Statement regarding the NDC report on laboratory diamonds

Rohdiamant und geschliffener Diamant

In early March, Rapaport reported that the Natural Diamond Council (NDC) was planning a campaign to clear up misconceptions and false promises about the sustainability of lab-grown diamonds. Now, the NDC has published an initial report on which we would like to comment.

It is gratifying to read that the NDC has remained fair and factual in its dealings with laboratory diamonds. The report raised some important points that are also of concern to us.

Difference between laboratory and mine diamonds clearly detectable

First, it was correctly established that all laboratory diamonds are identifiable as such with special technical equipment. Laboratory diamonds have a particular growth pattern because the manufacturing process accelerates the natural growth process from several million years to a few weeks. This feature is the only way to clearly distinguish a lab diamond from a mined diamond. The ability to clearly distinguish one from the other is enormously important in order to provide consumers with the necessary transparency. The slightly resonating accusation that the lab diamond industry would claim that one cannot distinguish lab diamonds from mined diamonds under any circumstances is, however, misleading.
Reputable lab diamond manufacturers simply communicate that to the naked eye, or even under a microscope, lab diamonds are indistinguishable from mined diamonds. This is because both diamonds have the same chemical, physical and optical properties. Moreover, every established gemological laboratory, be it IGI, GIA or HRD, ensures a clear distinction through the marking in the respective certificate.

Value and price trends

The value and price trends of lab and mined diamonds are also addressed in the NDC report: First, the report addresses the rarity of mined diamonds, which is one of the main reasons why mined diamonds are traded as a store of value, among other reasons. According to the NDC, the value trend is due to the fact that it is a limited resource and many mines are slowly being depleted. It then clarifies that diamonds are not intentionally held back in the diamond industry to create artificial shortages and drive up prices. Rather, according to the NDC, these fluctuations in the supply of natural diamonds are due to the fact that the diamond industry cannot influence how many diamonds can be found and mined accordingly. In this context, the report compares price trends of mined diamonds with lab-produced diamonds: In the analysis of the price development of lab-created diamonds in recent years presented by the NDC, it is emphasized that prices have dropped enormously and that a lab-created single carat of excellent quality already cost up to 80% less than a corresponding mine diamond in 2022. Thereupon the price development is considered in the direct comparison. It is pointed out that the prices of lab-created diamonds would only depend on the production costs, whereas the rarity of natural diamonds plays a major role.

Of course, this presentation is a clever juxtaposition to justify the price of mining diamonds with the potential resale value. In reality, however, only very few within the value chain benefit from the price development in the diamond industry. However, due to the long and non-transparent value chain, the wages of the workers in the mines in particular remain less than a fraction compared to the value of a diamond.

The poor value and price performance of laboratory diamonds in the industry is indeed a major problem. Cheap coal power and poor working conditions lead to a price war that denies the actual product its value. Educating people about these issues and calling for a fair price for a fully sustainable product is therefore urgently required.

The thing with sustainability: not all lab diamonds are the same

Correctly, the report highlights that laboratory diamonds are not automatically sustainable, even though this is often portrayed as such by various manufacturers and jewelry brands that use only laboratory diamonds. Much of the world's lab-grown diamonds come from China and India, where production is primarily coal-fired. The NDC acknowledges that sustainability depends solely on the manufacturer, and that laboratory diamonds can indeed be a sustainable alternative from this perspective. DIAVON, for example, obtains a large part of its MANUFAKTURDIAMANTs from the Diamond Foundry in the USA, where they are produced in a completely CO2-neutral manner using hydropower.

The NDC also points out that sustainability does not only include environmental friendliness, but that the so-called social footprint also plays a role here. We absolutely agree with this point. At DIAVON, we stand for transparency along the entire value chain, which is why social justice is at least as important to us as environmental commitment. We have personally made sure that all employees involved in the manufacturing process of MANUFAKTURDIAMANTs work under conditions that meet our social ethical standards. It is true, however, that there is little reliable data in the industry for this aspect in particular. Therefore, one should look closely at the respective manufacturer of laboratory diamonds in order to be able to assess which social standards are maintained in production.

Mining for laboratory diamonds?

The report then argues that laboratory diamonds are misrepresented as being free of mining, even though graphite and other metals may be required to produce laboratory diamonds, and even the reactors in which the diamonds are produced are made of metals that have been mined. Thus, the NDC addresses a perfectly correct argument - though, for the two most common methods of producing laboratory diamonds, the HPHT and CVD processes, graphite is not needed. However, when making lab diamonds using the detonation method, the use of graphite may be required, even if only in very small quantities. Moreover, this method is not widely used. Of course, it is also true that metals that have been mined are in the reactors that produce the lab diamonds - as is the case in any technological product, whether it is a smartphone, an industrial machine, or a car.

However, in the case of the diamond industry, one must clearly see the use of raw materials obtained through mining in proportion. The great advantage of laboratory diamonds is that they themselves do not have to be mined, whereas 250 tons of earth have to be moved to mine one carat of natural diamond. These are enormous interventions in the environment. If, in comparison, for the construction of a reactor in which several million carats of diamonds can be produced, there is a certain amount of metals that have been mined, this is out of proportion. The metals for the reactor are mined once and then huge amounts of diamonds can be produced in the reactor. But to extract the same mass of diamonds naturally from mines would require mining on an unimaginable scale

Efforts to ensure environmental balance in the mining industry

The NDC also reports on how the traditional diamond industry is trying to offset its negative impact on the environment. On the one hand, NDC members are implementing more and more renewable energy projects as well as projects to offset the CO2 emitted in order to minimize the ecological footprint as much as possible. On the other hand, there are various projects for nature conservation and biodiversity preservation, with which NDC members try to create an ecological compensation for the damage that mining causes to nature. Of course, one has to praise these efforts and it cannot be denied that the diamond industry has made a lot of progress in the last two decades and is trying very hard to have a positive impact on the environment.

However, for all the commitment in ecological and social terms, it should be mentioned that it would be more sustainable above all not to damage nature and people through mining in the first place.

The Kimberley Process

As far as the ethical acceptability of mining diamonds is concerned, the NDC emphasizes that through the Kimberley Process, natural diamonds are now demonstrably conflict-free. However, this is not entirely correct. The Kimberley Process prevents so-called "blood diamonds" from entering the economic cycle. However, there are several difficulties with this: First, the Kimberley Process defines these conflict diamonds as "rough diamonds used by rebel movements or their allies to finance armed conflict to weaken a legitimate government." This means that in the case of Russia, for example, the Kimberley Process does not apply because this was a war started by a legitimate government. Since Alrosa, one of the largest diamond producers in the world, is 20% owned by the Russian Federation, trade in Russian diamonds thus helps finance the war of aggression against Ukraine. Russian diamonds are not considered conflict diamonds under the Kimberley Process. Second, the trade in natural diamonds is generally very intransparent. The principle of substantial transformation applies, so it is difficult to trace where a diamond actually comes from. Substantial transformation means that a diamond underwent a fundamental change in a country other than its country of origin, so that its value has changed significantly. This includes grinding and polishing. This means that a diamond originating from Russia, which has been cut and polished in India, can therefore claim India as the country of origin after further processing.

In addition, natural diamonds change hands far more often than lab diamonds before they actually reach the end customer. Therefore, it is not really possible to say that natural diamonds are 100% conflict-free thanks to the Kimberley Process. Nevertheless, the trade in natural diamonds has definitely had a positive development. More and more is being done in the industry to be able to offer transparency to customers and to actually be able to reliably track the diamonds. Nevertheless, laboratory diamonds are more easily traceable than mined diamonds simply because of their much shorter value chain.

All in all, the report mentions important points on both sides, regarding the advantages as well as the disadvantages. It tends to be a little more critical of laboratory diamonds, whereas the positive aspects of natural diamonds are highlighted. Nevertheless, it is absolutely necessary to clarify that not all lab diamonds are the same. Sustainability is a topic that is also becoming increasingly important for consumers and contributes to the purchase decision. For this reason, greenwashing has been on the rise for some time, and it is important to point out this problem.

After this first statement, we will take a deeper look at some aspects of the report and we will publish the results on the DIAVON homepage.

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