- Namibia produced $914 million worth of rough diamonds in 2016
- A typical 1-carat round stone costs $5,657
The world’s biggest diamond mining company De Beers is betting lower prices will lure U.S. shoppers towards man-made stones. How big of a threat could this be for Africa’s precious gem?
Why This Matters: De Beers’ U-turn regarding synthetic diamonds could pose a threat to the economies of the Democratic Republic of Congo, Namibia and Zimbabwe. These countries mine and sell the natural precious stones on a large scale. Even Botswana’s former minister of minerals, water and energy David Magang, warned countries about how limited the market would become if De Beers joined the synthetic diamond market.
“Clearly, synthetics represent one of the greatest threats to Botswana’s economic well-being… no one would buy our diamonds if synthetics became fashionable,” Magang said. However, it is interesting to note Botswana stands to profit from De Beer’s synthetic diamond sales since it has a 15% stake in the company.
The international gem giant launched Lightbox Jewelry and will sell laboratory-made diamonds that will retail from $200 for a quarter-carat stone to $800 for a 1-carat gem. A typical 1-carat round stone offered on Blue Nile, a major online retailer of certified diamonds, costs $5,657.
De Beers which is owned by multinational diamond mining giant Anglo American, reported rough diamond sales of $550 million during its fiscal Q4. The country of Namibia only produced $914 million worth of rough diamonds in 2016. This is a number that could see a significant drop, making the threat to the mining economy very clear. Also, in Botswana there has been a 40% drop in diamond prices, a closure of mines and the loss of over 1,000 jobs in the industry over the past three years.
What’s Next: The company is investing $94 million over four years to open a new Element Six production facility near Portland, Oregon. When fully operational the plant will be able to produce more than 500,000 rough carats of lab-grown diamonds annually.
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