One of the most widely reported developments in the precious stone market relates to the appearance of synthetic diamonds and the effect they may have on levels of supply and demand going forward. De Beers, who are ironically also developing their own manmade diamonds, have a dedicated small team of scientists working in a lab in Maidenhead in the UK, with the aim of identifying lab-grown diamonds from their natural counterparts, a task that is now almost impossible for the naked eye alone. Synthetic diamonds still only account for a very small market share but this is rising and a recent estimate from Morgan Stanley predicted they could account for up to 1 in 10 rough diamond sales by the end of the decade. They have the same chemical and physical properties as natural stones and their outward appearance is identical. They are also hard enough to be used for industrial purposes and they can currently be marketed without any reference to their provenance.
(A lab created diamond - the difference from a natural stone is imperceptible to the naked eyed)
The potential threat of an infinite supply of a product that has relied heavily upon it's rarity to underpin its value is plain to see. That is why the industry heavy-weights are fighting back. De Beers have created an array of devices that wholesalers, dealers and manufacturers can employ to identify synthetic diamonds and the GIA (Gemmological Institute of America) firmly believe they can now separate the manmade from the artificial in their labs. In the case of De Beers' parent company, Anglo-American, the stakes could not be higher as they are starting to sell off much of their non diamond production in order to focus more heavily on precious stones. De Beers now accounts for almost half the group's revenue! Current estimates of annual production of artificial stones sits at around 250,000-350,000 carats of rough, which actually pales into insignificance when one considers that over 135 million rough carats are mined each year. In fact Morgan Stanley recently stated that they did not expect synthetic diamonds to ever displace a large percentage of global output.
(An opencast diamond mine in Russia - mined diamonds still account for over 98% of the market)
It has been noted by some commentators that as the synthetic stones are around 20-30% below the market price of natural diamonds, they may actually sit in the market place alongside their mined counterparts as a cheaper alternative. Indeed, the capital costs involved in producing lab-cultivated diamonds are only a fraction below the cost of mining the stones. De Beers synthetic diamond production laboratory, known as 'Element Six,' produces manmade stones for industrial uses (such as precision cutting edges and drilling equipment but it is rumoured to be on the cusp of developing jewellery grade stones in the near future. The process of cultivating the lab diamond starts with a natural stone or another lab grown one which is used as a 'seed' to grow more precious gems. Carbonaceous gases are introduced at very high temperatures and pressures in order for the crystals to form new layers over days and weeks. When it comes to smaller stones, detection becomes harder as the cost per carat inspected increases. As with all new technologies, these costs will reduce over time and the illicit market entry of synthetic small stones will become harder and harder.
(State of the art: 'Element 6' De Beers synthetic diamond research and development centre)
No clearer an example of this is the De Beers 'PhosView' instrument which costs around £3,500 per unit, well within the budget of even the smallest retailer or manufacturer. This device, and many like it, exploit the unique properties of ultraviolet (UV) light to detect lab-grown stones from their natural phosphorescent glow, a rare phenomenon in natural diamonds. These machines proved so popular they sold out almost straight away. The attraction of mined diamonds in the words of Russell Shor, a senior analyst at the GIA is that "they come from deep, from Mother Earth. They're billions of years old, it's probably the oldest thing we can buy." Intriguingly some of the new synthetic diamond producers are actually using the argument that the mining industry's ethics have let it down for many years and this new innovation makes it possible to purchase a diamond certain in the knowledge that it is not a 'blood' or 'conflict' stone and no environmental or social damage or harm has been caused by its extraction.
(Compact, portable & priced at under £3,500, the De Beers PhosView can detect synthetic stones)
Just as De Beers once sought to drive up their sales by promoting the entire market in which they operate, they are now trying to protect their dominant position by investing heavily in making available to all the equipment necessary to identify a synthetic stone from a natural one. In the words of their Executive Vice-President, Stephen Lussier, "that's important because consumers need to be confident, when they are spending what is a large amount of money on a precious diamond, that it is indeed the precious natural diamond that they think it is." This couldn't be more crucial as global diamond sales are at their highest ever, crossing $80bn in 2014, and they're set to rise further over the coming years. It is clear that the premium market will always show a clear preference towards natural stones and "there's going to be a place for synthetic diamonds but not at the top end" (Charlie Rosario, Senior VP Lazare Kaplan International diamond manufacturers and distributors).
(Global diamond market, rising supply driven by rising demand - Source: Rapnet.com)
It is clear that as many of the major diamond production sites near exhaustion, such as the Argyle in Western Australia, there may be room for both synthetic and natural diamonds to coexist and carve out their individual niches. There is also the argument that competition provides both opportunity and value for money in equal measure and it could even guarantee that we can continue to enjoy the pleasures of making and wearing diamonds well into the often uncertain future. Given that diamonds, along with many other precious stones, are thought to exist in abundance on meteors, commits and other celestial bodies, we may find that in years to come synthetic stones are competing with natural as well as extraterrestrial diamonds for their share of this lucrative market.