GREEN CARAT
A NEW WAVE OF PRODUCERS IS LOOKING TO ‘MINE THE SKY’ WITH LAB-GROWN DIAMONDS.
They are among the world’s most valuable objects, formed billions of years ago deep beneath the earth’s surface then thrust hundreds of kilometres to its crust by volcanic eruptions before their eventual extraction.
But Dale Vince wants to make diamonds out of thin air.
“Mined diamonds I think are very time-limited now — the industry will come to an end, it’s a question of when,” said Vince. “We no longer need to mine the earth to make diamonds, because we can mine the sky.”
Vince, a U.K. entrepreneur who founded green energy group Ecotricity Plc., is one of a growing number of producers of labgrown diamonds.
Identical in composition to their naturally formed counterparts, manufactured stones are cheaper, posing a challenge to the diamond mining industry led by De Beers Group and Russia’s AK Alrosa PAO. They are sold by leading jewelry retailers from Swarovski to Warren Buffett’s Borsheims.
The traditional extraction of diamonds and the lengthy, energy-intensive process of manufacturing can both leave a significant carbon footprint — something Vince wants to address to appeal to a growing number of environmentally conscious consumers.
Lab-grown stones are made either by mimicking natural formation using high pressure and heat or by a process known as chemical vapour deposition.
With CVD a single-crystal diamond seed is placed in a chamber filled with hydrogen and a carbon-containing gas such as methane, then heated up to 1,200C. The carbon from the gas builds on the seed, forming diamond crystals.
Vince is unusual in that he even creates his own methane, a greenhouse gas that is a compound of carbon and hydrogen, by splitting hydrogen from water using electrolysis and taking carbon from the atmosphere.
Production of lab-grown diamonds has risen from about 2m carats in 2018 to 6m to 7m carats last year, according to consultancy Bain & Company. That compares with mined production of 111m carats last year.
The increased scale has helped push down prices, with a polished one carat lab-grown stone roughly a third cheaper than a polished mined diamond, according to Bain.
But while producers such as Diamond Foundry, a San Francisco startup backed by film star Leonardo Dicaprio, use renewable energy such as hydropower, a growing number of rivals in countries such as India and China do not, say analysts.
Last year 50 per cent to 60 per cent of the world’s lab-grown diamonds were made in China, according to Bain.
“The challenge in the synthetic stone sector has not been revealing where their energy is coming from,” said Saleem Ali of the University of Delaware, who is working on a new standard to measure the environmental and social performance of diamonds.
At the same time, the mined diamond industry has moved to burnish its own green credentials.
De Beers, a subsidiary of FTSE 100 mining group Anglo American, says it will move to using hydrogen-powered trucks and replace “nearly all” its fossil-fuelled electricity by developing dedicated wind and solar power plants.
The company is looking at removing its remaining carbon emissions by injecting carbon dioxide into old diamond mines to take advantage of the natural propensity of the kimberlite rock in which the stones are found to absorb carbon. It is also considering starting projects to support forest growth and looking at farming practices that help soils absorb more carbon on its large landholdings.
“The carbon footprint is starting to become an issue of interest for people that buy diamonds,” said Kirsten Hund, head of carbon neutrality at De Beers.
Alrosa, the world’s largest diamond miner, says it will spend US$466 million on improving its environmental footprint by 2024, including using lower-emission mining machines and managing waste. Eighty-six per cent of its electricity comes from renewable sources, it says.
Among the biggest challenges for lab-growers is that they lack the financial firepower of the miners when it comes to selling their products to consumers.
“Marketing spend, by not only the man-made diamond industry but also the natural diamond industry, is likely what will ultimately determine the success in the long run,” said Paul Zimnisky, a New York-based diamond analyst.
Vince aims to set a single price for his diamonds of about US$1,000 a carat because of their environmental credentials. His process uses 40 kilowatt-hours of energy to produce one carat, or four days’ worth of the average U.K. household’s energy use.
But Zimnisky said charging a premium for greener lab-grown diamonds could prove tricky because while consumers want a sustainable product they are not necessarily willing to pay more for it.
“If you’re trying to be the lowest-cost producer you don’t care about using hydropower as you aren’t going to get a premium for it,” he said. “You need to be able to sell it at a premium or build it as a brand.”
But Jessica Warch, co-founder of lab-grown jewelry retailer Kimai, said conscious consumers were not only concerned about the climate, and that the miners could not avoid the fact that they have to dig a big hole in the ground.
“From the perspective of sustainability it isn’t just being carbon neutral,” she said.
“There’s much more to it. There’s the environmental and social perspective that’s rarely taken into account when people talk about carbon neutrality, which to us is the most important part.”
Kimai’s supplier of lab-grown diamonds, Israel-based Green Rocks Diamonds, is in the process of being certified by auditing company SCS Global Services for its sustainability footprint, according to its chief executive Leon Peres.
“It’s very confusing today, there are a lot of companies that are talking about sustainability and being carbon-neutral but they can’t really put proof to the claim,” Peres said.
“When you see a new product coming into the market it’s kind of a free for all — there are no rules or regulations. But now you’re seeing consumers asking questions, the same questions they are asking about natural diamonds: what is the source?”
Amish Shah, of lab-grown producer ALTR Diamonds, believes the lab-grown industry will coalesce around new sustainability standards this year. He says his production facilities in India can easily move to using solar power and already use cow dung as the source of methane.
“I believe in the next 12 to 24 months we will see a major shift in consumer mindset which will force this industry to ensure that everything that is passing through is a low-carbon product,” he said. “And the lab-grown guys will push ahead.”