Diamond buyers, mugged forever?

The diamond industry has been savagely rocked by two developments during the past two years: blood diamonds, and the rapid acceptability of lab-grown ones.

De Beers, the world’s biggest diamond player, appears to be against blood diamonds. For instance, it markets its ware under the Forevermark brand, and claims to sell only ones ‘responsibly sourced’.

Yet, it seems to have linkages with peddlers of blood diamonds: last year protests erupted in the United Kingdom criticising Steinmetz, a De Beers associate, for being one of the major promoters of blood diamonds.

The issue has become so vexatious that almost a quarter of the $18 billion global market for diamonds is estimated to be blood diamonds, most of which get routed through Antwerp.

It was to avoid the stigma and ensure that customers got the purest stuff that some companies started growing rough diamonds in the lab – by replicating the conditions that Mother Nature engenders.

These diamonds are intrinsically of better quality than earth-mined diamonds. And unlike as with most other earth-mined diamonds, which either scar the earth with mining, or adopt unfair labour practices, lab-grown diamonds are therefore considered to be ‘ethical’ diamonds.

That possibly could have been the trigger to try and give lab-grown diamonds a bad name. It all began with De Beers issuing a global notice that some 600 stones had been discovered in Antwerp, which were allegedly given to a diamond testing laboratory IGI (International Gemmological Institute) so that they could be certified as being “earth-mined” or “natural” diamonds.

Some media reports claimed that they were from Gemesis, the largest producer of lab-grown diamonds in the world. Yet, curiously, after 10 months of investigations, the diamonds seized by the Antwerp police have turned out to be ‘natural’.

When DNA queried IGI, its co-CEO was not only hostile in his responses, but also refused to reply to any of the queries raised.

Then came reports that 10 more diamonds were discovered by Gemmological Institute of America (GIA) in Hong Kong that were “similar to Gemesis”.

But in its replies to DNA, GIA was helpful enough to admit that identifying the actual producer of lab-grown diamonds is not technically possible. It therefore appears that someone has been trying to malign Gemesis.

The role of the Antwerp World Diamond Centre, the umbrella organisation for diamond trade bodies worldwide, is equally curious. Its primary focus is to ensure that consumer confidence in diamonds does not get adversely affected. But it has not taken any stand against De Beers approved diamond traders who peddle blood diamonds, or against laboratories which are alleged to be willing to give any desired certificate for diamonds against a price (lab-shopping).

It told DNA that it did not want to comment on specific companies or laboratories. Antwerp Centre’s wholly owned subsidiary, HRD, is a diamond testing laboratory and one of the most profitable in the world, and it too has got involved in such a controversy.

What is even more curious is that none of the diamond testing laboratories has bothered to talk about the lab-grown CVD diamond factory that De Beers itself owns – ElementSix, which Financial Times (January 14, 2013 issue) reckons to be a mammoth in size and capabilities.

There are two fights thus taking place – between the earth-mined and lab-grown diamond folks, and second, the blood diamond peddlers and protestors.

Guess who’s benefiting from all this? The laboratories that test the rocks – they’re laughing all the way to the bank.

And the victim? There’s only one – the consumer, since he has to pay for the testing expense too, to check if the diamond is for real, and if he doesn’t, then live with the confusion of its worth.
Even De Beers appears to be a beneficiary because it has realised higher prices for roughs. In the index of diamond prices, the price of roughs has gone up faster than those of cut and polished stones.

The customer, for sure, is being taken for a ride.