Petra Diamonds: What Finsch Closure Means for Diamond Market

Petra Diamonds has closed its Finsch mine in South Africa, as the value of smaller diamonds drops globally due to falling China demand and a growing market for lab-produced diamonds. 

The company also pointed to Middle East tensions for declining values, as well as a strong rand.     

”We are faced with an unprecedentedly weak diamond market, due to global macro factors as well as the recent Middle East tensions,” says Vivek Gadodia, Chief Executive Officer of Petra Diamonds.

“In particular, we continue to see deterioration in the value of the smaller sized diamonds, where we do not currently expect a material near-term recovery.”

How the diamond market is splitting 

The diamond market has been gradually splitting in two over the last couple of years. Small to mid-size stones, two carats and below, are losing value, largely due to that end of the market increasingly being filled by cheaper, lab-grown diamonds.

Figures released by Petra regarding its Finsch mine closure tell the story. The company says the average realised diamond price fell to about US$47 per carat in April and May from US$56 per carat in the third quarter.

At the higher end of the market, however, larger and rarer stones are proving much more resilient. While prices at Petra’s Cullinan mine have also softened slightly, from around US$109 per carat to US$81 per carat, exceptional stones continue to command significant premiums.

Petra recently discovered a blue diamond weighing nearly 42 carats that has been valued at US$40.2m, while the 9.51 carat “Mellon Blue” diamond sold for US$25.6m at Christie's in Geneva.

Lab-grown diamonds are shifting the market 

Until recently, laboratory-produced diamonds were seen as a novelty. Then in 2022 big-box retailers such as Walmart started selling them as a more affordable alternative to natural diamonds, and the market exploded.

In Walmart’s case, synthetic stones accounted for half of its total diamond selection by 2024, with sales growing by 175% compared to the previous year, according to the retailer’s own data. 

A survey of nearly 17,000 US-based couples by The Knot in the same year found more than half of their engagement rings featured a lab-produced diamond, up from 40% in 2023. 

In 2025, according to Future Market Insights research, the synthetic diamond market was valued at US$27.2bn, and is projected to grow to US$47bn by 2036.

Their popularity is understandable. According to luxury London-based jewellers Lords, a one-carat lab diamond costs around £1,500 to £2,000, while a natural diamond of the same size would cost £5,000 to £7,000. On average, a synthetic diamond is typically around 60% cheaper than a natural diamond.    

How China's economic slowdown hit diamond demand 

China is one of the world’s largest producers of synthetic diamonds. According to the Gems and Jewelry Trade Association of China, the country accounted for 40-50% of global gem-grade lab-grown diamond production in 2022. 

The home-grown demand for lab diamonds is a significant factor in declining sales of natural diamonds in China, previously one of the world’s strongest markets.

What really shook China's natural diamond demand, though, was the crash in its domestic real estate market, which saw wealth and spending confidence plummet from 2021. This was compounded by the fact that Chinese households were more or less left to rebuild themselves after COVID, unlike the US, where stimulus packages encouraged a return to spending.  

As a result, in recent years the younger generation in China have pivoted hard into 24-karat gold investing, as it is seen as a more secure investment compared to property and gemstones.

The final factor is the continued decline in the number of people in China getting married, which has naturally led to fewer diamond sales. Figures from China’s Ministry of Civil Affairs show marriage registrations fell 6.2% year-on-year for Q1 of 2026, and are now around half the levels of 2017. 

The high costs of weddings, raising children and China’s notorious “996” working culture, working from 9am to 9pm for six days a week, are all thought to be reasons behind people in China falling out of love with marriage.    

Lab-grown diamonds have won the mass market and that is unlikely to reverse. What remains for producers like Petra is a smaller but potentially more valuable industry, one built around stones that no laboratory can create.