Former Dominion chief launches synthetic diamond venture

Industry veteran says natural reserves will run dry by the middle of the century

Henry Sanderson JANUARY 13, 2019

The former chief executive of the world’s third-largest diamond miner is launching a company making lab-grown diamonds, in the latest challenge to the mining industry from man-made stones.

Patrick Evans, who left Canada’s Dominion Diamond in December, will pick a location in the US with access to cheap solar power to produce lab-grown diamonds targeting the bridal market.

The development comes after a decision by the world’s largest diamond miner De Beers to start selling lab-grown diamond jewellery in September for the first time in its 130-year history. The miner is spending $94m on a plant in Oregon to produce the diamonds using cheap hydropower, but is targeting the fashion jewellery market rather than engagement diamonds.

The move has accelerated a fall in the price of lab-grown diamonds compared with natural stones. The average discount for a 1-carat lab-grown stone compared with a natural diamond has increased from 29 per cent in January 2018 to 43 per cent, according to Paul Zimnisky, a diamond analyst in New York.

But Mr Evans, a 22-year veteran of the diamond industry, said that his company would sell gem-quality diamonds larger than one carat for the engagement market. It hopes to achieve pricing at a discount of only 15 to 20 per cent off the cost of natural diamonds.

“We don’t think it’s necessary to discount the product heavily,” Mr Evans said. “We think that we’ll be able to achieve natural pricing.”

Mr Evans added that natural supplies of diamonds will soon run out as there have been no new discoveries of diamond mines, which are very hard to find. He expects natural diamond reserves to be almost completely depleted by the middle of the century.

“I’ve explored on four continents — it’s about 1,000 times more difficult to find an economic diamond mine than a gold mine,” he said. “The industry is just not investing in exploration.”

Lab-grown diamonds are chemically identical to natural mined diamonds and can only be told apart using scanning machines. De Beers launched a screening machine last year called “SYNTHdetect”.

While synthetic diamonds were first made by applying high pressure to a seed of carbon in the 1950s, the costs of producing them has fallen dramatically over the past decade.

The cost of producing lab-grown diamonds has fallen from $4,000 a carat in 2008 to between $300 and $500, according to consultancy Bain.

Technology has also improved, allowing larger stones to be made. One of the largest producers, Russia’s New Diamond Technology, has developed a 10-carat diamond using high pressure technology, which simulates the pressures that formed diamonds over billions of years in the earth.

Mr Evans intends to grow diamonds in a chamber using a carbon-containing methane gas, a newer method known as chemical vapour deposition, or CVD. In this process, carbon atoms are deposited layer by layer on a small carbon seed.

Mr Evans said he had secured investment from wealthy individuals as well as a global jewellery company, which he declined to name. He hopes to take the company public on the Toronto stock exchange in 2020.