* Industry worried about mixing synthetic with natural
* Israel Diamond Exchange has banned synthetics
* Production of synthetics still small but growing
* Tiffany's invests heavily in protecting its products
By Ari Rabinovitch
TEL AVIV, July 31 Diamonds are a girl's best
friend - but only if they are natural.
That is the message mining companies and luxury jewellers
are keen to instill in consumers as the diamond trade faces a
growing challenge from the production of synthetic diamonds.
Global diamond jewellery sales are worth more than $72
billion a year, according to the World Diamond Council, and
jewellers like Tiffany and diamond miners led by De
Beers stress that a jewel mined at great expense, and often with
great risk, is infinitely more valuable than one made by man.
But it can be hard to tell the difference.
Synthetic diamonds can be manufactured in a laboratory to
the extent that they have the same properties as natural ones,
raising the risk that a synthetic product could one day
inadvertently end up in a luxury jeweller's showroom.
"God help the major diamond jeweller, be it Cartier,
Tiffany, Van Cleef, anybody, who puts a piece of jewellery out
there and it's later found to be having synthetic diamonds in it
without disclosure. That fear is what's driving the industry,"
said Martin Rapaport, chairman of the Rapaport Group, which is
the primary source of diamond price information around the
Synthetic diamond production is still small: annual output
of gem-quality rough synthetic diamonds is less than 350,000
carats, a fraction of the 125 million carats of natural
gem-quality rough, according to India's Natural Diamond
Synthetic diamonds are legitimate and are increasingly used
for industrial purposes, and higher quality lab-produced
diamonds are used in jewellery. What worries the industry is
their use in natural diamond jewellery without disclosure.
Tiffany says it is confident it is not at risk of
inadvertently selling synthetic diamonds.
"We do not and will not sell non-mined diamonds. Tiffany's
insistence on only the highest standards produces diamonds that
are of the utmost beauty," the company told Reuters in a
But the diamond industry is stepping up action and
technology to ward against the mixing of synthetics and natural
diamonds in the market.
In a corner of the trading floor on the Israel Diamond
Exchange, one of the world's largest diamond markets, in Ramat
Gan near Tel Aviv, a worker operates a new machine developed by
the Gemological Institute of America (GIA), offering to test any
diamond if a buyer is unsure of its origin.
"We have to be very cautious. Very, very cautious, and
check. Not go according to our expertise only. We have to use
this machinery," said Shmuel Schnitzer, president of the
The exchange has banned synthetics from its trading floor
since last year and adopted the slogan "Natural is Real" for its
advertising and marketing.
If someone is caught peddling undeclared synthetics?
"He's finished. Because the main thing here at our business
is trust," said Schnitzer.
De Beers, owned by Anglo American and the world's
largest supplier of rough diamonds by value, has just developed
an Automated Melee Screening instrument that can test large
parcels of small diamonds at a rate of 360 stones per hour.
"I think we put a good number of measures in place. We've
been developing a lot of technology in order to assist the
marketplace in identifying synthetics," said Paul Rowley,
executive vice president in charge of sales at De Beers.
Depending on who you ask, synthetic diamonds trade at a 20
to 50 percent discount to the natural stones.
While they are unlikely to ever fetch the same price as
natural diamonds, synthetics are here to stay, said diamond
consultant Edahn Golan.
"Their introduction into the market in a major way is
inevitable. Right now it's a trickle," Golan said.
In the past two years reports have popped up of undisclosed
mixing, breeding a level of mistrust within the diamond supply
Chemically, physically and optically the two kinds of
diamonds are the same, said Tom Moses, chief laboratory and
research officer at the GIA, which grades and evaluates
The only thing differentiating them is how they are formed -
one underground over a couple billion years, the other in a lab
over two to three days.
The GIA has discovered undeclared lab-grown diamonds, Moses
said, but "fortunately, it's a very small number of instances".
Rapaport, however, cites a case in China when someone
obtained an authentic GIA grading report of an existing diamond
and created a synthetic diamond to match it exactly.
The industry has experience of having to protect the market.
Conflict diamonds, or "blood diamonds", whereby production in
countries such as Angola or Sierra Leone among others has been
used to fund violent conflict or involves human rights abuses,
have been a particular problem.
International pressure on governments and the diamond
industry to take action to eliminate conflict diamonds from
international trade has had some success although the problem
has not been wiped out entirely. Tackling the undisclosed mixing
of synthetic diamonds may be an even bigger challenge because
the product is so sophisticated.
"How can you trust your supplier? What is your supply chain
like? The issue isn't just if the diamonds are involved in human
rights abuses anymore," Rapaport said. "This whole idea of trust
within the industry, this is now being raised to a much higher
level than it ever was before."
One case that caused a stir was in 2012 when the lab of the
International Gemological Institute - a certifier of diamonds
like the GIA - in Antwerp uncovered in a parcel of about 1,000
small diamonds believed to be natural, that more than 600 were
And they were not "ordinary" synthetics, but included
"impurities, which were apparently intentionally introduced in
the synthetic production process not to make the stone more
beautiful but solely to make the stone look more natural," the
Lisa Bissell, chief executive at New York-based Pure Grown
Diamonds, a leading distributor of lab-produced diamonds for
jewellery, said the synthetic diamond sector is still in its
infancy. Her company recently changed its name from Gemesis to
highlight that its stones were synthetic not natural.
"Differentiation or disclosure is the base of the diamond
industry, of which we all are equal participants," she said.
Part of the appeal of lab-produced diamonds, she said, is
that consumers can be sure they are buying diamonds that are
"sustainable, certified, and conflict-free".
Traders of natural diamonds say sentiment will always set
their product apart.
"We are very much of the opinion that there is a huge
difference between the two. Very much from an emotional value
perspective," said De Beers' Rowley.
The industry's response to cases of nondisclosure has been
"robust", bringing them quickly into the limelight, he said.
De Beers itself is involved in synthetic diamond production,
strictly for industrial use. It owns Element Six, which makes
synthetics for uses such as synthetic diamond sensors in
radiation therapy and synthetic diamond cutters for oil and gas
drilling, saying the stone's exceptional hardness compared with
other materials and its high resistance to thermal shock, among
other properties, make it an ideal industrial material.
Tiffany says it invests heavily to ensure there is no
confusion about the purity of its diamonds.
"We do not have any evidence that non-mined diamonds are
affecting our sales in any way," the company told Reuters in a
statement. "We have always led the industry by grading our own
diamonds and have invested in our sourcing, our supply chain and
technology to ensure that the diamonds sold in Tiffany's jewelry
meet our strict standards."
But within the diamond industry risks associated with rising
production of synthetic products are being felt.
"Of course they (diamond exchanges, producers and
distributors) are threatened and they should be threatened,"
said Rapaport. "If we want to maintain the idea that the diamond
is the ultimate gift ... then the diamond industry has to do
something about that."
(Editing by Susan Fenton)