4 Trends Defining The Diamond Industry In 2022

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The diamond industry is constantly evolving. It’s never been one to sit stationary for long. And along with these changes, there are significant shifts in supply, demand, value, and consumer preferences. 

Sometimes trying to keep up can be daunting.

4 Biggest Industry Trends

The diamond industry, like virtually every other industry, was dramatically impacted by the pandemic. But now that we’re on the other side of the pandemic – or at least appear to be past the worst of it – things are changing rapidly. 

Here are several of the biggest trends:

1. Diamond Industry Rebound

In 2019, the diamond industry saw a fall of 7%. Then the pandemic came in 2020, which drove prices for rough diamonds down by another 11%. Thankfully, those two years are looking like anomalies in the overall movement of the market.

In 2021, the price of rough diamonds grew by 21%, while polished diamonds – which had declined by 3% and 5% in 2019 and 2020 – increased 9% year-over-year. Both rough and polished prices are now close to pre-pandemic levels. However, they’re still well below their historic peaks, which indicates plenty of room for continued growth.

The increase in diamond values led to increased margins for both mining and retail players. They generated a collective $7 billion more profit in 2021 compared to the previous year. 

2. Lab Grown Diamond Market Size Increases

When you look at the diamond industry as a whole, lab-grown diamonds still make up a small percentage of the overall diamond jewelry market. However, their share is certainly growing. 

Prior to 2018, lab-grown diamond jewelry (which is composed of the same materials as naturally formed diamonds and shares identical chemical and physical properties) accounted for less than $1 billion in global sales. That represented less than 1% of the total market.

By 2019, the market for lab-grown diamond jewelry had doubled, but still represented just 2% of the global market. That number ticked up to 3.5% in 2020, and at least 5 percent in 2021. However, some diamond industry analysts, like Paul Ziminisky, say those numbers are suppressed. 

“[Ziminsky’s] research indicates that in 2021, global lab-grown diamond jewelry sales totaled approximately $5.9 billion, representing 7 to 8% of the total diamond jewelry market,” according to National Jeweler.

Ziminsky believes lab grown jewelry sales – driven by fashion jewelry like tennis bracelets, diamond pendants, and diamond stud earrings – could realistically approach 10 percent of the industry by the end of 2022, and somewhere near the $10 billion mark by 2023.

3. Increased Volume Among Miners

While almost all major mining companies reduced their diamond production in 2020, and even 2021, these companies have taken major steps forward to increase volume and replenish inventories. 

Upstream inventories hit historically low levels at the end of 2021, but are recovering fast. And as the demand for diamonds increases, mining companies are seeing 9%-11% improvements in their margins, on average.

It’ll be interesting to see if diamond mining values return to historic averages over the next several years, or if the explosion of lab grown diamonds and increased demand among millennials and younger demographics have any influence over naturally mined diamonds.

4. Industry Mergers and Acquisitions

It was a big year for mergers, acquisitions, and joint ventures in the diamond industry. And while it’s difficult to predict which moves will be successful, it’s clear that some consolidation is happening. 

In 2021, Rio Tinto acquired the remaining 40% share of Diavik and became the company’s sole owner. They also formed a joint venture partnership with Angolan ENDIAMA so they could explore Chiri kimberlite in Angola. 

In Botswana, Gem Diamonds sold their Ghaghoo mine to the Botswana Diamonds-Vast Resources joint venture. 

The Australian Merlin mine was purchased by Lucapa, while Visionary Victor Resources purchased Firestone Diamonds’ operations in Botswana.

Adding it All Up

As the diamond industry rapidly evolves, we’re beginning to see things take a new shape. And while natural-mined diamonds will always have mass appeal, the rise of lab grown diamonds and shifting preferences among consumers paves the way for an entirely new future. 

Exciting things are happening – this is a market worth keeping an eye on.

This post contains sponsored advertising content. This content is for informational purposes only and not intended to be investing advice.