In this month’s cover story, Kavita Parab tried to delve deep on the lack of ethics in the industry and the ways to improve the situation.
Undisclosed Synthetic Diamonds And Industry Trust
Shmuel Schnitzer: There is no reason to panic. The amount of synthetic diamonds in the market is limited, and they are no threat to the natural diamond market. These stones will find their place and role in the market place and that is fine. At the same time this does not mean that we can turn ablind eye toward unethical practices, such as selling synthetic diamonds undisclosed. Those are practices we will find tooth and nail – not the product, but misconduct concerning the product.
Alex Popov: Just preceding the JCK show in Las Vegas, the Accredited Gemologists Association (AGA) held a highly informative seminar on synthetic diamonds. The most important outcome was that the attending producers agreed that the number of stones in the also market is negligible - less than a 100,000 carats of gem quality synthetic diamonds have been inserted into the market. There are many millions of carats of natural diamonds, and we understand the very limited impact these stones have on our business. However, these same diamond growers also said that the capacity of their plants will grow, and most importantly, that they are serving a healthy interest in the consumer market.
These synthetics are here to stay. It is to us to do a better job in the marketing and promotion of natural diamonds and to bring back the story telling of diamonds that will attract the consumer for natural diamonds.
Maxim Shkadov: The IDMA has no tolerance for anyone who sells polished, gem quality synthetic diamonds undisclosed. However, I have no doubt that while some consumers may be swayed by the product, the natural diamond will retain its leading role as the symbol that represents the unique expression of love between two lovers. It is the industry’s responsibility to do a better job in promoting natural diamonds to the consumer, and bring back that lost market share that has been eroded by other luxury market products. As to the appeal of synthetic diamonds, I’ll repeat what I have said a long time ago - women want real love, and not a synthetic representation of it.
Nirupa Bhatt: Ensuring the public’s trust is crucial to the growth of the gem and jewellery industry, and proper disclosure of any diamond treatments or synthetics is important to retain that trust. For this reason, GIA made its Diamond Check device available to major diamond bourses around the world at no cost in early 2014. The device accurately identifies colourless natural, untreated diamonds in the D-to-N range and refers diamonds that are potentially synthetic or treated for further examination.
Ravi Chhabria: With science and technology rapidly advancing, the creation of gem quality lab grown diamonds has now become commercially viable, hence the recent influx of lab grown diamonds in the market. Undisclosed lab grown or treated diamonds entering the market remain an overall industry challenge, not only for diamond grading labs in general but to the end-consumer in particular. It seems that the industry is hoping this is still a one-off incident but it I think it’s fair to assume that nobody can estimate the amount of undisclosed goods that are currently in the market. This really underscores the importance of reliable diamond certificates and the necessity for advanced research in order to detect anomalies and potential new treatments. This is why HRD Antwerp continuously invests in its research department by means of developing cutting-edge screening and detection technology and providing intensive training to all of its employees.
Russell Mehta: I do not agree that the overall trust regarding diamonds is on a downfall. In the billions of dollars of natural diamonds we are selling, the incidence of such undisclosed synthetics is perhaps in hundreds of thousands of dollars presenting minuscule percentage and hence stray incidences.
WAYS TO STOP UNHEALTHY PRACTICE
Nirupa Bhatt: Ask for an independent diamond grading report from a trusted third-party laboratory like GIA. A GIA diamond grading report details the gemological quality of the diamond. It tells whether the stone is natural or synthetic, if it has been treated - and how, and its quality rankings in each of the 4Cs (colour, clarity, cut and carat weight). Synthetic diamonds undergo the same rigorous grading process as natural diamonds. Synthetic diamonds have fewer colour and clarity grading categories, but all grading processes are the same.
Ravi Chabbria: As even a slight difference in colour can mean a significant increase in profit so traders or manufactures with malicious intentions will most likely continue their practices which means there is no infallible way to avoid undisclosed treated or lab grown goods entering the market. This is why a transparent, objective and reliable diamond certification remains paramount in order to safeguard consumer confidence throughout the diamond pipeline. Additionally, a strict KYC (Know Your Customer) policy and in-depth customer screening are becoming very important. When unhealthy incidents occur, it’s of capital importance this is announced publicly in order to warn the industry in order to increase caution.
Russell Mehta: Every industry has black sheep and it is for us to weed them out. We need to have best of technology and processes working for the industry to weed out the undisclosed synthetics. I am sure the newer and better machines will come which can work faster and detect even the smallest of the small synthetics in the very near future.
Shmuel Schnitzer: At the IDE, we do not allow synthetic diamonds to be traded on the trading floor. Members are free to handle products in the privacy of their offices but we do not wish to see them in the public realm of our bourse. Under Israeli law, synthetic gemstones, synthetic diamonds and other synthetic gemstones, cannot be imported or released from customs through offices of the Diamond Controller. To us, they are just another product made by man. As to penalties, all bourses have clear rules in place what happens to members who transgress and overstep the clear boundaries of ethics, the WFDB’s and the bourses’ by-laws and the rule of law.
Alex Popov: First of all, the reported mixing of synthetic diamonds with natural diamonds is scandalous if not plainly criminal. Since this is done mostly with small goods, it is obvious that the focus has been on reported incidents in India and I am encouraged by the unequivocal condemnation that I have heard from our counterparts in India. Of course, all bourses need to take the measures needed to stamp out these practices.Clearly, the best way to fight against these products is to do a better job on promoting natural diamonds. This has been lacking for a long time and I am glad that the demand for more generic promotion and advertising among consumers is heard throughout the industry pipeline.
Maxim Shkadov: As a manufacturer, I am very pleased that just recently; the leading diamond miners and producers have resolved to establish a Diamond Producers Association (DPA). While their initial drive may very well have been the threat of synthetic diamonds, their declared motivation is to advance promotion and advertising of natural diamonds and to bring back consumer desire for natural diamonds. This - and little else – should drive the entire supply pipeline. Synthetic diamondsare just a blip on our horizon.The restoring of consumer desire and with it increased diamonds sales and polished prices is our chief goal.
Penalty To The Perpetrators
Nirupa Bhatt: Many diamond dealers are members of trade organisations, which meansthey need to follow certain mutually agreed upon code of conduct. GIA conducts synthetic diamond workshop worldwide as part of GIA’s commitment to education about gemology. This is an extension of GIA’s efforts to bring industry-leading education, research and laboratory services to the diamond and gem industry.
Ravi Chhabria: The first thing is to determine whether the incident was intentional or accidental. In terms of penalties, we would like to maintain an unbiased opinion but we’re confident that the leading regulatory bodies within the industry will act upon malignant practices where necessary. As the industry already is somewhat self-regulating, perpetrators are flagged in all diamond bourses with their information published in the public domain across the globe in order to protect the industry from these malpractices.
Russell Mehta: Whatever the law of the land provides it. All the frauds and cheating should be reported to police and the law should then be allowed to take its own course.
Re-instilling The Trust In The Industry
Shmuel Schnitzer: Can the industry come together on single page and look at its joint interests? While it will not be an easy task, it can be done. Why, because all players in the supply pipeline are aware that without a thriving consumer market for diamonds and diamond jewellery, none of us will remain in business. So whatever the current differences between the participants in the supply pipeline are, I am convinced that common sense will come to the forefront and that we will see a highly motivated industry that will work jointly work to take us forward. My father always told me that to work successfully in diamonds you have to be an optimist. I choose to be an optimist and at the same time do all I can to reach this goal.
Alex Popov: Naturally, I view the WDM as one of the major instruments toward healthy future growth of diamond sales – and prices - to consumers. During the past year, the WDM has proven that even with its limited resources, we have made great strides in diamond promotion. We believe that with the creation of the DPA, we have come closer than ever toward a joint all-industry effort to bring consumer desire for natural diamonds back. Let’s just do it!
Maxim Shkadov: I think, in the recent times, we have started seeing clear signs that the various members of the supply pipeline are becoming more aware of how inter-dependent we all are one on another. The latest example - the lowering of rough diamond prices and the establishment of the DPA - is just an example of that growing awareness. But we need to do much more to become an orchestra that plays a beautiful, natural diamond symphony. To raise the desire for natural diamonds among consumers, to increase prices and to bring profitability back to all of us, we need to work together, with our eye on the long term, joint interests. That is going to be a tough task and a high order. But it can be done.
Ravi Chhabria: As an important supplier to the diamond manufacturing industry and trade, we don’t see any issues as it’s well known that HRD Antwerp applies the most stringent security and quality controls.Our customers know that we are making on-going investments towards our research department in order to keep them protected from potentially undisclosed goods.
Russell Mehta: Please understand that we as an industry are still selling billions of dollars of diamonds compared to tiny amounts of undisclosed synthetics if any to consumers. As long as the consumers are buying from reputable jewellery retailers, I think they are very well protected. I haven’t heard any of my friends or acquaintances questioning purchase of diamonds because of such undisclosed issues.
Message To The Industry
Over the years, there have been many changes in the close-knit diamond industry. Once strictly cash business has gone on to adapting to the modern financial life. Thus, making way for cheques, credit cards, etc. However, a thing still remains unchanged is that the industry still thrives on TRUST.
Adapting to the changes still plays key role. On this Nirupa Bhatt added “This industry is based on trust both for B2B and B2C segments and it is important that it fully discloses what the products are sold. Today, the customer profile has changed, therefore retailers must take a note and adapt to the new-age consumer.”
Stressing on the importance of advance technology, Ravi Chhabria said “Only reputed, qualified diamond grading labs with the required experience and know-how should be the choice for the industry. With science and technology rapidly advancing, it is crucial for diamond labs to continue to invest in equipment and human capital in order to stay on top of the latest industry developments and trends.”
While Russell Mehta had few warning message to give to the industry as he said “Future of our industry is in our hands. It is up to us if we are ‘living up to diamonds’ or not!!”
Conclusion
The entire diamond industry thrives on trust. Good and the bad exist. But the united goodness can easily wipe out the bad. Natural diamonds and synthetic ones can co-exist provided unhealthy practices of selling undisclosed lab-grown diamonds are totally rooted out. After all, ‘Diamonds are forever!’
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