Russian sanctions could boost conflict-free lab-grown diamonds – Quartz

The US ban on Russian diamonds boosts the appeal of lab-grown stones.

Russia contributes nearly a third of the world’s diamond supply, according to the US Treasurywith around 90% of Russian production coming from Alrosa, the world’s largest state-backed diamond mining company.

Industry experts expect a double-digit rise in diamond prices in the coming months and an increase in sales of laboratory stones.

Even before the US announced the ban, as part of sweeping moves to punish Russia for its invasion of Ukraine, a consulting firm Kenneth Research expected the market for lab-grown diamonds to grow by an average of 9% through 2028. Even traditional natural diamond giants like De Beers have started selling them.

Demand for diamonds surged

The ban comes at a time when supply is already tight. Diamond jewelry retail sales jumped 29% last year from 2020 and were up 11% from pre-pandemic levels, according to a report by a consultancy According to the Bain & Co..

“For the jewelry industry, this has been a historic boon,” said Monil Kothari, founder of the fine jewelry brand. house of brilliance. “Everyone you talk to made money because the supply was reduced. You had cash in the market and people were bored at home and had discretionary cash.

Rising labor costs in India, where the majority of jewelry manufacturing takes place, also fueled higher diamond prices.

Coinciding with this is pent-up demand in the marriage market as covid restrictions ease. There will be approximately 2.5 million marriages in 2022, according to The Wedding Reportthe most in the United States since 1984. This means that wedding guests, both brides and guests, will be looking for jewelry for the occasion.

The promise of lab-grown diamonds

The full impact of the ban is unclear. Rough diamonds are usually sent to India or China to be cut and processed, thereby obscuring the country of origin. But if Burmese rubieswhich have also been banned by the United States, are an indication the Biden administration will take steps to seal off opportunities for diamonds to arrive through intermediaries.

Amish Shah, founder of ALTR Created Diamonds, which sells lab-grown stones, thinks more consumers will turn to synthetic options, whether for ethical or budgetary reasons. He estimates that if U.S. officials are strict about scrutinizing Russian diamonds, prices could jump 15-25%, although the impact would not reverberate for several months.

Typically, buyers can get a stone nearly 50% larger for the same price as a naturally mined diamond, without compromising on quality. At the same time, these lab-grown diamonds have a lower carbon footprint and are conflict-free, which Shah says will resonate strongly with global consumers who oppose the war in Ukraine.

However, while lab-grown diamonds might meet some consumer demand, they could not fully replace Russian supplies. Total lab-grown diamond production is around 8 million carats, well below the 32.4 million carats supplied by Alrosa alone in 2021.

Sarah C. Figueiredo