The Diamond Industry in Crisis

Al Cook has described this rapidly expanding parallel market as a “scam,” a strong term that only serves to underscore the CEO's concerns about this threat. Lab-grown gems are created using methods that can artificially generate the temperatures and pressures required in nature to create diamonds, but at an estimated price 20 to 50% lower than that of natural stones.

In 10 years, lab-grown diamonds have flooded stores and attracted buyers with their prices and “ethical” guarantees. The status of diamonds as they once were—a timeless luxury asset—is now being seriously questioned.

The latest figures confirm the seriousness of the situation: the giant De Beers accumulated $2 billion in unsold stock in 2024 and the company was forced to announce the loss of more than 1,000 jobs at Debswana in Botswana.

The situation for other major companies in the sector is also fragile. Alrosa, the Russian mining giant, is suffering from the diamond crisis linked to international sanctions resulting from the conflict in Ukraine. The company has lost 77% of its profits and several mines have been closed since 2022.

In Australia, Lucapa was placed in receivership in 2023, while in Sierra Leone, Koidu Limited closed its doors and laid off more than 1,000 employees following strikes that resulted in losses of $16 million in 2022. Currently, lab-grown diamonds account for 20% of global diamond jewelry sales, whereas ten years ago, synthetic gems accounted for only 1% of the market.

According to a study conducted by the US wedding website The Knot, more than 50% of engagement rings sold in the US in 2024 contained lab-grown diamonds. For economies heavily dependent on the sector, such as Botswana (90% of the country's income), Canada, Namibia, Angola, and Russia, the risks are high.

Other factors, beyond competition from lab-grown diamonds, are further weakening the natural diamond market: on the one hand, the luxury goods crisis in China, and on the other, US customs duties on exports of goods to the United States.

In an attempt to revive the market, De Beers recently closed its lab-grown diamond jewelry brand, Lightbox, to refocus on natural diamonds. The company now aims to renew and strengthen marketing in the sector to enhance the value of natural gems.

It should be noted that in Africa, the main diamond producers gathered in Luanda on Wednesday 18 June signed a “historic” agreement to stimulate global demand. For the first time, Botswana, South Africa, Namibia, the DRC, and Angola want to devote 1% of their annual revenues from rough diamond sales to funding an international advertising campaign promoting natural diamonds (source: Agence Ecofin).