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 Post subject: De Beers Lab Grown Diamonds
PostPosted: Tue May 29, 2018 9:25 pm 
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So what does everyone think about De Beers announcing that they7 will begin selling lab grown diamonds? Building a big lab up in Portland Oregon to make the stones, so not worried about U.S. politics and regulation.

Does this mean that the larger sight holders will also now be free to enter the market? 1 Carat stones that retail for $800.00 which is significantly less that current lab grown stones. I see prices for non brand named lab stones dropping down near Moissanite in short order.

Why did De Beers feel the need (opportunity?) to do this now, and announce days before the largest Jewelry show of the year this weekend in Vegas?

Mistake?

Genius?

How will this affect the broader market?

I am interested in everyones initial thoughts about this. It may be the biggest development in our industry in recent history.

Will you use lab diamonds as accents with your fine, rare colored gems?

Diamonds have no soul, never did.....


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 Post subject: Re: De Beers Lab Grown Diamonds
PostPosted: Tue May 29, 2018 11:10 pm 
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DeBeers has been on the forefront of synthesis for a helluva time.
They are in the business of making (vast amounts of) money.

As African sources are depleting and the cost of mining and extraction increases, expanding one's options seem sound. That includes the recent DeBeers Diamond Buy Back program.

I suspect many commercial manufacturers would be open to options as well.

That being said, no, I am not a fan of synthetic anything. I am also not a fan of DeBeers for anything....whatever options they conjure.

Alrosa, 100% for contemporary goods.

Yes, diamonds cut before 1930 do have a soul....and a legacy.


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 Post subject: Re: De Beers Lab Grown Diamonds
PostPosted: Fri Jun 01, 2018 5:10 pm 
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We have a saying in french that says more or less :

"Since these events are beyond our control, let's pretend that we organize them."


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 Post subject: Re: De Beers Lab Grown Diamonds
PostPosted: Fri Jun 01, 2018 5:15 pm 
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This announcement does not surprise me.
Element 6, formerly known as DeBeers, usually does not engage in pioneering research or manufacturing, but they utilize business intelligence as a tool to investigate other markets for their manufacturing and marketing expertise.
Two years ago, a manager at an Element 6 research facility in Texas contacted me about a project he would not describe in any detail and sent me a very broad non-disclosure agreement suitable only for employees, not outside vendors. I responded by telling him that the NDA was appropriate for employees, but to comply as a vendor, I would need to keep notes of our exchanges of confidential information so I knew what information to protect. He responded that their law firm in Manhattan would not approve of a traditional vendor NDA as I described. I politely wished their project well and told him that I would be happy to help them in the future if they required that.
Now it all makes sense. His contact was not a random event.
I think Portland, Oregon is a wise choice for a manufacturing facility.

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 Post subject: Re: De Beers Lab Grown Diamonds
PostPosted: Fri Jun 01, 2018 9:23 pm 
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There is a bunch more to the story.

https://www.bloomberg.com/news/articles/2018-05-29/de-beers-is-said-to-make-u-turn-by-selling-man-made-diamonds

https://lightboxjewelry.com/

They are doing two things that are quite obvious (to me) by the article and their site.

First, they are trying to change the perception of created diamonds, away from an equal but less expensive alternative to mined diamonds. Instead, they are shown as a manufactured item, all alike, made at will, no sense of rarity or enduring value. Common, all alike, they even say "not real."

Second, they are hitting the created diamond industry in the pocket book - taking most (for some producers ALL) of the profit from the item. A drop from $4,000/ct to $800/ct is going to hit a lot of them very hard.

Going to be fun to watch the fallout over the next few years...

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 Post subject: Re: De Beers Lab Grown Diamonds
PostPosted: Sat Jun 02, 2018 3:22 pm 
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Yes, I can think of a few producers who would have a difficult time in competing with Element 6. Three are based in the U.S. One of those I advised several years ago about this very scenario and encouraged the company to go into producing high quality diamond wafers for precision diamond tools. The marketing person scoffed at my advice. I have been in the diamond business for 37 years and he was in it for less than 5. I have done business with DeBeers and other producers and know what to expect. Element 6, formerly known as DeBeers, has smart technical and marketing professionals in their employ.

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 Post subject: Re: De Beers Lab Grown Diamonds
PostPosted: Sun Jun 03, 2018 12:07 pm 
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Irony is De Beers has been against and scorned lab made diamonds for years and now they are welcoming it with open heart (and open pocket). anyway this will have huge affection on the trade. now days the jewelry business is not what is used to be now young people prefer to buy latest game console or mobile/tablet or invest in crypto currencies.. i remember 20 years ago business was so good De Beers was also advertising everywhere, maybe this sounds bad but maybe it also be a good thing, to be honest affordable Lab Grown Diamonds in jewelry was inevitable and sooner or later we should have faced it

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 Post subject: Re: De Beers Lab Grown Diamonds
PostPosted: Sun Jun 03, 2018 2:42 pm 
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Source for lab grown diamonds @$800/ct?
Serious question.


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 Post subject: Re: De Beers Lab Grown Diamonds
PostPosted: Sun Jun 03, 2018 3:10 pm 
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Barbra Voltaire wrote:
Source for lab grown diamonds @$800/ct?
Serious question.

what do you mean? do you think it's not a US base Lab?

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 Post subject: Re: De Beers Lab Grown Diamonds
PostPosted: Sun Jun 03, 2018 3:33 pm 
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:D No, I frankly don't care if they are manufactured on the Millennium Falcon.
I was just curious, where can one buy a synthetic diamond, of a reasonable size, for $800/ct.


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 Post subject: Re: De Beers Lab Grown Diamonds
PostPosted: Mon Jun 04, 2018 1:17 am 
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Just back from JCK/AGTA show in Vegas. I went to two public DeBeers/DPA presentations on this subject. I also had some in depth private conversations with friends inside De Beers, owners of Lab Diamond plants, and some cutting shops. All of these people were personal friends of mine for years, so I have some faith in what I was said. I am sure that much information was not given due to constraint of confidentiality, and I did not push for inappropriate information out of respect for my friends. However, I have developed my own idea about what is happening with this. Too tired this evening, but I will post some thought over the next few days. very interesting subject for me. I think the industry at the show was missing what is really going on. It will be a very interesting next few years for sure.

Barbara, just to answer your question on pricing. You can buy fine make melee in Lab stones for around $100/ct now. The manufacturers confirmed to me that DeBeers position that cost is linear is mostly true. As an example, if it takes 2 days to produce a .25ct stone, it takes 4 days to produce a .50ct stone, 8 days to produce a 1.00ct stone and 16 days to produce a 2 ct stone. (Note in this example time and daily cost are my estimates, not based on actual knowledge and are just for the example.)

So, if the cost to run the machine is $50 per day
then:

2 days X 50 = 100 /.25 = $400/ct
4 days X50 =200/.50 = $400/ct
8 days X 50 = 400/1.0 = $400/ct
16 days X 50 = 800/2 = $400/ct

So, as far as manufacturing costs are concerned, it is very possible that all sizes could be sold at the same price per carat. In fact, the cutting costs of melee is higher than it is for larger stones, so it could be that total cost could actually be lower for larger stones if normal manufacturing pricing formulas are used.

Currently melee is pretty much being sold on a cost plus basis as is normal in a manufacturing industry. The Lab Created Diamond industry is currently trying to ride on the back of natural stone pricing for larger stones and making huge profits because of this. Large stone are being priced at 70% to 85% discounts off of RAP Sheet prices. However, it is obviously possible, and even likely, that De Beers will succeed in driving the price of lab stones of all sizes down to normal cost plus pricing. When (if) that happens you will be able to buy large stones at the same per carat price as melee which will be close to $100/ct.

Most rough I saw is coming from a single Chinese company. I was told there are 10,000 machines at this company, with only 1,000 currently dedicated to producing gem rough. The rest are producing industrial and scientific use rough. So already supply capacity could be huge overnight.

More later.....


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 Post subject: Re: De Beers Lab Grown Diamonds
PostPosted: Mon Jun 04, 2018 11:17 am 
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Excellent post!


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 Post subject: Re: De Beers Lab Grown Diamonds
PostPosted: Tue Jun 05, 2018 1:09 am 
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Below are my thoughts and conclusions. Put on your tin foil hats, we are in conspiracy theory territory now. I have no inside knowledge, nor any direct confirmation. However, when I presented this to a group of De Beers people, I got lots of smiles, and the comment that I am a very insightful.

When I first read the announcement on LightBox I thought wow, there are two choices. De Beers is being stupid, or they are geniuses. Since I have known them a long time, my choice was they are geniuses, so now what are they up to?

Why Lightbox Manufactured Diamonds, and why now?

The why now is the easy part. De Beers although no longer a monopoly is still a powerhouse in the diamond business with over 6 Billion in annual revenue to protect. The Lab Diamond industry is growing very quickly. India reported that they broke the billion dollar per year mark in lab diamonds this year. Time for De Beers to act, it would soon be too late.

The why Lightbox, is a bit less clear. One has to think about the secondary, and tertiary reasons and effects on the industry the LightBox will have. I believe the simple answer for LightBox is here:

https://en.wikipedia.org/wiki/Predatory ... ted_States

De Beers has a long history of difficulties with U.S. antitrust laws. However, the U.S. market is over 40% of the diamond market. If the battle is to be fought and won, it must be fought here.

The entire structure, and positioning, and pricing model of the Lightbox Company hits almost verbatim the description of successful defense issues of antitrust/predatory pricing law.

De Beers needs to create the perception in the public mind that Lab is has low value and is on par with CZ and Moissanite. Suitable only for costume/fashion jewelry.

All of the advertising from De Beers, the new Diamond Producers Association, Alrosa, and all of the sightholders are in alignment for the next year. It is all variations on "Real is Rare" . Let us not forget that the whole reason for the formation of De Beers was that once diamonds started being mined from the primary deposits in Southern Africa, instead of the historical low producing alluvial deposits, they were no longer actually rare. The De Beers management of supply, and promotion to create demand, and the perception of rare value, is probably the most successful example of that business model in history. The have the best minds, experience, and infrastructure in the World. If anyone can be successful with the "Real is Rare" and therefore valuable story it will be them. Perception is reality.


I don't the the 200 Million is gross sales that De Beers is eventually targeting from Lightbox is at all important to their business. It is a rounding error is size. However, it does give them a reason to advertise, and make real the opposite of "Rare is Real", Lab Diamonds are not rare no matter what size, and therefore has no real value and prices, and prestige should reflect that. De Beers cannot just go out and start that kind of predatory campaign without a company light Lightbox to give them cover. They can by promoting the Lightbox story and pricing model, and in fact make it a reality for the consumer. It is not just talk, you can actually buy the stones. I also believe that a profit can be made at those prices. If so they have perfect cover from the antitrust laws. The are even building the factory in the U.S.. They can say that hey we located the factory here because we anticipate making the biggest part of our market and profit here. Growing diamonds is energy intensive so we located in the Pacific Northwest for the low electricity costs. We want to make a profit.

Don't forget melee is already $100/ct and they will sell for $800/ct. That can hide a lot of losses growing big stones depending on how they choose to do their manufacturing cost accounting.

So that is my tin foil theory. What do you guys think.

Does it make sense?

What will be the effect?

How will the Lab producers respond?

How low will prices go?

Will the financial World invest and loan money to labs in the face of this kind of battle.

At what discount to natural do think lab diamonds become compelling?

For those of us in the colored stone industry, will you ever use lab diamonds with your natural colored stones? I can't see it for most stones, but treated stones like blue topaz and others, yes.

Interesting stuff to think about, and now is the time to do it.


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 Post subject: Re: De Beers Lab Grown Diamonds
PostPosted: Tue Jun 05, 2018 1:18 am 
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I encourage everyone to take a minute and go here:

https://lightboxjewelry.com/pages/lightbox-moments

The most beautiful ad campaign I have ever seen that is actually a backhanded statement showing that the product is for trivial, unimportant moments that one would not associate with rare valuable things. Mostly featuring teenagers, and nary a man in sight with the courage to present his woman with a fake diamond.

De Beers......... Advertising and perception geniuses.


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 Post subject: Re: De Beers Lab Grown Diamonds
PostPosted: Tue Jun 05, 2018 1:55 am 
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Maybe, but the public is becoming more aware all the time thanks to social media. I think that DeBeers has lost their luster and the whole notion of rare is gradually being tossed into the trash bin. What would an informed person care if a diamond was synthetic or not as long as it takes sophisticated means to differentiate it from a natural one? I am thinking that with the advent of the rise of synthetic diamonds the most hopeful thing we will see is a trend towards the greater use of colored stones.

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