De Beers to Stop Producing Lab-Grown Diamonds for Jewelry

De Beers will cease creating synthetic diamonds for its Lightbox consumer brand in a strategic revamp that will also see it manufacture and sell natural polished. 

“We believe the value of lab-grown diamonds lies in technology rather than in jewelry,” De Beers CEO Al Cook said Friday at the company’s JCK Las Vegas breakfast event. 

The miner’s Element Six business will streamline its three chemical vapor deposition (CVD) plants, merging them all into its $94 million facility in Portland, Oregon. That plant will pivot into a technology hub that produces diamonds for industrial applications, executives explained. 

De Beers aims to make Element Six into “the leader in synthetic-diamond technology solutions,” Cook said. “This starts with concentrating all our resources in a single world-class CVD hub.” 

The announcement calls time on De Beers’ six-year experiment of producing its own lab-grown diamonds for the Lightbox jewelry line, which launched in 2018. Prior to that, Element Six had been synthesizing diamonds for industrial and research purposes. 

During those six years, prices for lab-grown diamonds collapsed, leading to thinner retail margins in dollar terms and making the category less appealing to jewelers. De Beers also received backlash from the industry at various points, notably when it briefly tested lab-grown diamond engagement rings.  

Last month, Lightbox reduced retail prices by up to 40%, reflecting developments in the sector. 

Pivoting, not dropping 

Lightbox will continue to operate as a consumer brand after the transition, which will happen in the next few months, Cook said in a separate interview with Rapaport News Friday.  

The brand has enough inventory to keep sales going for the “foreseeable future,” after which it will make a decision on how to proceed, he explained. Discarding the line is not among De Beers’ considerations. 

“Core to the Lightbox proposition has been [that it is] carbon-neutral,” Cook added. “We’re very proud it’s made in America. We intend to stick with that element of the brand.” 

The choice to refocus on natural diamonds — parts of the company’s new “Origins” strategy — will see De Beers reinvigorate category marketing, including through retailer partnerships. This follows its recent team-up with Signet Jewelers, which includes training sales associates to sell consumers the natural-diamond story. De Beers will also roll out Diamond Proof, a new in-store instrument for detecting lab-grown diamonds. 

Contract model 

Nestled within the extensive strategic plans De Beers outlined on Friday was a plan to manufacture some of its own natural rough diamonds via contractors and then sell the polished, capitalizing on the traceability of its goods. 

Its Tracr provenance platform “will allow us to venture into the sale of premium polished diamonds with an unrivaled storyline starting at the source,” Cook explained. 

De Beers will sell these under its traceable Code of Origin brand and develop its Origin Story program, a digital product providing detailed provenance information and a “rarity score” for each stone. 

The company has not determined whether it will sell these diamonds primarily to retailers or directly to consumers. It will use a minority of its rough production for the program, and the contractors will include sightholders, Cook reported. At present, De Beers sells around 90% of its supply through the sight system. 

“This is about an ‘and’ rather than ‘or,’” according to Cook. “It’s about a minority. It’s about an opportunity. As a business, we sit on $1.7 billion of rough inventory as of our last financial results. So we are very confident that we can meet every need [for] every one of our sightholders and do this on top.” 

Clarity upgrade 

The announcement came under the shadow of De Beers’ impending separation from Anglo American, which owns 85% of the company. 

Last week, miner BHP abandoned talks with Anglo American regarding a takeover of the group. That decision “provides clarity that we will advance the plan that Anglo American announced a few weeks ago,” Cook said, referring to the May 14 announcement that it would divest or de-merge De Beers. 

Anglo American assumed control of De Beers in 2011, meaning that “for 124 of the 136-year history of De Beers, we haven’t had Anglo American as a majority owner,” the CEO pointed out. “So [parting from it] literally doesn’t affect one bit of our operations or one bit of our strategy.” 

Furthermore, he continued, “the future of diamonds lies as much in marketing and retail as it does in mining. So separating…from Anglo American, which is a mining company, enables us to really have strategic flexibility to deliver our full value.” 

De Beers also announced the following developments: 

• The company will pause all operations in Canada except for its Gahcho Kué mine, prioritizing investments in high-return projects such as the ramp-up of the Venetia underground mine in South Africa and the progression of the Jwaneng underground mine in Botswana. Exploration will focus on Angola. 
• It will dispose of non-diamond assets and non-strategic equity holdings and defer non-core projects. These will help it progress toward $100 million in annual cost savings. 
• It will negotiate a new set of supply contracts with sightholders during 2025. 
• As of 2024’s second half, the miner will stop publishing sight-by-sight sales results, shifting to more detailed quarterly reporting. Industry members and investors had requested “more transparency and less frequency,” Cook said. 
• Forevermark will refocus on the Indian market.  
• The company will scale up and “evolve” De Beers Jewellers, its higher-end consumer brand. “The brand is a bit cold today — I would say a little bit engineered,” said Sandrine Conseiller, CEO of De Beers’ brands, at the JCK event. “So we need to make it much more emotional and really unleash the true personality of De Beers Jewellers.” It will launch its first flagship store in Paris, on the prestigious Rue de la Paix. 

Image: Loose lab-grown diamonds. (Lightbox)