The potential sale of De Beers highlights the challenges facing the natural diamond industry. The rise of lab-grown diamonds, weakening consumer demand, deteriorating economic conditions and years of changing consumer perceptions have combined to place unprecedented pressure on an industry that supports millions of livelihoods around the world.
The natural diamond industry is facing a defining moment. De Beers, one of the world’s most recognised diamond producers, is at the centre of a proposed ownership change as its controlling shareholder, Anglo American, seeks to sell its 85% stake in the business.
According to reports, luxury group Richemont, owner of Cartier and Van Cleef & Arpels, is considering joining a consortium led by former De Beers chief executive Gareth Penny. Other potential participants reportedly include Belgian diamond manufacturer Pluczenik and US jewellery retailer Signet.
The involvement of major luxury, manufacturing and retail businesses reflects the strategic importance of natural diamonds to the jewellery trade. However, it also raises a difficult question: are the challenges facing the diamond industry temporary, or are they evidence of a fundamental structural change?
The rise of lab-grown diamonds has changed the market
One of the most significant developments affecting natural diamonds has been the rapid growth of lab-grown diamonds.
Chemically and physically similar to natural diamonds, lab-grown stones can offer consumers comparable visual characteristics at substantially lower prices. Advances in production technology have increased supply and intensified price competition, particularly in the commercial and lower-priced segments of the diamond market.
For consumers primarily interested in appearance and size, lab-grown diamonds can be an attractive alternative. But their growing availability has also changed expectations about what a diamond should cost.
Natural diamonds and lab-grown diamonds are produced through very different processes. Natural diamonds are geological products formed over immense periods of time and recovered through mining. Lab-grown diamonds are manufactured using industrial processes that require equipment, energy and ongoing technological investment.
As manufacturing capacity expands and production becomes more efficient, lab-grown diamond prices can fall sharply. This creates a challenge for natural diamonds, whose supply depends on geological discoveries, mining operations, labour, infrastructure and substantial capital investment.
The consequences extend beyond competition at the retail counter. When consumers begin comparing natural diamonds with substantially cheaper laboratory-grown alternatives, natural diamond producers, manufacturers, wholesalers and retailers must reconsider pricing, marketing and inventory strategies.
The result has been significant pressure on diamond prices, although the impact varies according to size, quality, rarity and market segment. Higher-quality and genuinely rare natural diamonds may behave differently from more readily available commercial goods.
Economic uncertainty is adding to the pressure
Lab-grown diamonds are not the only factor affecting the natural diamond market.
Diamonds are discretionary purchases. When household budgets are under pressure, interest rates remain elevated, employment prospects become uncertain or consumers worry about the economic outlook, expensive jewellery can be postponed or removed from the shopping list altogether.
Weakening consumer confidence in major markets, economic uncertainty and changing spending priorities can therefore reduce demand for natural diamonds at the same time that lab-grown supply is expanding.
This combination is particularly difficult for an industry that relies on consumer confidence, luxury spending and the willingness of buyers to pay premiums for natural stones.
When demand weakens, retailers reduce orders, manufacturers become more cautious, wholesalers hold inventory for longer and miners may be forced to reduce production or sell rough diamonds at lower prices.
These pressures can reinforce one another. Lower prices affect profitability, weaker profitability reduces investment, and uncertainty throughout the supply chain makes it harder for businesses to plan for the future.
De Beers illustrates the scale of the challenge
De Beers has been loss-making since 2023, according to the figures reported in the source material. For 2024, it recorded an underlying earnings loss before interest and tax of approximately US$787 million, on revenue of nearly US$3.5 billion.
The proposed sale of Anglo American’s controlling stake has consequently attracted considerable attention.
For Richemont and other potential investors, ownership could provide greater influence over an important part of the natural diamond supply chain. For the industry as a whole, however, the central issue is whether consumer demand can recover sufficiently to support a sustainable business.
If the downturn is cyclical, an improvement in economic conditions and luxury spending could provide relief. If the market is undergoing a more permanent structural change because of lab-grown competition and evolving consumer preferences, a recovery may be considerably more difficult.
The distinction matters. A temporary decline can be managed by reducing costs and adjusting production. A structural decline requires businesses to reconsider their long-term strategies, their target markets and the reasons consumers should continue choosing natural diamonds.
The unintended consequences of the ‘blood diamond’ narrative
Another important chapter in the industry’s difficulties concerns the public campaigns against so-called blood diamonds.
The term emerged from genuine and serious concerns about diamonds being used to finance armed conflict and human rights abuses. These issues deserved attention, and initiatives such as the Kimberley Process were developed to help prevent conflict diamonds from entering legitimate international trade.
However, there is a difference between exposing documented wrongdoing and allowing a broad public narrative to create the impression that the entire natural diamond industry is associated with conflict or exploitation.
In the public debate, the distinction between diamonds from conflict areas and diamonds responsibly mined in other parts of the world has not always received the attention it deserves.
Botswana, Namibia, South Africa and other diamond-producing regions have developed legitimate mining industries that provide employment, government revenue, infrastructure and opportunities for local communities. In some countries, diamond revenues have played a significant role in funding public services and supporting economic development.
When consumers are encouraged to view natural diamonds as inherently unethical, without understanding where individual stones originate or how they were produced, the consequences can extend well beyond the intended target of the campaign.
The uncomfortable question is whether well-intentioned campaigns can sometimes cause harm to the very people they are meant to protect.
A campaign designed to discourage the purchase of diamonds associated with conflict may also discourage purchases of responsibly sourced diamonds from communities whose livelihoods depend on mining.
When demand falls, the consequences can reach miners, independent diggers, cutters, polishers, traders and local businesses. Workers who have spent years developing specialised skills cannot necessarily transfer those skills to another industry overnight.
Small-scale miners and independent diggers are particularly vulnerable. Unlike large corporations, they may have limited financial reserves and few alternative sources of income. If their stones become harder to sell or their prices fall below the cost of extraction, their livelihoods can disappear.
This does not mean that concerns about human rights, environmental damage or conflict financing should be dismissed. They remain important. It means that campaigns should be evidence-based, specific and attentive to the economic consequences of their demands.
The problem with being an armchair warrior
Public advocacy can play an important role in exposing misconduct and encouraging responsible business practices. But there is a danger when people who have little direct experience of an industry campaign for sweeping changes without fully considering the consequences.
It is relatively easy to demand that consumers stop buying a product. It is much harder to understand what happens to the workers, families and communities whose incomes depend on producing it.
An armchair warrior can advocate for a seemingly simple solution from a comfortable distance, without having to live with the consequences if the solution fails.
In the diamond industry, a blanket rejection of natural diamonds can affect people far removed from the controversies that prompted the original campaign. A responsible miner in southern Africa, an independent digger, a diamond polisher in India or a small jewellery business may have no connection to the conduct being condemned, yet still suffer from the resulting decline in demand.
The same principle applies to many industries. Campaigns that focus exclusively on one perceived problem can overlook the broader economic system in which millions of people work.
Good intentions do not automatically produce good outcomes. Effective advocacy requires an understanding of both the problem being addressed and the people who may bear the cost of the proposed solution.
Natural diamonds have a story lab-grown diamonds cannot replicate
Despite the challenges, natural diamonds retain characteristics that distinguish them from their laboratory-grown counterparts.
Their geological origins, natural rarity and individual histories form part of their appeal. For many buyers, a natural diamond represents more than its appearance. It can symbolise a milestone, a family connection, a relationship or an object intended to be passed from one generation to the next.
Lab-grown diamonds offer a different proposition. They can provide size and visual appeal at a lower purchase price, but their economics are closely connected to manufacturing capacity, production costs and technological development.
Neither distinction means every natural diamond will retain its value or that every lab-grown diamond is a poor purchase. Diamond prices depend on many variables, and consumers should not assume that either category guarantees future appreciation.
The important point is that the two products have different supply dynamics and different market propositions. Treating them as interchangeable simply because they may look similar overlooks the factors that influence their long-term supply and commercial value.
For the natural diamond industry, the challenge is to explain these differences honestly and convincingly, without relying on outdated assumptions or promising consumers that natural diamonds will always rise in price.
What happens next?
The proposed sale of De Beers is more than a corporate transaction. It is a test of confidence in the future of the natural diamond business.
Potential investors must weigh the company’s renowned position in the industry against its recent financial performance, the cost of mining, changing consumer preferences and the uncertainty surrounding future demand.
The outcome will depend on several interconnected factors:
- Consumer confidence: Whether improving economic conditions encourage households to resume spending on discretionary luxury goods.
- Lab-grown competition: Whether natural diamond producers can establish a clear and compelling distinction between mined and manufactured diamonds.
- Responsible sourcing: Whether the industry can demonstrate credible standards while ensuring that legitimate producing communities are not unfairly stigmatised.
- Supply discipline: Whether production can be aligned with genuine demand without undermining the long-term viability of mining operations.
- Consumer education: Whether buyers receive balanced information about origin, rarity, manufacturing, environmental considerations and the differences between natural and laboratory-grown stones.
The industry may emerge smaller and more focused, with greater emphasis on quality, provenance and genuinely rare natural diamonds. However, a sustained recovery cannot simply be assumed. If consumer preferences have permanently shifted in some market segments, businesses will need to adapt accordingly.
A final thought: good intentions need real-world understanding
The diamond industry is experiencing the combined effects of technological change, economic uncertainty, shifting consumer preferences and decades of debate about ethical sourcing.
Lab-grown diamonds have introduced a powerful new source of competition. Deteriorating economic conditions can weaken discretionary spending. Meanwhile, campaigns against conflict diamonds, although rooted in legitimate concerns, demonstrate why broad public messaging must distinguish between documented abuses and responsible producers.
Behind every price chart and corporate announcement are real people: miners, independent diggers, cutters, polishers, jewellers and families whose livelihoods depend on the trade.
Holding businesses accountable for genuine wrongdoing is necessary. But damaging an entire industry through inaccurate generalisations or poorly considered campaigns can create consequences that extend far beyond their original objectives.
Before demanding that an industry disappear, it is worth asking who will pay the price, what alternatives will replace the lost livelihoods, and whether the intended beneficiaries will ultimately be better off.
The future of natural diamonds will depend not only on corporate ownership and market prices, but also on whether the industry can rebuild consumer confidence, communicate its value and demonstrate that responsible diamond production can support both economic opportunity and ethical standards.
DCLA is the Diamond Certification Laboratory of Australia. Understanding the differences between natural and laboratory-grown diamonds, including their origins and identification, is increasingly important for consumers navigating today’s changing diamond market.
