On a few visits to Hatton Garden this past month, I was surprised by just how much retail space has shifted over to lab-grown diamonds in the heart of London’s jewellery district.
There have been plenty of headlines over the years about younger buyers preferring these to mined diamonds, but actually seeing jewellers heavily advertising their stones as lab-grown hammered home the change in the market.
To be clear, the impact is still limited on the other end of the supply chain. De Beers, the second biggest producer in the world, reported slightly weaker sales in its most recent ‘cycle’ compared to the previous one, but these were still well ahead of last year, at $630mn (£518mn) versus $514mn. Admittedly, some of the pricing strength is down to Russian diamonds coming out of the market, after the world’s biggest producer Alrosa was sanctioned and some retailers pulled their Russia-sourced diamonds from sale.
The boss of De Beers parent company Anglo American (AAL), Duncan Wanblad, highlighted consumers’ greater expectations over provenance last week. He said buyers’ top priority was to “ensure that they have a diamond from a good source and produced in a meaningfully sustainable way”.
Without getting bogged down in defining what makes something sustainable, lab-grown diamonds do have some undoubted advantages on that front: there is no mine, and they can effectively go straight to cutting from the ‘reactor’ in which they are created. The process does need plenty of energy, as mining representatives are keen to point out, but there are solutions to that. For instance, India’s Hari Krishna (that’s a real company name, and it's a major player in the diamond sector) stuck solar panels on the roof of its test plant to cut costs and associated carbon emissions.
The boss of its lab division, George Prout, said the industry had shifted significantly in just a few years. “It’s almost like a light switch has turned [with jewellers],” he said, speaking recently on diamond expert Paul Zimnisky’s podcast about demand for lab-grown jewels.
The market for mined stones is unlikely to disappear when it comes to mid-sized and large stones, however, and London has its fair share of Africa-based diamond miners where investors can find a bit of sparkle. It takes some confidence in consumer buying to dive in now, but there are options like Gem Diamonds (GEMD), which routinely comes up with large stones of 100 carats or more, and Gemfields (GEM), which is a clearer play on luxury buying as it mines emeralds and rubies and owns storied jeweller Fabergé.
As for my own time in Hatton Garden – lab-grown or newly mined diamond? Neither. Vintage.
