De Beers Diamonds: Are They Forever or Just Right Now?

CBx Vibe:Diamonds Dancing” Drake & Future

  • 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.

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“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.

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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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CBx Vibe:Diamonds Dancing” Drake & Future

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