Synthetics Threat Will Grow, Says ABN Amro

RAPAPORT... The impact of lab-grown diamonds on the industry willsignificantly increase in the next two years, according to ABN Amro. "We think that 2019 and 2020 will be the years thatlab-grown diamonds take off and move from an introduction phase to a growthphase," Georgette Boele, senior precious metals and diamonds analyst for the Dutchbank, said in a report Tuesday. "Sooner, rather than later, lab-grown-diamondwedding jewelry will be part of the offering." This will have "seriousconsequences" for the trade, Boele added. Four main factors will lead to the growth of the syntheticsmarket, she said. As technology progresses, lab-grown-diamond producers areable to create bigger, higher-quality stones, which could prove more attractiveto consumers. Lower pricing will also bring demand up, as will the perceptionof sustainability. Finally, De Beers' launch of Lightbox, its line of lab-grown-diamondjewelry, has made the category more acceptable, the report noted. While lab-grown diamonds have already created challenges for thesmall-stone trade, the problem is likely to spread to the large-stone market aswell, Boele predicted. Prices of large natural diamonds face threats from twosides: Improved mining processes enable producers to find larger diamonds,creating the perception among consumers that they have become less rare.Additionally, improvements in synthetics technology have resulted in greatercompetition from large lab-grown stones. There are three ways miners can increase their chances ofsurviving, Boele noted. They can speed up mining activity to cash in on the diamondsthat are still under the ground before prices and demand fall. They can also stopsearching for new mines, as high exploration costs are unlikely to be offset byany income from future sales of natural diamonds. Finally, miners can move intothe lab-grown industry themselves, either on their own, or by teaming up withlab-grown diamond producers, she said. "In a few years from now, it is highly uncertain if naturaldiamonds [will] hold their value as always has been assumed," Boele added. Image: Lab-grown diamonds (Diamond Foundry)