Natural or lab-created diamonds – which is best in your engagement ring?

A few short years ago lab-created diamonds weren’t even on people’s radar, much less considered a serious option for engagement ring buyers.

That situation is rapidly changing.

Since about 2017, they’ve become readily available in the general diamond jewellery market and are now making serious inroads into the bridal and engagement ring space.

Of course, the natural diamond world isn’t very happy about this development. Lab-created diamonds are starting to eat into their previously exclusive marketplace. But what does this mean to you if you’re thinking about buying an engagement ring?

Lab-created diamonds are diamonds

​Before we go too far, let’s make sure we’re on the same page. When we talk about lab-created diamonds, we’re not referring to things that look like diamonds (simulants like cubic zirconia – CZs) or diamond alternatives (like lab-created moissanite).

Lab-created diamonds, or man-made, synthetic or lab-grown diamonds as they’re variously called, are made of … well … diamond.

They have the same chemical structure, the same optical qualities, the same specific gravity and the same hardness as diamonds that come out of the ground.

What that means is, when it comes to the purely physical properties of lab-created versus natural (or mine-origin) diamonds, there is no material difference between the two. It takes very advanced detection equipment to tell them apart.

From a consumer’s perspective, man-made diamonds behave in exactly the same way as do natural stones. But once you get past the purely physical properties, things get a little more complicated.

Some of those complications relate to intangible things like perceptions of origin and ‘tradition’. Others relate to more tangible considerations like environmental costs, social costs (or benefits), rarity and value for money.

The intangible differences

Let’s start with perceptions about natural versus man-made.

There’s no disputing the fact that natural diamonds were created as a result of natural volcanic actions whereas lab-created diamonds are manufactured in an artificial environment in factories.

What’s important in relation to these two basic facts is how you feel about those different processes.

Does it matter to you?

Maybe it does? Maybe it doesn’t?

Whether the diamonds are removed from an incubator or dug out of the ground, the reality is both are produced on an industrial scale. One involves big factories. The other involves big pieces of earthmoving and processing equipment creating big holes in the ground. Neither method is particularly pretty or what you’d call ‘romantic’.

And when it comes to the notion of tradition, there’s no question natural diamonds have been around a lot longer than their factory-produced alternative.

The first documented use of diamonds in matrimonial jewellery was in Austria in the late 1400s, but they didn’t really become the ‘must have’ option until the 1930s – thanks to a very successful advertising campaign by De Beers. Before then, coloured gemstones were the go-to choice.

I think it’s fair to say that diamonds are now the preferred option for many people getting engaged because that’s what the advertisers have been telling us for the past 90 years, but I wouldn’t go so far as to say they’re traditional.

Tangible differences between lab-created and natural diamonds

Put two similarly graded and sized lab-created and natural diamonds side by side and it’s virtually impossible to tell them apart by eye. And yet there are some meaningful differences between the two once you look beyond their physical characteristics and the processes by which they were formed.

Diamonds and the environment

Regardless of whether you dig them out of the ground or create them in a factory, diamond production has a negative impact on the environment. There’s no escaping that fact.

The difference is that natural diamond mining has a large, direct physical impact on the local environment. The pursuit of diamonds has resulted in the creation of some of the biggest holes on Earth and almost all diamond mines are located in environments vulnerable to run-off, dust, noise, light and other forms of pollution from human activity. Not to mention the physical displacement of millions of tonnes of rock and other tailings.

The direct environmental impact of man-made diamond production is, however, significantly smaller – being limited to factory buildings in urban areas. Of course, human activity still has an impact on those local urban environments and there are things like water consumption (for cooling) to be considered, but on the whole, lab-created diamond production does less direct damage to the environment – especially to what might be called more fragile ecosystems.

The carbon cost of diamond production

You can’t have any discussion about the environment without considering carbon emissions.

Both diamond mining and factory production yield carbon emissions. How big those emissions are varies from mine to mine and factory to factory.

Most of the carbon produced is a function of the energy sources used. It doesn’t matter whether it’s a mine or a factory, the more access they have to renewable energy, the fewer the carbon emissions.

The reality is, some mines have a really small carbon footprint and some are disturbingly bad. The same can be said when it comes to factory production. It’s all about how efficient they are and where the energy comes from.

In other words, what really matters is specifically which mine or which factory an individual diamond came from.

You can’t compare factory-produced and mine-origin diamonds side by side and say one is inherently better than the other because of their method of production. You can only make that judgement when you know specifically who the producer is and where their mine or factory draws its energy from.

If you care about the impact your purchase is having on the environment, then you need to seek out a supplier who cares about those things too and can provide you with diamonds of known origin.

The social impacts of diamond production

Both mining and manufacturing are big economic drivers that, more often than not, deliver meaningful economic benefits to localities, regions and countries.

Both take relatively inaccessible and/or low-value raw materials and turn them into products worth a lot more, creating wealth along the way.

The downside is many people are negatively affected by diamond production – most often in politically volatile developing counties or in exploitative diamond cutting factories, also usually sited in developing nations.

Historically, the diamond mining industry has a poor record when it comes to human rights abuses and in certain parts of the world there are still very real problems with conflict funding, smuggling, slavery, exploitation, corruption and all kinds of criminal activity.

Most of this is confined to the artisanal small-scale mining (ASM) sector, though it’s also true that some larger scale operations are less than humane when using security forces to protect their mining interests.

Conflict diamonds are still a ‘thing’

In places where the rule of law is questionable, the flow of money connected with diamond production often brings out the worst in people.

How big the problem is is difficult to say, but with some 15-20% of diamonds originating from ASM operations, the likelihood is a meaningful percentage of suspect diamonds make their way into the mainstream supply chain.

Our advice would be, if the reseller can’t show you (via a reputable certificate) exactly where a diamond originated from – and you consider yourself a socially responsible person – don’t touch it.

It might cost a little more to find a diamond of known origin, but there is peace of mind in knowing where it came from.

Lab-created diamond production is (typically) socially responsible

To the best of our knowledge, issues of exploitation and criminal corruption are essentially non-existent in the man-made diamond sector, but that doesn’t mean you should be careless.

It’s probably safe to say that diamonds grown in Singapore, Europe or the US are free of human rights abuses, but we can’t be quite so sure about all those grown in India, China and Russia.

Don’t overlook cutting and polishing

Where diamonds are cut is important too.

About 90% of the world’s diamonds are cut in India – including lab-created diamonds – and sometimes the working conditions of those diamond cutters and polishers are extremely poor and exploitative, with the use of child labour being all too common.

Workers are often paid by the piece and have little or no job security.

Again, if you care about these things, choose your supplier carefully.

The value in diamonds

When it comes to discussing value, probably the two biggest issues are:

• How much bang you get for your buck now; and
• What might your purchase be worth sometime in the future, i.e., how much value might it retain.

At the moment, natural diamonds larger than tiny accent stones (called melee) are typically around 30% more expensive than equivalent lab-created diamonds – but this is only true of colourless (sometimes called white) diamonds.

What this means is, if you’re comfortable with the idea of buying a diamond made in a factory, you can get a lot more bang for your buck – either saving a significant amount of money up-front or enabling you to purchase a larger and/or higher graded stone for the same money.

Coloured diamonds are a different ballgame

Once you start talking about coloured natural diamonds – especially the pinks, blues and reds – the gap between man-made and natural gets much wider because these fancy natural colours are incredibly rare and sought after.

However, if you like the idea of a pink or blue diamond, lab-created options, whilst not cheap, they are still hugely more affordable than an equivalent natural diamond – by a very, very wide margin.

Let’s talk finances

Now, supposing you choose to save money up-front by going lab-created, there’s a financial benefit to that decision because you can use the money you saved to do other things – maybe avoid some debt, put it towards your wedding, save it for a holiday or whatever – but there is a potential downside.

The possible downside is that man-made diamonds probably won’t retain their value as much as natural diamonds are likely to.

What this means is, were you to try and resell your engagement ring sometime in the future you’ll probably get less for it than you would if it featured natural diamonds.

How much less? Well, that’s really hard to say because that would mean predicting the future and I don’t have a crystal ball, much less one that works.

Of course, here in Australia the issue of resale value is much less important for most people because we tend to buy (or give) one ring and it’s kept, hopefully, forever. This makes the whole idea of resale value little more than an academic exercise.

In places like the US however, where it’s much more common for engagement ring diamonds to traded in or upgraded at a later date, the issue of retained value is much more hotly debated.

Still, if retained value is something you want to seriously weigh up, here are some key points you might want to consider:

• Natural diamonds are a finite resource, and as the decades pass, they will inevitably become more and more scarce. In any other situation you might expect this to increase prices over time if there were no alternative – but the advent of lab-created diamonds is changing the market dynamics;
• In most instances, the resale value of diamonds, lab-created or natural, will be determined by the wholesale value of ‘new’ equivalents, not what you paid retail. Generally, you’re far more likely to lose money when reselling a diamond ring than you are to make a profit;
• As newly mined diamonds become more scarce, it’s possible that natural diamond resellers will start to tap into an obvious alternative source – secondhand diamonds – of which there are tens of millions around the world. This may result in an increase in prices for pre-owned diamonds as a more formal market develops;
• As time goes by, it’s likely man-made diamonds will become much more common as production volumes go up. They’re also likely to get cheaper – especially if they’re unbranded. That said, there will always be a meaningful minimum production cost, particularly for quality stones, so they’re unlikely to ever be really ‘cheap’. (Not like diamond simulants such as CZs.); and
• Man-made diamonds are also highly valued in technology applications. What that means is the really high-quality product that would be ideal for high-end jewellery is also prized in industry because of its purity, reliable supply and low cost relative to suitable natural diamonds. This may prop up prices of quality lab-created diamonds due to growing demand in industry and technology.

All this said, unless you’re buying investment diamonds or jewellery (which is not what this article is about), resale value is a bit of a side issue, especially in the Australian market. But it is something you should be aware of.

The harsh reality is, just like when you drive a new car out of the showroom and it decreases significantly in resale value, the same is true for diamonds leaving a jewellery shop.

There are exceptions of course. Some cars go up in value, as do some diamonds. However, both are usually very rare and expensive to begin with and out of reach of the average buyer.

So, which do you choose – man-made or natural?

In summary, the big decision points are:

1. “Authenticity”: Lab-created diamonds are, by definition, not natural. Natural diamonds are a natural product. Physically they’re the same but it’s up to you decide whether this difference makes one better than the other or is relatively meaningless;
2. Up-front cost: Lab-created diamonds are, like for like, significantly less expensive than equivalent natural diamonds – by up to 30-40% for relatively common sizes, cuts and grades;
3. Retained value: Natural diamonds are more likely to retain at least some resale value over time, probably more than equivalent man-made stones;
4. Environmental concerns: Man-made diamond production does less direct physical harm to the environment compared with diamond mining. But when it comes to carbon cost it’s a matter of production efficiency and the source of the energy used in the specific mine or factory that determines which is better; and
5. Social concerns: Lab-created diamonds of unknown origin are less likely to be tainted by human rights abuses than mine-origin diamonds, but the only way to be sure either way is to choose traceable stones from a reputable supplier.

Like so many things, choosing between man-made and natural diamonds is not a simple decision – at least not for most people. (Of course, if neither feels quite right, recycled and vintage diamonds are another very responsible – and affordable – option.)

Ultimately, whether you choose lab-created or natural is a personal thing because it’s not just about the chemistry and the money. We can’t direct you one way or another, other than to say we would hope you’d choose the most environmentally and socially responsible option available – the one that limits harm as much as possible and does the most good.

Ethical Jewellery Australia specialises in creating engagement and wedding rings that are as environmentally and socially responsible as we can make them. Every ring we produce is designed one-on-one with our customers and we would be delighted to help you design yours and make it for you.

Drop us a line at info@ethicaljewels.com.au if you’d like us to help you create a ring you and your partner will love.