For The People

De Beers to sell synthetic diamond jewellery

De Beers recently announced the launch of a new company called Lightbox Jewelry that will begin marketing a new brand of laboratory-grown diamond jewellery under the Lightbox name in September. The diamond giant’s decision to sell synthetic diamond jewellery has caught the attention of Martin Rapaport, founder of the Rapaport Diamond Price List. The Price List, also known as the Rap Report, is the industry standard for the pricing of diamonds and is published weekly and given to jewellers and diamond merchants to set prices for consumers. “It is De Beers’ intention to transform from a mining company to a luxury consumer powerhouse. All this opportunity is made easier by De Beers’ position that it is a primary low-cost synthetic diamond producer with detailed knowledge and expertise about the demand side of the diamond equation.” Rapaport explained.

Lightbox lab-grown diamonds will retail at a fixed price of US$800 for a one-carat stone. “Lightbox will transform the lab-grown diamond sector by offering consumers a lab-grown product they have told us they want but aren’t getting: affordable fashion jewellery that may not be forever, but is perfect for right now,” said Bruce Cleaver, CEO, De Beers Group.

According to Rapaport De Beers was the custodian of diamonds for over a century. They maintained rough diamond prices by buying excess supplies of other companies and spent about R2 billion annually on advertising generic polished diamonds. This approach worked well until the year 2000 when Australia’s Argyle and Russia’s Alrosa dropped out of the cartel, and De Beers found themselves with over $5 billion of inventory and a market cap well below book value. Rapaport said that De Beers is still a dominant diamond player, with 42% of the world’s rough diamonds sales.

“De Beers is a corporation with no emotional attachment to diamonds or the trade. While De Beers does take proactive socially responsible measures to build the profitability of its brand, corporations are not altruistic. It’s all about profits. De Beers is a corporation loyal to profits, nothing more and nothing less” said Rapport. He also said that by promoting and selling synthetic diamonds, De Beers will be competing directly with natural diamonds. Furthermore, their claim that lower prices will push out or reduce profits of other synthetic producers only applies if they directly compete against the specific product categories of the other producers. Rapaport believes that if De Beers push lower synthetic prices into the engagement ring market, it may lead to the demise of the natural diamond market.

Perhaps it is just a clever strategy of De Beers by grabbing the opportunity that synthetic diamonds provide. On the one hand they believe that they can maintain a dominant and profitable position in both natural and synthetic diamond markets. Moreover, a future in synthetics makes them less reliant on natural diamonds. Rapaport on the other hand, is of the view that “If the most important thing to you is profit, then go ahead, sell anything to anyone at any price. However, if you and your business have real values that transcend profits, take a pass on synthetics. You might miss out on business and make less money, but you will build confidence in who you are and what you sell. Being real is not easy, but it’s the right thing to do.”

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