For years, companies such as DeBeers have dominated the industry with mined diamonds, but is that about to change? Recently, Pandora announced that they would start using lab-grown diamonds as they are almost indistinguishable from the real thing. However, some purists would argue that creating a diamond in a laboratory takes away its rarity and its value.
Lab diamonds are man-made and known as cultivated diamonds. They are manufactured using carbon, high pressure and extreme temperatures that replicate a similar process to how natural diamonds are formed. Lab-diamonds became commercially available in the 1980s. Fast forward to 2020 and according to the Guardian, demand for lab-grown diamonds “grew between 6m and 7m carats.”
Should more companies consider switching to lab-grown diamonds? Lab-grown diamonds are more affordable, more accessible, and more sustainable. Millennials and Gen-Z are looking for more sustainable producers. Companies such as Pandora are trying to reduce their costs, emissions, and carbon footprint, but the process of creating a lab-grown diamond still requires a lot of energy. In China, some companies are using coal-powered electricity to produce their lab-grown diamonds, whereas, in the US, some are using more renewable energy.
Leonardo DiCaprio invested in Diamond Foundry, one of the largest US producers of lab-grown diamonds, after starring in the film 'Blood Diamond'. This film helped shed light on the conflict in countries such as Sierra Leone, where diamonds are mined in war zones and sold to finance conflicts. The big well-known brands with loyal followers, such as De Beers and Tiffany & Co, continue to use mined stones. However, their customers still want to make sure they are buying conflict-free diamonds. Tiffany & Co are providing customers with a source of origin document that tracks the diamond back to the mine as a way of offering further reassurance.
During the pandemic, the diamond industry suffered due to lockdowns, travel restrictions and economic uncertainty. However, the outlook for the diamond market remains positive, and high-net-worth customers with a good disposable income will keep demand for diamonds high.
If you are importing or exporting lab-grown or mined diamonds, speak to one of our experts about our hedging strategies and see how we can help you save money.