This year's Investment in African Mining Indaba, which took place in Cape Town, South Africa, in early February, featured a panel discussion titled "Diamonds—critical for Africa's socio-economic development."
The panel, chaired by De Beers’ Senior Vice President Government Relations Emma Wade-Smith, comprised of De Beers chief executive Al Cook, Botswana minerals and energy minister Bogolo Kenewendo, Endiama director of mining operations and joint venture management Miguel Vemba and Angola national director for mineral resources Paulo Tanganha.
Kenewendo noted that for the natural diamond industry to survive there is a need to work out how to navigate the changes.
“Particularly the price of synthetics and how they have been brought so close to natural diamonds to the point that we now have to qualify our diamonds as natural diamonds,” she said.
“So that is a serious threat to our diamonds [and] to revenue generated from that.”
Cook spoke after the Botswana minister said that the industry needs to actively differentiate natural and lab-grown diamonds.
He said the current misrepresentation of lab-grown diamonds as equivalent to natural diamonds poses a risk to the industry's reputation let alone the "destruction of trust" in the diamond industry, particularly in the US.
“I think that there are actions that we need to take on this that we haven't sufficiently addressed. To me, it's a little bit like you have the Mona Lisa hanging in the Louvre, and someone works out you can make posters of the Mona Lisa and sell them on Amazon,” Cook told the audience.
“But instead of selling them for the price of a poster, $6, they sell them at a price related to the price of the Mona Lisa. So they say, look, yeah, this is a bit different from the Mona Lisa, but it's got some advantages as well, it's much newer. And therefore the price that we sell our posters at should be related to the price of the Mona Lisa.
“It's not true, but that's essentially what's happened. And I think we need to speak up. We need to speak up as an industry to address that. Because the people who produce the posters of the Mona Lisa are certainly not going to tell their customers that. And what we have at the moment is a really interesting situation, where the price of lab-grown diamonds has slumped. Why is it slumped? It's slumped because the production of lab-grown diamonds is unlimited.”
He said natural diamonds formed from the earth’s crust for billions of years cannot be compared to synthetics that are produced in a “microwave in China”.
“[You] produce as many as you like. The wholesale market has worked that out. And the price of lab-grown diamonds has tumbled. To the extent where now, you can buy 20 lab-grown diamonds for the price of one natural,” said Cook.
“Because people still understand that natural diamonds are extremely rare. But if you go into a store in the United States, in Houston Chicago or New York, will you hear that from a jeweller? Or will you hear the story that the poster of the Mona Lisa, is an equivalent to the Mona Lisa? Take your pick, they both have their advantages. And that's the bit where I think we should focus our attention."
He said the natural diamond industry needs to tell the story.
“The story of the difference between a natural diamond created over a billion years, bringing tremendous good to countries like Botswana and Angola,” said Cook.
“Recovered at extraordinary cost and with extraordinary delicacy. Brought out of the ground in an ethical and sustainable manner. Versus something churned out of Microwaves. And if we don't tell that story, it's our problem, not the problem of the lab-grown diamonds. I think there's a really powerful story to be told. But if we don't tell it, we're going to get ourselves into problems. One, it's going to be a long time before people work it out.
“But secondly, there is a real risk, particularly in the United States, that consumers will say, 'my goodness, I've been sold a lab-grown diamond. I might have spent $2,000 or $3,000 on it. I just found out it's worthless. Absolutely worthless.' And if we have that destruction of trust in jewellers, in diamonds as a whole, then we've got a real problem. So we need to turn all our attention to focus on the differentiation between lab-grown diamonds and natural diamonds.”
Cook said natural and lab-grown diamonds are not equivalent.
“One is rare, one is natural, one takes a billion years to produce,” he said.
“One, one day, will run out, one is not rare, one is cheap to produce, and one is mass-produced. And one will never run out. And it's up to us to tell that story.”
Aggressive marketing
Although the natural diamond industry had been making disparaging remarks against synthetics someone has since realised that was not enough.
Marketing of the natural diamonds was the answer ending years of reluctance and basking in the yesteryear glory.
The Dubai Diamond Conference convened in November last year heard that the natural diamond industry needs a budget of $100 million for category marketing.
The target is to gather $65 million annually for the Natural Diamond Council (NDC) apart from its current budget of $35 million, which will take the annual budget to $100 million it had before Alrosa’s departure in February 2022.
NDC is currently receiving funding from De Beers, other mining companies and a few trade partners.
In November, De Beers also launched a new marketing campaign, ‘Forever Present’, to reinforce the desirability of natural diamonds ahead of the holiday gifting season in the United States.
The campaign saw the return of the iconic ‘A Diamond is Forever’ tagline following its reintroduction to De Beers’ category marketing activities in 2023.
The campaign featured diverse real-life couples, illustrating unforgettable moments and key milestones worth celebrating with the most special people in our lives, bringing the true essence of their relationships to life on screen.
The Forever Present campaign followed the Worth the Wait campaign, a collaboration between De Beers Group and Signet Jewelers.
Worth the Wait is focused on soon-to-be-engaged Millennial and Gen Z audiences, while Forever Present appeals to gift-givers of all ages by showcasing the connection between natural diamonds and creating precious memories with loved ones this holiday season.
The campaign appeared to have gained some traction as finished diamond jewellery sales maintained their stability from November to December 2024, according to Tenoris, which collects retail sales data from a broadly representative sample of US jewellery retailers.
“In December, revenue from diamond-set finished jewellery inched up 1.2%, an important change of direction from the declines it suffered in December 2023,” it said.
The average price of diamond jewellery jumped 6% to $1,956, showing consumers’ preference for larger diamonds.
Despite these little gains over the December holiday in the United States, demand for synthetic diamonds continued to rise; but, prices dropped even lower as consumers regard them as the low-cost option and expect to see prices decline even further.
The natural diamond industry has an uphill task to undo the damage caused by synthetic diamonds and no amount of derision calling them microwaved diamonds will work unless it sticks to telling the story about the uniqueness of the stones.
The slashing of De Beers' value by $2.9 billion in 2024 is a wake-up call for the natural diamond industry, which faces a rough patch in the years ahead.
Mathew Nyaungwa, Editor-In-Chief, Rough & Polished
