Wednesday, April 19, 2017

Synthetic Diamonds

The irony of synthetic diamonds

Producing mines or developing projects in the diamond industry are always having a close eye on the synthetic diamond market and where it is headed. This does include projects like Chidliak when determining what value the diamonds being extracted from Chidliak could be valued and sold at.

A single rough diamond carat produced at a mine site will have quite a variable range of costs across the many producing mines. A single rough synthetic diamond produced in a lab will have a cost based on the amount of energy and time and materials that are needed to produce that single stone. From that point on, the costs of polishing, marketing, selling are relatively all the same.

A single rough diamond carat will be extracted from a very old volcano emplaced in a kimberlite pipe. A single rough synthetic diamond carat will be produced in a lab. The question that needs to be asked is where that lab get its energy from to create the stone.

The answer to the energy question is basically where is energy is the cheapest. Synthetic diamonds are small and very portable, there is virtually no cost to transporting these stones...so they can basically be produced anywhere in the world. So, to answer the energy question, one only needs to look at digital currency with the likes of bitcoin and other players. Digital currencies are produced via computer algorithms and these computers need cheap electricity to get the most profit out of producing a digital coin. They also generate a lot of heat....so dispersal of heat is also a direct input to the cost.  A simple google search will reveal that iceland has bit currency farms for very good reasons.

Iceland - A very geothermal friendly, active volcanoes, and a very young (geologically) country. A mere 18 million years old. This geothermal energy generates consistent and renewable energy that is very environmental sound. Sounds like a perfect home for a synthetic diamond manufacturer.

Synthetic diamonds are still mostly in the research phase. A lot of the companies that are producing synthetic diamonds for the jewellery market are not actually making money...especially when one takes into account the capital cost. These labs are in different parts of the world where the scientists are...not necessarily where it is the cheapest to produce.

One day, there may be a shift to move these into full production in a place like iceland.

The true irony of synthetic diamonds is that they will one day be made by  current volcanoes (the energy from) versus real diamonds that are made by ancient volcanoes (kimberlite pipes).

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