural counterparts. The only difference is they’re grown in a laboratory environment.
In their latest ruling, the FTC confirms lab-grown diamonds are indeed diamonds. It’s just they can’t be described as such without an appropriate qualifier like ‘man-made’, ‘laboratory-grown’, ‘cultured’ or similar.
Also, the FTC have ruled that lab-created diamonds cannot be described as synthetic, simply because they’re not. You can’t have a synthetic element. (You can’t have synthetic carbon, and that’s all diamonds are – carbon.)
By the way, lab-grown diamonds are not a new product. They’ve been on the market since the 1990s. Early development started in the 1940s and they now represent about 3% of global diamond production. (Source: https://betterdiamondinitiative.org/lab-grown-diamond-annual-production-soars-4-2-million-carats/ ).
Lab-grown diamonds are typically less expensive and will possibly become even more affordable
Until recently, lab-grown diamonds were sold for around two-thirds the price of regular* mined diamonds. But since De Beers announced they were going into the lab-grown diamond market earlier this year, prices of lab-grown diamonds have dropped to a small degree.
The fuss we’re seeing right now is because De Beers are selling their lab-grown white diamonds for around $USD800/carat. Very roughly, that’s in the region of one-tenth the price of an equivalent diamond taken out of the ground.
Importantly, De Beers do not grade their lab-grown diamonds. Obviously there’s a cost saving in not doing so, but the move also has the potential to taint the value of all lab-grown diamonds, not just those produced by De Beers. (Though we’ve yet to see much evidence of this in the market. Probably because the De Beers’ product is positioned as low-cost jewellery.)
Coupled with increasing production efficiencies, you should expect more downward adjustment in the price of Lab-grown diamonds. It will certainly be very interesting to see how the major producers of lab-created diamonds respond to the De Beers move.
Perhaps all the ruckus is about Millennials?
This is speculation but, here’s the thing, lab-grown diamonds have a hugely smaller carbon footprint than mined diamonds. And carbon cost is certainly a consideration for Millennials.
How huge? Whilst we’re somewhat skeptical about the figures, the International Grown Diamond Association (IGDA) claims that mined diamonds carry a carbon footprint of around 57,000g per carat. Whereas lab-grown diamonds generate only 0.028g of carbon per carat. That’s a claimed 1.5 BILLION times less.
Even if this carbon saving is grossly exaggerated, it’s still likely lab-grown diamonds have a drastically lower carbon cost than their mined counterparts – giving them appeal to Millennials. (Certainly Diamond Foundry are happy to report their production methods are certified carbon-neutral. This gives some credibility to the idea that lab-grown diamonds can have a zero carbon cost.)
Furthermore, the mined diamond industry as a whole has so far failed to deliver a transparent supply chain such that consumers cannot, in most instances, know whether the diamonds they’re buying are ethically sourced. Again, this is something of increasing importance to Millennials.
Perhaps De Beers is countering the threat of ultra-low carbon cost, ethically sound lab-grown diamonds by shifting the consumer’s perceived value of them to “cheap” – akin to Cubic Zirconias? (Of course, this is an entirely legitimate business strategy – assuming this is indeed their strategy.)
What does all this mean to you?
If you are looking for a lab diamond engagement ring, Lightbox is not the place to find one. De Beers (at this point in time) have indicated they won’t be entering the ‘significant jewellery’ market with their lab-grown product.
From our experience, whether lab-grown or natural, handmade engagement ring customers prefer certified diamonds. Lightbox doesn’t offer that.
In De Beers’ own words, Lightbox is ‘fun’, ‘frivolous’ jewellery set with ungraded lab diamonds. It’s for those who want to treat themselves without breaking the bank.
The upshot is, if you’re hoping to be able to buy a ‘new’ certified, one carat lab-grown diamond for USD$800, that isn’t going to happen.
Since the Lightbox strategy was announced, the impact on the wholesale price of graded lab grown diamonds hasn’t been significant. At best the price drop has been around 10% since March.