De Beers, the world’s largest producer of rough diamonds by value, is leaping into the synthetic diamond jewellery business, undercutting the prices of others in the sector by using its existing Element Six business to compete in a business it had long fought against.
De Beers has for years spoken of the synthetic diamond business as one of the major risks to the company, which has mines in SA, Botswana, Namibia and Canada.
It has developed machines for its clients to quickly distinguish natural diamonds from synthetic ones as a way to challenge the encroachment of synthetic diamonds into diamond jewellery.
Now, the 85% Anglo American-held subsidiary is immersing itself in the laboratory grown diamond business, directly challenging others producing manmade diamonds with cheaper products via a company it has set up called Lightbox Jewelry.
“Consumers regard lab-grown diamonds as a fun, pretty product that should not cost too much, so we see an opportunity here that has been missed by lab-grown diamond producers.”
“Lab-grown diamonds are a product of technology, and as we have seen with synthetic sapphires, rubies and emeralds, and as the technology advances, products become more affordable,” commented De Beers Group CEO Bruce Cleaver.
De Beers will invest $94m into a new Element Six plant in Portland in the US over the next four years to deliver more than 500,000 carats a year of coloured synthetic diamonds to supply exclusively to Lightbox.
The other Element Six plants are in the UK and produce synthetic diamonds for industrial uses.
The diamond jewellery will be offered in the US initially, starting in September.
Prices will range from $200 for a quarter-carat diamond up to $800 for a full carat in earrings and necklaces, with the offering in pink, blue and white. De Beers plans to add more colours in the future.
New York Times cited analysts at Citibank forecasting synthetic diamonds to account for 10% of the global diamond supply in 2030 from 2% now.
Global diamond jewellery buying hit a record high of $82bn in 2017, a 2% increase on the previous year, De Beers said recently.
De Beers produced 33.5-million carats from its mines during 2017 and sold 32.5-million carats, realising revenue of $5.8bn, a drop of 4% compared with the previous year. The average selling price per rough diamond carat fell 13% to $162.
Cleaver did not give a projection of what the synthetic diamond sales revenue could be or the level of annual sales.