Diamond Mines Shut Down, Prices Plummet

The Venetia mine was a major mine, accounting for over 40% of South Africa's total diamond production. Several other diamond mines worldwide, including the Williamson mine in Tanzania and the Kao mine in Lesotho, are also closing consecutively.

The general downward trend since the pandemic has been a major cause of significant deterioration in the profitability of mining companies like De Beers.

De Beers recorded a loss for the past two years based on EBITDA (earnings before interest, taxes, depreciation, and amortization).

Although it had previously recorded significant profits, recent poor performance suggests a third consecutive year of losses, including 2026.

Three main reasons are cited for the decline in natural diamond prices. First, the market expansion of lab-grown diamonds produced in laboratories.

Second, the decrease in diamond demand due to the slump in China's wedding market. Third, high tariffs imposed by the U.S. on the Indian processing industry have had an impact.

The number of marriages in China, which was over 13 million in 2013, has sharply declined to 6.6 million in 2024, halving in volume.

As a result, China's share of the global diamond market has significantly decreased from 13% to 5%. Many couples are omitting wedding rings or replacing them with gold.

General consumers have no way of identifying whether a diamond is natural without a certificate.

Initially, due to many impurities, they were mainly used for industrial cutting tools, but since the 2010s, production methods have advanced dramatically, primarily in the U.S., India, and China, enabling the creation of gem-quality diamonds.

High-Pressure/High-Temperature (HPHT) and Chemical Vapor Deposition (CVD) methods are used to produce synthetic diamonds. The HPHT method mimics the natural formation of diamonds but has limitations in impurity control.

In contrast, the CVD method uses methane and hydrogen to layer carbon, one layer at a time. This method, like a 3D printer, stacks carbon into crystals, increasing transparency and purity.

The CVD method has improved technology to produce gem-quality diamonds that are even cleaner than natural diamonds.

Specifically, to separate diamonds, water is sprayed to remove soil and stones, followed by a cleaning process using oil and water to prevent contamination.

Lab-grown diamonds, produced in laboratories, minimize environmental pollutants as they do not involve these mining and processing steps.

Lab-grown diamonds are much cheaper to produce than natural diamonds.

The production economics become even better as the size increases, especially for 2-carat or 3-carat diamonds compared to 1-carat. Currently, the global market has many lab diamonds under 1 carat, but for 1 carat or more, there is still a preference for natural diamonds.

Lab-grown diamonds are not only identical to natural diamonds in composition and optical properties but can also achieve even cleaner quality than natural ones.

Market forecasts predict that lab-grown diamonds will surpass natural diamonds in market share around 2030, about 4-5 years from now.

When Kokichi Mikimoto developed cultured pearl technology in 1893, there was a perception that they were not real pearls, but their composition was identical.

Currently, cultured pearls account for about 70% of the global pearl market and are widely popularized. This suggests that lab-grown diamonds could eventually dominate the natural diamond market through a similar path.

Given that their composition and quality are identical to natural ones, the prevailing outlook is that lab-grown diamonds, like cultured pearls, will become mainstream in the market.

The movie exposed the horrific reality of rebels threatening innocent residents with guns and forcing them into diamond mining, bringing the ethical issues of the natural diamond industry to global attention.

Similar to the fur industry, environmental pollution and irregularities in the production process tarnish the image of the natural diamond industry, narrowing its standing and acting as a major factor in its decline.

The cost breakdown for finished jewelry products is 40% raw materials, 30% processing costs, and 30% sales and administrative expenses and profit margin. Even though the price of rough diamonds, a raw material, has halved, the price of finished products such as rings and necklaces sold to consumers remains almost unchanged.

Theoretically, a decrease in raw material prices should lead to a reduction in finished product prices, but this is not the case in reality.

This is because price adjustments are rarely made due to the exclusive market dominance of luxury brands, the value of unique designs, and the high premium consumers place on brand value.

Especially for ultra-high-end rings costing 30 to 40 million won, many are custom-made, making price confirmation difficult, and consumers' price sensitivity is relatively low due to the one-time purchase nature, such as wedding gifts.

It is important to understand which angles to cut to optimize light reflection, brilliance, and sparkle.

Especially critical are setting the optimal angle for maximizing the crown's brilliance and efficiently cutting asymmetrical rough stones.

Among the 4Cs (cut, clarity, color, carat weight) that evaluate a diamond's value, cut directly reflects the craftsmanship. Excellent craftsmanship maintains a brand's reputation and provides high value to consumers.

Top-grade diamonds, through perfect cutting, optimize internal light to emit brilliant sparkle, holding value closer to an artwork than a mere jewel.