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China’s LGD industry is growing in leaps and bounds…

22 november 2021

The world over, interest in cheaper and more accessible alternatives to mined diamonds began much earlier than one would like to accept. While the others faded away as cheap alternatives, the Lab-grown Diamonds (LGDs) which is grown in a lab but sparkle, shine and chemically just like the natural diamond, caught the fancy of the young consumers in China, much like the rest of the world.

As LGDs are cheaper, similar and more accessible they are a popular alternative to mined gems. As per available data, the consumer market for lab diamonds is only worth $150 mn, which is just about 2 per cent of the consumer market for all diamonds. But, industry predictions show it is expected to grow at 22 per cent each year and reach $14.9 bn by 2035, taking up about 5 per cent of the consumer market for all diamonds.

Meanwhile, possessing better technology, Chinese producers have been upgrading existing equipment to produce larger, better-quality synthetic diamonds that can be used for jewellery manufacturing. China already has the infrastructure in place which allows for high production scalability of higher-quality synthetic diamonds, according to a New York-based independent diamond market analyst Paul Zimnisky. He claims that even if a fraction of Chinese production is upgraded to gem-quality diamonds, it would have a significant impact on the global supply. For decades. LGDs were used for industrial purposes, but are now looked upon as the greatest disruptor the mined diamond has ever faced. The $87 bn consumer market has landed an alternative to mined gemstones, and they are here to stay.

A Chinese website mentions that most industrial applications of lab diamonds are associated with their hardness, and this characteristic of the diamond makes them an ideal material for cutting tools. Later, many institutions and companies started to consider diamonds for use in computer chips, satellites, and even 5G networks as they can be used in extreme environments. Nanodiamonds, or diamonds with a size below 1 micrometer, also have the potential to operate at higher speeds while using less power than silicon-based chips. Though lab-grown diamonds were commonly used in industries related to high-end manufacturing for many years, due to technological advancements many labs are now able to create gem-quality diamonds at lower costs claim geologists. In fact, due to rapid technological improvements, many Chinese labs were able to remove the presence of other elements that impact diamond quality like nitrogen molecules that reduced the colour of the stone and reduce its value.

Reports from business analysis websites also mention that the cost of growing lab diamonds has also dropped by up to 90 per cent in the past 10 years, which augurs well for further growth of the LGD producing labs. Today, the cost of making a lab diamond is about 30 per cent lower than that involved in mining a gem of similar size and quality. Also, the time it takes to grow a 1-carat diamond is now five to eight days, which is much shorter than the time it takes to create a mined diamond, which can take billions of years to form. In addition, lab-grown diamonds are created artificially and are the same in terms of their physical and chemical characteristics, claim supporters of the LGD industry.

Of late, LGDs are also becoming more popular in China, with the post-1980 and post-1990 generations emerging as a major buying power. And, lab-grown diamonds used in jewelry will see an increased presence in the years to come.

Market studies indicate that consumers born in the 1980s, 1990s, and even millennials, are turning to LGDs as they are cheaper than mined diamonds of similar quality, and marketed as eco-friendly and ethically sourced as per their wishes.

LGDs are known by several different names, including synthetic diamonds, man-made diamonds, and cultured diamonds. But they have the same physical properties as natural diamonds because they are created in a lab using technology that replicates the natural diamond growing process.

A plus point is that lab-grown diamonds can be grown in one to four weeks depending on their size, rather than taking billions of years to form like natural diamonds. Not only in China but globally consumers from those generations are increasingly conscious of the environmental and ethical impact of their purchases. University research reports attribute Gen Z’s consciousness such as whether workers are fairly paid and the work is done in safe and environmentally friendly conditions etc towards them accepting LGDs instead of mined stones. Again, this is due to large corporations often falling short on promises to adhere to strict ethical and environmental standards in their operations.

But, the claims of LGDs being eco-friendly were reportedly challenged by an analysis company, pointing out that making and polishing a 1-carat diamond can produce about 511 kilograms of carbon dioxide compared with just 160 kilograms for a mined gem. However, most chemical waste from producing LGDs can be further managed within the lab, whereas for mined diamonds it is a different story.

China is now eyeing the consumer market by offering inexpensive products to a wider consumer basis, by using the latest technological advancement and increasing number of diamond labs … leading to rising consumer demand. Over the past few years, the lab-grown diamond industry has been growing steadily as the technology improves and more companies have become involved in their manufacture. By 2030, the global market volume of lab-grown diamonds is forecast to be nearly 19.2 million carats.

China's major diamond producers, Zhengzhou Sino-Crystal Diamond Co Ltd and ZhongNan Diamond Co Ltd are planning to produce lab-grown diamonds for jewelry lines, in addition to those for industrial purposes.

Henan-based Zhengzhou Sino-Crystal Diamond, whose lab-grown diamonds are widely used in the aerospace and equipment manufacturing industries, increased its investment in R&D by 14.4 per cent to $75.2 bn last year. The company’s technological advancements in diamond making, refining, and polishing, as well as its equipment, have allowed it to produce gem-quality diamonds in white, pink and blue. Also, the increased investment was to develop artificial intelligence in manufacturing and to tap China's growing consumer market for jewelry lab-grown diamonds.

However, China is still at a nascent stage and the development of its consumer market for lab-grown diamonds is still to grow further. Many questions on grading and pricing are still unanswered. While mined diamonds are graded by carat, cut, color and clarity, evaluating a lab diamond's quality and value have not yet been formulated. The Gems and Jewelry Trade Association of China launched a sub-association for lab-grown diamonds was launched… a step that was considered significant for the development of the industry in China.

Of late, LGD market share within the entire diamond market has been growing steadily and is forecast to amount to 10 per cent of the diamond market worldwide by 2030. As of 2019, China was by far the world’s largest producer, accounting for a 56 per cent share of lab-grown diamond production worldwide that year. Produced just a 15 per cent share of lab-grown diamonds, India was the world’s second-largest producer, with the United States followed closely to third place, at 13 per cent.

 Today, China makes 56 per cent of the world's gem-quality lab-grown diamonds, outpacing India in second place, according to a report from South China Morning Post. With a hardness of 10 Mohs, diamond is a mineral made up of carbon, which is the hardest substance known to man in nature. On the other hand, synthetic diamond is a diamond product derived from the physical or chemical conversion of carbon from readily available mono-plasms or compounds. Synthetic diamond is widely used in building materials, machinery, mining, electronics and other industrial industries because of its excellent mechanical, thermal, electrical and other characteristics.

The cultivation of lab-grown diamonds is an attempt by man to make gem-grade diamonds, with physical and chemical properties similar to natural diamonds. China has excelled in this field and as they are almost the same, LGDs have become a new choice for diamonds. The continuous improvement of synthetic diamond technology has made it possible to make large monocrystalline diamonds of the industrial gemstone grade. Cultivated diamonds have the same physical and chemical properties as natural diamonds, and can be comparable to natural diamonds in terms of crystal structure integrity, transparency, refractive index, dispersion, etc. The market position of cultivating diamonds has gradually been recognized worldwide, and the legal recognition, industry organization and technical specification of cultivating diamonds have been established.

Regarding supply and demand status in China, the industry ushered in the outbreak period of supply-side quality improvement, choice of diversity. Demand-side and supply-side, the quality continues to improve while prices still have room to fall. On the one hand, the training of diamond manufacturers using technology is constantly improving, large carats, colorless, high-clarity cultivation diamonds are expected to continue to emerge.

As a case study of China's LGD sector, a look into the leader Huanghe Whirlwind is worthwhile. The industry, in general, is actively expanding production and the HPHT equipment for gem-quality and industrial diamond cultivation is versatile so that manufacturers can switch production capacities on demand. The HPHT six-sided top press operated as general equipment, use of different raw material formulations and different synthetic process parameters can be employed to produce monocrystalline diamonds.

Huanghe Whirlwind is currently a leading domestic scale producer making the most complete industrial chain of various super-hard materials. The company produces ultra-hard materials mainly products for various specifications of diamond such as industrial diamond, gem-grade diamond, metal powder, super-hard composite materials (composite), ultra-hard knife, diamond wire saw.

Producing the world's most complete range of superhard materials, Huanghe Whirlwind can now provide customers with product categories, complete specifications and stable performance of all kinds of superhard materials and products, including superhard materials monocrystalline and products, cubic boron nitride and products, diamond polycrystalline and products, as well as auxiliary super hard materials. When it comes to lab-grown diamonds, Huanghe Whirlwind can be regarded as the biggest market leader at present. The single-crystal diamond produced by Huanghe Whirlwind is the basic product of the superhard material industry chain and the company is one of the most important superhard material enterprises in Henan Province. This product supports the development of the entire downstream industry of the superhard material industry. As the company is the leading domestic superhard material supplier with the leading scale, it is capable of supplying the most complete variety. Besides, it supports the complete industrial chain and is already the largest synthetic diamond production base in the country, ranking top in the output in the country.

In 2020, the number of lab-grown diamonds produced by Huanhge Whirlwind accounts for about 20% of the global cultivated diamond sales market, of which high-end quality will account for more than 50%. It is one of the well-deserved leading companies in lab-grown diamonds.

At present, Huanghe Whirlwind has a national-level R&D center. The company has also formed a technical system with proprietary characteristics and has mastered core technologies with independent intellectual property rights. Its strong R&D capabilities enable Huanghe Whirlwind to continuously innovate and upgrade its products.

China's early development of enterprises engaged in synthetic diamond production was used to supply their products to construction, exploration, mining, and mechanical processing companies, as well as to apply them in sawing, cutting, grinding, and drilling operations. These companies will benefit significantly from the diamond industry expansion. In the long run, synthetic diamond has the performance advantages of heat, light, electricity, sound-related properties, and is expected to open up new applications in high-end fields such as the military industry and semiconductors.

In recent times, the domestic market of China has been growing rapidly and the shortage of demand in the international market has resulted in the growth of the Chinese market. In China, where 90 per cent of the world's LGDs are produced, diamonds grown for the consumer market take up 3 per cent of the total diamond market.

Aruna Gaitonde, Editor in Chief of the Asian Bureau, Rough&Polished