De Beers is closing down its lab-grown diamond operation
Diamonds are forever, but the business behind the natural stones might not be so robust.
In recent years, synthetic diamonds have surged in popularity — so much so that even De Beers, the world’s leading diamond company, got into the lab-grown game with its Lightbox brand range in 2018. Just seven years later, however, the company is shutting its synthetic gem business, announcing its “commitment to natural diamonds” last week.
Wholesale prices for lab-grown alternatives to the symbol of eternal love have slumped in the years since Lightbox was established, though, sending 52% of American couples rushing to incorporate the cheaper stones into their engagement rings.
Diamond in the rough
In the late 1980s, the 137-year-old De Beers company had the diamond world locked down, taking an 80% share of the market, per estimates from industry analyst Paul Zimnisky. However, its grip on the business has slipped since then, with the stone giant’s earnings under pressure in recent years as synthetic alternatives have weighed on diamond prices globally.
Last year, one measure of De Beers’ profit (underlying EBITDA) came in at just $300 million, down 88% from the $2.4 billion it posted only two years ago, as lab-grown stones from cheaper competitors in China and India dented the company’s finances and overall demand.
In recent years, parent company Anglo American has consistently written down the value of De Beers, reflecting the fact that the storied diamond miner hasn’t sparkled for some time.
