Why are Diamonds Expensive?
This is one of the most common questions that I get asked as a gemologist and a really good question to ask. And it might be one of my favorite questions to answer. Not every question requires a fascinating tiny behind-the-scenes tour of the diamond industry and how each part of the process makes the diamond that we see online or in person.
The answer to this question will take you on a journey from the incredible birth of the diamonds, the arduous process of mining them, the high-tec magic of cutting them, and finally to retailers we are all so familiar with. Climb on board as we follow the diamond and the money!
Rare Origin and Difficult Ride:
Diamonds don't really belong here on the surface of the planet. Because of the high temperature and high-pressure condition that is needed to form diamonds, they feel most at home underneath continental plates, massive slabs of rock that we live on. To get here, diamonds would need to travel through at least 90 miles or 150 km of solid rocks to get here.
So, how do they do it? They take a ride in an elevator. Unlike the tame elevator of us earthlings, a diamond's choice of transport is an explosive, high-speed magma elevator. Geologists refer to these hardcore elevators as kimberlite or lamproite tubes. And these elevator rides are rare, geologically speaking. The last eruption of such an elevator ride was 100 million years ago in the Early Cretaceous Era. So the last creature to witness a diamond visit was a dinosaur and there is no telling when the next one will be.
Mining is hard:
But we clever humans have a way of figuring things out and we know where to look to find this treasure-rich conveyer belt. Luckily, scientists have figured out that only in continental cratons or in the most ancient part of the major continents have diamond mines. Only these places have the stable condition to nurture and store diamonds. Unfortunately, nature does not care where these cratons are located or if they are easy to operate.
Canada and Russia are two of the top producers in the past 5 years and are all located in very inconvenient places. All of these mines are located far up north in freezing temperatures! Both countries face huge logistical challenges getting supplies into the remote regions and combating the near-constant inclement weather. Some of the Russian mines experience such bad weather conditions that they can only operate in a summer month and need to suspend operation entirely in the winter.
After you have dealt with the weather, the diamonds coming out of the ground look nothing like the stones most people are familiar with seeing. A big chunk of them will never end up in jewelry. From a typical mine, only about 5% of the rough is larger than 2cts. About 17% of the roughs are between 0.4-2.0ct. The remaining 35% are less than 0.4ct. And a whopping 40% are industrial grade. At least half of the diamonds that are mined will likely never end up in jewelry. But wait did I mention the cutting process.
Buckets of Diamond Dust
Even though we have sophisticated laser scanners to map the inside of the diamond, computer programs that calculate the best course of action, and automated cutting systems that ensure products are close to perfection - we still will end up with diamonds much smaller than the rough and a lot of precious material lost in the cutting process.
Because of the shape of most natural diamonds, most of the common diamond cutting styles would result in an average weight loss of 50-65% during the cutting process. This does not mean that diamond cutters are just throwing the majority of the diamond in the trash, but it means that the weight of the original rough is much larger than the final product.
Let me break this down for you. So say you want to have a rough diamond weighing 2.50cts and the shape of the rough is a classic octahedron (imagine two pyramids glued together at the flat base.) To cut the rough, you will have to split the rough diamond into two sections so you can turn the diamond into two polished diamonds. To keep it simple, you split it down the middle and you end up with two 1.25ct halves. After that, the two halves have to be faceted to remove major inclusions, damages and create the sparkly facets we all love and cherish. The end results, if you are lucky, might be two 1.00ct polished diamonds, but most of the time to maximize the quality of the final product, even more of the diamond needs to be polished away.
What about lab-created diamonds?
If you compare the prices you will notice there is a big difference between the two. And you are not wrong to assume that the process of creating diamonds in the lab is much simpler. Indeed, it is and technology is refining the process and pushing the boundary even further. The relatively newer process of CVD or Chemical Vapor Deposition has vastly improved the efficiency and control over the process of diamond creation. However, the process is still not cheap by any means. Both methods require intense electrical input and sophisticated facilities to maintain the ideal condition for diamond growth for weeks.
Final Stop: Retail Mark-Up
What is so crazy about this? We all know that retailers charge a premium to sell us the stones. But what I think is crazy is how much they charge you. According to a report from The New York Times, the average diamond on Rare Carat when compared to traditional retail stores is marked up by 12-21%. Let's say a diamond worth $10,000 came out of the polishing factory and when the diamond is on display in the showroom window, it will be listed between $11,200 - $12,100. If you use a website like Rare Carat, you will be saving at least $1,200 - 2,100, with a few clicks on the website.