The diamond industry is experiencing a significant transformation as lab-grown diamonds (LGDs) gain traction amid market shifts. Following a brief surge in demand for diamond jewelry during the pandemic, diamond miners are now contending with oversupply issues, prompting efforts to manage excess inventory. Natural diamond prices have plummeted by nearly 20% compared to a year ago, reversing a surge observed in 2022, although they remain higher than a decade ago.
Anglo American’s De Beers, the leading diamond producer by value, has responded to sluggish demand by scaling back its output. Meanwhile, Russian miner Alrosa, the world’s largest producer of rough diamonds by volume, ceased publishing sales data in early 2022 due to sanctions, reducing its output by 2.8% to 34.6 million carats last year.
The rise of laboratory-grown diamonds (LGDs) is seen as a major catalyst behind the industry’s current challenges. Unlike traditional miners, companies involved in LGDs are reporting positive outcomes. Pandora, the world’s largest jewelry maker by production volume, witnessed a notable success after shifting away from mined diamonds in 2021. By doubling its sales of lab-grown diamonds in the first quarter of the year, Pandora recorded an 87% revenue increase, attributing this surge to the use of lab-made diamonds in its largest market, the United States.
Consumer preference for more affordable and ethically sourced alternatives is driving the shift towards lab-grown diamonds. However, industry experts caution that this trend may not be permanent. While younger consumers show greater acceptance of lab-grown diamonds, older generations still favor mined stones, according to Alexander Lacik, Pandora’s chief executive.
Diamond industry analyst Paul Zimnisky highlights the rapid growth of lab-grown diamonds, with global sales reaching nearly $12 billion in 2022, marking a 38% year-over-year increase. However, Zimnisky anticipates a price decline for man-made diamonds akin to that of mined stones, with prices dropping by about 20% last year alone.
Jewelry maker Nightingale, offering both mined and lab diamonds, suggests that the rise of lab-grown gemstones could incentivize miners to adopt more transparent and ethical practices. While acknowledging that demand for mined diamonds won’t vanish overnight, Nightingale envisions a gradual transition towards a blend of ethically sourced mined and lab-grown diamonds, driven by consumer demand for ethical products, akin to past movements such as the opposition against blood diamonds.
