Why lab-grown diamonds are putting natural diamond miners under pressure

As lab-grown diamonds become more common, the industry is splitting into two markets: one built on rarity and natural origin, the other on scale, lower prices and affordability

Lab-grown diamonds are changing the economics of the global diamond trade. As production has expanded and prices have fallen, the laboratory-created stones have gained acceptance among consumers looking for larger diamonds at lower prices.

 

The shift has added pressure on the natural diamond industry, where weak demand, falling prices and excess inventories have already forced producers to cut output and delay investments.

 

The latest example came with De Beers' decision to pause operations at its Venetia underground mine in South Africa for two years as part of cost-cutting measures. While the slowdown has multiple causes, the rapid growth of lab-grown diamonds has emerged as one of the biggest structural changes affecting the industry.

 

Why lab-grown diamonds are disrupting the market

Unlike imitation stones such as cubic zirconia or moissanite, lab-grown diamonds have the same chemical and physical properties as natural diamonds. They are produced in laboratories instead of being mined and can be manufactured using two main processes—High Pressure High Temperature (HPHT) and Chemical Vapour Deposition (CVD).

 

According to the Gemological Institute of America (GIA), HPHT recreates the high-pressure, high-temperature conditions under which natural diamonds form inside the Earth, while the CVD process grows diamonds from carbon-containing gases inside a vacuum chamber. Both methods produce diamonds that closely resemble natural ones in their chemical composition and physical characteristics.

 

The biggest shift is that diamond supply is no longer determined only by geology. Unlike natural diamonds, which depend on discovering and developing new mines, laboratory-grown diamonds can be produced at scale by expanding manufacturing capacity. While natural diamonds take millions or even billions of years to form underground, laboratory-grown diamonds can be produced within weeks using HPHT or CVD technology.

Falling prices are changing consumer behaviour

As production capacity has expanded in India and China, prices of lab-grown diamonds have fallen sharply. Lower prices have made larger stones more affordable and widened the price gap with natural diamonds.

 

According to a report published by International Monetary Fund (IMF) in December 2025, wholesale prices of lab-grown diamonds have fallen by about 90 per cent since 2019, allowing retailers to sell the stones at much lower prices while still earning relatively high margins. The report said these margins have supported wider distribution of lab-grown diamonds, particularly in the United States.

 

The IMF also said the US accounts for more than three-fourths of global demand for lab-grown diamonds, with many consumers choosing them because they cost less than natural stones. The price gap also widens as stone size increases. According to the report, a one-carat natural diamond sells for around $4,220, compared with about $800 for a lab-grown stone. A three-carat natural diamond sells for about $55,255, while a laboratory-grown stone of the same size costs around $3,735.

 

The lower prices have encouraged more consumers to buy larger stones and weakened demand for smaller and mid-sized natural diamonds, where buyers are more willing to switch to laboratory-grown alternatives.

 

De Beers said in its 2026 Diamond Report that retail prices of synthetic lab-grown diamonds have continued to trend lower even as volumes have increased. The company also said rapid supply growth from India and China has contributed to the expansion of the category.

Pressure moves up the supply chain

The shift in consumer demand has affected companies that mine natural diamonds.

 

The IMF said demand for natural diamonds weakened during 2023 and 2024 because of increased competition from artificial diamonds, lower demand from China and greater spending on other luxury goods. Producers initially reduced output only partially but cut production further in early 2025 after inventories continued to build and demand failed to recover.

 

Unlike factories producing laboratory-grown stones, natural diamond mines involve high upfront investments and fixed operating costs. New mines take years to develop and require significant capital expenditure, making it harder for producers to adjust supply when demand weakens.

 

In its Diamond Report, De Beers said the current market has been shaped by several factors, including macroeconomic conditions, geopolitical uncertainty, high inventories across the midstream segment and the rise in synthetic lab-grown diamond supply. It said these factors have put pressure on natural diamond prices.

 

The company also expects global rough diamond production to continue declining over the coming years as existing mines mature and few new projects enter production.

 

Against this backdrop, producers have responded by reducing output, delaying investments or temporarily pausing operations. The suspension of mining activities at Venetia is the latest example of these broader industry trends rather than an isolated event.

India is both adapting to and driving the shift

Surat remains the world's largest centre for cutting and polishing natural diamonds. At the same time, India has emerged as one of the world's largest manufacturing hubs for CVD-grown laboratory diamonds.

 

Indian companies now process both natural and lab-grown diamonds, allowing the country to participate in both segments of the market.

 

However, higher production has not always translated into higher export earnings.

 

Data released by the Gem & Jewellery Export Promotion Council (GJEPC) showed exports of polished lab-grown diamonds declined 10.55 per cent year-on-year to $1.13 billion in FY26 even as shipment volumes increased. The council said the decline reflected an "ongoing price correction" in the segment.

 

The figures show that while India has increased production, continued price correction has limited export earnings from laboratory-grown diamonds.

China has expanded global supply

China has also played a major role in expanding global supply. The country is one of the largest producers of HPHT-grown diamonds, while India has emerged as a leading CVD manufacturing centre. Together, the two countries have significantly expanded manufacturing capacity, allowing laboratory-grown diamonds to be produced in much larger volumes than natural diamonds, whose supply depends on discovering and developing new mines.

 

The IMF said China and India are now the world's two main suppliers of laboratory-grown diamonds. It estimates production of rough laboratory-grown diamonds for jewellery at around 25 million carats in 2025, compared with less than one million rough carats when the segment began gaining commercial traction about a decade ago.

 

De Beers also said rapid supply growth from India and China has driven higher volumes of synthetic lab-grown diamonds while retail prices have continued to decline.

 

This contrasts with natural diamonds, where bringing a new mine into production can take several years and require investments running into billions of dollars.

Two products, two markets

Natural diamonds continue to be marketed around rarity, provenance and long-term value. Laboratory-grown diamonds, meanwhile, are positioned around affordability, larger stone sizes and fashion jewellery.

 

De Beers said clear differentiation between the two categories will become increasingly important as the market develops. The company said natural and synthetic lab-grown diamonds share some physical and optical properties but are not the same, making clear nomenclature important for maintaining consumer confidence.

 

Regulators have also introduced disclosure requirements. The US Federal Trade Commission's Jewellery Guides require marketers to truthfully represent the nature, origin, production and other characteristics of jewellery products sold to consumers.