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What Hondor said, and it's extremely capital-intensive to develop a mine to production. Even after all the geoexploration to find a deposit, it's on the order o
by ridgeguy 10y ago
What Hondor said, and it's extremely capital-intensive to develop a mine to production. Even after all the geoexploration to find a deposit, it's on the order of $1B - $2B to get into production. You have to move and inspect hundreds of tons of rock to find a carat of diamond in most mines [1].
Mined diamonds can't ever compete with CVD diamond synthesis costs. As more CVD producers come online, I think we'll see prices for synthetics drop drastically. There's a lot of margin available for market-grabbing.
[1] http://www.bloomberg.com/news/articles/2016-07-05/first-find-the-world-s-biggest-diamonds-then-don-t-break-them http://www.bloomberg.com/news/articles/2016-07-05/first-find...
edited for typos
- imh 10y agoWhy don't the same cartel dynamics for natural diamonds apply to synthetics? If they can sell them for more, why won't they?
- ridgeguy 10y agoThey kind of do. Prices for synthetics are typically ~ 75% of the natural equivalent. For CVD synthetics, there's significant margin in that pricing, margin that could be used to initiate price wars. For now, the synthetic vendors are riding on diamond's traditional high pricing as sustained by artificial scarcity. They're cheaper than the naturals, but not all that much. I think it's their way of maintaining high margins during early business & market development. I expect pricing to change when there are more suppliers and sales channels. Probably a couple of years to a definite downward inflection point.