Cultured, Conflict-free: Diamond Terms in Review

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(Rapaport…February 26, 2005) Along with ecological-friendly automobiles, and a handful of Oscar trophies at the 77th annual Academy Awards in Los Angeles, some celebrities will find a diamond pendant or lapel pin valued between $2,500 and $3,500 in their gift (SWAGG) bag. The diamonds, however, are man-made… or synthetic, or cultured. It simply depends upon whom you ask to define what, ultimately qualifies to be conflict-free diamonds. But unbeknownst to award ceremony attendees, the diamond industry continues to debate terminology while the major players uphold ethical values behind producing diamonds for retail.

The need to maintain consumer confidence in the diamond industry is of particular interest to De Beers. “Significant concerns have been voiced in the media such as conflict diamonds and the risk of non-disclosure of synthetics,” said Lynette Hori, De Beers Group external affairs.

Even before the SWAGG bag announcement on February 22, 2005, stories in the press confused the issue by reporting that man-made diamonds could trick the average jeweler in Florida, Ohio, and Wisconsin behind hidden cameras. One print story on February 14th from Newsweek magazine attributed an up-and-coming diamond boom to undetectable, conflict-free diamonds from Gemesis Corporation, and Apollo Diamonds Inc. Media reports missed efforts by the diamond industry to differentiate conflict diamonds, or man-made from natural diamonds. Newsweek even hinted to a pending diamond market crash.

“Diamonds for Humanity released that [SWAGG] statement, not Gemesis, although we support their effort because it is conflict-free,” David Hellier, president of Gemesis, told Rapaport News.

Hellier complimented the industry for taking steps to end illegal diamonds, for without “the Kimberley Process there wouldn’t be access to conflict-free [natural] diamonds.”

De Beers’ Diamond Trading Company (DTC) launched a consumer awareness campaign in February 2005 to build consumer confidence for diamond purchases, and to reiterate that market diamonds are conflict-free and natural. Hori told Rapaport that all stakeholders in the diamond industry must work with the highest environmental and ethical standards.

“Diamonds hold a deep emotional meaning for people, and it is important that consumers are confident that their diamond purchases have been sourced and produced in an ethical and professional way,” Hori said.

Hellier agrees on industry identification controls. “We believe that identification of all diamonds, whether cultured, created, or mined, and treated or enhanced is absolutely necessary,” he said. “The retailer is foremost the link to consumers, and both must be confident of what they are buying.”

The European Gemological Laboratory “agreed to grade and identify our product,” Hellier said. It is a disservice to both retail and to consumers, “a defensive position to protect natural products,” that other labs don’t grade Gemesis diamonds he said.

Using a laser marking and trace elements of nickel to identify Gemesis from natural diamonds, “we’ve shared our technology with every gem lab, but they have not agreed to grade our created diamond, even though we’ve asked repeatedly,” he said.

“All synthetics are easily detectable,” Hori said, “Any reputable laboratory can screen 100 percent of diamonds in a matter of seconds using the DTC detection instrument, DiamondSure.” Approximately 2 percent of those screened require further testing with DTC’s DiamondView, “which can clearly identify all synthetics,” she said.

Gemesis’ market strategy is based upon an emerging consumer trend for “fancy colors, there is a very large market opportunity to make fancy colors available for consumers,” Hellier said. For the value ascribed to fancy color diamonds, “most consumers will never be able to afford them.” Gemesis consistently creates high quality gems and can make them available at a price “most consumers can afford to pay.”

According to Hori, when it comes to diamonds, “people want the real thing. They say that diamonds have special meaning and they are the only way to show how much you value the people who matter.

“Synthetics don’t enshrine such core human values and emotions and so, in our view, they are much better placed in industrial and technical applications,” she said.

Apollo, based in Boston, is the second major player in non-mined diamond production. Company president Bryant Linares spoke with Rapaport about the opportunities awaiting industrial applications, which is their main focus. “Apollo sees two major opportunities, cultured diamonds; fashion and jewelry, and industrial applications in optics and electronics.” Linares said Apollo cultured diamonds would branch into “diamond based semiconductors, where the purity of our diamond really shines compared to even the rarest mined diamond.”

The opportunities for non-jewelry use diamonds presents “exciting opportunities for synthetics in electronics,” Hori said, and a market value higher than $50 billion for switching devices in energy and telecom industries.

However, for the retail trade, all three companies agree with full disclosure, “whether they are an Apollo cultured diamond or mined. We also believe that diamond purchasers, when appropriate, should insist on verification-of-origin information at the time of purchase,” Linares said.

Where differences of opinion lie can be traced back to Germany’s court case in December 2004 that ruled on legal terms of defining what “cultured diamond” means.

“The specific court issue was with our representative in Germany and a consumer ad they placed,” Hellier said. Gemesis “did not say ‘cultured diamond,’ it was a German translation to mean cultured.” He said Gemesis finds that the term cultured is appropriate, “because we believe consumers understand that term.

“Cultured doesn’t mean solely an organic process,” he said.

Apollo too refers to its diamonds as cultured diamonds, “because we use a chemical vapor deposition process to cultivate or grow a real diamond from a diamond seed in a prepared medium of carbon gas; which results in a new diamond that is chemically and structurally identical to mined diamond,” Linares said.

While Apollo was not involved with Germany’s case, “We find it unfortunate that a Munich district court chose to use a dated diamond definition created by a trade organization without regard for advancements in science,” Linares said.

For now at least, the diamond industry’s concerns, agreements and disagreements, will be ongoing and won’t be noticed on the red-carpet runways at the Academy Awards on February 27th.

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