Can gemstones made from chemical vapour deposition (CVD) diamond

be made a commercially profitable process?

An investigation by James Legge

Abstract
Mankind has been making diamonds for decades but only recent technological
advances have permitted the manufacture of gemstone sized diamonds. This
investigation sought to provide an answer, using both qualitative and
quantitative analysis of the diamond market, to the question of whether CVD
diamonds have the economic potential to be sold commercially as gemstones. A
small manufacturing facility with eight CVD machines using Icelands cheap
electricity and the countrys strong ethical image will aide making this operation
both profitable and appealing, whilst allowing for the scaling up the process. 1
Introduction
The history of a natural diamond is a great story. It is believed that the organic
sedimentary layer of sub-ducted oceanic crust is the main donor of carbon to the
earths lithospheric mantle, the element only comprising 0.001% (100ppm (parts
per million))1 of this layer. Diamond is a high pressure and high temperature
polymorph of carbon, thus conditions for natural formation occur in this region,
as well as in the impact crater of meteor. Oxygen, which comprises around
44.33% of the mantle1, disrupts diamond formation as a significant presence of
the element will result in the formation of carbon oxides, hence not diamond,
conditions need to be near perfect for the tetrahedral allotrope of carbon to be
formed. The diamond then needs to find its way back to the earths surface via
magma convection and then up through a kimberlite pipe, the most common of
which is a volcano. Geologists then need to recognise kimberlitic rocks and
instruct the miners where to apply their trade.
This fantastic tale is what threatens the commercialisation and profitability of
man-made diamonds, as the public conception of anything man-made as
opposed to natural is that it is illegitimate or not as good. A look at the current
online market for lab made diamonds would be in alignment with my own market
research that the public, on the whole, would only be willing to spend 60-80%
the price of a mined gem.
Selling a diamond is not straightforward, cut and polished diamonds of a
reasonable size need to have their key attributes documented and certified by a
reputed institution such at the Gemological Institute of America (GIA). This is to
credit jewellers and diamond dealers with legitimacy and to inform the buyer of a
stones origin and quality.
The market is ever changing, the newest generation of gemstone buyers
dubbed the millennials are increasingly conscious and astute when it comes to
a goods history2. No longer is it overlooked if a gemstone is the product of child
labour or war criminals. This is where the laboratory grown gemstone market
has an unrivalled moral argument, a diamond grown in a lab is guaranteed to be
of responsible and ethical origin. What has been hampering the growth of this
particular industry is the lack of technology, decent marketing and uneconomical

production costs. The first two of which have now been overcome with plasma
based CVD and the maturing of the millennial generation in a more commercially
transparent age where corporations are being held more accountable for their
operations. The final obstacle high production costs is ever reducing due to
cheaper raw materials and the lack of dependence on highly skilled personnel.
The know-how to make CVD diamonds is now more or less available to any
determined scientist and the physical inputs of the process can be achieved by
an inexpensive technician.
Before delving too deep into the research, one must refine the possibilities of
where to look at costings. A logical place to start would be where electricity costs
are lowest, as this will reduce the operational cost of the business. A list of
suggestions has been made.
Iceland

5.54 US cents/ kWh3

Sweden

6 US cents/ kWh (0.059 Euro/ kWh)

5

South Africa

8.46 US cents/ kWh

India

9 US cents/ kWh 6 (2013)

Canada

10 US cents/ kWh

America

12 US cents/ kWh

Using these six locations, the investigation will be conducted. The positive and
negative implications of setting up the business in these countries is discussed in
the Choosing the location section.
Capital Investment
The initial outlay any burgeoning business would undertake upon commencing
this process would not be inconsiderable.
The first expense incurred would be the plot of land on which to build the
business headquarters, under which roof all operations take place. This would
need to be large enough to accommodate all machinery, office space, storage of
gas cylinders and operational workspace. The detail of what is required from a
factory location are explored later on. The infrastructure then needs to be built,
the expense for which will vary from country to country. 8
The next expense is the machinery required to produce high quality products.
This will include not only many CVD machines but the laser cutting and polishing
hardware too. There are a variety of machines on offer, however for the size and
quality of gemstone needed high end machines are essential. One CVD machine
would cost in the range of 200,0009 500,00010 United States Dollars (USD),
depending on capacity and size. The number of machines initially bought would
depend on the original investment and the timeframe agreed on for repaying
investors. One would advise buying too few so not enough gems are made for
the business to be economical, equally one would not suggest buying too many
for multiple reasons; supply out pacing demand for gems, allowing for the
scalability of the business, reducing investor risk and prioritising capital
investment.

A laser cutting machine would be necessary, the processing power (78 stones/
hour) is much greater and the finish is of a higher standard than of a gemcutter.
A contraption of suitable standard is on the market for 38,000 USD 11, however
would need to be shipped to location due to it being made in India by
Sahajanand Technologies Pvt. Ltd. Two of these would be bought in case of
malfunction and to increase capacity upon the scaling up of the business.
A diamond polisher can be made to order by any competent metal worker due to
the simplicity of the machine. No software is needed, just a technician to
manoeuvre it. An estimate for this would be around 5,000 USD per unit.
See Capital investment section of excel spreadsheet.
Operational costs
The capital investment in this project is one aspect duly considered, a more long
term consideration is the operational cost. CVD machines need to be operated,
stones need to be cut, polished, certified, made into jewels then sold to the
public. These processes have a human input which would need to be costed and
factored in to the overall balance sheet of the business. The wages paid to
personnel will vary from country to country, with the businesses biweekly salary
payout being greater in more developed countries. On the one hand paying
employees more in 1st world countries will be expensive, but the skill set
acquired might be an investment in itself, with workers in poorer countries
potentially causing the system to malfunction. A review of the Laser cutter,
discussed in the Capital investment section, claimed the machines too costly
and too complicated to operate by Indian manufactures and artisans, the
majority of whom were not literate. 12 Finding the balance between cost and risk
of hiring workers in a given country is considered when deciding the plant
location.
On the excel spreadsheet provided, a wage comparison for the short listed
countries of; Sweden, Canada, USA, Iceland, South Africa and India has been
made based on the average wage of those countries 13.
One would need to consider the cost of the raw materials used, in this instance
the cost of Hydrogen and Methane, in addition to the cost of the diamond wafer
seeds. The gasses will have to bought in bulk to not only reduce cost but to also
reduce the admin time associated with ordering and installing the compressed
gas cylinders. Upon consultation with BOC group Ltd. to gauge the cost, prices
were quoted for various purity grades and volumes. It was decided that buying
N514 grade hydrogen and methane would suffice for the operation and ensure a
premium quality of product with next to no inclusions. It was also stated that if in
partnership with a university, then a 25% discount can be awarded on the list
price. It would be a savvy move to be In partnership with a university close by so
as to gain this discount.
Gold and silver vary in price from day to day and in purity so an average price for
average quality has been used.
The insurance on both machine and factory must be considered, as well as the
security of the premises. Insurance premiums for expensive machines are costly,
on top of this the product being made is also of considerable worth. Working out
the cost versus risk factor for insuring the contents of the factory and the

building is a job for a trained asset manager. I would point out that diamonds
themselves will not be destroyed in a fire and could therefore be recovered after
an incident. To reduce the risk of total loss of assets, I would recommend each
CVD machine be built in a fire proof room and safety precautions be taken with
the upmost ruthlessness. Furthermore, personnel would be on hand at any given
moment to extinguish fires or prevent theft. Crime rate and risk of fire are two
parameters that will be needed to be taken into account when choosing the
factory location, to be discussed later. The cost of a security guard has been
included in the calculations, however insurance has not. Which will skew the
profitability making the total operation seem much more lucrative than if it had
been considered.
See operational costs of excel spreadsheet.

The product
The current diamond buying generation has been brought up with the notion,
which was the outcome of a century of aggressive marketing, that an
engagement ring should cost 3 months wages, which is not an insignificant sum.
Comparisons can be drawn between new CVD grown diamonds and that of the
transition from analogue to digital radio, VCR to DVD and horse drawn cart to
automobiles. The last ten or so years have seen this technology tested in the
market with limited success, although more and more companies are springing
up offering the ethical alternative, with the persistence akin to that of Steve
Jobs and his iApples, CVD diamonds will soon be mainstream and in high
demand. Now is the time to enter the market and establish ourselves as leaders
in the trade and technology. With a CVD manufactured diamond, the consumer
knows this gem to be conflict free and would be getting more for his monies
worth in terms of quality and carat, with a 20% discount from a mined
counterpart proposed.
The money is in the cut, clarity, colour and carat. Only 5% of mined diamonds
have excellent clarity and colour (Excellent carat and clarity are for all intents
and purposes a given, due to the mechanical nature of the manufacturing
process). Although, this is where a research scientist or two would make good
insight into the manufacturing operation, if they had their own machine they
would be able to develop the existing technology and create new methods for
better growth rates and reliability. Having a research scientist would ensure that
the business remains at the forefront of the technology and provide the company
with a competitive edge.
Certification is an important process required to instil trust with the consumer
and build the brands image15. A certified gem is worth more than a non-certified
equivalent. It is suggested that any stone larger than 0.2 carat be documented.
The GIA has been chosen to certify the stones as they are the most reputed
institution who offer the service.

The 4 Cs ClarityA1 16, CaratA2, ColourA3 17 and Cut are what characterises and
defines a diamond. The repetitive nature of making a CVD diamond will ensure
that the highest clarity is achieved every time. The colour and carat will be down
to the parameters determined for that particular cycle. The consumer and the
jewellery maker will determine the final C cut, as it is a personal preference. All
costings have been made based on averages, implying that the business will
produce a range of carat, cut and colour.
Colour is where man made diamonds have an advantage, they are extremely
rare when mined, however a simply alteration to the robotic process can produce
fancy diamonds at the click of a button. For blue diamonds, the stone needs to
be doped with Boron18, something which can be included in the chemical vapour
fairly easily.
As mentioned in the introduction, millennials are more moral when considering
consumer goods. This generation is growing and will only continue to do so,
which is perfect for the presently niche industry of lab-grown diamonds. It was
also reported that this generation has a preference for coloured stones, a product
we can offer at minor extra expense.

Choosing the location

In terms of location of the plant, most European countries may be disregarded
due to average electricity tariffs nearly double that of Canada, India, China or the
United States of America.
When it comes to choosing a factory location there are four principle things to
consider.19
1.
2.
3.
4.

Raw material availability

Market considerations
Labour and legislation
Environmental considerations

Before a final location is decided, it must be tested against each criterion and be
deemed to pass.
Canada
Positives:

Canada has a history with diamonds and is no small player in the market.
No language barrier
Large market
Certifying company Canadian Gemological Laboratory Inc (CGL-GRS)

Negatives

Highest cost of building out of the countries being considered

Highest initial investment of any of the countries.

Canada is being disregarded on the grounds that it is the most expensive region
in which to set up the business.
Sweden
Positives

Sweden has a good ethical image, being Scandinavian.

The country has good rates for electricity.
Sweden is a member of the European Union thus has access to the single
market and to gem certifying laboratories such as the EGL (European gem
lab) or any other EU gem grading consultants such as CIBJO (The World
Jewellery Confederation) or the Diamond High Council in Antwerp.

Negatives

Fairly expensive to hire thus adding a challenge when considering growth

of the company.
Primary language barrier
No existing diamond culture
The only distributor of industrial quantity gas located conducts business in
Swedish and did not reply to my inquiries.

Sweden is being rejected as a potential plant location for the lack of potential in
the diamond industry and lack of availability of raw materials.
South Africa
Positives

There is a strong diamond culture in the country.

The cost to build and labour are both reasonable.
Has a certifying organisation in the form of the Jewellery Council South
Africa (CSA).
Second cheapest Country in which to start operations

Negatives

The De Beer empire dominates the South African diamond landscape and
does not approve of lab-grown gems
Unethical history in the industry, with the revelations made by the
Kimberly Process that a vast swathe of gems coming from the country
were funding conflicts over the continent.
Dependence on non-renewable energy.

South Africa is being dismissed a candidate due there being better locations in
which to practise an ethical and environmentally friendly business.
India

Positives

Most economical country in which to set up the business.

Labour and electricity costs are very low.
Is a current forerunner in the lab-grown diamond industry
Rich past in the diamond industry.
The city of Surat is the diamond centre of Asia, like the Antwerp of Europe.
Has a gem certifying organisation - Indian Diamond Institute (IDI)
(although it should be noted it is not of good repute and most of the work
is carried out by trainees)
Growing middle class able to afford diamond jewellery

Negatives

India has a poor record for environmental issues.

Lack of qualified and literate personnel.
Poor Health & Safety regulations
Would need extra expense in refrigerating the large pressurized gas
containers to keep at a safe temperature.

India was strongly considered due to the minimal operating costs but has
ultimately been overlooked due to the crowded Indian CVD diamond market and
adverse environmental factors.
Iceland
Positive

Responsible and environmentally resourced energy supply

Relative cost effectiveness in the setting up of the business
Unsaturated diamond market, allowing a unique product to be made

Negative

Relative geographical isolation from the world delaying delivery time on

goods and products.
Small pool of skilled workers to hire from.
No domestic organisation for certifying gemstones.

Iceland is being considered as a potential plant location due to the average

energy bill being a quarter (5.54 US cents/ kWh 3) that of the English equivalent
(22 US cents / kWh 20), with the added bonus that over 86.5% of the energy
produced in Iceland is renewable (2014) 21.
The site being considered is situated in the countrys capital Reykjavik.
Statistically, Reykjavik is an extremely safe place to live and work 22. The isolation
coupled with the local feel to the country will dramatically reduce insurance
premiums on infrastructure and assets. This is one figure unaccounted for in the
costings, however, as previously mentioned, will be a significant cost to the
business. Any measure that can be taken to reduce this expense must be
considered with the upmost seriousness.

The main gas works is next

door, thus buying the gas
would be inexpensive due to
no transporation costs

Proposed site for the plant.

An industrial scrubland near
the countrys main gas works
and on the outskirts of the
capital Reykjavik.

Figure 1

Good access to the

international airport.

Geolocation of the site prime

for development - Fiskisl

United States of America

Positives

Skilled workforce
The most reputed gemstone certifying organisation, the GIA.
Raw materials readily available
Large domestic market

Negatives

Not the most environmentally conscious sourcing of energy

Fierce competition amongst other diamond growing labs
Expensive workforce

The USA is being considered for the above stated reasons. There is fierce
competition due to the flourishing CVD diamond market yielding more and more
success for those bold enough to enter it.
A couple of sites have been identified as being suitable for the business. They
are already made and would need a relatively small cash injection to convert the
premises into high grade - environmentally friendly - diamond growing
laboratories. Both are situated in Houston - Texas, which has extremely good
access to raw materials and a skilled workforce.
Site 1

23

Cost - $722,000
This compact site is large enough for the small scale operation envisaged for the
early years of operation. Access to a skilled workforce and raw materials could
not be better, being literally across the street from both General Electric energy
and Pilot Chemical, two established gas and chemical plants respectively. This
site doesnt do as well on the security front as the other Texan site being looked
and would potentially need new security infrastructure put in place to replace the
existing wire fence.
Site 2

24

Cost - $1,400,000
Much larger in size allowing for more rapid expansion of the business and is also
situated in the states capital Houston, so recruiting the required workforce will
not be hard. It comes with a higher price tag though, which increases the risk of
the initial investor, as there is more to be lost if the business fails.
Conclusions
When attempting to conclude this investigation, it is necessary to keep in mind
that there is a definitive answer, but no specific and textbook way of achieving
CVD diamond commercialisation. It would be my strong recommendation to run
with the Icelandic based plant, for primary reasons of the unique product being
not only ethical, like other lab-grown gems, but with the lowest carbon footprint
too, as opposed to the Texan alternatives. In an age where people are becoming
increasingly conscious of their carbon footprint and the ethics of the material
goods they are buying, a diamond born in Iceland will demand more awareness
from the gemstone market than one created elsewhere. Affordable, ethical and
environmentally produced diamonds are not a thing of science fiction, but of
science. So, based on the numbers crunched, I would conclude that CVD
diamond may be made commercially at a profit.

References
1

H. Palme, H St. C. O'Neill, Cosmochemical Estimates of Mantle

Composition, pp. 138 in The Mantle and Core, Edited by R. W. Carlson, Oxford:
Elsevier Ltd., 2005, p 14
-A scientific analysis of the earths Lithosphere which gave great detail into the
compositon by element and therefore the minuscule probability a diamond is
formed naturally.
2

GIA website http://www.gia.edu/gems-gemology/summer-2016-colorresponsibility-ethical-issues-solutions-colored-gemstones (last accessed 24th

October 2016)
-Gemological Institute of America is the leading authority on Diamond
classification
3

Orkuveita Rejkjavik https://www.or.is/ (last accessed 18th October 2016)

-An energy utility company in Iceland.

4

- Eurostat http://ec.europa.eu/eurostat/statisticsexplained/index.php/File:Electricity_and_gas_prices,_second_half_of_year,_2013%
E2%80%9315_(EUR_per_kWh)_YB16.png (last accessed 19th October 2016)
-The Official Directorate-General of the European Commission
5

- Businesstech http://businesstech.co.za/news/energy/99494/electricity-pricessouth-africa-vs-the-world/ (last accessed

-Businesstech is a news reporter and commentator on business technology and
finance in South Africa.
6

International energy Agency

http://www.worldenergyoutlook.org/media/weowebsite/2015/IndiaEnergyOutlook_
WEO2015.pdf (last accessed 19thOctober 2016)
-A special report on Indias energy program by a world leading Organisation.
7

Ovo Energy https://www.ovoenergy.com/guides/energy-guides/averageelectricity-prices-kwh.html (last accessed 19th October 2016)

-Ovo energy is an energy supplier based in Bristol in the UK
8

Building (company name)http://www.building.co.uk/global-infrastructurecomparing-costs-across-countries/5068427.article (last accessed 31st October

2016)
-This article is a report using smart analysis of the building costs of airports
around the world and scaling them in terms of USD per metre squared. This
gives a comparative view of the cost to build the same infrastructure in different
parts of the world.
9

Seki Diamond http://sekidiamond.com/microwave-plasma-cvd-systems/6-kwsystem/ (last accessed 1st November 2016)

-Seki Diamond are an established manufacturer of Chemical vapour deposition
machines and thus a sensible choice of company to attain prices from.
10

Microwave Enterprises Ltd. http://www.mwe-ltd.com/cvd-products.asp?

partno=DT%201800 (last accessed 1st November 2016)
-Microwave Enterprises Ltd. Supply larger machines than Seki and thus was
useful in establishing a range of machine with different capabilities.
11

Indiamart http://www.indiamart.com/proddetail/magnus-digital9767138588.html (last accessed 2nd November 2016)

-Indiamart is an online supermarket for any goods or services based in India, like
Alibaba.
12

Industrial Laser Solutions http://www.industriallasers.com/articles/print/volume-30/issue-4/features/laser-cutting-transforms-thediamond-processing-industry.html (last accessed 2nd November 2016)

-A review of the laser cutter being considered for the manufacturing process,
which highlighted the lack of literate Indian personnel.

13

British Broadcasting Company http://www.bbc.co.uk/news/magazine-17543356

(last accessed 18th October 2016)
-This article compares the average salary of workers in a given country and was
used in determining the difference in wages that would need to be paid in
different locations.
14

BOC group. http://www.boconline.co.uk/en/contact-and-support/technicaladvice/speciality-products-advice/purity-grades-concentration/purity-grades.html

(last accessed 3rd November 2016)
-BOC group was used to get quotes for the industrial quantity gasses needed for
the manufacturing process thus their grading system is needed to confirm purity.
15

Jewelrywiseblog http://jewelrywiseblog.com/how-to-get-a-diamond-certified/
(last accessed 18th October 2016)
-This blog was used to gain a non-biased opinion on the ins and outs of getting a
diamond certified, the positives and negatives.
16

Lumeradiamonds http://www.lumeradiamonds.com/diamondeducation/diamond-clarity (last accessed 4th November 2016)

-Lumera claim to be the best place to buy diamonds and more importantly get
their stones certified by GIA.
17

Lumeradiamonds http://www.lumeradiamonds.com/diamondeducation/diamond-color (last accessed 4th November 2016)

-Same as above.
18

M. Field, A quantitative geological approach to the economic evaluation of

diamond-bearing kimberlites, 2009, p 25
-A PhD thesis by a Bristol Geologist which gave detailed insight into the diamond
mining processes in South Africa and their economic impact.
19

G. Towler, R. K. Sinnott, Chemical Engineering Design; Principles, Practise and

Economics of Plant and Process Design 2nd Edtn, Elsevier, 51, pp. 1066-1068
-The leading textbook on Chemical Plant Design.
20

-Electricityprices http://www.electricityprices.org.uk/c/suppliers/ (last accessed

20th October 2016)
-Gave a factual account of the figure for average electricity prices in the United
Kingdom.
21

Statistics Iceland http://www.statice.is/statistics/businesssectors/energy/energy-recovery/ (last accessed 19th October 2016)

-The go to website for attaining statistics for Iceland.
22

Numbeo https://www.numbeo.com/crime/in/Reykjavik (last accessed 4th

November 2016)

-Numbeo claims to be the worlds largest database of user contributed data

about countries and cities worldwide so seemed a reasonable place to ascertain
crime rates in Iceland.
23

Loopnet http://www.loopnet.com/Listing/20012325/7211-Spindle-Dr-HoustonTX/ (last accessed 25th October 2016)

24

Loopnet http://www.loopnet.com/Listing/19997114/1630-FM-1960-Rd-HoustonTX/ (last accessed 25th October 2016)

-Loopnet has the most traffic, listings and geographical coverage than any other
commercial real estate marketplace and therefore a good place to search for
warehouses in Houston.

Appendix
A1 GIA clarity scale

A2 GIA carat scale

A3 GIA colour grading scale