A tectonic shift is taking place in the once-exclusive diamond industry as machines are now able to create these precious stones in a laboratory at a fraction of the cost. In fact, a report from Ars Technica indicated this week that the equipment needed to produce synthetic diamonds can be acquired on Alibaba for $200,000 right now.
Although the average consumer may not find this price tag attractive, jewelers are increasingly turning to synths to keep up with the market’s demand for cheaper yet still beautiful and appealing pieces.
Two methods are currently employed to create diamonds. The first is called High-Pressure High-Temperature (HPHT) and it consists of replicating the conditions that are necessary for a diamond to be produced, which is a high-pressure environment that is often only possible in the deepest helms of our planet Earth.
Meanwhile, a more advanced method known as Chemical Vapor Deposition (CVD) uses a different procedure involving the injection of carbon-rich gases at high pressures to produce these precious gems.
The machines used for HPHT are available at $200,000 while those employed for CVD cost more than twice that price.
The Science Behind Synthetic Diamonds
Lab-grown diamonds, as they are often known, were created in 1950 by an engineer from the General Electric company called Howard Tracy Hall. He managed to successfully produce the first synth by using the HPHT process.
The procedure consists of placing a smaller diamond – referred to as the seed – but in the form of graphite. The machine subjects the piece to high pressures and temperatures to recreate the conditions that produce natural diamonds. As a result, the carbon within the machine crystallizes and forms a larger diamond.
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Meanwhile, the CVD process occurs in a vacuum chamber where a diamond seed is also placed and bombarded with carbon-rich gases. These gases heat up to the point that they form plasma. The result is that pure carbon atoms stick to the seed and progressively melt with the seed to create a larger stone.
Although these machines may be accessible to the general public, the expertise needed to operate the equipment is another factor that may deter people from making such an investment.
HPHT operators need to find a source of high-quality graphite, catalysts like iron and cobalt, and invest in pressure and temperature control systems. Moreover, the CVD process requires a steady supply of gases including methane and hydrogen and other sophisticated industrial systems.
Price per Carat of Synths Drops 90% Since 2008
The economics of the diamond industry are being radically shaped by lab-grown pieces. The reason is the lower cost at which synths can be created. In 2008, the cost of producing a CVD diamond was $4,000 per carat.
As of 2024, that cost has been reduced to just $300 per carat – a 90% drop in 16 years. Young buyers are now being increasingly attracted to buy synths as they no longer see these precious stones as a symbol of status or at least not to the extent that previous generations did.
As Virginia Drosos, CEO of Signet Jewelers, noted in a recent earnings call: “Lab-created … [has] been broadly available in jewelry since 2019. So, the story of lab diamond pricing-dropping has been a consistent story over that time period.”
Impact on the Natural Diamond Market
Mined diamonds have seen their price drop by nearly 6% in 2024 and accumulate a 30% decline in the past two years. On the other hand, the market share of synths has been increasing rapidly and stands at 20% at the moment this is written.
The traditional diamond industry is now struggling as a result of this trend as diamonds were perceived to be rare and valuable before their lab-grown peers arrived. Companies like De Beers have opted to enter the market for synths through a subsidiary called Element Six.
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They have managed to gain an edge in this market by producing pieces that far exceed the necessary standard to be considered jewels and can be considered useful for high-tech applications.
Meanwhile, other prominent miners have preferred to enhance their operations and have developed the technology to identify and extract rarer pieces like a 2,492-carat that was discovered recently.
However, these technological advancements in natural diamond extraction have created an unexpected challenge: a glut of giant diamonds that are too large for typical jewelry use. This oversupply, combined with the increasing affordability of synthetic diamonds, is putting further downward pressure on diamond prices.
What Does the Future Hold for Diamonds?
As synthetic diamonds become increasingly accessible and affordable, the question emerges: what does this mean for the future of diamonds – both as jewelry and as industrial materials?
In the jewelry market, we will likely see a continued shift towards synthetic diamonds, particularly among younger consumers who may be more price-sensitive and less concerned with the traditional cachet of natural diamonds. The prices of these diamonds will likely only continue to drop as synthesis procedures are improved further.
However, there will always be a market for natural diamonds, particularly for high-end luxury pieces and among consumers who find subjective value in the idea of wearing or purchasing a stone that has been formed over millions of years in the deepest corners of earth.
In the industrial sector, the increasing availability of high-quality, low-cost synthetic diamonds could open up new applications. Synthetic diamonds are already used in a variety of industrial applications, from cutting tools to high-power electronics. As production costs continue to fall, we may see diamonds being used in even more diverse ways.
One intriguing possibility, as noted by engineer John Nagle, is the use of synthetic diamonds in consumer electronics. With synthetic diamonds now available “by the kilo, in plastic bags” he sees a future where products like smartphones may come with unbreakable diamond glass screens.
The rise of synthetic diamonds also has implications for the ethical and environmental issues that are often linked to the diamond industry. Traditional diamond mining has long been associated with environmental degradation and, in some cases, human rights abuses. Synthetic diamonds, which are produced in controlled laboratory conditions, eliminate many of these issues.
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However, it’s worth noting that synthetic diamond production is not without its own environmental impacts. The machines used to produce these diamonds consume significant amounts of energy which could result in a sizable carbon footprint.
In any case, the availability of diamond-generating machines on public marketplaces like Alibaba marks a new chapter in the long history of diamonds. It represents a step forward in the democratization of this once-exclusive product that would have been unthinkable just a few decades ago.
As synthetic diamonds become the go-to alternative for young generations, the industry will need to adapt to survive.
For consumers, this new era offers more choices than ever before. Whether opting for a natural diamond with billions of years of history or a lab-grown stone that represents the pinnacle of human scientific achievement, buyers now have an unprecedented range of options.