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Edahn Golan: Halo effect from lab-grown diamonds driving high demand for large, 2-carat natural stones in the U.S.

27 january 2025

edahn_golan_xx.pngThere was a high demand for large and 2-carat natural diamonds among U.S. consumers last year.

Edahn Golan, owner of the eponymous Edahn Golan Diamond Research and Data, told Rough & Polished's Mathew Nyaungwa in an exclusive interview that their research found a halo effect from lab-grown diamonds.

He said the trend among lab-grown diamond (LGD) consumers to purchase larger and higher clarity LGs influences natural diamond buyers.

Golan said the average loose natural diamond acquired now is 18% bigger than five years ago.

He also said the amount of 2-carat natural diamonds sold in 2024 rose 11% yearly.

Golan said the halo effect is also contributing to the growth of demand for 2-carat natural diamonds.

Two-carat diamonds are the most common size for LGDs, which is influencing natural diamond buyers, he said.

Golan also projected recovery in the US this year, although the first quarter may be slow.

He said retail inventories are still down, and while unit sales have dropped, reallocating inventory to higher-priced items will benefit them.

Golan said China's economy is showing early indications of recovery, although it appears that the journey ahead is lengthy and difficult.

He projected a slower year-over-year fall in China as its economy began to recover.

Below are excerpts from the interview.


The U.S. finished jewellery sector experienced a sales increase of 2.9% in 2024, recovering from a 3.4% decline in 2023. What factors contributed to this rebound?

Americans felt their wealth had improved, owing primarily to record highs in the US stock market. That coincided with a broad strengthening in the US economy. Also, keep in mind that the improved results come from a low base in 2023. Finally, Americans may have experienced jewellery saturation after raising their jewellery purchases during COVID-19, but they have since overcome it.

The average price per item surpassed $1,090 in 2024, marking the highest level in half a decade. What drove this increase in the average price of finished jewellery in the U.S.?

The surge in the price of gold contributed to jewellery price rises. Furthermore, when consumers feel affluent, they are more likely to buy higher-priced items.

Edahn_interview_jan25_1.png

What was the overall impact of the rise in average price, considering the significant drop in the number of units sold last year?

The average price per item grew 4.5% year on year in 2024, outpacing the decrease in unit sales. That indicates that retailers' revenue improved, which is significant relief for them.

What is driving the demand for large diamonds among U.S. consumers?

Our research found a halo effect from lab-grown diamonds. The trend among LGD consumers to purchase larger size and higher clarity LGs is influencing natural diamond buyers. The average loose natural diamond acquired now is 18% bigger than five years ago.

Edahn_interview_jan25_2.png

What are your projections for the demand for natural diamond jewellery in the U.S. and China during the first quarter of 2025?

In the US, I expect a recovery in 2025, although the first quarter may be slow. Retail inventories are down, and while unit sales have dropped, reallocating inventory to higher-priced items will benefit them. This will have a favourable impact on the value chain. Manufacturers have also decreased inventory and are in the process of realigning their intake with actual customer demand, with a concentration on the United States.

China's economy is showing early indications of recovery. However, it appears that the journey ahead is lengthy and difficult. I anticipate a slower year-over-year fall, as China begins to recover.

Despite a three-year decline in sales of natural loose stones, why is there still a high demand for 2-carat natural diamonds?

The amount of 2-carat natural diamonds sold in 2024 increased 11% year on year. Several factors contributed to the growth. First, consider the halo effect, which I mentioned before. Two-carat diamonds are the most common size for LGDs, which is influencing diamond buyers. For high-net-worth individuals (HNWIs), the price is less of a problem, thus they continue to purchase natural diamonds. In addition, the retail prices for 2-carat diamonds have dropped in the last year, encouraging purchasing.

What factors are causing prices of lab-grown diamond (LGD) jewellery to decline?

LGDs are still seeing price decreases. LGD-set jewellery will continue to fall in value as long as LGD prices do. The average price of LGD jewellery dropped by 8.3% in 2024.

What is your forecast for this segment in the coming year?

Prices continue to fall. However, our research reveals that LGD price declines began to slow in mid-2024, and I predict this trend to continue into 2025.

Edahn_interview_jan25_3.png

How can both the natural and LGD industries effectively navigate the challenges ahead?

It's all about marketing.

If you look closely at both sectors, you will see several trends. For starters, natural and lab-grown are becoming increasingly dissimilar. Except for their chemical characteristics, they now have far less in common than they had previously.

Aside from that, production of both is more in line with consumer demand, manufacturing is more closely managed, and price is acceptable to consumers.

The only thing left to do is to focus more on marketing. Independents can focus on utilizing their distinct position as trustworthy and competent in their local markets. Manufacturers must build programs to help their retailers. For example, contribute to advertising costs, fund community engagement activities, and more.

For miners, continuing to support the natural diamond category is critical.

Mathew Nyaungwa, Editor-In-Chief, Rough & Polished