Lab-grown diamonds called growth industry

By ZHU WENQIAN in Beijing and SHI BAOYIN in Zhengzhou | China Daily | Updated: 2022-02-25 09:44

Synthetic diamond products developed by Henan Huanghe Whirlwind Co Ltd are on display. [Photo/Xinhua]

Central China’s Henan Province Bolsters Its Strong Reputation as a Center for Cutting and Polishing Synthetic Tapers

Zhecheng, a small city in Henan province, is often called China’s diamond capital, even though the province has no natural diamond deposits.

This is because of the industrial clusters that manufacture and process artificially grown diamonds.

For more than 40 years, the processing of super-hard materials has been a traditional pillar of the industry in Zhecheng. In recent years, the city has further developed its lab-grown diamond manufacturing sector, fueled by strong demand for diamond jewelry from Chinese consumers.

The annual worldwide production of laboratory-grade jewellery-grade rough diamonds is approximately 6-7 million carats. Of this total, China’s production capacity is about 3 million carats per year, or about half of the total. In China, 80% of lab-grown diamonds are made in Henan province, said consultancy Bain & Co. A carat is equal to one-fifth of a gram.

According to the China Geological Survey, the world’s current reserves of proven natural diamonds are around 2.5 billion carats, which are non-renewable and difficult to mine. In 2017, global production of natural rough diamonds reached a peak of 152 million carats. Later, global production fell by about 5% per year. In 2020, global production stood at 111 million carats, according to the World Diamond Center in Antwerp.

With the decline in the volume of natural diamonds available, synthetic diamonds are turning the world of fine jewelry upside down. Synthetic diamonds, which are cheaper to produce, are proving an attractive choice for millennial consumers. Manufacturing the synthetic version also produces less carbon emissions than mining natural diamonds, making them more environmentally friendly, experts say.

In China, diamond rings are in high demand among Chinese couples engagement. Diamond jewelry such as necklaces and bracelets also remain popular, especially as a wider variety of stylish designs have emerged.

Given the scarcity of natural diamond deposits in China, most of which are not of sufficient quality for use in jewelry, the country is almost entirely dependent on the importation of natural rough diamonds. At the same time, Henan offers an alternative option with artificially produced diamonds.

Lab-grown diamonds are synthesized by artificially simulating the crystallization conditions and growth environment of natural diamonds. They resemble natural diamonds in their composition and in their physical, chemical and optical properties, but are essentially different from zircon and moissanite, which are two other hard gemstones.

Zhecheng’s production of diamond micron powder – an ultra-fine abrasive made with artificial diamonds used for grinding and polishing hard materials like gemstones – accounts for 70% of domestic production and 50% of export volume of the substance, according to the local government.

The Zhecheng Industrial Park for the Manufacture of Superhard Materials is occupied by some 60 enterprises involved in related activities. The city plans over the next three to five years to increase the value of its processing of these materials to more than 50 billion yuan ($7.9 billion) and build an industrial cluster with cutting-edge technologies, according to local government.

“Lab-grown diamonds possess all the essential qualities of natural diamonds, only their origin is a laboratory instead of the earth,” said Zhu Guangyu, senior diamond industry analyst.

“The formation cycle of natural diamonds can take hundreds of millions of years, whereas it only takes a week or a few weeks to grow lab-grown diamonds, giving the products a huge cost advantage. “, said Zhu.

The average retail price of synthetic diamonds is about one-third that of natural diamonds. With the availability of a group of mature domestic synthetic diamond manufacturers, domestic retail brands are able to expand their business in the synthetic diamond business, Bain & Co said.

In 2020, the penetration rate of synthetic diamonds in the jewelry market was only 6% globally, and 94% of jewelers still used natural diamonds as their primary material, indicating significant room for growth for synthetic diamonds, the consultancy said. .

Henan has more than 200 enterprises that manufacture products using ultra-hard materials, according to enterprise information provider Tianyancha.

Among them are some major listed manufacturers including Henan Huanghe Whirlwind Co Ltd, Zhongnan Diamond Co Ltd, Sino Crystal and Henan Liliang Diamond Co Ltd.

Henan Liliang Diamond, a maker of high-end synthetic diamonds in China, has invested 3.8 billion yuan in building its factory in Zhecheng. The company went public on the Shenzhen Stock Exchange in September, becoming the fourth listed synthetic diamond maker in Henan. He saw his business explode, market watchers said.

On September 24, Liliang Diamond’s first trading day, its shares opened with an issue price of 20.62 yuan per share and closed at 229.38 yuan per share, 11 times higher than the opening price. .

In the first three quarters of 2021, the company posted revenue of 340 million yuan, up 107 percent year-on-year. During the same period, its net profit reached 160 million yuan, up 271% year-on-year, according to its earnings report.

Technological development in the manufacture of synthetic diamonds has made great strides in terms of equipment and methodology. Diamonds were first grown in laboratories using high-pressure, high-temperature systems that used extreme heat and high pressure and a small piece of diamond “seed” to turn graphite into diamonds. A new way to grow diamonds is chemical vapor deposition, in which a seed is sealed in a chamber with a carbon-rich gas and heated to high temperatures.

Liliang Diamond said that the weight of a single portion of the lab-grown diamonds it produces could exceed 30 carats, which is a sign of the company’s capacity for innovation. The manufacturer, along with others, has also worked with colleges and scientific institutions such as Zhengzhou University, Jilin University, Henan University of Technology, and China Society of Mechanical Engineering.

“The company has five core technologies it has developed that have helped it build a strong market-leading advantage. The market potential for synthetic diamonds is remarkable, and the product penetration rate in China is expected to grow rapidly,” said a research report from Soochow Securities.

Domestic diamond suppliers and brands have seen a growing demand for synthetic diamonds. In the case of natural diamonds, foreign suppliers and brands have had greater market advantages, and domestic brands have faced fierce competition, Soochow Securities said.

However, Chinese synthetic diamond makers can produce large quantities of three to six carat semi-finished diamonds, which can then be made into one to two carat jewelry diamonds. By 2025, global production of lab-grown semi-finished diamonds is expected to reach 18 million carats, representing a 38 billion yuan market, according to a research report by Guosen Securities.

Sarah C. Figueiredo