A diamond in the rough can fetch over $2,000 per carat. These precious stones are mined deep within the Earth where they were forged in extreme pressure and heat over thousands of years. However, companies in mainland China have now mastered advanced technology to manufacture them en masse in several weeks or even in days, with products almost indistinguishable from natural ones, reported Xinhua News Agency.
China, a significant consumer of mined diamonds, has a decent chance of becoming a large supplier of synthetic gems and could reshape the entire global diamond industry, analysts warn.
By Chinese industry estimates, the country produces about 10 billion carats annually, but most are used in industrial applications, such as aeronautics, oil rigs, and electronic chips.
As competition swells and technology to manufacture synthetic gems matures, Chinese companies on the mainland have shifted from using diamonds in industrial applications to fine jewelry, a move that could upset Anglo American, De Beers Sa, Alrosa, and Rio Tinto.
Liu Yongqi, the general manager of Sino-Crystal, told Xinhua the company manufactures between 2 million and 3 million carats per year, with more than half of the carrots used for expensive jewelry.
"We began our transformation in 2014 to expand to gem-grade diamonds," said Liu.
According to Paul Zimnisky, a diamond expert in New York, “It is important to understand that even if synthetic diamond production is initially lower quality, the diamonds can be ‘enhanced’ with processes that turn lower quality goods into higher-quality.”
He further explained that if a fraction of Chinese synthetic gems is upgraded to jewelry-quality diamonds, it will unleash a massive deflationary wave that could collapse diamond prices.
"China, and by extension Asia, is the main producer of synthetic diamonds," Margaux Donckier, spokeswoman for Antwerp World Diamond Center, told Xinhua. "Synthetic goods only represent about 3-5% of the [consumer] market, but the share is growing rapidly."
In the last several years, an ample supply of synthetic diamonds have flooded the global market, Chinese manufacturers said, mainly originating from De Beers, one of the largest players in the diamond space who popularized the saying, "a diamond is forever."
Reversing its previous position on lab-made gems, De Beers did an about-face that shocked the diamond industry in 2018 by selling synthetic diamonds through its Lightbox Jewelry brand.
"Since De Beers embraced man-made diamonds, the market has been developing rapidly," said Liu, citing expanding sales in Japan.
Synthetic diamond's growth prospects are their increasing quality at declining cost. It is almost impossible to tell a fake diamond from a mined one with the naked eye.
Experts with high-tech computers can distinguish the two, but that distinction is so irrelevant to the Federal Trade Commission (FTC) of the US, that the previously specified "natural" origin within the FTC's definition of a diamond was removed last year.
In its handbook for Jewelry, Precious Metals, and Pewter Industries, the FTC ruled "based on changes in the market, the final Guides eliminate the word 'natural' from the definition of diamond...because lab-created products that have essentially the same optical, physical and chemical properties as mined diamonds are also diamonds."
Regulations in China and many other countries require that synthetic gems and natural diamonds be clearly labeled so that consumers can understand the difference.
Man-made diamond jewelry is classified as "fashion jewelry" while natural diamonds are called "fine jewelry," Zimnisky said.
While synthetic diamonds represent 3-5 % of the consumer market, the share is growing at an exponential rate, expected to grow 22% annually from $1.9 billion to $5.2 billion by 2023, Zimnisky projected. The analyst added that Chinese companies could soon compete with De Beers.
Yonden Lhatoo, the chief news editor at the Hong Kong-based South China Morning Post, wrote in a recent column: "Anyone with a basic education should know by now that the ridiculous tradition of men having to buy diamond engagement rings for women before marriage was wholly concocted."
"Diamonds are such a waste of money," he wrote: "If you must buy a diamond, it makes much more sense to go for a lab-manufactured one."
In a world where global wealth inequality is at extremes, made-in-China diamonds could be the best news American millennials have heard in a while, considering they are wrapped up in insurmountable debts with borrowing costs moving higher, have delayed marriage, i.e, they cannot afford a real diamond -- until now.