Tuesday, June 11, 2024
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De Beers to Cease Production of Lab-Grown Diamonds for Jewelry

At the recent JCK Las Vegas jewelry show, De Beers’ CEO Al Cook announced a significant strategic shift for the renowned diamond company. De Beers will cease producing lab-grown diamonds (LGDs) for jewelry, pivoting instead to their industrial applications.

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Strategic Shift

For the past six years, De Beers explored the LGD jewelry market through its Lightbox brand. However, the company has decided that the economics of LGDs for jewelry do not justify continued investment. “As the value of lab-grown diamonds continues to fall, their focus increasingly shifts to lower-priced fashion jewelry rather than meaningful pieces people buy to celebrate key moments in life,” Cook stated.

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This decision aims to create a clear distinction between lab-grown and natural diamonds in the jewelry market. De Beers plans to capitalize on the technological potential of synthetic diamonds. “We see the main long-term opportunities for synthetic diamonds in a range of exciting technology applications due to their extreme physical properties,” Cook explained, highlighting uses in 6G technology, semiconductors, and quantum computing.

Focus on Industrial Applications

De Beers’ subsidiary, Element Six, which has produced LGDs using chemical vapor deposition (CVD) technology for Lightbox, will now focus entirely on industrial uses. As the cost of synthetic diamonds decreases, new opportunities for their application in advanced technologies emerge. Element Six is collaborating with Amazon Web Services to explore the use of LGDs in quantum computing and working with the Department of Defense on advanced military communication and electronics applications.

Consolidation and Cost Efficiency

To support this strategic shift, De Beers will centralize Element Six’s production from three facilities into its state-of-the-art $94 million plant in Portland, Oregon. “This starts with concentrating all our resources in a single world-class CVD hub,” said Cook. Additionally, De Beers aims to streamline other corporate operations to achieve over $100 million in annual cost savings.

Economic Rationale

The decision to exit the LGD jewelry market is driven by economic realities. Data from Edahn Golan Tenoris indicates a 34% decline in wholesale prices and a 25% drop in retail prices for two-carat LGDs from January 2020 to April 2024. In contrast, natural diamond prices are projected to rise by 3% to 5% compound annual growth rate (CAGR) through 2032 due to tightening supply.

Future Outlook

De Beers’ decision is part of its broader Origins strategic plan, which aims to boost EBITA growth to just under $1.5 billion by 2028, up from under $100 million in 2023. By focusing on natural diamonds and leveraging the technological advantages of synthetic diamonds, De Beers is positioning itself to lead in both the jewelry and industrial markets.

This strategic pivot underscores De Beers’ commitment to innovation and market leadership. By realigning its resources and expertise, the company is set to redefine the role of diamonds in both traditional and emerging markets.

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Alice
Alice
Alice is a seasoned jewelry designer renowned for her exquisite creations that seamlessly blend artistry with elegance. With a passion for craftsmanship and an unwavering commitment to quality, Alice has established herself as a distinguished figure in the world of fine jewelry. Drawing inspiration from diverse cultures and artistic movements, Alice brings a unique perspective to her designs, creating pieces that transcend mere accessories to become timeless works of art. Her meticulous attention to detail and insistence on using only the finest materials ensure that each creation reflects not only her artistic vision but also a commitment to unparalleled craftsmanship. Having honed her skills through years of dedicated practice and a keen understanding of evolving trends, Alice is adept at translating her clients' desires into bespoke, one-of-a-kind pieces. Her portfolio encompasses a range of styles, from classic and timeless to avant-garde and contemporary, showcasing her versatility and ability to cater to a diverse clientele.

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