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Are Lab Created Diamonds Greener than Mining for Them?

Climate change advocates will most likely dismiss the topic based on the definition of ‘green’ because when it comes to eco-friendly processes, there are no gray zones. Something is either environmentally friendly or it’s not. However, over the last few years, several reports have been published claiming that lab-created diamonds are less harmful to the environment than their mined counterparts.

Proponents of this argument say that growing diamonds in labs results in fewer carbon emissions than mining for them using diesel-powered machines and dynamites. There are also others that have pointed to the fact that mined diamonds have been among the top products/minerals that have triggered the start of civil wars in several developing countries. And then of course wars have a negative impact on the environment.

Therefore, it is correct to say that to some extent, lab created diamonds have a positive impact on the environment.

But every debate has two sides, those who support the motion and those that are against it. And the situation here is not any different. Reports interrogating this question point to the fact that countries like Botswana have managed to grow economically because of mining the luxurious stones for trade.

As such, it is correct to say that mined diamonds have helped to alleviate poverty in various countries thereby having a positive impact on the environment.

But do lab-grown diamonds really play any role in the renewable energy space? Let’s examine.

Well, the fact that no blasting of mines or highly powered earth excavation machines are used in growing diamonds in a lab clearly indicates that less energy is required to create the valuable stones in a lab.

According to reports from various companies that grow diamonds in a lab, there are two key elements involved. Carbon, which is an abundant element on earth and electricity for powering the system used to create the diamonds.

So, basically, there are no dynamites involved.

This means that companies that create diamonds in labs can easily adapt their processes to renewable energy sources like wind and solar. In fact, reports already indicate that most of the companies involved in the lab created diamonds market are using green energy to power their systems.

This, of course, ties their operations close to their clients whom surveys have identified to be environmentally and socially sensitive people. Mined diamonds have some level of stigma attached to them due to the several conflicts that have destroyed communities as they fight for the precious stones. As such, some have branded mined diamonds as blood diamonds and this is a sensitive issue for socially conscious people.

In the same case, mined diamonds have impacted the environment negatively thereby putting off most environmentally sensitive people from the market. The two groups represent what analysts fear could be the biggest threat to diamond mining companies.

According to stats, lab-grown diamonds currently represent 1.5%-1.75% of the overall diamonds market. However, as more people continue to become environmentally sensitive coupled with the fact that lab-created diamonds are less expensive, the market share could soar in the next twelve years to about 10%.

Citi estimates lab-grown diamonds to account for 10% market share by 2030, chart via FT.

Earth mined diamonds took billions of years to form through earth’s natural geological processes. And since the mining of diamonds started, over 6 billion carats of diamonds have been extracted. On the other hand, only 1.2 billion carats of mineable diamonds remain in the earth today according to estimates. That represents roughly 16% of what was at the very beginning.

On the contrary, there are about 65 trillion tonnes of carbon on earth according to estimates made by NASA. Add this to the fact that most regions in the world are beginning to embrace the use of renewable energy sources to power their plants and you have a future possibly dominated by lab-grown diamonds.

We are talking about places like the Columbia River Valley, Iceland, Mojave Desert, and Scotland that have solar, hydro, geothermal, or wind energy in abundance potentially creating diamond ‘greenhouses’ or ‘gigafactories’ near their renewable energy sources. In fact, some are already actively building such plants to power their diamond growing facilities, a good example being the one being constructed in Washington State. So, it’s not a fairytale. Actionable steps are already being taken and it is only a matter of time before more companies fall in line with the trend.

Nick is the editor of CAGRValue.com a growth investing focused blog, which discusses emerging industry trends and the best growth opportunities in the market. Follow our latest guides on Investing in general, and especially Growth Investing. Opinions expressed here are my own and do NOT represent an investment advice or recommendation. 

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