Raul Sapora looks at whether De Beers missed the lab-grown threat.
Raul Sapora, a gemologist, ESG consultant, and Gübelin Gem Lab ambassador, offers his thoughts on whether De Beers misjudged the threat of lab-grown diamonds.
There is a growing narrative around De Beers. It is neat, persuasive, and, with the benefit of hindsight, almost irresistible. It says that De Beers, the great architect of the modern diamond industry, underestimated the synthetic diamond threat.
I find that interpretation difficult to accept. Not because De Beers should be immune from criticism. But because history deserves more discipline than that.
And few companies on Earth have understood synthetic diamond technology for longer, or more intimately, than De Beers.
A note on terminology: I use “synthetic diamond” throughout this article because it remains, in my view, the precise gemological term for a diamond produced artificially by technological processes. “Laboratory-grown” is now widely used commercially and by many institutions.
This is not a judgment on the material. Synthetic diamond is a remarkable achievement of materials science. It is simply something with a different growth history from a natural diamond. Which is where this story begins.
De Beers’ long history with synthetics
The idea that De Beers only became aware of synthetic diamonds when they entered jewelry stores is historically untenable. De Beers’ involvement goes back to the technology’s beginnings.
Its Diamond Research Laboratory in South Africa successfully synthesized diamond in 1958, with Harry Oppenheimer publicly announcing the achievement the following year. By 1971, the laboratory was growing large synthetic crystals. Element Six, its industrial-diamond business, ultimately descended from this research and has now worked with synthetic diamond technology for more than seven decades.
And De Beers did not restrict its experiments to industrial grit. By the 1970s, its researchers were growing gem-quality synthetic diamonds experimentally. A 1987 Gems & Gemology study examined De Beers-grown crystals weighing up to 11 carats and documented their color zoning, metallic inclusions, growth structures, and fluorescence characteristics. Further research in the early 1990s examined near-colorless and blue boron-doped material.
So, De Beers did not encounter synthetic diamonds as an external technological surprise. It helped develop the science. Then it helped the industry to learn how to detect them.
As gem-quality synthetic production became commercially plausible, another question emerged. How could the trade reliably distinguish natural diamonds from synthetic ones? Again, De Beers moved early.
In the mid-1990s, scientists at its research center in Maidenhead developed two instruments that would become enormously important in gemological laboratories: DiamondSure and DiamondView. DiamondSure was designed as a rapid screening instrument. DiamondView used short-wave ultraviolet luminescence imaging to reveal growth structures characteristic of natural or synthetic formation. The underlying research was published in Gems & Gemology in 1996. De Beers formally introduced prototypes in 1997.
These were not defensive marketing devices. They were scientific instruments addressing a genuine identification problem. DiamondView, in particular, became an important part of modern synthetic-diamond identification and was subsequently used by major gemological laboratories, including GIA.
De Beers continued developing screening technology as synthetic production evolved. PhosView appeared for HPHT screening. SYNTHdetect was launched for multiple stones in set jewelry. More recently, De Beers developed DiamondProof for use directly at the retail counter. This is hardly the behavior of an organization unaware of technological change.
If anything, De Beers repeatedly anticipated the identification challenges that synthetic diamonds would create.
The market changes
For many years, the industry’s principal concern was undisclosed substitution. Could synthetic diamonds enter parcels of natural diamonds without being detected? That was fundamentally a gemological and supply-chain integrity problem.
But during the 2010s, the nature of the challenge began changing. Synthetic diamonds no longer needed to masquerade as natural diamonds to affect the natural-diamond market. They could be disclosed accurately and still compete.
HPHT production improved. CVD production expanded. Colorless material became easier and cheaper to manufacture. Production capacity increased, particularly in China and India.
The problem gradually moved from identification to substitution.
That is a very different commercial problem. A synthetic diamond sold transparently is not fraud. But it may still substitute for a natural diamond in a consumer’s purchasing decision. And here the story becomes much more interesting.
The launch of Lightbox
In May 2018, De Beers did something that surprised almost everyone. It launched Lightbox. Synthetic diamonds would be sold in finished jewelry at a simple linear price: $800 a carat. De Beers committed $94 million to a new Element Six production facility in Oregon, designed eventually to produce more than 500,000 rough carats annually.
It is difficult to reconcile this with the claim that De Beers simply refused to recognize synthetic diamonds. It recognized them sufficiently to build a factory and a consumer brand around them.
The strategic assumption was different. De Beers believed that natural and synthetic diamonds could occupy distinct consumer categories.
Synthetic diamonds would become accessible fashion jewelry: technologically interesting, attractive, and substantially cheaper. Lightbox deliberately reinforced this separation.
The new brand would avoid conventional rarity-based pricing. A one-carat stone cost twice as much as a half-carat stone. Pink and blue stones did not command extraordinary premiums merely because their natural equivalents were rare. In economic terms, De Beers was attempting to price synthetic diamonds as manufactured products.
Was that strategy correct? That is a legitimate question. But it was not naive. It was a thesis about how the market would segment. Perhaps the real miscalculation was not technology but consumer behavior.
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Main image: Courtesy: De Beers
Source: The Jewelry Wire