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Synthetics Threat Will Grow, Says ABN Amro

The sector will take off in 2019 and 2020, bank predicts.
Jan 17, 2019 5:05 AM   By Rapaport News
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The impact of lab-grown diamonds on the industry will significantly increase in the next two years, according to ABN Amro.

“We think that 2019 and 2020 will be the years that lab-grown diamonds take off and move from an introduction phase to a growth phase,” Georgette Boele, senior precious metals and diamonds analyst for the Dutch bank, said in a report Tuesday. “Sooner, rather than later, lab-grown-diamond wedding jewelry will be part of the offering.” This will have “serious consequences” for the trade, Boele added.

Four main factors will lead to the growth of the synthetics market, she said. As technology progresses, lab-grown-diamond producers are able to create bigger, higher-quality stones, which could prove more attractive to consumers. Lower pricing will also bring demand up, as will the perception of sustainability. Finally, De Beers’ launch of Lightbox, its line of lab-grown-diamond jewelry, has made the category more acceptable, the report noted.

While lab-grown diamonds have already created challenges for the small-stone trade, the problem is likely to spread to the large-stone market as well, Boele predicted. Prices of large natural diamonds face threats from two sides: Improved mining processes enable producers to find larger diamonds, creating the perception among consumers that they have become less rare. Additionally, improvements in synthetics technology have resulted in greater competition from large lab-grown stones.

There are three ways miners can increase their chances of surviving, Boele noted. They can speed up mining activity to cash in on the diamonds that are still under the ground before prices and demand fall. They can also stop searching for new mines, as high exploration costs are unlikely to be offset by any income from future sales of natural diamonds. Finally, miners can move into the lab-grown industry themselves, either on their own, or by teaming up with lab-grown diamond producers, she said.

“In a few years from now, it is highly uncertain if natural diamonds [will] hold their value as always has been assumed,” Boele added.

Image: Lab-grown diamonds (Diamond Foundry)
Tags: ABN Amro, De Beers, Georgette Boele, lab-grown diamonds, Lightbox, Rapaport News, Synthetics
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