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LABORATORY-GROWN DIAMONDS

A worker in De Beers new factory in Greshem, Oregon, producing laboratory-grown diamonds for Lightbox Jewelry.

DE BEERS TAKING A CHANCE ON THE LAB-GROWN DIAMOND MARKET, INVESTING $94 MILLION IN AN OREGON-BASED PRODUCTION FACILITY

 

While the future course of the laboratory-grown diamond sector is not yet certain, one organization that is not sitting on the fence is the De Beers Group. Having launched its own laboratory-grown diamond jewelry company in 2018, the company is building a factory in the U.S. State of Oregon that, when at full steam, will be able to turn out up to 500,000 carats per annum.

According to media reports, the 5,574 square-meter plant that is being built in the town of Greshem will cost De Beers about $94 million. The land on which is it is located was originally bought by the Port of Portland to encourage industrial development. The synthetic diamond production plant is located alongside a factory producing semiconductors.

The factory was supposed to have been fully commissioned this year, but that has been pushed back to 2021 because of the COVID-19 pandemic. Full production capacity should be possible by the end of the first quarter next year.

“The building itself and plant infrastructure [are] already complete, and we are now in a phase of installing and commissioning the deposition equipment,” reported Lightbox CEO Steve Coe in an email to Rapaport News in May. “To ensure a safe working environment, we have had to slow down this commissioning process as we work in accordance with state and local guidelines…and believe these new working practices will delay the full ramp-up of the plant by no more than a few months.”

In the meantime, Lightbox is getting its supply of rough laboratory-grown diamonds from De Beers older synthetic diamond subsidiary, Element Six, which has manufacturing facilities in the Republic of Ireland, Germany and South Africa.

SHAKING UP THE LAB-GROWN DIAMOND SECTOR

The announcement in May 2018 that De Beers would be launching its own laboratory-grown diamond line shook up the diamond markets, not so much because world’s predominant natural diamond mining organization was expanding into man-made goods – after all, it was already the world’s largest producer of synthetic, albeit for industrial use – but rather that it introduced a pricing model that was substantially different to what was already being used by the nascent laboratory-grown diamond trade.

Announcing the prospective launch Lightbox Jewelry, De Beers said that it would be selling its laboratory grown diamonds at a flat rate of $800 per carat, irrespective of whether that were white, blue or pink. Others in the industry had linked their prices to those being requested in the natural diamond market, although the discount they were giving on synthetics was growing quite rapidly as the number of laboratory-grown diamonds in the marketplace was increasing quite rapidly.

The Lightbox Jewelry factory in Greshem, Oregon.

De Beers long-term strategy appears to be that laboratory grown diamonds can flourish as an affordable but still high-end fashion jewelry item, whose brand value is a positively enhanced by that of natural diamonds, even though the price structure of both are not connected. Its opinion, apparently, is that both sectors will flourish, and possibly be enhanced by one another, possibly because they both provide consumers with a clear choice.

“That’s really what creates the big growth opportunity because it gives consumers the opportunity to buy this product more frequently,” said Steve Coe, CEO of Lightbox, as quoted by OregonLive.

In principle, a vertically integrated company has the means to create a more streamlined, efficient and ultimately profitable production process, but there have only been a handful of firms that have done it successfully to date.

Laboratory-grown diamonds by Lightbox Jewelry, produced in three colors at a flat rate of $800 per carat.

BUILDING A RETAIL DISTRIBUTION NETWORK

In the meantime, Lightbox Jewelry is establishing its market position. After first signing agreements with Bloomingdale’s and the Reeds Jewelers chain, the company has now announced that its products will be sold by 10 independent jewelers in the United States and Canada. This means that the jewelry line is available today in close to 100 stores across North America.

Furthermore, Lightbox also announced that it has entered into a partnership with online jewelry retailer, Blue Nile, to produce an exclusive fashion jewelry collection. It is the first time in Blue Nile’s history that it will be offering laboratory-grown lab-grown diamonds.

The Blue Nile collection is described as an “everyday, on-trend premium fashion product.” Laboratory-grown diamonds will be set in 14K gold earrings, pendants, bracelets and rings.  Prices will begin at $600.

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