Mumbai – It was a process that took India’s natural diamond industry more than three decades to complete – the transformation from smaller, scattered manufacturing units to massive, centralised complexes with state-of-the-art equipment.
The country’s emerging lab-grown diamond industry has done the same in just a few years.
At the pinnacle of this new segment of the industry are mega-sized factories, employing thousands of skilled artisans and producing millions of carats.
Consider companies such as Greenlab Diamonds, Lumex or Kira; some of the networks they have created are staggering.
Greenlab has more than 1,000 reactors, 2,500 skilled employees and an annual production capacity of 200,000 carats.
Lumex, which describes itself as an agile marketing and distribution company that can scale its operations according to market conditions, has access to a network of suppliers that can supply the market with up to 200,000 carats of polished diamonds.
And Kira, just a few months old, lays claim to being the world’s largest producer at the moment, with a 700,000 square foot facility in Surat employing 2,500 people.
Much of the industry uses so-called green energy, such as solar or wind power, and focuses on some of the now popular sustainable development goals – women’s empowerment, energy-efficient processes and recycling materials wherever possible, to name a few.
And most, if not all, of those at the helm are young professionals with roots in families with a long history in the natural diamond business.
It seems hard to believe that this transformation is taking place against the backdrop of a major price collapse.In his September State of the Diamond Market Report, industry analyst Paul Ziminsky noted, “In the third quarter of 2023, a sample of 1- to 3-carat lab-grown diamonds offered at retail will be priced at an average discount of 80 percent to natural diamonds of the same quality.
He pointed out that the average amount spent on engagement rings in the United States in 2023 (approximately $5,500 to $6,500) could buy either a 1-carat round natural diamond or a 2.75-carat lab-grown diamond.
Five years ago, the cost of a 1-carat natural diamond was equivalent to only a 1.4-carat lab-grown diamond.
Data provided by Edahn Golan, another analyst who tracks trends in retail diamond jewellery sales in the US, shows that prices for lab-grown diamonds were down 28 per cent year-on-year in August.
He reports, “The price gap between natural and lab-grown diamonds is wide and growing. In January 2020, the retail price of a 1-carat round lab-grown diamond was 35 percent less than a comparable natural diamond … Currently, the price gap is 76 percent, even as the price of natural diamonds is falling.”
The gap is even wider at the wholesale level, with a discount of more than 90 per cent, which is 10 per cent higher than a few years ago, observers say.
According to the Gem & Jewellery Export Promotion Council, exports of lab-grown polished diamonds are down 27 percent year-on-year in the April-August 2023 period, falling to $562.5 million from $765.9 million a year ago, although industry sources say that in carat terms, exports are at last year’s levels.Major players in the lab-grown diamond manufacturing and distribution segments seem relatively unperturbed by the fall in prices.
Vishal D. Mehta of Lumex, which has integrated operations from the trading to the retail stage of the pipeline, said, “Such trends reflect a market that is trying to find the balance between supply and demand and the appropriate level of pricing. We have seen this in other industries, such as electronics, where technology creates new products and segments, and there is rapid expansion once the changes are accepted”.
Smit Patel of Greenlab Diamonds said there is currently “overcapacity in production” and the “increase in supply has outstripped consumer demand”.
The industry has moved beyond the initial price levels set during the “high demand, limited supply” phase. Competition has increased, pushing prices down, even though demand has also grown steadily in recent years.
Rajesh Lakhani, Partner at Kira, says: “Prices were relatively high earlier and there was a need for stability and normalcy, which has now been achieved. The sector is moving in a positive direction, even now we are seeing several new traders and retailers every day expressing interest in buying loose lab-grown diamonds or jewellery”.
Analysts say that even at the lower price levels, manufacturers are able to cover their production costs.
Although there has been some accounting loss in the value of stock held, including goods issued on credit, the overall loss in value is much less than it would have been for companies in the natural diamond segment.Capex (capital expenditure) in the sector is also low for the time being. Some of the infrastructure at each stage of the lab-grown diamond pipeline, be Mumbai – It was a process that took India’s natural diamond industry more than three decades to complete – the transformation from smaller, scattered manufacturing units to massive, centralised complexes with state-of-the-art equipment.
The country’s emerging lab-grown diamond industry has done the same in just a few years.
At the pinnacle of this new segment of the industry are mega-sized factories, employing thousands of skilled artisans and producing millions of carats.
Consider companies such as Greenlab Diamonds, Lumex or Kira; some of the networks they have created are staggering.
Greenlab has more than 1,000 reactors, 2,500 skilled employees and an annual production capacity of 200,000 carats.
Lumex, which describes itself as an agile marketing and distribution company that can scale its operations according to market conditions, has access to a network of suppliers that can supply the market with up to 200,000 carats of polished diamonds.
And Kira, just a few months old, lays claim to being the world’s largest producer at the moment, with a 700,000 square foot facility in Surat employing 2,500 people.
Much of the industry uses so-called green energy, such as solar or wind power, and focuses on some of the now popular sustainable development goals – women’s empowerment, energy-efficient processes and recycling materials wherever possible, to name a few.
And most, if not all, of those at the helm are young professionals with roots in families with a long history in the natural diamond business.
It seems hard to believe that this transformation is taking place against the backdrop of a major price collapse.In his September State of the Diamond Market Report, industry analyst Paul Ziminsky noted, “In the third quarter of 2023, a sample of 1- to 3-carat lab-grown diamonds offered at retail will be priced at an average discount of 80 percent to natural diamonds of the same quality”.
He pointed out that the average amount spent on engagement rings in the United States in 2023 (approximately $5,500 to $6,500) could buy either a 1-carat round natural diamond or a 2.75-carat lab-grown diamond.
Five years ago, the cost of a 1-carat natural diamond was equivalent to only a 1.4-carat lab-grown diamond.
Data provided by Edahn Golan, another analyst who tracks trends in retail diamond jewellery sales in the US, shows that prices for lab-grown diamonds were down 28 per cent year-on-year in August.
He reports, “The price gap between natural and lab-grown diamonds is wide and growing. In January 2020, the retail price of a 1-carat round lab-grown diamond was 35 percent less than a comparable natural diamond … Currently, the price gap is 76 percent, even as the price of natural diamonds is falling.”
The gap is even wider at the wholesale level, with a discount of more than 90 per cent, which is 10 per cent higher than a few years ago, observers say.
According to the Gem & Jewellery Export Promotion Council, exports of lab-grown polished diamonds are down 27 percent year-on-year in the April-August 2023 period, falling to $562.5 million from $765.9 million a year ago, although industry sources say that in carat terms, exports are at last year’s levels.Major players in the lab-grown diamond manufacturing and distribution segments seem relatively unperturbed by the fall in prices.
Vishal D. Mehta of Lumex, which has integrated operations from the trading to the retail stage of the pipeline, said, “Such trends reflect a market that is trying to find the balance between supply and demand and the appropriate level of pricing. We have seen this in other industries, such as electronics, where technology creates new products and segments, and there is rapid expansion once the changes are accepted”.
Smit Patel of Greenlab Diamonds said there is currently “overcapacity in production” and the “increase in supply has outstripped consumer demand”.
The industry has moved beyond the initial price levels set during the “high demand, limited supply” phase. Competition has increased, pushing prices down, even though demand has also grown steadily in recent years.
Rajesh Lakhani, Partner at Kira, says: “Prices were relatively high earlier and there was a need for stability and normalcy, which has now been achieved. The sector is moving in a positive direction, even now we are seeing several new traders and retailers every day expressing interest in buying loose lab-grown diamonds or jewellery”.
Analysts say that even at the lower price levels, manufacturers are able to cover their production costs.
Although there has been some accounting loss in the value of stock held, including goods issued on credit, the overall loss in value is much less than it would have been for companies in the natural diamond segment.Capex (capital expenditure) in the sector is also low for the time being. Some of the infrastructure at each stage of the lab-grown diamond pipeline, be
