Synthetic Diamonds: Are They The Next Generation Gemstones?

synthetic diamond market value

“Diamonds are forever”. This phrase was famously coined by DeBeers and had become a symbol of enduring love in popular culture. In fact, the marketing campaign to promote naturally mined diamonds in the 1940s was so successful that it inspired books, films and songs about diamonds.

Though recently, the natural diamond industry has come under threat due to governmental regulations and technological breakthroughs in the manufacturing of synthetic diamonds.

In this article, we will take a comprehensive look at what synthetic diamonds are and what are the changes that they might bring to the jewelry industry…

What Are Synthetic Diamonds And How Are They Produced?

Synthetic diamonds have the same chemical and mechanical properties like a natural diamond. In fact, they are made of the same Carbon atoms and possess the same molecular structure. The only difference is that one is man made while the other is created by natural forces deep within the Earth.

Contrary to popular belief, the technology for producing synthetics was not developed in the age of computers. In fact, the first synthetic diamond was created more than a century ago in 1893 by Henri Moissan.

He used an appliance to create diamonds by subjecting small amounts of carbon to high pressure and high temperature (HPHT). In the present day, a very similar process is also used for the commercial production of diamonds for industrial applications.

To see an animated process of how diamonds are made, click this link to see an infographic we made.


Here’s a short list of companies who produce them using High Pressure High Temperature:

New Age Diamonds – http://www.newagediamonds.com
D.NEA – http://d.neadiamonds.com
DNA 2 Diamonds – http://dna2diamonds.com

Besides HPHT, scientists have also developed another method to create gem-quality diamonds using a process known as chemical vapor deposition. In a nutshell, an initial seed diamond is grown by depositing carbon atoms in a low pressure environment.

Here’s a list of companies who produce diamonds using Chemical Vapor Deposition:

Washington Diamonds Corp – http://www.washingtondiamondscorp.com/
INDAB – http://www.indab.com/
Hebei Plasma – http://www.hediamond.cn/en/

Natural Diamonds Pains, Synthetic Diamonds Gains

diamond mining open pit dangers

Diamond mining pit in the town of Aykhal, Yakutia, Russia.

Industry experts have been talking about a phenomenon called “peak diamonds” for many decades. The world’s current supply of rough diamonds come largely from existing mines which are operating near the end of their life cycle.

Unless large mines are discovered, the current reserve of rough diamonds is expected to be depleted in 30-50 years time.

Herein also lies the conundrum of mining natural diamonds. It should also be noted that as the mines age and deposits deplete, it becomes more difficult to increase output as the processes get more hazardous and costly.

Also, the exploration of new diamond pipelines is extremely costly and requires huge amounts of capital. Companies who undertake the momentous task of finding new mines need to have very deep pockets as the financial risks taken may not yield economic benefits at the end of the day.

To add to this, the increasing environmental regulations on mining natural diamonds and increased consumer awareness have paved way for synthetic diamonds (lab grown diamonds) to gain greater market penetration.

Where is the Opportunity For Industry Players?

semiconductor high tech usage diamond

Demand for ultra high performance in modern electronics manufacturing.

At the time of writing, the demand for synthetic diamonds in the jewelry market is very small. Currently, synthetic diamonds are estimated to make up only 2% out of an $87 billion market. This may change in the future as synthetic diamonds gain acceptance by consumers.

However, the advanced electronics market segment has a different story to tell. Due to their exceptional ability to diffuse heat efficiently, lab-created diamonds are seeing a growing demand in high performance electronics manufacturing where they are used as a major component.

In 2018, the Semiconductor Industry Association posted sales of about $122.7 billion, a 13% increase from 2016’s sales. Against this backdrop of growing demand, there’s a lot of economic potentials for synthetic diamonds to be used in smart technologies such as virtual reality and artificial intelligence.

If you think about it, almost every single modern day gadget is comprised of electronics and semiconductor chips. From mobile phones, cars to coffee makers, there is an unyielding drive towards better performance and miniaturization of components.

As a matter of fact, some of the larger synthetic diamond makers such as Element Six, Scio Diamond Technology Corporation, AOTC, Applied Diamond Inc, D.NEA and Washington Diamonds Corporations are already tapping into the opportunities in the semiconductor market.

Do They Pose a Danger to the Market And the Value of Your Diamonds?

diamond rings valuable or not

Perhaps one of the biggest reasons why lab-grown diamonds haven’t created a dent in the industry lies in their costs. After all, when it comes to something that is artificially created in relatively high volume, I’m sure most people would associate products like these with the word “cheap”.

However, it isn’t the case with synthetic diamonds and there are 3 main reasons why their prices aren’t low.

First of all, the process of polishing a diamond is pretty much unchanged and utilizes the same techniques that were used a hundred years ago. You see, diamonds are the hardest material on Earth and only a diamond can be used to polish a diamond. Today, this is done in the form of powdered diamond abrasives on a polishing wheel.

More importantly, polishing a diamond is labor intensive and requires highly skilled workers as well as specialized equipment. The costly overheads for processing a rough diamond (whether it is synthetic or natural) is very much the same!

The second reason behind the high prices is a result of the multilayered distribution channels. Each step of the supply/distribution chain involves costs from retailing, marketing, lab grading and taxes to be incurred.

The third reason is that growing diamonds requires state of the art equipment and energy intensive processes. While you can argue that man-made stones remove the cost of mining from the equation, it still requires significant investments and operational costs.

Also, lab grown stones require huge amounts of time for them to grow and in any businesses, time is money. There are also certain limitations in growing diamonds to extremely large sizes with current know-hows. For example, growing a 5 carat stone is very challenging and almost at the limit of current technological capabilities.

What Consumers Need to Know About Artificial Diamonds

do synthetic diamonds hurt sales

For people who cannot afford a natural diamond, the lower prices offered by synthetics might be an alternative you can consider; especially when it comes to fancy color diamonds with pink or blue hues.

Besides lower prices, another advantage of synthetic diamonds is that they are 100% conflict-free and their origins can be traced back to the labs that make them.

That said, it isn’t all sunshine and rainbows when it comes to synthetic diamonds. They also have their fair share of negative news and problems associated with them as well.

There had been a number of incidents where synthetic diamonds were mixed and sold together with natural diamonds by unethical manufacturers. While the majority of these scams had been exposed, my suspicion is that some inadvertently go undetected.

For consumers who are worried about buying undisclosed synthetic stones, make sure you only buy a diamond that is certified by a reputable gemological lab like GIA or AGS. Having a reliable grading report for your purchase is the best assurance of the diamond’s quality as it is subjected to stringent tests that accurately detect treatments and authenticity.

In Conclusion – What Can We Expect to Happen In the Future?

As the synthetic diamond industry opens up and more players enter the market, you can expect a rapid influx of synthetic diamonds being injected into the market. As basic economics would dictate, consumers can expect a fall in prices as supply grows.

In fact, there are already signs of lower prices when Lightbox (owned by De Beers’s) entered the market in September 2018 with their line of fashion jewelry featuring laboratory-grown diamonds.

Would synthetic diamonds be here to stay or will it be eventually forced out of the market if consumers reject the notion of using them in jewelry? It’s hard to say how it would all pan out with certainty.

Given the current state of affairs, I believe synthetic diamonds are here to stay and will give the natural diamond market a run for its money. In my opinion, it will take at least a decade before synthetic diamonds gain wide-spread acceptance and that’s where things will reach an equilibrium where both natural and synthetic diamonds will co-exist.

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6 Comments

  1. John-
    August 22, 2017 at 9:20 pm

    Can an expert distinguish synthetic from natural?
    Can a consumer distinguish them?
    What do you think about synthetic colored diamonds and the impact on diamond investments in the natural market?

    These answers would complete your already great article.

    regards
    john

  2. Paul Gian-
    August 23, 2017 at 8:59 am

    Without proper equipment, it would be extremely hard for an expert to tell a synthetic from a natural one. And obviously for a consumer, it’s even harder to do so. If you are worried about buying undisclosed synthetic stones, make sure you only buy a diamond that is certified by a reputable gemological lab like GIA or AGS.

    It’s as simple as that. Grading reports are your best assurance because every diamond is subjected to stringent tests which can accurately detect treatments and authenticity.

    For people who cannot afford a natural diamond, the lower prices of synthetics might be viable options to explore; especially if you are considering to buy a fancy colored stone. Besides lower prices, consumers of synthetic diamonds can be assured that their purchase is 100% conflict-free since they originate from a lab.

    On the last note, until the public’s mindset of purchasing the “real stuff” for someone they love is shifted, you won’t see the demand or value of a natural diamond diminishing in near future.

  3. Mark-
    June 13, 2018 at 6:07 pm

    Wouldn’t synthetic diamonds, especially those produced by the low-pressure process, be free of inclusions? For that matter, wouldn’t they be colorless also? Just as there’s nothing special about Canadian diamonds, isn’t it also true that there’s nothing inherently inferior about a synthetic diamond? What’s more, one might suspect that it’s possible to “dope” the process (similar to a depositing a semiconductor substrate) and thereby produce fancy colored synthetic diamonds…

  4. Paul Gian-
    June 14, 2018 at 12:35 pm

    There are microscopic inclusions due to the material used. For colorless CVD diamonds, the newer technology has been able to create those as well. By and large, color in diamonds is caused by elemental impurities (e.g. nitrogen causes yellowishness). And you are right about Canadian diamonds. There’s nothing intrinsically different from those found in Africa, Australia or other parts of the world. What separates them is marketing.

  5. Debra-
    July 9, 2018 at 12:18 am

    Paul, can you recommend a synthetic diamond low pressure producer who is reputable. I would like to inquire about a synthetic stone. Also, what are Nexus diamonds? Thank you. I love the articles and information you provide.

  6. Paul Gian-
    July 9, 2018 at 2:22 am

    Brilliant Earth is the largest vendor of man made diamonds and they are certainly reputable.

    => https://beyond4cs.com/lab-created-diamonds/

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