Real. Pure. Beautiful. Affordable. Precious. Synthetic diamonds have all the qualities that consumers want in their diamonds. And above all, synthetic diamonds cost less than mined diamonds. Does that mean they are less precious than mined diamonds? Certainly not! According to experts, the emotional value that mined-diamonds have come to hold is all man-made. Diamonds weren’t part of any tradition. Marketing tactics of certain diamond brands created the hype about making diamonds an integral part of engagements and traditions around the 1940s. Neither does a mined-diamond’s value appreciate or bring high resell values. Market experts suggest that investing in diamonds is a myth in itself.
But diamonds are definitely precious stones that carry beauty and make for beautiful jewelry pieces. The purpose of diamonds is being beautiful and real; lab-created diamonds meets both these requirements. Lab-grown diamonds are as real as mined diamonds with the same physical, visual and chemical properties. They are as beautiful, as sparkly and of the same quality as mined diamonds. One of the main differences between mined and real synthetic diamonds is the price.
In general, real synthetic diamonds are 20 to 30 % cheaper than mined diamonds.Why is that so? There are several reasons for the high prices of mined diamonds.
There are around 20 large diamond mines in the world, which produce the maximum number of diamonds. Only around 11 mines make up 60 to 70 percent of the world’s production of diamonds by carat. Diamonds are getting even rarer, hence the hype and market creates high prices for mined diamonds. (Source: www.cnbc.com)
It requires heavy machinery, tools, manpower and time. A lot of time and money is consumed in mining out just 1.4 carats of rough diamonds. All these expenses make the mined-diamonds much more expensive than lab-created diamonds.
Diamond producers and marketers have created myths and hype about the emotional and monetary value of mined-diamonds, which consumers have bought into. The prices of mined-diamonds are much higher than lab-created diamonds because of market strategies where producers have a high profit margin.
Miners and producers who mine rough diamonds, merchants, cutters and polishers who buy rough diamonds and then polish them, jewelry manufacturers and retailers who sell the jewelry to the consumers. Such a long value-chain automatically increases the prices of mined-diamonds. A number of synthetic diamond manufacturers have made it possible to reduce this value-chain and hence are able to cut down the final market price of lab-grown diamonds.
Demand of diamonds too is dictated by economic trends. Economic booms and recessions affect prices of diamonds. Diamonds are a luxury item and hence its demand growth is generally expected to be parallel the GDP growth. Slower GDP growth is not favorable to mined-diamonds industry.
Man-made diamonds are created with technological processes. Unlike the process of mining out rough diamonds that requires a large amount of financial investment, the process of growing diamonds in labs is comparatively cost effective. Lab-created diamonds are created inside growing chambers in machines in the labs. Each machine can produce a large number of diamonds multiple number of times, which makes diamond production cost effective.
Moreover, experts have constantly been innovating and introducing more efficient machinery and technology to produce diamonds in labs. Even diamond cutters are now using sophisticated computer technology to cut diamonds efficiently. High-tech laser cutting machines are used to cut and polish diamonds with the highest quality results, which is more cost-effective.
Synthetic lab created diamonds are man-made by technology and machinery. They are produced at great speed. Real synthetic diamonds take about two to three months to get ready in the labs. Compare this with the time taken for diamonds to form under the Earth. Mined diamonds take millions of years to form. What does that mean for the demand and supply of mined-diamonds? Mined diamonds cannot meet the high market demands.
On the other hand, the supply of high quality lab created diamonds can be controlled according to the demands, because they are produced faster by machinery. Experts suggest that the demand for mined-diamonds will soon outperform its supply, which will bring imbalance in the demand-supply ratio that affects prices of commodities. This is not the case of lab created diamonds; hence these diamonds can maintain stability and affordability.
A report by Better Diamond Initiative shows that global annual production of lab-grown diamonds has soared to 4.2 million carats from around 350000 carats two years back. (Source: www.betterdiamondinitiative.org, September 2017)
An article in Forbes by Pamela Danzinger titled, Diamonds Disrupted: How Man-Made Diamonds Will Disrupt The Mined-Diamond Industry, suggests that the $80 billion global diamond-mining industry is concerned and threatened by the rapidly growing man made diamond industry. The report further elaborates on price being one of the top three considerations that drives consumers’ purchasing decision.
The report is backed by analysis of a survey conducted by Stax Inc., where the strategy consultancy firm surveyed over 40,000 consumers. The report concludes, “Sales of lab-created diamonds, now estimated at $150 million, are expected to increase to $1 billion by 2020 and outpace mined diamonds, which have been in decline.”(Forbes.com, September 2017)
Mined-diamonds are a status symbol for a large affluent population. They have the buying capacity for mined diamonds that are 20 to 30 percent more expensive than lab created diamonds. Whereas, on the rise is a growing middle class with an increased buying capacity and the millennial population who are, by nature, conscious and prefer buying lab-made diamonds for all the right reasons that these diamonds stand for. Lab generated diamonds are conflict-free, environment conscious and cost effective. For a large number of populations, these are prerequisites and deciding factors for purchasing diamonds.
While producers in the mined-diamond market are stressing on “real is rare”, real synthetic diamonds are already winning hearts of a growing young population that is taking a liking to man-made sparklers. It is only a matter of time that synthetic diamonds will become more valuable than the mined counterpart.
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