DE BEERS “FIRE IN THE HOLE” – by Chaim Even-Zohar and Pranay Narvekar (Jeweller Magazine – December 6, 2018)

What is really behind the jewellery industry’s greatest U-turn? CHAIM EVEN-ZOHAR with PRANAY NARVEKAR analyse De Beers’ real motives.

In the mining business, shouts of “fire in the hole” are warnings that an explosive detonation in a confined space is imminent. They warn of a dynamite charge that has been set. Depending on where you are positioned, ignoring it can be hazardous or even lethal.

The Lightbox Jewelry announcement of De Beers, signaling its policy U-turn of moving into the gem-quality synthetic diamond business, is a comparable ‘fire’ warning to the industry. This explosion may be foreshadowing the eventual end of natural diamond mining.

This U-turn by De Beers has always been a question of ‘when’ and not ‘whether’. The introduction of the Lightbox lab-grown diamond jewellery lines, coming on top of several other lab-grown diamond collections, symbolises another light pole on the edge of the road towards a rapidly growing global diamond jewellery market in which, eventually, any dissimilarity (differentiation) between lab-grown and naturally mined diamonds will evaporate.

Product differentiation will not be sustainable – except, maybe, for some very exceptionally large natural stones ‘with a history’. In the long term, there will be only one diamond price, one product, without premiums for naturals. However, we aren’t there yet – and it might take anywhere between five to 15 years to get to this point. The Lightbox announcement, however, will unquestionably fast-track this process.

De Beers has now taken ownership (or rather macro-management) of a most uncomfortable transition period marked by accelerated disruptions brought about by new technologies, by new entrants into the diamond business and new business models. It may delay, frustrate, or otherwise impact the timeline – but the end result is inevitable.

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