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Next month, the Gemological Institute of America (GIA) will change the way it grades laboratory-grown diamonds, to distinguish them further from natural diamonds. The “four Cs” used for natural diamonds — clarity, carat weight, cut and colour — will be replaced by the terms “premium” and “standard” to characterise their quality.
The GIA says 95 per cent of lab-grown stones fall into such a narrow range of colour and clarity that it does not make sense to apply the same scales and terms used for the colours and clarity of natural diamonds. “It is no longer relevant for GIA to describe man-made diamonds using the nomenclature created for the continuum of colour and clarity of natural diamonds,” says Tom Moses, chief laboratory and research officer at the GIA.
Each report will cost $15 per carat and synthetic stones that have been graded will also be laser-inscribed with an assessment number.
Lab-grown diamonds are mass-produced using energy-intensive machinery at temperatures generally over 1000C to create the same crystal structure as natural stones and nearly the same properties. They are also cheaper to produce and that has made them immensely popular, particularly in the US — the world’s largest diamond market, accounting for about half the industry’s sales. Today, a three-carat lab-grown stone sells for just 7 per cent of the price of a mined equivalent, according to analyst Paul Zimnisky.
David Kellie, chief executive of the Natural Diamond Council, a marketing body funded by the diamond industry to promote mined diamonds, says “sustainability claims often lack scrutiny”, considering that 70 per cent of lab-grown diamonds are produced in China and India using electricity generated from fossil fuels to power the machinery. “Consumer protection is paramount to the natural diamond industry [and that] requires clear product disclosure.”
According to Kellie, lab-grown stones, which can be produced in limitless quantities, have driven down the prices of all diamonds. The NDC says the wholesale price of a 1-carat round, near colourless lab-grown diamond is 5 per cent of what it was in 2018, while the retail price has fallen 76 per cent over the same period, according to analysts Zimnisky and Edahn Golan. Retail margins, however, have kept prices higher, rising from 46 to 84 per cent, indicating that retailers have not passed on price falls to consumers.
The Chinese and Indian lab-grown diamonds flooding the US and other markets are “one of the greatest risks to our business — and to the sustainability movement more broadly”, says Madeleine Macey, chief executive of Skydiamond, a UK company and one of the few producers using renewable energy. Founded by green energy entrepreneur Dale Vince and based in the Cotswolds in central England, Skydiamond uses wind and solar power, as well as rainwater for coolant.
“There is a widespread misconception that all lab-grown diamonds are equal. They’re not. [Our] stones are carbon-negative by design,” says Macey, who believes the GIA’s new classifications should also account for sustainability, or emissions. “Without a recognised metric for environmental impact, the market risks losing sight of the real innovation happening in this space,” she says.
Nevertheless, Macey does not anticipate GIA’s changes to grading nomenclature will have a significant impact on Skydiamond, pointing out that systemic changes take a while to filter down to customers and that they simply reframe the language.
The relatively low price of lab-grown diamonds frees up designers at Skydiamond and independent brands such as Fei Liu. The Birmingham-based jeweller believes that the fall in price “tells us consumers see lab-grown as an alternative rather than a replacement for natural diamonds. Younger buyers are choosing [them] simply because they are more affordable.” While Liu’s passion is for natural diamonds, he has introduced a collection called Celestia that uses 0.50ct lab-grown stones, believing that these “are more suited to accessories than to the future of fine jewellery”.
Liu believes perceptions about lab-grown diamonds will shift considerably when today’s buyers, in their thirties and forties, consider upgrading their lab-grown rings and find they hold no resale value. Then, “the emotional and financial qualities of a natural diamond may begin to resonate more deeply”, he says.
De Beers, the diamond company founded by Cecil Rhodes, similarly moved into lab-grown diamonds in 2018 when it launched its Lightbox brand with decorative designs geared towards fashion trends. However, in doing so it sparked a price war that also dragged down the price of natural diamonds, which were simultaneously hit by a slump in demand. Lightbox shut earlier this year, while De Beers owner Anglo American is seeking to sell the diamond miner as part of a broader corporate overhaul.
“Lightbox was established with an objective of helping to provide clarity on the differences between natural diamonds and lab-grown diamonds, including their fundamentally different value propositions,” says Sandrine Conseiller, CEO of De Beers Brands, the division that runs the retail jewellery business. When Lightbox was launched, lab-grown diamonds were selling at around 90 per cent of the value of mined diamonds, which are usually priced for their rarity. “We saw this as unsustainable, because this was much higher than the cost of production,” Conseiller says.