Resource World Magazine

D E C E M B E R / J A N U A R Y 2 0 1 9 www.resourceworld.com 61 MINING W hat to make of De Beers, the world's leading diamond company, and its surprising new venture – sell- ing low-cost jewellery set with synthetic diamonds? The Lightbox brand website presents a cheerful array of pendants and earrings sparkling with pink, blue, and clear diamonds manufactured by Element Six, a De Beers subsidiary. The jewellery pieces are meant for lighter moods and moments like birthdays and beach days, although we are encouraged to buy "real" diamond jewellery for more significant occasions like engagements and anniversaries. Really? As a gemologist and geologist familiar with the fascinating geological and geochemical conditions under which gemstones form, I am more than bewil- dered by all this. Only two years ago, De Beers par- ticipated in the "Real is Rare" diamond marketing campaign led by the Diamond Producers Association. The company retains more than a 30% market share of the global rough diamond industry and continues to operate the world's richest diamond mine in Botswana. To help ensure future diamond rough supply, De Beers recently bought Canadian junior Peregrine Diamonds Ltd., a company with a promis- ing diamond project in northern Canada. Is De Beers competing against itself by marketing both gem-quality natural dia- monds and synthetic diamonds? De Beers, through the Lightbox web- site, sells its synthetic diamonds up to one carat directly to US-based customers at a fixed price of about $1,000 per carat. Online diamond retailer Blue Nile offers natural, high-quality, one-carat gem dia- monds for between $8,500 and $19,500, depending on the particulars. The price difference is significant, particularly to cash-strapped millennials or mortgaged to the hilt Canadian homeowners. Most certainly De Beers is moving aggressively to eliminate competition in the synthetic diamond sector by driving down the price. For over 50 years, several compa- nies, including De Beers, have manufactured diamonds for industrial applications includ- ing drilling and cutting tools, lasers, and semiconductors. In the past five years, technology has advanced to enable the manufacture of larger (one carat or more) gem-quality diamonds on an economic scale. Until De Beers entered the market, gem-quality synthetic diamonds were fetching far higher prices in the retail mar- ket. Diamond Foundry Inc. manufactures and sells synthetic diamonds and hypes endorsements from celebrities including Leonardo DiCaprio: "I'm proud to invest in Diamond Foundry Inc. – cultivating real diamonds in America without the human and environmental toll of mining." A well- cut, high-quality, synthetic diamond from Diamond Foundry retails for about $4,200. Diamond Foundry and other synthetic diamond producers have filed a complaint with the US Federal Trade Commission, accusing De Beers of selling its synthetic diamonds below cost. What does all this mean for the Canadian diamond mining industry and the demand for Canadian diamonds? The price of syn- thetic diamonds is falling, and the question is whether the price decline for synthetic diamonds will preserve the demand and market price for natural diamonds. Sizable mines producing plentiful, high-quality diamonds are reaching the end of their life. Economic diamond deposits are rare, and the global supply of high-quality dia- monds is expected to decline, particularly for larger high-quality stones. Even if syn- thetic diamond jewellery proves popular, demand from China and India for "real" diamonds is expected to further bolster prices for larger high-quality diamonds. But do people really want to buy their loved one a synthetic diamond manufac- tured in an energy-intensive, high-tech plasma reactor as opposed to a real billion- year-old diamond crystallized in the deep mantle of the earth? Diamond Foundry breathlessly touts its founding team of M.I.T., Stanford, and Princeton engineers working to build cutting-edge plasma reactors with hundreds of individual precision-engineered parts. The whole process doesn't seem very organic. An informal poll of acquaintances and relatives of varying age shows that, yes, there is undoubtedly an interest in lower- priced synthetic diamonds, but most state they would still buy natural diamonds for important events. Retailers are offering a more robust chain of custody protocol for their inven- tory of natural diamonds to reassure customers concerned about the point of origin. Will the next generation accept supply-chain assurance when buying natural diamonds or will they only want to buy synthetic diamonds? If they do buy natural diamond engagement rings will they be repeat customers and buy additional diamond jewellery or will they spend hard-earned cash on technology products and travel? Whatever the future trend is, it is likely that Canadian-mined diamonds will remain a superior option for those interested in purchasing a high-quality, natural diamond mined in a socially and environmentally responsible manner which represents a truly unique piece of natural earth history. n Will consumers accept synthetic diamonds? by Lori Walton, P.Geo., G.G.

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