New York meeting aims to deal with fears of undisclosed synthetics in melee parcels

Members of the global diamond industry may still get the nomenclature wrong, calling them synthetic diamonds stones, but no matter what the name lab-created, lab-grown or cultured diamonds are causing considerable panic. Almost without trace, the output of factory-created diamonds has grown to an all-time high.
With industry analysts commenting that never has it been so easy and relatively inexpensive to create such products, it is perhaps no surprise that the presence of such diamonds is so widespread. Some estimates put the value of the production of such diamonds at $500 million annually.
In recent months, diamond industry stakeholders around the globe have been lining up to attack the spreading phenomenon of synthetic diamonds being mixed into parcels of small natural diamonds. Among these players is the Diamond Manufacturers & Importers Association of America (DMIA) which announced in late November that a range of diamond and jewelry industry organizations will take part in a meeting following an urgent call by the body to host an industry-wide meeting in New York City about measures to prevent synthetic diamonds being presented as natural diamonds.
The meeting will be held under the banner of the DMIA, the Diamond Dealers Club of New York (DDC), the Indian Diamond and Color Stone Association (IDCA), and the Natural Color Diamond Association (NCDIA), said DMIA President Ronnie VanderLinden. "We have already engaged law enforcement agencies and have received confirmations from national organizations such as Jewelers of America (JA), the American Gem Society (AGS), the Manufacturing Jewelers & Suppliers of America (MJSA) and the Jewelers Vigilance Committee (JVC),” said VanderLinden.
“Also, three major gem labs that service our industry are on board: the Gemological Institute of America (GIA), the International Gemological Institute (IGI) and the European Gemological Laboratory (EGL USA.) We are confident that this meeting will result in strong measures that will have real teeth," he added.
"We noted earlier that one of the major obstacles in attacking this issue was the lack of cohesion from industry stakeholders. Witnessed by the strong response from our partners we are building that cohesion. “We strive for a single-minded and enforceable joint resolution to halt synthetics being mixed into parcels of natural diamonds by repeat offenders. Those who defraud the industry will pay a heavy price," he said.
 
Meanwhile, De Beers reiterated in a document distributed to the media that its view of synthetic diamonds has not changed. It continues to believe that synthetic stones that are fully disclosed have a place in the diamond and jewelry industry that cannot be dismissed. But passing off a synthetic stone as a natural diamond is a huge threat to consumer confidence and the practice is unethical and fraudulent.
The De Beers document appeared to show that the mining giant feels that such undisclosed trading of synthetic diamonds remains a relatively small part of the worldwide trade. However, in light of growing fears in the diamond business recently, it decided to put together a guide to help understand synthetics, what to watch out for and how to protect the diamond business in its entirety.
''You value what it means to be a sightholder of De Beers. It is a signature of confidence for your clients, partners and lenders. We therefore have a shared responsibility with you to protect the reputation and goodwill of De Beers and our sightholders,'' said CEO Philippe Mellier. He confirmed that all rough diamonds sold by De Beers are natural, and that the firm has the technology to detect all synthetics. ''De Beers has invested heavily over decades to develop technology that enables us, and you, to detect all types of synthetics. And we are continuing to invest to ensure we remain several steps ahead of synthetic production technology,'' Mellier said. He added that some of the leading diamond grading laboratories use De Beers synthetic detection equipment.
De Beers is now testing a new Automated Melee Screening (AMS) machine that it expects to unveil in the first half of next year. In the meantime, sightholders can put samples of melee parcels to the test with De Beers' DiamondSure as a way of severely cutting the chances of purchasing undisclosed synthetics, Mellier said.
Needless to say, De Beers best practice principles (BPPs) forbid the sale of undisclosed synthetics, and some industry analysts believe that De Beers will increase these measures  to provide for systems and controls to protect Sightholders from inadvertently trading in undisclosed synthetics. ''De Beers will work with industry bodies to identify entities that have sold undisclosed synthetics. This will help discourage non-disclosure,'' Mellier said. ''Selling one product by misrepresenting it as another, as in the case of undisclosed synthetics, could be illegal and may be a criminal offense in some jurisdictions to be addressed by law enforcement authorities.''
"Purchases from secondary sources (i.e., not the polisher of the goods) increases the opportunities for synthetics to be substituted for natural diamonds or spread across parcels sold to unsuspecting clients,'' Mellier said. Putting diamonds to the test or sending them to a lab, will ensure greater confidence in purchasing. "Once assured or tested and in your possession, your diamond stock is vulnerable to 'swapping' on the factory floor. Effective security and monitoring processes will protect the value and integrity of your stock,'' Mellier added.
''Ignorance cannot be an excuse and we must all take the necessary steps to protect our reputations. 'More needs to be done and the technologies team at De Beers is producing more screening equipment like the AMS and will launch further technology in the years ahead. I would like to thank you for your support thus far and would value direct engagement with you to get your views and discuss ideas on how we can continue to safeguard consumers’ confidence in diamonds,'' he added.
 
The De Beers document raises the issue of whether the industry has the level of technology that will enable it to deal with the issue. Larger stones have been relatively comfortably recognized in recent years. In addition, they were typically the size of non-lab grown diamonds that were made since there was little financial incentive to create smaller stones. And it is probably because smaller stones were not inspected in the past that they are now being created and mixed in with melee.
The International Gemological Institute (IGI) warned of the necessity for well-established synthetic identification services. “This is an issue that not only affects all aspects of the diamond industry, but ultimately hurts consumer trust,” said IGI President and CEO, Jerry Ehrenwald. “The trade has a responsibility to remain vigilant and now – more than ever – synthetic detection technology and services are of utmost importance.”
The IGI said it offers batch testing of diamonds (synthetic versus natural) on an individual basis, and uses advanced equipment, such as De Beers’ DiamondSure and DiamondView machines, to assist in weeding out synthetic stones. The IGI said it has been monitoring the growth of synthetic diamonds for decades through its diamond research laboratory division and officially launched its IGI Laboratory Grown Diamond Report in January 2007.
“The industry is really doing its best to deal with this problem,” Ehrenwald told New York Diamonds. “We used to see synthetics in larger diamonds, and the issue of them being mixed in melee is new. Our diamond service for checking melee can 100 percent weed out synthetics. If anyone has any doubts about the stones, we are here for them.”
He said that less than 5 percent of the stones mixed in melee, of the parcels that IGI-USA has seen, are synthetic stones. “We cannot identify where they are from. In fact, even the clients who submit the stones don’t know”
The warning from the IGI was followed by an alert from the World Federation of Diamond Bourses (WFDB), which expressed concern at the growing numbers of cases of undisclosed synthetic diamonds entering the market. “While the WFDB acknowledges that synthetic diamonds have a place in the market, they must not be confused with or marketed as natural diamonds. It has been the policy of the WFDB that synthetic gems must be declared and as such the Federation will have a zero-tolerance approach towards individuals or companies who do not abide by this.
"As the industry and the WFDB work hard to protect the reputation of diamonds, the Federation has put out an official warning that it will not stand for the passing off of synthetics as natural. During the organization’s executive meeting in London, which took place last week, a unanimous decision was made to take severe action against any member who is found to knowingly misrepresent or fail to disclose synthetic diamonds.
"Members of the diamond industry need to understand that they are personally responsible for what they sell, which is why it is of the utmost importance to know your supplier and the legitimacy of their product whether it is ensuring they are Kimberley Process compliant or disclosing synthetics.
"The law is clear and the punishment for fraud will be pursued. The WFDB will work with all legal agencies across the globe to assist in the prosecution of those who participate in this type of fraud in the diamond industry," the WFDB said in a statement.
 
The most recent alerts followed reports in May 2012 from the IGI regarding several hundred Chemical Vapor Deposition (CVD) diamonds at its labs in Antwerp and Mumbai that were submitted to be certified as natural diamonds. Roland Lorié, the co-CEO of IGI, said that following the case from May last year, his labs have seen increasing cases of individual diamonds or items of jewelry featuring synthetic rather than large packages. In other words, not large volumes, but more incidents.”
The IGI uses the De Beers-developed DiamondView, DiamondSure, or DiamondPlus machines. And the diamond miner is now working on further simplifying the process for identification of small synthetics via its Automated Melee Screening Device (AMS). It has conducted successful testing of the AMS and is now carrying out comprehensive field trials with several sightholders whose specialty is melee. The trials are due to be finished in the coming months and the firm anticipates that the AMS will be ready for wider deployment with its client in the first half of next year.
 
If the producers of non-naturally mined diamonds are to be believed – and there does not seem to be any reason why that should be the case – then production of lab-grown diamonds is set to rise substantially. But, more than that, demand appears to be strong and growing. Scio Diamond Technology Corporation CEO Mike McMahon said manufacturers, including the firm he manages are not able produce enough stones to meet demand. As of now, Scio Diamond produces some 30,000-40,000 carats annually, but he has claimed in media reports that there is demand for more than one million carats.
What is the attraction of factory-created diamonds? After all, leaders of diamond industry organizations have been saying for many years that it is unlikely that couples would want to celebrate the fact that they have found a life partner with a diamond that was made artificially.
Unfortunately for the natural diamond industry, synthetics have several advantages. These include the fact that they are being touted as affordable. At a time of rising prices when industry forecasts suggest that the costs of diamonds are likely to soar in the coming years due to rising demand from India and China, that is a not inconsiderable factor.
In addition, they are conflict-free, and again that is a huge advantage in the modern era when consumer interest in the provenance of diamonds and insistence that they come from areas that are not the subject of internecine, or other, types of conflict.
Then there is the fact that diamonds are relatively environmentally-friendly stones. Land, rivers and lakes have not been harmed in digging them out. Native peoples have not been moved from their ancestral lands in order to enable mining.