The Need to Change
May 21, 20
Diamonds are forever. Or maybe not.
The stones themselves are virtually indestructible, but the supply is far from infinite.
Consider crude oil for a moment. Proven reserves are currently put at 1,650 billion barrels.
We're getting through it at a rate of 35 billion barrels a year, so supplies will last about 47 years at current rates of consumption.
Bear in mind, though, that the automotive industry is investing a fortune in non-petrol alternatives. Within the next 10 years almost half of global cars sales will be electric or hybrid, say forecasters.
How do diamonds compare? Global reserves are estimated at 1.1bn carats. Current demand is around 155m carats annually, likely to rise to 200m carats within six years and to keep on rising, according to a report just released by the London-based finance publication Learnbonds.
Divide 1.1bn (total reserves) by 200m (approx annual demand) and that amounts to little more than five years' supply.
Of course, new reserves may be discovered, but it typically takes 10 years to bring a mine online, by which time the jewelers' display windows may be empty.
Volkswagen, Toyota, Renault-Nissan, General Motors and other giants of the automobile world have long seen that the writing is on the wall for black sticky stuff and have been exploring new avenues.
Should the diamond industry also be looking elsewhere? Think about how many diamonds already exist in the world - from whenever our ancestors first unearthed them, to the landmark discovery on Diederik and Johannes de Beer's farm 150 years ago, to the industrialized production of the 21st century.
We proudly recycle our paper, glass and plastics - commodities of negligible value - but where's the market for "ready-mined" or "pre-owned" diamonds? How many millions of carats are gathering dust as forgotten heirlooms, unfashionable earrings or engagement rings that only serve to remind their owner of what a terrible mistake they made?
Recycled, polished diamonds account for the tiniest fraction of a $80bn global business, attracting the interest of few, aside from pawn brokers.
There's room to exploit the market, but there is another option, one that does seem to be gaining traction. If natural supplies are running low, make your own.
Lab-growns are catching on with the about-to-be-weds and others, who prefer to pay $800 a carat, rather than $8,000, for something that's pretty much indistinguishable to the naked eye.
De Beers has embraced the brave new world of chemical vapor deposition, and is now investing $94m in a lab-grown diamond factory in Oregon, USA, where it aims to produce 500,000 carats of rough a year.
That's a game-changing chunk of the market. Martin Roscheisen, CEO of Diamond Foundry and another big player in CVD diamonds, has boldly claimed that lab-growns will overtake natural diamond sales - presumably by volume, not value - by 2030.
Coronavirus has shown us all that things can change more quickly and unexpectedly than we ever imagined. Perhaps, with five years' supply dwindling by the day, such a prediction is not so wide of the mark.
Have a fabulous weekend.