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And De Beers now say they will sell lab-grown diamonds for 90% less. (https://news.ycombinator.com/item?id=17183603 https://news.ycombinator.com/item?id=1718360

And De Beers now say they will sell lab-grown diamonds for 90% less. (https://news.ycombinator.com/item?id=17183603 https://news.ycombinator.com/item?id=17183603) So either De Beers will make a huge loss on each diamond, or the synthetic diamond startups must be making huge profits?

shinryuu 8y ago
I think the difference is that De Beers brands those diamonds as lab grown, to be able to differentiate it. That does not seem to happen with these diamonds.
_Codemonkeyism 8y ago
De Beers takes a huge loss b/c they want to devalue lab grown diamonds and keep their monopolisitc margins.
jaclaz 8y ago
I think that it is well worth underlining contents of the linked to article by Morgan Stanley (2016): https://www.morganstanley.com/ideas/diamond-market-lab-grown-disruption https://www.morganstanley.com/ideas/diamond-market-lab-grown... >Morgan Stanley estimates that the capital costs for lab-grown diamonds are negligibly lower than minded [sic] diamonds: $343 per carat vs. $367 per carat for mined. >Yet, at the wholesale level, they may sell at a 30% to 40% discount to mined stone. This is in part because lab-grown diamond producers are a fragmented, independent channel, while the mined diamond industry is highly consolidated and coordinated, in terms of supply, distribution, marketing and pricing. The labs aren’t just competing with the mined diamond industry, but also with each other for market share. So costs are around 350 US$ per carat, and they sell retail the ring ".95-carat lab-grown stone" for US$ 4,000, let's say that US$ 500 are for the (white) gold and craftmanship (the ring seems a very simple one). It would be interesting to understand where the remaining 9/10th of the price go.
- mywittyname 8y ago
  > It would be interesting to understand where the remaining 9/10th of the price go. Preventing competition. I'm sure monopolies like this are expensive to maintain.
  - jaclaz 8y ago
    >Preventing competition. I'm sure monopolies like this are expensive to maintain. Preventing how? There is NO monopoly (at least yet) for lab-grown diamonds, if you use the same calculations for the real diamond, you have 5000-500=4500/370= 12x, which may apply to the De Beers' monopoly (but being a monopoly you have no real alternatives by definition). The point I was trying to make was more that while I can understand how a monopoly can have and maintain a 12x margin/profit over capital costs, it is hard to justify a 10x one for the "lab-grown" ones. This startup, which seemingly is only a commercial middle-man, with no particular innovative (as I would expect from a start-up) business (in the sense that buying goods from producers and/or wholesalers and selling them to final customers it is "traditional commerce"), seems like having a lot of overhead.
    - mywittyname 8y ago
      Ah, I interpreted your question to be about DeBeers. I imagine diamonds need to maintain some minimum price point in order to sell, after all, they are a luxury good. And a 10x margin is high enough to not raise eyebrows, but low enough to undercut the competition. If Lamborghini released a $40,000 Mustang competitor, then their brand would suffer. But if the same car retailed for $120,000, then people would accept it.
      - jaclaz 8y ago
        >I imagine diamonds need to maintain some minimum price point in order to sell, after all, they are a luxury good. Yep, but only (or however mostly) because of the DeBeers marketing. > And a 10x margin is high enough to not raise eyebrows, but low enough to undercut the competition. My eyebrows are raised nonetheless. We are not talking of technology, design or "brand" such a Mustang or a Lamborghini, we are talking of (almost) RAW materials, not entirely unlike gold or any other "mined" material. As an example in Napoleon III times, aluminium cutlery was a "luxury" item, because the metal was more valued then gold. Reference: http://www.todayifoundout.com/index.php/2014/05/aluminium-cost-gold/ http://www.todayifoundout.com/index.php/2014/05/aluminium-co... (coincidentally the above article talks in passing-by of diamonds, citing a report thaat is giving completely different valuation of the diamonds market, so maybe the numbers cited are completely off ) I cannot access the Bain report cited, right now, but is dated 2011 and available via Wayback Machine: https://web.archive.org/web/20170830050614/http://www.bain.com/Images/PR_BAIN_REPORT_The_global_diamond_industry.pdf https://web.archive.org/web/20170830050614/http://www.bain.c...
- CyberDildonics 8y ago
  Debeers doesn't sell mined diamonds anywhere close to the cost of acquiring them. Their monopolistic cartel behavior has been to secure as many diamonds as possible to control the market so that mined diamonds don't drop in price and become flooded with supply.

shinryuu 8y ago

I think the difference is that De Beers brands those diamonds as lab grown, to be able to differentiate it. That does not seem to happen with these diamonds.

_Codemonkeyism 8y ago

De Beers takes a huge loss b/c they want to devalue lab grown diamonds and keep their monopolisitc margins.

jaclaz 8y ago

I think that it is well worth underlining contents of the linked to article by Morgan Stanley (2016): https://www.morganstanley.com/ideas/diamond-market-lab-grown-disruption https://www.morganstanley.com/ideas/diamond-market-lab-grown... >Morgan Stanley estimates that the capital costs for lab-grown diamonds are negligibly lower than minded [sic] diamonds: $343 per carat vs. $367 per carat for mined. >Yet, at the wholesale level, they may sell at a 30% to 40% discount to mined stone. This is in part because lab-grown diamond producers are a fragmented, independent channel, while the mined diamond industry is highly consolidated and coordinated, in terms of supply, distribution, marketing and pricing. The labs aren’t just competing with the mined diamond industry, but also with each other for market share. So costs are around 350 US$ per carat, and they sell retail the ring ".95-carat lab-grown stone" for US$ 4,000, let's say that US$ 500 are for the (white) gold and craftmanship (the ring seems a very simple one). It would be interesting to understand where the remaining 9/10th of the price go.

mywittyname 8y ago
> It would be interesting to understand where the remaining 9/10th of the price go. Preventing competition. I'm sure monopolies like this are expensive to maintain.
- jaclaz 8y ago
  >Preventing competition. I'm sure monopolies like this are expensive to maintain. Preventing how? There is NO monopoly (at least yet) for lab-grown diamonds, if you use the same calculations for the real diamond, you have 5000-500=4500/370= 12x, which may apply to the De Beers' monopoly (but being a monopoly you have no real alternatives by definition). The point I was trying to make was more that while I can understand how a monopoly can have and maintain a 12x margin/profit over capital costs, it is hard to justify a 10x one for the "lab-grown" ones. This startup, which seemingly is only a commercial middle-man, with no particular innovative (as I would expect from a start-up) business (in the sense that buying goods from producers and/or wholesalers and selling them to final customers it is "traditional commerce"), seems like having a lot of overhead.
  - mywittyname 8y ago
    Ah, I interpreted your question to be about DeBeers. I imagine diamonds need to maintain some minimum price point in order to sell, after all, they are a luxury good. And a 10x margin is high enough to not raise eyebrows, but low enough to undercut the competition. If Lamborghini released a $40,000 Mustang competitor, then their brand would suffer. But if the same car retailed for $120,000, then people would accept it.
    - jaclaz 8y ago
      >I imagine diamonds need to maintain some minimum price point in order to sell, after all, they are a luxury good. Yep, but only (or however mostly) because of the DeBeers marketing. > And a 10x margin is high enough to not raise eyebrows, but low enough to undercut the competition. My eyebrows are raised nonetheless. We are not talking of technology, design or "brand" such a Mustang or a Lamborghini, we are talking of (almost) RAW materials, not entirely unlike gold or any other "mined" material. As an example in Napoleon III times, aluminium cutlery was a "luxury" item, because the metal was more valued then gold. Reference: http://www.todayifoundout.com/index.php/2014/05/aluminium-cost-gold/ http://www.todayifoundout.com/index.php/2014/05/aluminium-co... (coincidentally the above article talks in passing-by of diamonds, citing a report thaat is giving completely different valuation of the diamonds market, so maybe the numbers cited are completely off ) I cannot access the Bain report cited, right now, but is dated 2011 and available via Wayback Machine: https://web.archive.org/web/20170830050614/http://www.bain.com/Images/PR_BAIN_REPORT_The_global_diamond_industry.pdf https://web.archive.org/web/20170830050614/http://www.bain.c...
CyberDildonics 8y ago
Debeers doesn't sell mined diamonds anywhere close to the cost of acquiring them. Their monopolistic cartel behavior has been to secure as many diamonds as possible to control the market so that mined diamonds don't drop in price and become flooded with supply.