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Victoria Gomelsky for the NYT "Shopping for a Diamond Is About to Change"

Victoria Gomelsky for the NYT "Shopping for a Diamond Is About to Change"

“A decent quality two-carat Argyle tender stone probably starts at $1 million a carat, wholesale, and goes up,” Mr. West said. “But when you have something that’s going to cease to be produced, it’s really hard to speculate.”

Diamond mines are not forever — not even the world’s most productive.

After mining more than 865 million carats of rough diamonds since opening in 1983, the Argyle Mine in the remote East Kimberley region of Western Australia brought the last truck of diamond-bearing ore to the surface on Nov. 3.

The owner, the Anglo-Australian mining giant Rio Tinto, had announced in 2018 that, by the end of this year, it would no longer be economical to keep digging.

Argyle was famed for supplying 90 percent of the world’s pink diamonds, among the rarest and most valuable gems on earth. But it was also noted, if less celebrated, for its vast reserve of inexpensive brownish diamonds, many of them in colors and qualities once shunned by fine jewelers. The low-end product was embraced by the Indian cutting industry in the late 1990s, when manufacturers based in Gujarat began using the gems to make jewelry that could retail for as little as $199.

Now, the mine’s long-anticipated closure is prompting an industrywide conversation about the future of natural, or mined, diamond supplies at both the high and low ends of the market, and how competition from the thriving lab-grown diamond sector will reshape consumer demand in years to come.

It’s not something a future bridal couple or jewelry fan might notice for a year or two, but when dealers sell what remains of their Argyle stocks, pink diamonds are expected to become costlier, while lower-end jewelry made with natural diamonds may become more scarce.

“Argyle’s closing is like the death of an artist,” said Larry J. West, owner of L.J. West Diamonds in New York, which deals in fancy colored diamonds. “After Picasso died, what was his best art worth?” (Mr. West should know. In 2016, he purchased a 2.83-carat oval-shaped violet diamond at Rio Tinto’s annual silent tender, a trade auction of its small but extremely valuable cache of rare pink, red, purple and violet diamonds each year. “It’s impossible to value because it is so rare,” he said.)

All of this, however, doesn’t mean the end of pink diamonds.

Alrosa, a mining company partially owned by the Russian government, occasionally discovers spectacular pink diamonds at its mines in Yakutia, in Russia’s Arctic region. (Take the 14.83-carat fancy vivid purple-pink diamond unearthed in 2017 at the company’s Ebelyakh deposit; named the Spirit of the Rose, it sold for $26.6 million at Sotheby’s Magnificent Jewels sale on Nov. 11 in Geneva.)

But without Argyle’s consistent supply, high-end jewelers are bracing for prices to rise.

“Over the last six months, pinks have started to firm up in pricing,” said Tobias Kormind, managing director of 77 Diamonds, an online retailer based in Britain. “People are aware that the Argyle mine is closing. Interest rates are low, people are worried about inflation and deflation and they’re looking for alternative assets to put their money in for wealth preservation.”

A good quality one-carat intense pink diamond retails for approximately $250,000 and a vivid pink goes for more than twice that amount, about a 15 percent increase over last year’s prices, Mr. Kormind said.

For a polar opposite perspective, consider what industry watchers have to say about the end of Argyle’s brown diamond production.

“That’s the area most vulnerable to inroads from lab-grown diamonds,” said Russell Shor, a longtime industry analyst based in Carlsbad, Calif. “You’ll see a gradual substitution of lab-growns for Argyle goods in the under-$500 pieces. They’re made for that market, really.”

The extent to which lab-grown diamonds — which are optically, chemically and physically identical to mined diamonds — will supplant naturals has preoccupied the trade since at least 1955, when scientists at General Electric announced they had produced a synthetic diamond in a high-pressure, high-temperature growth chamber, simulating what happens inside the earth.

Until recently, however, retailers’ long-simmering mistrust prevented the lab-grown category from flourishing. That began to change about a decade ago, when jewelers realized the margins they stood to make on sales of lab-grown diamonds far exceeded those on naturals.

“A psychological barrier was broken among U.S. retailers,” said Edahn Golan, a diamond industry analyst based in Israel. “At first they viewed lab-grown diamonds as ‘synthetics’ and something a luxury retailer wouldn’t touch. That changed into ‘I’ll offer what my clients are asking for.’”

In the past five years, the lab-grown sector has welcomed countless newcomers, most notably, the South African diamond miner De Beers, which in 2018 channeled decades of expertise in creating diamonds for industrial purposes — through its Element Six division in Britain — into a fashion jewelry subsidiary called Lightbox.

At the end of October, Lightbox opened a $94 million manufacturing facility in a suburb of Portland, Ore., just as it announced a partnership with the leading online retailer Blue Nile. Lightbox sells one-carat white, pink or blue lab-grown diamonds for $800 (not including the cost of the setting), a striking difference from the cost of a one-carat natural diamond, which can range from $1,800 to $18,000. (Lightbox’s pricing, however, undercuts most lab-grown producers, whose gems sell for about 30 percent to 50 percent less than the equivalent natural diamonds.)

The essential difference between the two types of diamonds, said Stephen Lussier, De Beers’ executive vice president of consumer markets, hinges on their enduring value.

“It seems pretty clear that in contrast to naturals, the price of lab-growns will continue to fall,” he said. “Look at prices below a carat, where we’ve seen a 50 percent decline. That’s going to keep happening because of production capacity.”

Photo image credit: Rio Tinto


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