This requires the understanding of thermodynamics. Thermodynamics dictates that in order to convert graphite to diamond, a negative ΔG is required for it to happen spontaneously. Of course, the more negative ΔG is, the faster the rate. But at what conditions is this ΔG negative? Certainly not in atmospheric conditions where the pressure is 1 atm and temperature is 293 K. That is why diamonds are never formed on the Earths crust but below it where the conditions are much more harsh. These conditions supply the sufficient energy for the formation of diamonds. Therefore it requires extreme conditions to accomplish this conversion and 1950s, technology was created that could withstand those conditions and complete the conversion at a reasonable rate. The conditions of that conversion were pressure in excess of 100,000 atm and temperature about 2800 Celsius. When graphite is subjected to these conditions, the carbon atoms of graphite rearrange themselves in a tetrahedral network and diamonds are formed. The synthetic diamonds that are formed are very small and could not be formed into a gem, but they were sufficient enough for industrial use such as coating and cutting. For more extensive details, visit the following links.
- http://www.bristol.ac.uk/Depts/Chemistry/MOTM/diamond/diamond.htm
- http://www.chem.wisc.edu/~newtrad/CurrRef/BDGTopic/BDGtext/BDGDmnd.html