The global diamond industry, a century-old symbol of luxury and enduring value, is facing a crisis of unprecedented scale. A “perfect storm” of collapsing prices, a technological revolution in the form of lab-grown diamonds, and shifting consumer values has shattered the market’s foundations, triggering a painful global contraction with widespread layoffs from the Canadian arctic to the polishing hubs of India.
The numbers paint a stark picture of the devaluation. After a brief, anomalous peak in early 2022, natural diamond prices went into a freefall, plummeting by nearly 25% by the end of 2023. The slide has continued; between May 2023 and May 2024, the average retail price for a benchmark one-carat natural diamond dropped a staggering 17.26%. This has eviscerated the core marketing pillar of the industry: the idea that a diamond is a reliable store of value.
At the heart of this turmoil is the unstoppable rise of the lab-grown diamond (LGD). Chemically and optically identical to their mined counterparts, LGDs have exploded in popularity, driven by a simple and powerful value proposition: a bigger, visually identical stone for a fraction of the price. On average, an LGD retails for about 86% less than a natural diamond of similar quality. This price disruption has been revolutionary, particularly in the United States, the world’s largest consumer market. As of 2024, LGDs account for a stunning 56.8% of all diamonds sold by volume and have captured nearly 45% of the crucial engagement ring market.
This consumer shift is fueled not just by price, but by a change in values. The LGD industry has successfully marketed its products as a more ethical and sustainable choice, bypassing the historical baggage of conflict diamonds and the environmental impact of mining. This narrative resonates deeply with Millennial and Gen Z buyers, who are now the primary drivers of the bridal market.
The natural diamond industry’s internal weaknesses made it vulnerable to this disruption. A massive oversupply of polished diamonds in the hands of cutters and retailers created a buyer’s market, exerting immense downward pressure on prices. Fear that prices had not yet bottomed out created a vicious cycle, stifling demand and causing prices to fall further. In response, jewelers have abandoned the practice of building inventory, now buying only what they need for immediate sales, which drains liquidity from the market.
The human cost of this market correction has been severe and global. In Canada’s remote Northwest Territories, Burgundy Diamond Mines announced in mid-2024 it was suspending open-pit mining at its flagship Ekati mine and laying off “several hundred” employees and contractors. The company was blunt, stating that record-low diamond prices had rendered the operation “sub-economic.” The mine, which reported a staggering $97.3 million loss for the 2024 fiscal year, is a casualty of a global downturn that has seen demand from China plummet and operational costs soar. This is not a temporary setback; it is a structural contraction. The region’s other major mines, Diavik and Gahcho Kue, have also reported massive losses, raising fears of early closures that could devastate the territorial economy, where mining accounts for a quarter of GDP.
This pain is mirrored across the globe. In the diamond polishing hub of Gujarat, India, the crisis has led to factory closures and significant job losses, with one report linking the financial strain to a tragic wave of worker suicides. In South Africa, Petra Diamonds announced plans to lay off hundreds at its historic mines after a 30% drop in sales. Even Russia’s state-owned Alrosa, the world’s largest producer by volume, has been forced to cut production and staff, citing the “deep crisis in the market.”
At the center of this storm is De Beers, the company that architected the modern diamond market. Its attempts to manage the LGD threat have been a case study in the incumbent’s dilemma. In 2018, it launched its own LGD brand, Lightbox, in a calculated strategy to devalue the entire category. By pricing LGDs as cheap, unserious “fashion” items and refusing to have them independently graded, De Beers hoped to protect its far more profitable natural diamond business. The strategy backfired. By producing LGDs itself, De Beers inadvertently gave the category its most powerful stamp of legitimacy. Consumers reasoned that if the world’s top diamond expert was making them, they must be real.
By 2025, De Beers admitted defeat, announcing it would discontinue its Lightbox jewelry line to focus all its resources on defending natural diamonds. But the most damning verdict came from its parent company, mining giant Anglo American, which announced plans in 2024 to sell or spin off its entire De Beers business. The move signals that global capital markets now view the diamond industry as a high-risk, structurally challenged asset, preferring to invest in commodities like copper that are vital to the green energy transition.
The U.S. market, which accounts for nearly half of global demand, has become a crucible for these competing trends. A fascinating bifurcation is occurring. On one hand, unit sales of natural diamonds are down. On the other, consumers who remain committed to natural stones are using the lower per-carat prices to “trade up” to larger, higher-quality diamonds. Demand for natural diamonds in the 2-carat range, for example, jumped 18% in 2024. Meanwhile, LGD sales volumes have soared, but their plunging prices mean retailers must capture enormous gross margins—now averaging a record 70.8%—to maintain profitability.
Adding another layer of complexity are new geopolitical pressures. In response to the war in Ukraine, G7 nations have imposed a phased ban on Russian diamonds, which is designed to close a loophole that allowed Russian rough to be cut in countries like India and then sold into Western markets. As of September 2024, the ban will apply to any Russian-origin diamond of 0.5 carats or larger, regardless of where it was polished. This is forcing a costly re-plumbing of the global supply chain, requiring robust traceability to separate Russian from non-Russian goods. However, it may also create an unintended “provenance premium” for diamonds verifiably sourced from mines in countries like Canada or Botswana, offering a potential lifeline to beleaguered non-Russian producers.
The diamond industry is being irrevocably transformed. The old model, built on manufactured scarcity and marketing genius, is broken. In its place, a new, bifurcated market is emerging: a smaller, true-luxury niche for natural diamonds defined by rarity and provenance, and a high-volume, technology-driven mass market for increasingly affordable lab-grown stones. The sparkle has not faded from the diamonds themselves, but from the business model that sustained their mystique for a century.
