The Current - Is the diamond industry losing its sparkle?

Episode Date: October 27, 2025

We've all heard the saying, diamonds are forever. That’s meant for the natural stone, but turns out lab-grown diamonds are also forever —  and that is pushing the industry into a crisis, causing significant drops in natural diamonds. So, what’s the future of the diamond industry in Canada and beyond — and what this shift to lab-grown diamonds mean for countries like Botswana where the health of the economy is tied to the health of the industry: We talk to Casey Hetman, a geologist, and a corporate consultant at SRK, an international mining consultancy firm, and Timothy Puko, Commodities Director at the Eurasia Group, covering metals and mining for the firm's Energy, Climate & Resources team.

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Donate at lovescarbro.cairbo. This is a CBC podcast. Hello, I'm Matt Galloway, and this is the current podcast. We've all heard the saying, diamonds are forever, and for hundreds of years, diamonds have been the gemstone of choice for engagement rings. They are a symbol of an elite, rare, and durable luxury good. But natural diamonds are experiencing significant price drops, and the industry is facing a crisis. Why? Lab-grown diamonds are becoming increasingly invovalued.

Oret Oymachus is the owner of Livia Diamonds in Toronto. He's been in the diamond business for decades, and the current's Mellie Goumish had a chance to visit his store. We have two diamonds here of equal size, clarity and color. One is set in a ring and one is on a holder. Can you see the difference between what would be a mind or a lab-grown diamond? I'm looking very carefully. Wow, no, I cannot tell the difference.

I'm going to make a guess. Is it the left one, natural diamond? It's the right one. I was wrong. There you go. But that's okay, because they are pretty much the same thing, so it's almost like a guessing game rather than being able to tell which is which. It's like comparing ice made in your freezer versus ice made outside.

There's absolutely no difference because they're both crystallized carbon. In their physical form, they're identical. Grette believes the shift isn't a bad thing. The industry as a whole has switched over to selling a lot more lab-grown diamonds, just because that's what the consumer wants. It is somewhat new. It's been around maybe for about five years now, and every year it seems to be ramping up as in people coming in asking specifically for lab-grown diamonds.

I guess in every industry, there are always shifts that are happening, and in our industry, when it comes to diamonds, it has shifted into lab-grown diamonds. First, there was a little bit of hesitancy as to what it is. How is it a diamond if it's not mined? Once people understood that it is generally physically the same exact thing, they were more open to the fact that obviously they can get more of the look that they want for less. They're happy making that decision knowing that the diamonds are conflict-free, ethically sourced,

and that also helps as well. I'm actually happy it's happening because I never believed in people having to spend tens of thousands of dollars to buy a symbol of a commitment. It is a diamond at the end of day. It will last forever. It will sparkle just like any mine diamond. So in my opinion, I think it's good. To talk more about the future of that industry, I'm joined by Casey Hetman. He's a professional geologist, diamond expert, and corporate consultant at SRK and international. mining consultancy firm. He's in our Toronto studio. Casey, good morning. Thank you. I appreciate the invitation to participate this morning.

We just heard from Arret about how he is seeing the demand shift at his store from natural diamonds to lab-grown diamonds over the last few years. How much of a shift, a crash, is the market for natural diamonds facing right now? Yeah, that's a good question. There's no doubt that there's been an impact, you know, the availability of the lab-grown. own diamonds, particularly over the last few years, has had an impact. And prices have probably dropped in the order about 25% over the last two years, and that's for the natural diamonds. And so how much of this is about the price versus something about the diamonds themselves? Yeah, it was interesting, you know, when Mellie went into the store and she was observing those two

diamonds. And the key thing here that's important to take into consideration when you're looking at these new lab grown diamonds, particularly over the ones that they have been able to produce over the last few years. You know, they're very large and they are excellent quality. And by eye, you cannot differentiate them from something that is generated from the earth. You need obviously analytical tools or good hand lens and someone with a sort of trained eye to differentiate the difference between the natural and lab grown diamonds. So there's no doubt that it's attractive to a lot of consumers to purchase some of these lab-grown stones. We also heard the idea of conflict-free. How much does that play into the preference?

I don't think that that has any impact. I mean, the natural diamonds that are being sold on the market today are also conflict-free, and that's thanks to the Kimberly process. So we have controls in place to ensure that those natural goods that are sort of going to market are coming from areas in the world that are not associated with conflict. Beyond just the influence of lab-grown diamonds, what are some of the other reasons the diamond industry has been struggling? Yeah, that's a good question. And that sort of has a bigger thing here at play.

And when we think about the exploration industry in Canada, it's not just about diamonds, right? So in order for us to sort of discover mineral deposits and put those mineral deposits into production, And when I talk about production, I'm talking about not just diamonds, like I said, gold and base metals and critical minerals. We have to have a healthy exploration industry sort of functioning in order to sort of continue to sort of deliver those resources so they can be mined and distributed. I do certainly want to talk more about what's happening in Canada, but writ large, I mean, we hear so often more people visiting food pantries, people struggling with the cost of living. Surely that, too, is affecting the diamond market.

Specifically related to the diamond market, yeah. So obviously, diamonds are a luxury good. And obviously, when we look at the sort of global economy, you know, people are struggling, right? So obviously the priority is to sort of focus on things that are important to sort of sustain life. And obviously, they're being careful about where they're directing their funds. So right now, there isn't a huge sort of push. And that's not just diamonds, but a lot of luxury products. whether they're watches or purses.

Canada was at one point a pretty significant player globally in the diamond market. How big are we talking? Yeah, it was considered one of the top three or four in the world, and you have to take into consideration not only the sort of number of carrots being produced, but the actual value of those diamonds. So are there obviously big players, are countries like Botswana, Russia, Angola? And what we have to appreciate is that mines have a life, right? They do sort of wind down.

And a lot of those deposits that were discovered and put into operations are winding down now. And that's just a natural sort of progression that is part of the mining industry. What we haven't done is continued with our exploration and evaluation of other diamond deposits in Canada so we can keep that process moving forward. So we have the right land and obviously the right kind of geology. And there will be other mines that will be discovered in Canada. That is a fact. And then in order to sort of generate that healthy sort of mining environment, the foundation is exploration, right?

You have to be spending money on the ground. So those exploration companies have to be on the ground. They have to be supported with funding and have their kind of right infrastructure in place in order for them to be successful, to make the discoveries and move those discoveries on through various sort of technical studies to develop new mines. I take your point that this goes beyond diamonds. But I think when we think of that industry, in particular, they are a luxury good. And some people might hear this and say, well, who cares? Who cares if the Canadian diamond industry thrives or not? Why is this an important conversation?

Yeah, that's a good question. You know, the diamond community, a lot of the diamond mines are located in isolated environments in Canada, particularly, obviously, in the far north. And there are a lot of both economic and social impacts that we can see. see when you build a mine and you engage a community in the development of that mine and the running of the mine. And those benefits not only go to the government who then provides more sort of money and support for infrastructure with its roads and hospitals, but it goes directly into a lot of the First Nations communities where it sort of impacts them directly and elevates those communities, not only in terms of generating cash flow in those environments,

but elevating the sort of knowledge transfer and development of their youth as they become sort of involved in those projects. We have a prime minister right now who is very interested in what Canada can provide to the world. He's talking a lot about natural resource projects. How optimistic are you that there might be some changes in how good Canada gets at getting things out of the ground, including diamonds? I don't understand exactly what he has in place or what he's developing, but what is important to appreciate is that the foundation or what we need in order to sort of realize a goal like that is geology. Okay.

And we have some of the most spectacular geology in Canada. A lot of mineral deposits when you think about the foundation of what's required is this what we call archaean cratons, right? So we have the largest archaean craton on the planet, which is the superior. So the foundation is there. So that's possible. That's the first kind of checkbox. Other thing that you need is people, right?

And when you think about the academic institutions in Canada, they're excellent, best in the world producing some fantastic technical people that, you know, have the knowledge and experience to sort of move those kinds of projects forward. Other sort of thing that is a plus that we have is obviously the First Nations communities distributed across Canada. So not only the people, but the infrastructure that exists in those communities is key. to sort of supporting that exploration through evaluation to developing of mines. And then what it will take is obviously streamlining policy and permitting, right? Because one of the challenges we have in Canada, we are competing for exploration dollars, right?

So there is no doubt jurisdictions in other parts of the world that are far more streamlined and have better sort of infrastructure in place. And we are competing with those jurisdictions for those exploration dollars. and not only the dollars but the people. So you see a lot of our best minds are sort of dedicated to projects outside of Canada. This ascent isn't for everyone. You need grit to climb this high this often.

You've got to be an underdog that always over delivers. You've got to be 6,500 hospital staff, 1,000 doctors all doing so much with so little. You've got to be Scarborough. Defined by our uphill battle and always striving towards new heights. And you can help us keep climbing. Donate at lovescarborough.ca.a.

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between lab-grove diamonds and natural diamonds. Do you share that opinion? Well, there's a huge difference. And, you know, when you take a natural diamond, if you understand the processes that were involved to sort of generate that particular mineral, the source of those diamonds, they're coming from deep in the earth, 150 to 250, and sometimes even as deep as 750 kilometers, right? And so those are special geological processes and parts of the earth that are untouchable. And the only reason why we can see these things is they come to the surface through very specific kinds of eruptions in a rock called Kimberlite or Lampwright. And it's not just that these things are super rare, and they are rare, good quality diamonds, and that they're special because they're part of the earth.

And some of these diamonds originate. The carbon actually is originating from ancient oceans, right? So it's quite special when you think about what all is required in order to generate a natural diamond. So it is very, very different than something produced in a factory. It's not real, right? Something that's in a factory. I kind of often attribute it to, you know, you can have an oil painting and you go in the Van Gogh Museum and you look at his work. And then you see a copy.

It's just not the same. Does it bother you then that there's less enthusiasm for the van goes in this metaphor? No, that's okay. I think there's a place. There are consumers that are going to want to purchase a synthetic stone, and that's okay. But there's going to be always part of the population that want something that's real from the earth. Listen, Casey, thank you for taking the time to talk to us about this. Thank you.

Casey Hetman is a professional geologist, diamond expert, and a corporate consultant at SR. an international mining consultancy firm. Well, it's not just Canada feeling the pressure of declining diamond prices. Timothy Pucco is Commodities Director at the Eurasia Group, and he covers metals and mining for the firm's energy, climate, and resources team. Tim, good morning. Good morning. Thank you so much for having me. Thanks for making the time.

You heard what Casey had to say about diamond industries here, the struggle here in Canada. How is that playing out internationally? It's interesting. I didn't hear him mention China very much. And it is very much a China story. It's very much an Africa story. This is another example of a new technology that Chinese industry has essentially perfected

and then turned it into overcapacity and has given the world a plethora of supply. But there are countries in Africa. Russia also has long been a big supplier, and it has knock-on effects for that. It can be very destabilizing, actually, for some to lose a revenue source. that had been so important, such a big share of their economies. Well, the story of Botswana is pretty striking. This is a huge deal for them. Give us a sense of that. Well, by some measures, diamonds account for about a quarter of the entire Botswanan economy. It already owns a small share of De Beers, the iconic diamond producer. It's interested

in buying more because De Beers owner, Anglo, is trying to sell off that asset. The diamond price collapse has been so damaging that some in the industry just want to get out. Botswana doesn't have a choice. It can't get out. Its whole economy is really dependent on the health of the diamond industry. And so its response has been, well, let's buy it up. Let's own beers. And political leaders there have ideas about how diamonds should be marketed and what the company could be doing differently. And this is another example of resource nationalism where a country's existence, really, its health, economic security is so tied up in resources in some way that the government feels compelled to try to take more control. Talk a bit about how Russia fits into this picture.

Yes, Russia also a big supplier. And it's not quite as impactful there in Russia as it is in a place like Botswana, just because Russia has oil reserves and has other elements of its economy, but it's a huge source of revenue for them, too, and has been a complicated issue geopolitically. There are a lot of people who think about conflict diamonds. You've mentioned this before. There have been rising ethical concerns. I do think that's a very real thing, especially in Western markets. I can actually speak to it personally. I was buying an engager ring for my wife a couple years ago, and we didn't want a Russian diamond. And so it sometimes pushes people to look far wide to figure out alternatives. So Casey sort of suggested

the conversation around conflict diamonds is an old one. I mean, where are we in 2025 on that? It's an old one, but it's not a resolved one, again, especially in Western markets. Lab-grown diamonds are not just appealing because they're cheap. They're appealing because for the most part, it's an industrial process that comes with supply chains, modern economies, They are not the source of revenue to propagate wars across Africa or to give support to Russia as it invades Ukraine. People do really think about this. You can see it in the numbers. You can see it in the rise of companies like Brilliant Earth.

There is an appeal for diamonds that are free of that conflict. When I say it's unresolved, the issue is there is the Kimberly process, but how that actually applies in reality whether that information gets to consumers, whether suppliers take it seriously, it's a whole other question. And if you're out there diamond shopping and you want assurances that you're not getting a conflict stone, the Kimberley process doesn't really necessarily provide you with a wholly convincing full set of data that gives you a lot of confidence. And in many ways, the easiest decision is just like, well, buy something made in a factory. So is this an industry worth saving the natural diamond industry?

That's a great question, right? Like, what does it mean? What do diamonds mean to any of us? The fact that they have been so wrapped up in marriage, engagement rings, social status is in many ways just a market construct to begin with. I go back to Debears, you know, savvy marketing campaigns over decades. That's what made this important to people. It's not actually tied to religion or certainly not culture beyond, you know,

those relatively modern inventions, TV, flashy magazine ads, slick magazine ads. And so, you know, I'd certainly say, I don't want to be insensitive to a country like Botswana, its other African neighbors. There are certainly countries in the world where a natural diamond industry is vital to its economic stability, vital to regional stability, to peace, to people's safety. And so for that reason, you're going to have a lot of people who are going to feel very attached to natural diamonds and have a tremendous case for their importance. But for many people, you know, it's, like I said, it's really just a marketing device and doesn't hold a whole lot of real deep sway. If it comes with moral questions, then, you know, you can see it easily being

sacrificed. You talk about China being a big player in the lab-grown diamond market, sort of perfecting it. India is very involved as well. But like everything else in global markets, this is another area where Donald Trump's tariffs come into play. How is that affecting the market? Well, I mean, you have to think about the fact that the U.S. is typically the number one consumer for a lot of materials like this. And at a time, oh, tariffs are going into place, at a time when a lot of Americans still have concerns about cost of living. We haven't fully seen this play out yet, but if tariffs make diamonds and other commodities, other materials, other consumer products, more expensive, it's very easy to see that the problems the diamond industry

is having now get worse before they ever get better. So what can be done to revive the industry? That's a good question. And I think part of the reason that so many countries are struggling with this is that there are no easy answers. You know, I mentioned that by Botswana is looking to buy De Beers, Angola, also interested in buying a stake. Right now, what those countries are thinking is that they have to have control. They have concerns that, you know, that marketing effort that I mentioned that for so long gave life to this industry, it hasn't been as vital. The natural diamond industry hasn't found a message with consumers that resonates in a way,

that dissuades them from lab-grown diamonds. And so, I think that you're probably going to see a more concerted effort from countries like that to push a more aggressive marketing effort to get people to come back to something that's more natural. So, but Tim, what if the industry can't be revived? If I could just push back on the premise just very gently, the one thing I like to remind people is that the commodity cycle is undefeated. And that goes both ways.

So when we're in a downturn like this, you know, I think it's really hard to predict that the industry is going to just disappear. There is a new technology that is creating a new product. And you see this over and over again in all types of commodity markets. The markets will get oversupplied, and then there'll be a washout. It is going to be painful for a lot of these manufacturers in China and in India that will get wiped out. There will be bankruptcies. It will be painful for Botswana and other neighbors that are dependent on the revenue. They will have to find new ways to work with less.

And quality of life will probably go down in a couple of those countries that are really dependent on the sector. But typically what you see is that after that washout happens, the industry stabilizes. Diamonds have been around so long. I mean, even literally, or I should say figuratively with us and modern consumers over the past couple decades, but obviously literally for thousands, if not millions of years. This industry won't go away. It only exists in some form. You expressed a little bit of cynicism about the marketing campaign, but I did know what you said you purchased a diamond yourself when it was

engagement ring time. Yeah, yeah, I did. It was a black diamond. So not quite that high quality, fully clear stone. Like many consumers today, my wife was interested in something a little bit more colorful with a little bit more flare. We did end up going with a reused diamond that had a local artisanal jeweler who buys on secondary markets and at least how he tells it, this industry is tough. It's hard to ever get full confidence in this. But as he tells it, the best way to have real security in your diamond is you buy one that was used before. And so, you know, so we saved a little money that way, but we got something that has a little more character. Fascinating. Tim, thank you for this conversation.

Sure thing. Pleasure talking to you. Timothy Pucco is Commodities Director at the Eurasia Group, and he covers metals and mining for the firm's energy, climate, and resources team. You've been listening to the current podcast. My name is Matt Galloway. Thanks for listening. I'll talk to you soon.

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