Lab-grown diamonds. Forever?
Pandora sends shockwaves through the $200bn+ jewellery industry, announcing that they will be shunning mined diamonds for lab-grown alternatives. So, what’s all the fuss about?
Diamond mining is under pressure
Long-lingering concerns about the ethics and environmental impact of the diamond industry have led to calls for an alternative.
The origin of many diamonds is sketchy. In West African countries, the bountiful supply of diamonds turned out to be a poisoned chalice, leading to civil war, horrific human rights abuses, and the coining of the term blood diamond.
Whilst the human aspect of the diamond trade is well-documented -- DiCaprio made a film and Kayne rapped about it -- the ecological impact is mostly overlooked.
And it’s big.
For every carat of diamond that is mined, ~100 square feet of land is rendered unusable, even after the diggers have gone. Think soil erosion, deforestation, pollution of waterways etc. Not to mention the energy mining consumes.
Is this love? Diamond mining in Sierra Leone
Luckily, there’s a ready-made solution
And it’s not Haribo rings. Although, they did work a charm in the playground.
If you have read the title (which, if you got to this point, is a fair assumption) you’ll know I’m talking about 💎lab-grown diamonds💎.
LGDs have been in the pipeline for a while now; the first synthetic diamond was produced by General Electric waaay back in 1954.
Lack of demand and scaling issues have meant until now synthetic jewellery has mostly been overlooked.
However -- now with the backing of an $80bn jewellery behemoth -- LGDs are becoming harder to ignore. And they’re changing the face of the diamond industry as we know it.
“Some things just take time. You can’t make a baby in a month by getting nine women pregnant”
The Oracle of Omaha clearly wasn’t talking about diamonds.
LGDs take just weeks to produce, rather than the billions of years needed for diamonds to form in nature. The process uses high-temperature, high-pressure ovens, and only costs around 1/3 of that of naturally-occurring diamonds.
Moreover, 60% of the energy used in the LGD manufacturing process is renewable. And Pandora hopes to make it 100% by 2025.
As for the quality: LGDs are molecularly identical to the world’s most treasured gemstone, meaning the same clarity, colour and brilliance. In short, they’re carbon copies.
All of this means the economics are loaded very heavily in Pandora’s favour.
Despite this, Pandora argue that the move isn’t primarily a cost-saving exercise. CEO, Alexander Lacik, claims Pandora is going lab-grown simply because “it’s the right thing to do.”
But LGDs have their detractors too
…who’d rather shove the synthetic jewels where the sun don’t shine.
Unsurprisingly, the World Diamond Council (WDC) is leading the verbal assault, emphasising the loss of income faced by miners in poor regions. According to their data, the diamond industry directly or indirectly supports some 10m people worldwide – and they reckon LGDs pose a threat to their livelihoods.
We’re nice people here, so let’s give them the benefit of the doubt, but a cynic might claim it is their wallets they’re actually looking out for…
And others just want to make mined diamonds more transparent through technology. Since 2016 companies such as Everledger have been using a blockchain-based tracking system to enhance the traceability of their supply chain. Consumers can then decide for themselves which diamonds are ethically sourced.
Speaking of chains…Rick Ross is miffed future generations will think his bling makes him look cheap
Smart positional play
Diamonds only represent a small fraction of the 100m+ pieces of jewellery Pandora sells each year. So no doubt the company is relying on the combination of lower prices and positive PR to give sales a bump.
By betting on LGDs -- and being a vocal critic of mined diamonds -- Pandora is positioning itself as the innovator thinker in the jewellery industry. A classic carat and stick tactic, if you will.
The move is also a savvy one for Pandora, because consumers can feel good about purchasing diamonds from a ‘responsible’ jeweller. It’s an approach that’s sure to resonate with millennials, who are far more in to so-called ‘conscious consumerism’ than other generations.
Or the death of an industry?
Diamonds are valuable because they are scarce.
So, there is concern that flooding the market with lab-grown diamonds will drive the price down and diminish from the allure.
It wouldn’t surprise me to see an OPEC equivalent for diamonds emerge, in which the biggest producers/jewellers collude to control supply and maintain an acceptable price floor.
But if that doesn’t materialise, LGDs may well be a box Pandora -- and the rest of the diamond industry -- wish they’d left unopened.
Snippets:
Stories from the week in 30 secs
Green giant:
Orsted, the Danish wind turbine giant, unveiled a $57bn plan to become the world largest renewable energy producer by 2030. It faces stiff competition; Spain’s Iberdrola has committed $183bn to the same goal, whilst Italy’s Enel has set aside a not-too-shabby $195bn. Most pressingly, however, Orsted must hope people forget its previous name, Danish Oil and Natural Gas: DONG. I mean, come on…
Shop till you Depop:
Etsy acquires the second-hand clothes app for a reported $1.6bn. The resale market is growing at a 39% CAGR -- twice the pace of the global fast fashion market. It’s expected to reach $64bn in the US alone by 2024. This is positive news; the fashion industry is a huge polluter. And, with 90% of Depop users are under 26, it seems like Etsy will be well positioned to capture а vast swathes of the market.
Boardroom battle at Exxon:
The party’s over at ExxonMobil…well, maybe. Two climate-friendly directors were voted on to the board at a shareholder meeting last week. Companies the size of Exxon seldom have anyone but ‘yes men’ on their boards, so it will be interesting to see how nonconformist opinions are taken. Exxon has so far pledged $3bn to green projects over the next 5 years, a figure which pales in comparison to the $100bn for other projects. Last year Exxon recorded a $22bn loss, so change is very much needed, even if it won’t be welcomed