Recycled diamonds: a new opportunity for the market?

Marianne Riou

Who would think anyone might want to exchange their diamond engagement ring – or a ring that belonged to their mother, grandmother, or aunt? This seems to contradict the famous slogan “A Diamond is Forever” or the current trend of considering diamonds as new highly prized investments…

And yet, whether they will take off like a raging bonfire or be a flash in the pan, recycled diamonds are increasingly on the agenda in the USA. In view of the difficulty in reviving the bridal in the main diamond market (the USA account for 50% of polished bought in the world) and in the current crisis, what is being questioned is consumer spending habits. For individuals reselling a family heirloom set with diamonds, the immediate financial advantage is clear, although the importance of this market for the diamond industry is questionable. To get straight down to the subject of diamonds as investments, it must be noted that not everyone is concerned yet.

Polished with a lower purchase cost

These are obviously retailers that benefit first and foremost from the market for recycled diamonds. The purchase cost of a polished diamond, sold by a consumer looking for a bit of cash in return, simply cannot be beaten, and represents a good way of increasing your margins, even when the recycled diamond needs to be repolished (thus losing some of its weight) to be set in a new jewel! When you know the difficulties that players in the diamond market experience in obtaining substantial margins, in view of the prices of polished diamonds, this incentive is certainly not to be sniffed at.

The size of the market shares held by recycled diamonds – 5% of sales? – is currently difficult to assess, and there is no reason to believe, for the moment, that they have a real impact on the industry (quite unlike recycled gold, for example). Nevertheless, several companies have specialised in this trade. In 2012, the company White Pine Trading, whose principal activity is the buying and selling of recycled diamonds, auctioned off more than 5 million dollars’ worth of this category of diamond.

Sustainable development applied to diamonds

One significant advantage of recycled diamonds is that they convey an image of natural diamonds, and, if not exactly ethical, are at least “responsible”. Admittedly, it will be difficult to obtain reliable information about their provenance or ensure that they are not “blood diamonds”. However, they still adhere to the principles of sustainable development, as the etymology of the term “recycled” further reinforces. Gaining the trust of customers and ensuring full transparency in the diamond supply chain is a day-to-day struggle at all levels of the industry. We also know that the mining industry is extremely polluting (and expensive). However, we can safely argue that a jewel made with a recycled diamond respects the principles of social and environmental responsibility : a very good marketing point for the retailers who sell them!

In conclusion, one thing is certain. Looking at recycled diamonds, there glimmers an opportunity for the future. The difficulty, again, lies in the way the industry will decide to market this topic to consumers…