Diamonds are best, naturally
● Are diamonds still a girl’s best friend? Depends: natural or lab-grown?
Nosiphiwo Mzamo, newly appointed CEO of the State Diamond Trader, a government entity, believes natural diamonds still hold significant allure despite the growing popularity of synthetic, or lab-grown, diamonds.
Speaking to Business Times on the sidelines of the Investing in African Mining Indaba last week, Mzamo was adamant that synthetic diamonds have less value than their natural counterparts.
“The minute you buy a synthetic diamond, you cannot resell it. Natural diamonds carry value, you can always resell them. With the synthetic diamond, the minute it leaves the shop the value is gone. There was hype around synthetic diamonds but consumers realised there was no value, you just buy the stone,” she said.
Mzamo is convinced natural diamonds are everlasting. “As women, we want that value that is forever; if someone loves you, they should buy you natural diamonds.”
Synthetic diamonds are made in controlled laboratories using a process mimicking the formation of those mined. The result is stones that resemble natural diamonds but are sold for significantly less.
As technology enables the growth of production, they have increased in popularity and have become chosen gems for engagement rings and other diamond-encrusted jewellery.
Still, WD Lab Grown Diamonds — the second-largest maker of synthetic stones in the US — filed for bankruptcy in 2023 amid a pile of debt as its liabilities greatly outnumbered assets.
The 2023 Jewellery Consumer Trends Report by Hong Kong-based Chow Tai Fook Jewellery Group found that 74% of consumers still view natural diamonds more as a luxury and valuable purchase than labgrown ones.
Richard Duffy, the CEO of London-based Petra Diamonds, said lab-grown stones had evolved since 2015 and prices have declined to a fraction of what they were five years ago as production volumes increased. Still, he believes there is room for lab-grown and natural diamonds to coexist.
Duffy views lab-grown diamonds as more akin to adornments rather than meaningful gifts. Natural diamonds, since they are rare and unique, have a complete purchase proposition.
“Natural diamonds are billions of years old, they were formed in the earth’s mantle by a quirk of nature, and you cannot order them to size or colour. You get what you get, they are unique in that sense and they are disappearing,” he noted.
The diamond industry has been hit by global geopolitical tensions, with the ongoing war between Russia and Ukraine, as well as Israel and the conflict with Hamas in Gaza affecting prices, Mzamo said.
About 70% of production is concentrated in mining giant De Beers and Alrosa, a Russian group of diamond mining companies that combine exploration, mining, manufacturing and the sale of precious stones. However, the group is under strain as a result of Western-imposed sanctions.
Israel has a big diamond polishing and cutting industry, accounting for around 20% of global production.
Botswana is the second-biggest producer of diamonds in the world. A year ago its government hinted it might end a 50-year extraction and sale partnership with De Beers. The joint venture, Debswana, operates four mines: Jwaneng, Orapa, Letlhakane and Damtshaa, which produce 95% of Botswana’s stones.
However, a deal will see Botswana’s share in the partnership rise from 25% to 30%, and De Beers obtain an extension of Debswana’s mining licence to 2054.