Debmarine Namibia is a joint venture between De Beers, the world’s leading diamond mining company and the government of Namibia, a country of 2.1 million people nestled in the southwestern edge of the African continent. The company is responsible for deep sea mining of diamonds, a mineral that still contributes significantly to the country’s economy. Debmarine Namibia is currently operating a $10 million crawler deep in the waters of the Atlantic Ocean; a place you can only reach via a helicopter.
Ten million is chump change for a company that makes billions of dollars in revenue each year. Until a decade or two back, such large capital investments were not only routine but also made sense in the diamond industry. After all, De Beers had managed to monopolize the world’s diamonds industry and kept the price of the mineral artificially high through an impeccable cartel strategy.
But that changed in the past decade. The industry got a lot more fragmented after producers in Australia and Canada started moving out of the cartel. But investments in exploration continued to rise thanks to the bad publicity caused by the issue of blood diamonds that forced the company to limit its sales to their own mined products.
However, the diamond industry is now facing a new disruption that could alter the economics of the trade ‘forever’ – synthetic diamonds. These are diamonds that are produced by compressing naturally found carbon using High Pressure High Temperature (HPHT) incubators over several days to simulate the earth’s natural diamond-growing conditions. Temperatures are often set in excess of 2000 centigrade and the pressures are kept as high as 60,000 atmospheres. And the best part is that the these diamonds are priced cheaper than the mined diamonds.
A slew of startups have emerged in the synthetic diamond industry that is giving companies like De Beers a run for their money. Quite recently, Leonardo DiCaprio, the star of the movie Blood Diamond announced his plans to invest in Diamond Foundry, a startup that specializes in making synthetic diamonds for retail consumers. Synthetic diamonds have not only become as close to the real thing in recent times, they are also a lot more pure giving customers their every penny worth of carbon.
Besides factors like cost and purity, synthetic diamonds are also customizable. One Pennsylvania based startup focuses entirely on making personalized diamonds. The company uses carbon extracts from the hair or ashes of a loved one to prepare diamonds that are more personal and precious to the wearer. These are value-adds that the traditional diamond mining industry cannot provide.
But perhaps one of the biggest disruptions to the diamond market is expected to come from the use of synthetic diamonds in industrial applications. Diamond is one of the hardest minerals known to mankind and has been quite extensively used in the manufacture of cutting and drilling tools used in mining. The arrival of synthetic diamonds could potentially bring down the cost of mining which can have a cascading effect on the prices of mined goods, including geothermal energy that requires drilling.
Diamond producers like De Beers are not the only players to be impacted by synthetic diamonds though. Countries like Botswana have already sounded the alarm on the growth of synthetic diamonds that could strongly hit the country’s economy which is majorly driven by diamond mining.
Having said that, these are still early days. The worldwide synthetic diamond industry is currently valued at $15.7 billion and is expected to grow to $28.8 billion by 2023. For perspective, the global diamond jewelry market alone is pegged at $79 billion dollars. But it is a matter of time before synthetic diamonds gain the same levels of acceptance among consumers as natural diamonds do. That could be the watershed moment for the world’d diamond industry.