De Beers shocked all and sundry end of May when it announced the launch of a new company called Lightbox Jewelry, which will market a new brand of laboratory-grown diamond jewellery in September.
This effectively meant that the group had departed from its long held position that it won’t sell synthetic diamonds.
Industry analysts and the media were confounded with some openly criticising De Beers of being hypocritical and opportunistic, only to retract their statements a day later.
One headline screamed: “De Beers admits defeat over man-made diamonds.”
However, is it the case?
Independent diamond industry analyst Paul Zimnisky thinks the opposite.
He told Rough & Polished’s Mathew Nyaungwa that this was a strategic move out of necessity by De Beers on behalf of the whole natural diamond industry.
NB: Zimnisky has a monthly subscription-based diamond industry newsletter called, State of the Diamond Market and a proprietary rough diamond price index available at www.roughdiamondindex.com.
Below are excerpts from the interview.
What is your opinion on De Beers’ decision to set up Lightbox Jewelry, given that it had been a critic of laboratory-grown diamonds?
I think this was a strategic move out of necessity by De Beers on behalf of the whole natural diamond industry. I don’t see this as a move by De Beers to simply take a piece of the lab-created diamond market pie, but rather take control of the lab-created industry and steer it in a way that protects their natural diamond business.
What do you think might have forced De Beers to make the volte-face?
I think misinformation. For example: What exactly is a lab-created diamond? Can lab-created diamonds be distinguished with certainty from natural diamonds? What makes a lab-created diamond preferable to a natural and vice versa? How valuable are lab-created diamonds? These are the kinds of questions the natural industry does not want diamond consumers asking because it could undermine consumers’ confidence in buying a natural diamond. With Lightbox, and the marketing and branding support behind it, I think De Beers hopes to steer the direction of the lab-created industry and thus quell these customer questions and concerns.
What impact will this have on the existing synthetic diamond industry?
I think it completely changes it. With De Beers’ steep price undercutting and marketing influence, it will be very difficult for the existing players to continue in my option without a very strong brand and/or special jewelry design. I think all of this was inevitable anyway, within say five years, but with this announcement De Beers really accelerated the timeline.
What do we deduce from the pricing of the lab-grown diamonds by De Beers to as low as $800 a carat, which is a significant discount to the price of natural stones?
I think sub-$1000 for a 1-carat diamond is a very significant psychological level for consumers. Importantly, it puts lab-created diamonds into a similar pricing category as diamond simulants, for example moissanite; and this is all part of De Beers’ plan, to place lab-created diamonds in a different, distinct category from natural diamonds.
What is the future of diamond mining, by and large, given De Beers’ move?
I see this as a positive development for the miners. I think this move is the best way for the natural diamond industry to protect itself from potentially losing market share to lab-created diamonds longer-term. There will be some collateral damage in terms of still losing some market share to lab-created diamonds, but given the options at the moment, I think this strategy makes the most sense. I see this as a bold play by De Beers, but it’s the right play.
De Beers said that the man-made diamonds are not competing with natural stones and that it will not grade them in the traditional way. Do you agree with their reasoning?
Absolutely, it devalues the perception of a gem if it is not graded, as if it’s not valuable enough or worthy enough to be graded.
Some critics have accused De Beers of being hypocritical and opportunistic as it was now putting synthetic diamonds in the same category as naturals. Do you concur?
I disagree with this notion completely. I see what they are doing as the complete opposite of this.
Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished
