News — diamond industry

Just as synthetic rubies and sapphires, the synthetic diamond market has been growing rapidly since the technology to create new, colorless varieties were introduced. As the lab-created diamonds cost about 35% less than the real diamonds, many experts fear a major decrease in demand for the real diamonds, and that’s why advanced screening devices are being used to separate the real ones from the synthetic varieties. 

What is the impact of synthetic rocks on the real diamond market? 

Although it’s unlikely that the synthetic diamonds will replace the real rocks any time soon, if the consumers are aware of what they are buying, the risks are greater due to the lower price expectations. The real diamonds may lose their luxury because of their cheaper peers. This apart, the real diamonds are also being increasingly associated with the harsh practices and inhuman measures of mining, which gives them the nickname ‘blood diamonds’. As the synthetic ones are created in the labs, they are considered more sustainable and eco-friendly among the environmentally-conscious population. The market for vintage and antique diamonds actually has not been affected since the true old cuts cannot be remade and collectors always find them valuable and desirable.

So, are natural diamonds no longer valuable?

Of course, no! The natural diamonds still are quite able to connect with the customers on an emotional level, which is lacking in the case of synthetic rocks. If a clear distinction is observed between the real diamonds and the synthetic ones, the people, who value quality above everything else, will go for the former undoubtedly. For jewelers, who deal both in natural diamonds and lab-created ones will, however, be at the most advantageous position, as they will have it all to meet specific customer needs. 

The year started quite well for the diamond industry and the sales were quite robust, according to Alrosa, a leading diamond producer. However, the outbreak of the pandemic has led to a fall in demand in the Chinese market, which accounts for about 15% of the global share. The 11-weeks lockdown in China caused all the jewelry stores to bring down their shutters, which resulted in a reduction in sales.

Across the globe, social distancing and quarantine measures along with deteriorating economic conditions have led to an overall decrease in the demand for luxury items. In Match, the second-largest producer of diamonds, De Beers, reported a 28% reduction in sales to $355m from $496m in 2019. With 12 sales cycles per year, this notable decrease was due to the COVID-19 outbreak, as the first sales cycle stood at $551 at the beginning of 2020.

There is also a decline in the production of the diamond, as mining has been disbanded as a non-essential service in South Africa, as the country entered a lockdown phase on 26th March 2020. Other mines across the world in India, Lesotho, Namibia, Zimbabwe, and parts of Canada are also under restrictions following the lockdown.

However, as there’s no lockdown in Russia, Alrosa is relatively in a better place, but the company is following restrictions to avoid the spread of the infection while running their operations. De Beers is also not much impacted, as compared to the other companies. Most of its mining activities are centered in Botswana, where it has not been restricted or suspended despite the lockdown.

Coming to gold and other metal jewelry, gold is currently on an upward trajectory, after suffering an initial hit, but nothing much hopeful can be said about silver right now.

With most of the world under lockdown, we can all but pray for things to get better and normal conditions to restore.