Indians believe that a flawed diamond can wreck a person’s life. But it’s a flawless gem that has De Beers, the world’s largest diamond company, worried. De Beers, which at one time controlled more than 96% of the global supply of diamond roughs — stones before they are cut and polished — saw its share slip to 70% last year, according to a KPMG India report.
This was primarily because Australia’s Argyle and Russia began selling rough diamonds independently, instead of routing them through De Beers’ Central Selling Organisation.
Another reason was a steady rise in popularity of laboratory-grown cultured diamonds, which are different from CZ (carbonate zirconium) and other varieties of artificial stones commonly referred to as American diamonds.
Cultured diamonds are made in the laboratory by reproducing conditions of heat and pressure that nature creates over millions of years. They are of the same grade and similar to original diamonds in molecular structure. Cultured stones can be created layer upon layer without blemishes and customised to size and colour as per requirement.
De Beers lobbied in US courts to compel the industry to label cultured stones ‘artificial diamonds’. But, a few months ago, the courts permitted the industry to call them ‘cultured diamonds grown in laboratories’. The word ‘cultured’ has a more positive connotation than ‘artificial’.
According to estimates, $1 billion worth of cultured diamonds made their way into the diamond-studded jewellery market last year, where the share of diamonds alone was estimated at $4 billion at the retail level, says the KPMG report.
The share of cultured diamonds is likely to cross the $2 billion mark even as the market for diamonds in studded jewellery could cross $6 billion in less than five years.
Despite growing popularity, cultured diamonds are sold at a discount of around 15% compared to natural diamonds, unlike cultured pearls which command a premium in the market. Why this aberration? One reason could be that De Beers has kept the price of diamond roughs high.
But in coming months, the world is likely to see fresh negotiations between producers of natural diamonds and creators of cultured diamonds. India has a stake in the industry as it employs four to five lakh diamantaires — highly skilled diamond cutters and polishers who helped create a market for middle-class jewellery with smaller, cheaper cut and polished diamonds which the west could not offer at competitive prices.
Moreover, Rio Tinto recently discovered a major diamond pipe in India. With cultured diamonds, the market for diamond-studded jewellery could expand exponentially in India. Lower price, flawlessness and easy availability could dent the market for real stones.
Diamond retailers in the country, however, don’t agree.
“Those who know the value of real diamonds would never opt for cultured ones. Not one of my regular customers has asked for a cultured diamond. When you can afford the original, who would want a clone?” says jewellery designer Farah Ali Khan, while Ishu Datwani of Anmol Jewellers says, “Now that cultured diamonds are here, owning the real stuff will be a bigger pride.” Rajeev Arora, partner, Amrapali jewellers, says cultured diamonds have no resale value.
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