Synthetic Diamonds: An Intimidating Competitor for Mined Diamond Companies

First synthesised successfully in 1954, synthetic diamonds have become ever easier and efficient to produce, especially over the last 20 years, aided by growing technology. Synthetic diamonds, not just aesthetically but chemically and physically identical to their naturally formed counterparts, are increasingly posing a threat to the mined diamond industry. According to a report commissioned by the Antwerp World Diamond Centre (AWDC), the cost to produce a synthetic diamond comes up to 500 USD per carat using the popular Chemical Vapor Deposition (CVD) technique. Only 12 years ago, it cost 4000 USD to produce one carat using the same CVD method, showing a steep improvement in productivity and cost-efficiency. Synthetic diamond companies, therefore, have the capacity to undercut their rivals on pricing. This is an attractive outcome for what seems to be a growing market of price-sensitive consumers, who understandably are reluctant to pay the high price of a natural diamond, sitting at an average of 12400 USD per carat in June 2020.

 

Synthetic diamonds are currently largely produced using two distinct methods. The first, dubbed High Pressure High Temperature (HPHT), places a “seed” (a flat slither) of another diamond amidst graphite carbon in high temperatures and is pressurised to approximately 1.5 million pounds per square inch in a chamber. The second, more recent and efficient method, CVD, heats a ‘seed’ in a chamber with rich carbonated gas up to temperatures of 800OC to form a diamond. These production processes are far less capital intensive than the activity of mining for natural diamonds, where mines must be developed and exhaustively searched for the precious stone, forged in the crushing pressure and heat of the earth’s mantle. Synthetic diamond producers, such as Dale Vince, founder of green energy group Ecotricity, believe that the distinguishing feature of synthetic diamonds is their low carbon footprint. According to a study by Trucost, members of the Diamond Producers Association (DPA) produce an estimated average of 160 kg of CO2 emissions per carat of polished diamonds sourced from mines. However, Environmental, Social and Governance (ESG) criteria encompass far more than carbon emissions. Diamond mining, historically, has not been renowned for its sparkling ESG standards in the regions in which they operate. Mining has obvious adverse impacts on topography, shifting on average 250 tonnes of earth per carat of diamond. Additionally, there are large social humanitarian costs, as exhibited in the famous political war thriller Blood Diamond, starring Leonardo DiCaprio. The Kimberly Process is a scheme that aimed to reduce the humanitarian costs of mining through uniting civil societies, administration and industry to reduce the flow of conflict diamonds around the world. Nevertheless, a source in the conflict resources team at the NGO, Global Witness, says that “the Kimberly Process has failed to keep up”. In 2013, a civil war erupted in the Central African Republic over control of diamond mines among other conflicts of interest resulting in thousands of deaths and the displacement of many civilians. Historical evidence supports that diamond mining is likely, in at least some part, to encroach upon the human rights of those residing in diamond mining regions.

 

Despite the problems, economic and otherwise, associated with diamond mining that impact the global community, it is unlikely that a transition towards a diamond market supplied primarily by synthetic diamonds will come without costs to vulnerable people. The mined-diamond industry currently supports 10 million people, directly or indirectly, according to Diamond Facts, an organisation that focuses on the statistical analysis of diamonds. In 2016, the net socioeconomic and environmental benefits totalled 16 billion USD due to increased employment in low-income regions. As questioned by Brad Brooks-Rubin, previous special advisor on conflict diamonds to the US Department of State, ‘is it ethical to guide people away from buying diamonds from developing countries where a million people or more rely on work?’ One must also question whether it is ethical to sustain these industries that still exploit their workers. Upon estimation, one million diamond miners in Africa earn less than a dollar a day. Children comprise a large proportion of this workforce, with an estimated 46% of miners in the Lunda Norte province in Angola being aged between the ages of 5 and 16. Finally, health and sanitisation ratings are still poor within mining regions. Thus, although many are reliant on the work provided by mining companies, supporting these exploitative practices can’t be seen as the solution to this moral dilemma.

 

On the other hand, the energy-intensive production process of synthetic diamonds constitutes an issue for producers that strive to retain their climate-friendly status in order to distinguish themselves apart from mined diamonds. Ecotricity’s CVD production process requires 40 kilowatt-hours of energy to produce one carat of diamond, an amount of energy equivalent to 4 days’ worth of the average UK household. Diamond Foundry, which uses hydropower to fulfil its energy needs, has effectively found a solution to this issue that allows them to tap into climate-sensitive consumer demand. Consumers must not assume that synthetic diamond production is innately climate-friendly; only if non-carbon emitting energy sources are utilised can it be classed as a carbon neutral good. The mining industry-backed ‘real is rare’ advertising campaign has sustained current mined diamond demand for fine jewellery; however, this only consists of 30% of demand. With the primary use of diamonds being outside of fine jewellery in such things as drilling, cutting and grinding, cheaper, synthetic diamonds could help expand demand. According to Payne, ‘a diamond is the ultimate known semiconductor’ with diamond-based transistors reducing energy losses in their devices by up to 90%, according to the US Department of Energy. If industries such as these, outside of fine jewellery, utilise diamonds more in their production process, there seems to be no doubt that they will aim to use the cheaper synthetic diamonds to limit their costs. The steady increase in the production of lab-grown diamonds from 2 million carats in 2018 to 7 million carats last year (according to consultancy Bain & Co.), compared to the production of 111 million mined-diamonds suggests that synthetic diamonds do pose a threat to the mined diamond industry.

 

Synthetic diamonds, with their low price, low carbon footprint and growing demand, seem to be in a flourishing position to acquire a growing proportion of the diamond industry. It is however unlikely that the mined diamond industry will diminish substantially in the near future due to the innate rarity of the earth-borne product attracting a specific clientele. Nonetheless, with high workforce dependency on the mined diamond industry, synthetic diamonds and the potential expansion of their uses in industry are an intimidating competitor for diamond mining companies.

 

By Jack Reid

Sector Head: Edouard Nelson

 

 

 

Leave a Comment