How lab-grown diamonds are disrupting traditional mining and jewellery-making

Glittering diamonds sparkle the same ndash but there exist key differences between gems found naturally and those synthesised in labs While mined natural gems are more than a billion years old ndash formed under extreme pressure and temperature the rocks produced in a laboratory are relatively new and cost less than half the price of a mined diamondExboard member of Bharat Diamond Bourse Rajeev Kashikar informs ldquoThough trained jewellers can tell the difference between labgrown and natural diamonds theres nothing on the surface basis which one can distinguish between the twordquo Itrsquos this challenge of visual homogeneity between the two gems that has sparked a discourse in the diamond mining and jewellerymaking industryManmade gems have begun to reshape the 89 billion dollars global diamond jewellery market he adds As labgrown diamonds begin to replace traditional mining countries with economies dependent on diamond mining might be affected in permanent ways If not immediately then in due course manmade diamonds begin to consolidate into a large marketMimicking jewels in labsIn the west Indian city of Surat where 90 percent of the worlds diamonds are cut and polished diamond merchants are adopting a new technology In Smit Patels gleaming lab technicians drop crystal diamond lsquoseedrsquo slices into reactors mimicking the extreme pressure far underground Once the customer sees it for herself they are sold I believe this is the future said Patel director of Greenlab Diamonds and the third generation of his family to deal in diamondsReactors in labs such as Patels are pumped full of carboncontaining gases such as methane and the crystal grows under heat and pressure Rough diamonds are then taken to another facility where hundreds of workers design cut and polish the stones From seed to ringready jewels his team takes less than eight weeks to produce a diamond virtually indistinguishable from a mined gem Its the same product its the same chemical the same optical properties Patel saidLabgrown diamond exports from India tripled in value between 2019 and 2022 while export volumes rose by 25 percent between April and October 2023 up from 15 percent in the same period a year earlier according to the latest industry data published by Future Market Insights Weve grown at 400 percent year on year in volume Patel revealsReal vs machine made Dilemma for Indian buyersConsidering the deeprooted cultural habits of Indian consumers how extensively will labgrown diamonds LGDs penetrate the marketRamesh Kalyanaraman the executive director of Kalyan Jewellers shares that ldquoIn the case of labgrown diamonds we have yet to witness significant interest from consumers Furthermore fluctuating prices both globally and nationally contribute to the uncertainty regarding the future of labgrown diamondsrdquoWith a customercentric approach Kalyanraman has no immediate plans to introduce labgrown diamonds as a product segment until there is a clearer alignment between demand and supply Thus the consumer perception of machinemade diamonds also emerges as a crucial factor in deciding the fate of mined gemsWhile Richa Sinha recently went shopping and opted for a labgrown emerald In an interaction with Midday she says ldquoThe shopkeeper placed two stones on the table in front of us for a stone review We were immediately drawn to the lab option for its brilliance When we asked which was which we were surprised at the lab option and even more surprised to hear the stone was about INR 100757 while the nearidentical natural beside it was INR 1259472 I went with the lab alternative no contestrdquoLike any other industry even the diamond segment has a distinct structure that drives demand One such factor is the availability of alternatives for customers while another is the presence of substitutes Currently LGDs fall into the category of alternatives to natural diamonds It will take a considerable amount of time for synthetic gems to evolve into a true substitute for natural diamonds outlines KashikarHowever the global market share by value of labgrown gems rocketed from 35 percent in 2018 to 185 percent in 2023 states New Yorkbased industry analyst Paul Zimnisky Thus underscoring the rising consumer preference for labgrown alternatives to real diamondsSlump in demand for real diamondsIndian lab diamond makers exported 404 million carats between April and October 2023 a 42 percent yearonyear increase according to Indias Gem and Jewellery Export Promotion Council GJEPC In contrast natural diamond companies in India reported a more than 25 percent drop to 113 million carats over the same periodWhile natural diamond sales during the Covid19 pandemic surged as affluent shoppers sought to brighten lockdowns with luxury purchases demand dropped when economies reopened Top companies were left holding expensive excess stockAjesh Mehta from D Navinchandra Exports whose group is one of global diamond giant De Beers Groups authorised buyers or sightholders said it was the worst slump in his 30year career This is a different kind of lack of demand Mehta informs Everything came like a perfect stormFactors other than competition from labgrown rivals included slowing economic growth in the allimportant US and China markets as well as oversupply and sanctions against Russian roughcut diamonds Indias natural diamond industry was forced into a rare voluntary import ban on rough diamonds in OctoberImpact of budgetEarlier in July Finance Minister Nirmala Sitharaman proposed a reduction in basic customs duty on gold and silver to 6 percent and platinum to 64 percent The reduction in the basic customs duty on gold silver and platinum was welcomed as it has been a longpending demand of the gems and jewellery industrySpeaking of the impact this move shall have Kalyanaraman highlights that ldquoThe recent reduction in custom duty has led to a substantial increase in customer inquiries and showroom walkins across the country This clubbed with seasonal offers has played a critical role in further accelerating interest from millennial and GenZ consumers toward jewellery buying Addressing this consumer demographic jewellers are strategically aligning their offerings through deliberate expansion in our product portfolio to address changing preferencesrdquo This could also include labgrown gems however he didnrsquot hint at itDo LGDs promise any hope for the futureMachinemade diamonds were first developed in the early 1950s but it took technological leaps to create a commercially viable process less than a decade ago Producers boast that their gems come at a lower carbon cost although there are questions about whether the energyintensive process is any better for the environmentPatel said his lab uses solar energy from the local grid although others suck up electricity from carbonheavy sourcesAnd while mined gem sellers claim that conflict diamonds from war zones are kept off the market through the international Kimberley Process certification scheme lab producers argue their facilities guarantee a clean record Such environmental and humanitarian claims have helped make labgrown stones a popular choice among consumersAdditionally LGDs are generally considered better for the environment compared to mined diamonds Their production involves less land disruption and reduces the risk of habitat destruction and water contamination associated with mining Also they have a smaller carbon footprint since they avoid the extensive energy use and greenhouse gas emissions of traditional mining operations shares KashikarHowever LGDs donrsquot enjoy a monopoly in the markets The industry has had its problems too Supply has skyrocketed and prices have dropped drastically with wholesale prices down by 58 percent in 2023 alone according to industry analyst Edahn GolanRetailers in Surat share that the price of a lowerquality onecarat polished stone had fallen by more than half of it original value Additionally WD Lab Grown Diamonds the secondbiggest US producer of manmade stones filed for bankruptcy in October But Patel argues that falling prices will spur demand We knew that prices would come down because theres no monopoly in this industry he addsWith inputs from AFPAlso read Indian men rule the bling Statement jewellery takes centre stage