Editor’s Note
The diamond industry is undergoing a profound transformation. As this article details, the era of predictable prices and market control is over, disrupted by pandemic volatility and the rapid rise of lab-grown alternatives. This shift presents a fundamental challenge to traditional giants like De Beers, forcing a reevaluation of value and strategy in the gemstone trade.
Diamonds were long considered particularly expensive and valuable – but now a price decline has set in. For a long time, the diamond market was characterized by predictability. Since COVID-19, that is over. First, prices went through the roof, then they plummeted – now lab-grown diamonds are causing a further price drop. This is hitting the market leader De Beers at its core.
The problem: diamond prices have been falling for over two years. Market observers speak of a veritable price slump. After an all-time high in the first quarter of 2022, they fell by up to 20% in 2023, as demonstrated by the Zimnisky Global Rough Diamond Price Index. Currently, the pace of the price decline has slowed somewhat, but not the direction of the price trend.
For a century and a half, De Beers, as the de facto monopolist, could single-handedly dictate prices on the globally manageable diamond market – for example, also through artificial scarcity of supply. At the beginning of the COVID-19 pandemic, the market was thoroughly shaken up because global demand surged, but De Beers, due to limited capacities, for instance in processing, could not keep up. Then came a crash – more than a correction.
The crisis last year had two main triggers: A collapse in demand from China due to the worsening economic situation there, keyword real estate crisis. Simultaneously, more and more lab-grown diamonds, called synthetic diamonds in the industry, found their way to the market.
These are not fake diamonds; chemically, they are identical to natural diamonds. In their production, the natural circumstances of diamond formation – time, heat, pressure within the earth – are imitated in industrial facilities. The result is a stone that can be cut and processed like its natural counterpart. The costs for synthetic diamonds have been falling rapidly since 2016 and will likely continue to do so. The revenues of lab-grown stone manufacturers have multiplied in recent years.
For De Beers, the air is getting thin. Already in January, the disappointing figures for 2023 led to initial speculation about the uncertain future, and diamond prices were lowered. The company also announced spending cuts and reduced production volumes. In the first quarter of 2024, De Beers’ diamond production collapsed by 23%, and the forecast for the current year was reduced from an expected 29 to 32 million carats to 26 to 29 million carats. Carat is the unit of measurement for the mass of gemstones.
stated Anglo American. Over the course of a year, Anglo American’s shares have lost over a third of their value.
Now, the “Wall Street Journal” and the British “Financial Times” reported…