De Beers is shutting down its Lightbox lab-grown diamond (LGD) jewellery business and pivoting back to its “diamonds are for ever” naturally selected focus after a whopping 90% fall in value.
Lightbox was established in 2018 and launched with a price of US$800/ct LGD.
Since then LGD carat prices have fallen off a cliff by 90% at wholesale, tracking closer to a cost-plus model as they diverged from natural diamond prices.
That's because consumer demand was low, having been devalued in people's minds by the ease with which synthetics flooded the market - especially from China.
Reflecting on this sharp price decline, De Beers says it intends to discontinue the Lightbox business and return to its core values as a producer of rare natural diamonds.
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As part of the closure process, the company is discussing the sale of certain assets, including inventory, with potential buyers.
It will still run its Element Six arm, which focuses exclusively on industrial applications for synthetic diamonds.
De Beers says the failure of synthetic diamonds as jewellery has reinforced its “commitment to natural diamonds in the jewellery sector”.
“The evolution of LGD values in the jewellery sector underpins De Beers' core belief in rare, high-value, natural diamond jewellery as a separate category from low-cost, mass-produced LGD jewellery,” the diamond miner said.
Ever since synthetic diamonds came into the market, it's not been an easy road for De Beers - nor its parent company, mining major Anglo American.
It recently wrote down the diamond business's capital worth by US$4.5 billion, leaving it with a valuation of just US$4.1 billion, and has put it in the shop window for sale, with a backup plan to spin it off into an IPO for the market to gobble up.
“As we move towards becoming a standalone company, we continue to optimise our business, reduce costs and build a focused De Beers that is positioned for profitable growth,” De Beers chief executive Al Cook said.
“The persistently declining value of lab-grown diamonds in jewellery underscores the growing differentiation between these factory-made products and natural diamonds.
“Lightbox has helped to highlight the fundamental differences in value between these two categories.”
