Expert on the production of artificial diamonds: 'If there is no demand, there will be problems'

The prospect of artificial diamond production taking root in Azerbaijan has sparked both intrigue and skepticism within economic circles. Zakir Ibrahimov, Chairman of the Board of "Azergold" Closed Joint-Stock Company (CJSC), announced plans for establishing a facility in the ALAT Free Economic Zone to manufacture laboratory-grown diamonds. While the initiative holds promises of economic diversification and job creation, experts caution against the challenges posed by market demand and competitive dynamics.

Ibrahimov's assertion that artificial diamonds find utility across various industries, including medicine and defense, underscores the potential significance of such a venture. As stated by Turan in Azergold CJSC, the partnership established by the Indian company Dengi Innovations LLP indicates a strategic agreement aimed at entering the lucrative synthetic diamond market.

The global market for synthetic diamonds witnessed exponential growth in recent years, with a market value of $15 billion in 2022. Projections suggest a further surge to $24.4 billion by 2028, driven by factors such as cost-effectiveness and technological advancements. However, the dominance of established players from India, the USA, and Singapore underscores the competitive landscape awaiting Azerbaijani entrants.

Azerbaijan's foray into artificial diamond production raises questions about market readiness and competitive positioning. While the potential for export exists, experts caution against overestimating Azerbaijan's ability to penetrate established markets without a clear value proposition.

Togrul Valiyev, an economist, in an interview with Radio Azadlig, highlights the importance of market demand in shaping the success of such ventures. He notes that while state support and policy prioritization can bolster local industries, the absence of a defined strategy for fostering domestic production undermines the feasibility of initiatives like artificial diamond manufacturing.

Valiyev's remarks underscore a fundamental truth: without a discernible market demand, the viability of artificial diamond production in Azerbaijan remains uncertain. While the project holds promise in theory, its success hinges on factors beyond mere production capacity, including market competitiveness, export potential, and domestic demand.

Moreover, the track record of previous attempts at promoting domestic production in Azerbaijan serves as a cautionary tale. Despite ambitious plans, many initiatives failed to materialize due to a lack of market demand and competitive advantage.

The road ahead for Azerbaijan's artificial diamond industry is fraught with challenges, requiring a delicate balance between investment, market research, and strategic planning. While the allure of economic diversification is compelling, prudent decision-making grounded in market realities will ultimately determine the fate of this ambitious venture.