The world’s largest jewellery maker has sparked a debate about ethical mining and the Northwest Territories’ struggling diamond industry is at the centre.
The diamond industry is defending the ethics of mined diamonds after Danish company Pandora announced last week it would use only lab-grown products. Pandora said a combination of renewables and offsets will make its synthetic diamonds carbon-neutral.
Global jewellery organizations responded to Pandora’s announcement in a joint news release arguing the company had smeared natural diamonds by presenting the “misleading narrative” that lab-grown diamonds are an “ethical” alternative to gems pulled from the ground.
It might seem surprising that a multi-billion-dollar industry felt compelled to respond to one news release from one jewellery maker, but the question of what makes a diamond ethical sits at the core of the mined product. It’s also likely to determine whether synthetic alternatives will impact NWT diamond mines in the future.
Synthetic or lab-grown diamonds have the same physical properties as natural diamonds but are made in a lab by recreating the extreme heat and pressure found deep beneath the earth’s surface. They can be made in a fraction of the time – just weeks compared to billions of years. Synthetic diamonds are often used to harden drill bits or cool circuit boards. Increasingly, they’re being used in jewellery.
Pandora says synthetic diamonds are outpacing growth across the industry but Paul Zimnisky, a diamond analyst based in New York City, said that doesn’t tell the whole story.
“People don’t go to Pandora to buy diamonds,” said Zimnisky. “The reality is: the largest jeweller that previously didn’t sell mined diamonds is still not going to sell mined diamonds.”
Zimnisky lists Tiffany and Cartier as major North American diamond retailers. Pandora doesn’t qualify, he says, with diamonds in less than one percent of the jewellery it sells.
“These fashion jewellery companies have been adopting synthetic diamonds very regularly,” said Zimnisky.
“I was actually kind-of surprised Pandora wasn’t already in the synthetic diamond business before.”
None of the big luxury companies have made a similar commitment to synthetics.
Terry Kruger, a spokesperson for De Beers – majority owner of the NWT’s Gahcho Kué mine – said by email that natural and lab-grown diamonds are separate products entirely.
“Pandora is not a significant business in the natural diamond sector – it is a mass-market, lower price-point jewellery business which uses natural diamonds in less than 0.1 percent of its jewellery pieces,” Kruger said.
In terms of raw buying power, Pandora isn’t big enough to meaningfully impact NWT mines.
“Unless they’re changing their product lines to incorporate something different, it really should have no impact on the sale of Ekati’s diamonds,” said Kristal Kaye, chief financial officer of Arctic Canadian Diamond Company, owner and operator of the territory’s Ekati mine.
What makes a diamond ethical?
Pandora’s influence may instead lie in whether it can change the public perception of what makes a diamond ethical, said Rebecca Hall, a professor of global development studies at Queen’s University.
“Can Pandora change the narrative and say all diamonds, Canadian or not, are bad for people and the environment, and if you truly want to be ethical, you need a synthetic diamond?” she asked.
“If they can convince people of that in their branding, I think they could fundamentally change the diamond industry.”
Zimnisky, too, said the strength of Pandora’s announcement lies in its visibility.
“If anything, the media attention this got could actually have a secondary influence on this,” he said. “It was covered by almost every major media I can think of, all over the world.”
Hall said she wonders whether the weight of media attention will impact the industry’s reputation.
“I think one of the most interesting ripples to look out for is this question of what makes a diamond ethical,” she said.
Much of Hall’s research explores the social impacts of diamond mining in the Northwest Territories.
She said the Canadian diamond industry was founded as a response to unethical mining practices elsewhere in the world. The NWT diamond boom began in the late 1990s amid global condemnation of African blood diamonds.
“And then all of a sudden we see the Canadian diamond industry as this beacon of hope, this source of alternative so-called clean diamonds and ethical diamonds,” said Hall.
“There’s this idea that Canadian diamonds come out of this pure, empty landscape, which obviously isn’t true. Canadian diamonds are mined on Dene land. They’re mined by people … and that gets obscured when we see a picture of a diamond beside a polar bear or on a glacier.”
A spokesperson for Diavik, the NWT’s third active diamond mine, said in an email to Cabin Radio that its operations reflect an “empathetic relationship with the land, its people, and their legacy.”
It’s really about the money
Ultimately, Zimnisky said, Pandora’s decision to ditch natural diamonds – and the industry’s defence of them – likely comes down to cost.
With diamonds included in just a small fraction of its products, Pandora could save money and target lower-income consumers by making the switch. But a lower price point isn’t necessarily what diamond buyers want.
“It’s an emotional purchase,” said Zimnisky. “Knowing it’s naturally occurring, limited in scale by nature, and rare compared to manufactured products – that makes it more desirable.”
Patricia Caffet, director of the NWT Diamond and Jewellery Centre, said her customers can tell the difference. The jewellery centre only carries natural Canadian diamonds – no synthetics – because that’s what she says her customers are looking for.
“I feel that people want a real diamond when they’re making that kind of purchase, not a synthetic one,” she said.
“I’m not worried about the synthetic diamonds that are coming out.”
Pandora’s announcement came as the territory’s diamond mines rebound from losses sustained throughout the pandemic.
Canadian Arctic bought out Dominion Diamonds in February, as the former Ekati owner struggled to make routine business payments and service the interest on its debt.
Mountain Province, minority owner of Gahcho Kué, reported a $263.4 million loss last year and recently took out a $33 million loan from its largest investor to cover losses related to Covid-19.
The territory’s three active diamond mines are past peak production, and the NWT government identified “increased resource exploration and development” in a list of new priorities following the last election.