Natural Diamond Vs Synthetic Diamond

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by Raul Sapora

From a scientific perspective, a synthetic diamond has the same chemical composition, the same crystal structure, the same optical and physical properties of a natural diamond. As synthetic diamonds are conceptually identical to natural diamonds, they need to be analyzed and spotted by a gemological laboratory. Synthetic diamond screening is nowadays a major concern of the Jewelry Industry.

Unexpectedly, as far as I am concerned, Ada Diamonds[i], a synthetic diamond distributor, after discovering a few natural diamonds mixed in a synthetic diamonds melee lot, has implemented enhanced screening procedures to further inspect all parcels of melee diamonds to ensure that all diamonds sold are in fact synthetic, not mined and therefore not illicit mined diamonds. Despite it is based on the same principle (synthetic vs natural diamond screening), a whole new and extremely dangerous variable has been imported into the Diamond Trade: protecting synthetic from natural. I believe most of you who read this will smile at this – I did too at a first glance – but it is also easy to realize that a new powerful weapon has been forged and consigned to marketing experts, and if the synthetic diamond industry will have consumers perceive that synthetic diamonds are a better alternative, people will buy them.

The situation is becoming more and more complex. Retailers are in a constant state of great distress: they are uncertain whether they should sell synthetic diamonds or not. On the other end, mining companies are addressing the problem with considerable delay and most probably caught inside the conceptual circle of the same marketing campaign which had decreed their triumph in the past. When Martin Rapaport in his world renowned educated reprimand[ii] to Leonardo di Caprio says that ‘false claims and misleading marketing surrounding the sale of synthetics is having an impact’, I am afraid he forgets to say that diamond itself owes its success to the unrivalled advertising slogan created by Mary Frances Gerety for De Beers in 1948 ‘a Diamond is Forever’, and that claim is disingenuous anyway. De Beers was successful in making diamonds appear rarer than they are, by aggressively restricting the supply of diamonds on the market, and moreover nothing is going to be forever, not even diamonds.

I am a gemologist and Responsible Sourcing Auditor, and those who know me quite well are prepared to hear me pronounce the sentence: “The ethical nature of a gemstone has today as much to do with its social context and its environmental provenance as it has with its optical and chemical properties.” In fact, in my opinion, gemology without Responsible Sourcing is merely a scientific understanding of gemstones, and the world needs much more than this. Gemology, as a matter of fact, is evolving through ethics. Therefore, as a gemologist I have to protect truth, even if truth sometimes can be multifaceted.

Diamond Foundry, a Synthetic Diamond producer who raised a capital of over $100 million from 12 billionaires[iii], including Twitter founder Evan Williams and actor and environmentalist Leonardo DiCaprio, was launched in late 2015, after two years of research and development.” A diamond is a diamond,” says Martin Roscheisen, Diamond Foundry’s founder. “Scientifically it is a tetrahedral carbon allotrope, and it is the same thing whether mined or man-made.”

“Proud to invest in Diamond Foundry, a Company reducing human & environmental toll by sustainably culturing diamonds,” Leonardo di Caprio tweeted.

Apparently, the arguments embraced by synthetic (or lab grown as they like to say) diamonds manufacturers are mainly ethical: to some consumers they seem to be conflict free and socially responsible. That is because synthetic diamond marketers are touting their product to be “conflict-free”, which misleadingly associates all real diamonds with conflict diamonds.

Accusations of exploitation and inhumane working conditions in mines cast a dark shadow over the diamond industry. Mining is also said to be devastating to the environment, due to the amount of energy it requires, the potential for chemical leaks, and the harmful effects that removing large amounts of earth has on local ecosystems[iv]. Some of those arguments are highly deceptive: the world of diamonds, gemstones and jewellery is changing. The legislative landscape, consumer awareness of the problems in the jewellery supply chain and broader civil society groups demanding transparency and disclosure have impacted dramatically on this scenario: nowadays, thanks to Kimberley Process, Responsible Jewelry Council and other initiatives, just a very small fraction of diamonds production is being used to finance wars. Also, it is extremely important to understand that the diamond industry employs an estimated 10 million people around the world directly and indirectly, and also has become the almost entire economy of some specific, otherwise isolated locations, like Botswana and Northern Canada[v]. Another commonly repeated misconception is that diamond mining harms local ecosystems and wildlife. However, diamond mining is perhaps one of the least environmentally destructive forms of mining there is today. Diamond mining uses very few, if any, chemicals, and diamond mines leave a small footprint on local environments compared to other forms of mineral extraction. Most people are unaware of the role diamonds play in bringing real benefits to people in the countries around the world where diamonds are sourced. Nowhere is this more evident than in Africa.

A few facts:

·        An estimated 5 million people have access to appropriate healthcare globally thanks to revenues from diamonds.

·        Diamond revenues enable every child in Botswana to receive free education up to the age of 13.

·        An estimated 10 million people globally are directly or indirectly supported by the diamond industry.

·        The diamond mining industry generates over 40% of Namibia’s annual export earnings.

·        Approximately one million people are employed by the diamond industry in India.

·        The revenue from diamonds is instrumental in the fight against the HIV/AIDS pandemic.

·        An estimated 65% of the world’s diamonds come from African countries.

It is quite evident that synthetic diamonds pose a firm and serious threat to this huge network, while so much has been done and is being done to eradicate unethical implications from the complex jewelry world. As I said already, reactions have been slightly late and perhaps, at least in the early stage, not commensurate to the actual danger.

After almost one century and a half after diamond discovery in South Africa – happened in 1867, when fifteen year old Erasmus Stephanus Jacobs found the Eureka diamond on his father’s farm, on the south bank of the Orange River – and after the end of the De Beers monopoly, seven of the world’s leading diamond companies (De Beers, Alrosa, Dominion Diamond Corporation, Petra Diamonds, Gem Diamonds, Lucara Diamond Corporation, Rio Tinto Diamonds), founded in May 2015, the Diamond Producers Association (DPA): its mission is ‘to protect and promote the integrity and reputation of diamonds, thereby ensuring the sustainability of the diamond industry[vi].

DPA launched an advertising campaign called “Real is Rare,” that adopts a new verbiage on diamond marketing, in which the abracadabra claim “A Diamond is Forever” has been replaced by a narrative that is totally different from the past. The Diamond Producers Association (DPA) announced at the JCK, Las Vegas a few days ago that their 2017 marketing budget will total US$ 57 million. DPA’s Chairman Stephen Lussier commented: “The Board’s decision is a major turning point for the Diamond Producers Association and the diamond industry. All Board Members are aligned behind the goals and plans of the DPA, which is now fully equipped to fulfil its mission of communicating to next generation consumers about the timeless beauty and emotional value of diamonds. We look forward to working closely with the diamond and jewellery trade and with other industry organisations to build a stronger future for our sector” [vii].

The words pronounced from Lussier sound so far away from the place and time in which De Beers was the guardian of the trade and could steadily increase the price of diamonds, thus ensuring that diamonds were a good investment over time.

Is such a potentially huge advertising campaign enough to react to synthetic diamonds? In my opinion the necessary game changer in this dangerous situation are ethics and Responsible Sourcing practices. The only way is ethics, quoting Stacey Hailes’s speech at Birmingham a few weeks ago. It is of paramount importance for consumers to consider what the Kimberley Process Certification Scheme for Rough Diamonds, the Responsible Jewelry Council, the Signet Responsible Sourcing Program are among others doing. Although we are all working towards the full enforcement of these practices, they already had a significant impact on illicit trade in rough diamonds.

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[i] As reported in ‘Is This Lab-Grown Diamond Company Trolling the Trade?’ by Rob Bates, on JCKonline (June 1, 2017)

[ii] Rapaport, ‘Synthetic Diamond Scam’ April 2016

[iii] ‘Why Leonardo DiCaprio is backing man-made diamonds’ by Sophie Morlin-Yron, CNN money ( August 30, 2016)

[iv] ‘A Lab-Grown Diamond Is Forever’, by Chavie Lieber (June 14, 2016)

[v] ‘The History of Lab Grown Diamonds: Value Proposition’, by Ehud Arye Laniado (June 14, 2017)

[vi] Diamond Producers Association mission statement (www.diamondproducers.com)

[vii] DPA ups its Marketing Budget for 2017 – Allocates US$ 57 Million for the Purpose, TJM (June 6, 2017)

 

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Diamonds: Driven by market forces for the first time in 100 years

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Ce: Resource Investor

Author: Paul Zimnisky

Up until recently the diamond industry had a structural flaw — just one player controlled it. De Beers was the diamond industry, and diamonds were synonymous with De Beers. However, over the last 25 years, a series of events led to the dismantling of the De Beers monopoly. Today, De Beers no longer has complete control of the diamond industry, and for the first time in a century, market forces, not the De Beers monopoly, drive the diamond market.

In the late 1800s after a massive diamond discovery in South Africa, a diamond rush was born, and businessman Cecil Rhodes bought as many diamond mining claims as he could, including farmland owned by the De Beer family. By the turn of the century, Rhodes had accumulated enough properties that his company accounted for the majority of the world’s supply of rough diamonds. He called his company De Beers Consolidated Mines Limited.

As De Beers maintained a hold on the worlds rough diamond supply through the first quarter of the 20th century, financer Ernest Oppenheimer began accumulating shares of De Beers whenever available, and reached a controlling stake of the company by the mid-1920s. Under Oppenheimer’s control, De Beers further expanded into every facet of the diamond industry, intent on monopolizing distribution. De Beers successfully influenced just about all of the world’s rough suppliers to sell production through the De Beers channel, gaining control of the global supply not produced by De Beers mines. The cartel was born, giving Oppenheimer the power to influence diamond supply and thus diamond prices.

The De Beers distribution channel, named the Central Selling Organization or CSO, (later changed to Diamond Trading Co. or DTC), had the power to sell what, when, and where they wanted to. In order to buy from CSO, membership as a “Sightholder” was required, which was completely the discretion of De Beers, as was the quality and price of the product being sold. No negotiation between the CSO and Sightholder occurred, all transactions were take-it-or-leave-it. In order to maintain a stable but rising diamond price, De Beers had the power to stockpile inventory in a weak market or raise the prices charged to Sightholders, and then in an excessively strong price environment (with the potential to damage demand), De Beers had the excess supply on hand to release to the market when needed, repressing disorderly price increases.

To keep the system intact, it was necessary for De Beers to maintain control of the world’s rough diamond supply via purchases through CSO. In the second half of the 20th century, as new world class mines were discovered in Russia, Australia and Canada, it became more and more difficult for De Beers to purchase all global production. The biggest risk to the survival of the cartel was for mines to begin selling directly to the market, thus bypassing De Beers.

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Source: WWW International Diamond Consultants Ltd, Economic Times of India, and Authors analysis.

Russia (present day the world’s largest diamond producer by value) began producing diamonds in the mid-twentieth century. At first, the Russians agreed to sell production to De Beers keeping the cartel intact. However, this quickly became extremely costly to De Beers as the Russian mines produced greater quantity and lower quality stones than anticipated. This prompted De Beers to commence the ”Diamond is forever” marketing campaign, transforming the image of diamonds to a proxy for love, expanding demand of lower quality stones to a new middle class American market, in an effort to absorb the new supply. Another challenge emerged in 1963 when Anti-Apartheid legislation restrained the Soviet Union from dealing with a South African company. But the final blow to the arrangement came during the Soviet Union collapse in the 1990s, when political chaos and a weak ruble further separated Russia’s production from De Beers.

Shortly after losing control of Russian supply, the Argyle Mine in Australia, at the time the largest diamond producing mine in the world by volume, broke away from the DeBeers supply chain. Over the next few years, other mines followed suit, as new world-class mines in Canada sold supply independent of De Beers.

The emergence of new supply distributed outside of CSO meant that De Beers, was forced to hold back from selling large portions of its own inventory and to purchase excess supply from its new competitors in the open market, in an effort to maintain control of the market. By the end of the 1990s, De Beers’s market share had fallen from as high as 90% in the 1980s to less than 60%. De Beers no longer had control of the market in 2000, when the company announced a shift in strategic initiative to focus on independent marketing and branding, rather than generic diamond price control.

However, the monopoly officially ended in 2001, when several lawsuits were filed in U.S. courts alleging that De Beers “unlawfully monopolized the supply of diamonds, conspired to fix, raise, and control diamond prices, and issued false and misleading advertising.” After multiple appeals, in 2012 the U.S. Supreme Court denied final petition for review, and a settlement in the amount of $295 million with an agreement to “refrain from engaging in certain conduct that violates federal and state antitrust laws” was approved.

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Source: WWW International Diamond Consultants Ltd, Gem Certification & Assurance Lab, Price Scope, and Authors analysis. Price constitutes various qualities of rough and polished diamonds, and shows diamond price deviation from starting basis of 100 beginning in 1987.

Shortly after losing control of Russian supply, the Argyle Mine in Australia, at the time the largest diamond producing mine in the world by volume, broke away from the DeBeers supply chain. Over the next few years, other mines followed suit, as new world-class mines in Canada sold supply independent of De Beers.

The emergence of new supply distributed outside of CSO meant that De Beers, was forced to hold back from selling large portions of its own inventory and to purchase excess supply from its new competitors in the open market, in an effort to maintain control of the market. By the end of the 1990s, De Beers’s market share had fallen from as high as 90% in the 1980s to less than 60%. De Beers no longer had control of the market in 2000, when the company announced a shift in strategic initiative to focus on independent marketing and branding, rather than generic diamond price control.

However, the monopoly officially ended in 2001, when several lawsuits were filed in U.S. courts alleging that De Beers “unlawfully monopolized the supply of diamonds, conspired to fix, raise, and control diamond prices, and issued false and misleading advertising.” After multiple appeals, in 2012 the U.S. Supreme Court denied final petition for review, and a settlement in the amount of $295 million with an agreement to “refrain from engaging in certain conduct that violates federal and state antitrust laws” was approved.

Source: WWW International Diamond Consultants Ltd, Gem Certification & Assurance Lab, Price Scope, and Authors analysis. Price constitutes various qualities of rough and polished diamonds, and shows diamond price deviation from starting basis of 100 beginning in 1987.

The way De Beers did business, which revolved around the central concept of controlling supply in the market, was simply not viable in a more competitive environment, and De Beers could not maintain the monopoly. From 2000 to 2004 diamond prices modestly declined, as the De Beers stockpile was liquidated into new demand coming out of Asia. By 2005, the inventory overhang had been lifted allowing market forces to drive diamond prices for the first time in a century, resulting in unprecedented price volatility. Diamond prices made a new high in 2007, followed by a violent sell off in 2008 and 2009 before rebounding to another new high in the summer of 2011.

With a market share of less than 40%, in 2011 the Oppenheimer family announced a complete exit from De Beers, ending almost a century-long ownership of perhaps the greatest monopoly in history.

About the Author: Paul Zimnisky

Paul Zimnisky, has worked in the financial industry for almost 10 years, primarily as a buy-side equity analyst focused on the metals and mining space, and as an ETF arbitrage trader. Paul currently creates and develops new exchange-traded products. Paul has a finance degree from the University of Maryland.

China demand makes diamond too pricey

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Source: The Economic Times

Author: Sutanuka Ghosal

KOLKATA: India’s expanding middle class may now have to spend more to own a piece of diamond-studded jewellery. Prices of smaller diamonds (10 cents and 6 cents) have gone up due to a surge in Chinese demand.

Vipul Shah, chairman, Gem and Jewellery Export Promotion Council, told ET: “Prices of polished small diamonds (10 cents and 6 cents) have gone up 5% as demand for these categories has risen in China, Hong Kong and the other Asia Pacific regions. But demand for larger diamonds, known as sawn diamonds, has been sluggish as the US and Europe, the major consumers, are not purchasing them in big volumes.

Prices of polished diamonds may go up further as demand is increasing in the Asia Pacific region and supplies are not enough to sustain this demand.” The annual Global Diamond Industry Report says global consumption will help the worldwide value of diamond sales surge from £10 billion in 2011 to £17 billion a year in the next seven years. This boom will be fuelled by the rising middle class in India and China.

Demand from these nations is expected to soon surpass the US consumption. Vijay Jain, CEO, Orra, said: “Gold has witnessed a dramatic rise in price. But diamond has not seen such a huge appreciation . Though there is volatility in diamond prices, it is not as significant as gold. Therefore , the price hike in diamond is more acceptable to the consumer as it has been a steady rise.”

Bachhraj Bamalwa, past chairman of All India Gem and Jewellery Trade Federation, said: “Jewellers will now try to offload older stocks of diamond-studded jewellery before they introduce jewellery with new prices. By that time, consumers will get to know that prices have gone up and they will get prepared to shell out more.” Vinod Hayagriv, MD of C Krishniah Chetty and Sons, said: “If demand comes down, prices of diamond will fall. But that is not going to happen in near future.”

Companies are now looking at introducing products that are affordable to customers and yet have the look of an original high-quality diamond. The Orra CEO said the company has launched the Aquila range of diamond studded jewellery that have the look and feel of a one-carat diamond (100 cents make a carat). “Such items are being bought by aspiring middle class youngsters.

The industry will have to come up with innovative products at a time when diamond prices are rising. This has happened in gold too. Most jewellers have come up with lightweight gold jewellery with a heavy look.”

‘Princie Diamond’ expected to fetch $30-$40M

‘Princie Diamond’ expected to fetch $30-$40M

Source: The National Jeweler

The “Princie Diamond” has passed through the hands of royalty as well as one of the world’s top jewelry auction houses. This month, it will appear at auction for the second time at Christie’s in New York. Photo credit: Christie’s Images Ltd.

New York–Christie’s New York is poised to sell the largest fancy intense pink Golconda diamond ever offered at auction when the “Princie Diamond” goes up for bid on April 16.

The Princie is a 34.65-carat fancy intense pink cushion-cut diamond whose origin can be traced to the ancient Golconda mines in south central India. The stone was first recorded as belonging to the royal family of Hyderabad, who ruled one of the wealthiest provinces of the Mughal Empire.

First offered at auction in 1960 by the Nizam of Hyderabad, the London branch of Van Cleef & Arpels purchased the Princie Diamond for £46,000 (approximately $69,588 in today’s currency). The diamond got its name at a party at Van Cleef’s Paris store, where it was christened in honor of the 14-year-old Prince of Baroda, who attended the gathering.

This is the first time in 50 years that the diamond has appeared at auction, and Christie’s expects it to “achieve in the region of $30 million to $40 million.”

“One of the largest and finest pink diamonds in the world, the Princie Diamond carries a fabulous provenance. The rich history, combined with its rare pink hue, conveys a special charm, which will speak to all collectors in the world seeking the best of the best in gemstones,” said Francois Curiel, chairman of Christie’s jewelry department.

The Princie Diamond is part of Christie’s sale of Magnificent Jewels, which will offer nearly 300 pieces, from colored and colorless diamonds to gemstones, natural pearls and signed vintage jewelry.

Source: The National Jeweler

http://www.nationaljeweler.com/nj/fashion/a/~30674-Princie-Diamond-expected-to-fetch

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ALROSA Recovers 145-Ct. Diamond

Courtesy of RAPAPORT

Author: Dilipp S Nag

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RAPAPORT… ALROSA recovered a diamond weighing 145.44 carats, which may be valued at $1 million if it was placed for auction, according to experts from its diamond sorting center.

The world’s largest diamond producer by volume stated that the diamond was recovered in late January by its business unit, Aikhal Mining & Concentration Mill, at its factory No. 14.

The diamond was brought to grass from the depths of the Yubileynaya Diamond Pipe and measures 35.0 x 20.0 x 26.0 mm, ALROSA noted.

The company stated that the stone is a crystal in the shape of an octahedron, its transparent with a yellow hue and contains small graphite-sulfide inclusions in its periphery. A production- induced scuff is seen on one of its peaks and one of its facets has a shallow crack, it added.

ALROSA said that through new technology it had managed to improve diamond recovery and reduce the number of damaged gems.

Police now investigating fired Antwerp graders

We publish courtesy of National Jeweler

Antwerp–Grading laboratory HRD Antwerp announced Friday that it has passed the results of its internal audit on to judicial authorities there and has terminated its relationship with the three companies involved in the alleged misconduct that led to the firing of four diamond graders last month.

HRD Antwerp General Manager Georges Brys is refraining from commenting on the specific nature of the investigation, but toldNational Jeweler: “The police have received our findings. Based on this information, they have started an investigation. The police investigation is going on. It would be inappropriate to mention what they are looking for.”

HRD Antwerp did note in its statement that the internal review, conducted by an ad-hoc committee aided by an independent third-party company that audited the lab, found that the “grading improprieties” involved only a few individuals and companies.

“As HRD Antwerp’s own investigation was fully focused on its internal quality controls and staff adherence to the strict grading rules, the HRD Antwerp board unanimously felt that all the findings of the internal investigations should be passed on to the appropriate authorities,” the statement reads. “All staff members have received unequivocal instructions to fully cooperate.”

When asked if the police were considering action against both the diamond companies and the individual graders, Brys said, “It is up to the legal authorities to judge if action will be taken to people involved.”

HRD Antwerp announced in late March that it had fired the four graders for what it deemed “unprofessional acts.” The graders involved had worked at the lab between eight and 11 years.  

Sotheby’s to Offer 11-ct. Fancy Pink Diamond

We publish courtesy of Forbes 

Author: Anthony DeMarco

A 10.99-ct. pink diamond that hasn’t been on the market for more than 30 years will be offered at the Magnificent & Noble Jewels sale, being held by Sotheby’s Geneva on May 17. It has a pre-auction estimate of $9 to $16 million.

The diamond features a classic emerald cut, normally associated with white diamonds. This type of cut is highly sought-after when found in rare colors such as pink and blue, Sotheby’s said. This gem, mounted as a ring, has been graded “fancy intense pink,” natural color and VS1 clarity. It’s further assessed to be type IIa, meaning it is almost or entirely devoid of impurities with extraordinary optical transparency. Less than 2 percent of all diamonds in the world are given this grade of purity and most of those diamonds are white.

It is being offered for sale from a private collection.

Colored diamonds are very desirable on the auction market right now. In November 2010, Sotheby’s Geneva set a world auction record for any diamond and any jewel when it sold the 24.78-ct. Graff Pink for $46.15 million.

“I do not remember the market for colored diamonds to have ever been as strong as it is today,” said David Bennett, chairman of Sotheby’s Jewellery Department for Europe and the Middle East.