Open Letter to De Beers: Build Lightboxes Instead of Butchers
Dear De Beers — In advance of your impending launch of Lightbox Jewelry, I want to thank you for making a tough decision to embrace the future of jewelry and wish you all the best on the launch tomorrow.
You are currently investing $699 million USD in two separate projects to expand your diamond production — a $94m factory to grow cultured diamonds for Lightbox, and a $605m strip mining vessel, nicknamed ‘The Butcher’ by your own employees.
I Believe it is Your Moral and Fiduciary Duty to Cancel the Strip-Mining Vessel and Instead Invest the $699m in a ‘Lightbox Gigafactory’
Why? Compared to a butchering vessel, a diamond growth facility will
generate more profit, employ more people, and have a significantly smaller environmental footprint. In other words, it’s better for your shareholders, your employees, and the Earth.
If the gigafactory was located near one of the African diamond mines that you are closing in the next few years, it would provide high-quality jobs to current De Beers employees and contractors that will otherwise soon be looking for jobs:
“If De Beers is saying they are going to open factories here in South Africa to manufacture and beneficiate these synthetic diamonds, then we are going to support that,” said Association of Mineworkers and Construction Union general secretary, Jeff Mphahlele, “That in my view would create more jobs.”
If De Beers Grows Millions of Carats, Will They Sell? Absolutely.
Laboratory-grown diamonds will quickly rise to take at least 10% of the global diamond jewelry market, according to Morgan Stanley, Citi, and Bain. Thus, annual sales of lab diamond jewelry will quickly top $10 billion USD.
As the CEO of Ada Diamonds, I’ve sold millions of dollars of lab diamonds and partnered with the most iconic luxury brands in the world. I can say for certain that man-made diamonds are enthusiastically accepted by educated, sophisticated clients around the world, despite $100m+ lobbying and marketing campaigns to fight synthetics.
If De Beers were to build a diamond gigafactory, there is certainly enough demand for the entire production. Some diamonds could be sold by Lightbox, and other diamonds could be sold to ‘Lightholders,’ a new generation of De Beers Sightholders that would polish the diamonds into beautiful gemstones to be sold by retailers around the world.
Your Lightbox Gambit & Recommended Next Move
If lab vs mined diamonds is a game of chess, I’m guessing you view Lightbox is a gambit: an opening move in which a player, more often White, sacrifices material, usually a pawn, with the hope of achieving a resulting advantageous position. As you plan your next moves in the game, here’s three important observations to consider:
#1) Diamonds are new again & purchasers become proud evangelists
Many of my clients become vocal ambassadors of the product, encouraging all of their friends and coworkers to eschew ‘dirt diamonds’ and choose lab created diamonds instead.
There is no amount of money you can spend to convince those ambassadors that a lab diamond is not a real diamond. Many of my clients proudly proclaim to us that they will never buy a mined diamond again.
#2) Consumer acceptance is growing at breakneck speed
According to the Knot’s 2017 Engagement Ring Survey, 25% of US couples considered lab diamonds, a 56% increase from 2015. In that same time period, De Beers, ALROSA, Rio Tinto, and other diamond miners invested $133m in the Diamond Producers’ Association to fight synthetics.
Imagine the potential growth rate of lab diamonds if millions were invested to promote the future of fine jewelry, instead of well capitalized efforts to fight the future.
#3) Iconic luxury brands are quickly adopting lab diamonds
With increasing frequency, iconic brands are embracing cultured diamonds. My company has worked with multiple luxury brands on special collections, functional accessories, and complementary jewelry.
Make a Bold Move — Double Down on the Future of Fine Jewelry
I implore you, De Beers leadership, to make a truly bold move — abandon your $605m investment in unsustainable strip mining and instead invest in truly sustainable luxury. The business model is superior, the demand is sufficient, and a diamond gigafactory in Namibia would be better for Namibians than another Butcher.
Sincerely,
Jason Payne
Founder and CEO
Ada Diamonds
PS- I’m speaking at the GIA Symposium next month, and I know many of you are attending/speaking as well. I’m happy to discuss further at the symposium.
The Butchering of the Namibian Seafloor
95 million carats have been mined from the deserts and beaches of Namibia since diamonds were discovered in 1908. In over a century of mining, most Namibian diamond deposits have been bled dry, leaving abandoned ghost towns behind.
In order to keep diamonds flowing from Namibia, De Beers has transitioned to offshore mining, using enormous dredging robots to mine the ocean floor:
Nicknamed “The Butcher” by De Beers staff, the 280-tonne dredger carves a 21m swathe through the seabed, sucking up up 60 tonnes of seafloor per hour. The seafloor is then pumped up to the ship where it is processed to extract the diamonds and then the butchered seafloor is dumped overboard.
Today, the ocean mining arm of De Beers operates five diamond mining vessels in Namibian waters. The vessels combined to extract 1.17 million carats of diamonds in 2016, worth $585 million USD.
What is the Environmental Impact of the Butchers?
“You can’t get away from it, it does have an environmental impact.”
-Jan Nel, Head of Operations for Debmarine (De Beers’ marine subsidiary)“They are clearly trashing areas and killing a whole load of animals.”
-Professor Charles Griffiths, marine biologist at the University of Cape
Meet the Next Butcher
De Beers recently commissioned the construction of their largest strip mining vessel yet. At 577', the vessel will be longer than a New York-class battleship and almost as long as an Independence-class aircraft carrier.
The vessel is under construction in Norway, and is predicted to start mining the ocean floor by 2021. The cost of the bare vessel is $173 million USD, and the mining equipment will cost an additional $432 million USD.
Why a Gigafactory is a Better Investment
De Beers recently broke ground on a $94m USD facility in Oregon to grow lab diamonds for Lightbox Jewelry, a De Beers owned lab diamond fashion jewelry brand launching later this year. The facility will produce 500,000 carats per year and generate approximately $160m USD annually:
Thus, if De Beers chose to instead invest $605m USD to build six identical $94m facilities to grow diamonds (or one gigafactory), De Beers could grow millions of carats of diamonds annually and generate roughly a billion dollars of revenue per year, whereas the butchering vessel will generate roughly half that revenue.
Namibia is the ideal location for a gigafactory, for three important reasons:
#1) Namibia is a fantastic location to generate both solar and wind power. It averages 300 days of direct sunlight per year and has some of the strongest and most consistent winds in the Southern hemisphere. Thus, De Beers could make the grown diamonds truly sustainable by choosing to utilize renewable energy to power the factory.
#2) The diamond gigafactory and renewable power plant could be built on already butchered land, minimizing the environmental impact of the gigafactory and power plant.
#3) De Beers is planning to close multiple Namibian diamond mines in the next few years, and the staff of the shuttered diamond mines could be ideal employees for the gigafactory.
A Gigafactory = More Jobs than a Butcher
De Beers would create far more jobs in Namibia building and operating a diamond growth facility versus staffing a diamond mining vessel.
De Beers’ entire ocean mining operation, Debmarine Namibia, employs only 900 people and the new $600m vessel will only employ 130 people when it’s operational.
On the other hand, I believe it would take a minimum of 250 people to run a renewable power plant and diamond gigafactory.
Furthermore, the vessel is being constructed in Norway, so the surge of construction jobs are in Northern Europe. If a gigfactory were built instead, the construction jobs would benefit the the people of Namibia (per capita GDP: $11,528) instead of Norwegians (per capita GDP: $70,590).
Lastly, there are 13,700 Namibians employed in the fishing industry. I can’t imagine strip mining up to 3,700 square miles of seafloor has have anything but a negative effect on the Namibian fishing industry.