Sept. 17, 2003 – Diamonds conjure up images of romance, passion, intrigue, extravagance and even supernatural powers. And, thanks to relentless marketing, they are considered an essential prerequisite for marriage, to the dismay of many men who have gone into debt to keep the tradition.
Now, much of that natural mystique about the most popular gemstone in the world may be shattered by two companies vying to break up the world monopoly of the market — by manufacturing diamonds artificially.
Although synthetic diamonds have been around for more than 50 years, most are easily distinguishable from real diamonds and have use only for industrial purposes. But with recent advances in technology, that's about to change, and some industry observers think the result will be a drop in the prices of diamonds and an undermining of the grip one company has on the world market.
Despite what's said by some salespeople and gemologists, diamonds are not all that rare, unless you're talking about a colored diamond. A diamond is simply crystalized carbon, formed nearly a billion years ago in volcanic activity beneath the Earth's surface. Every year, 120 million carats of rough diamonds are mined.
What is rare is that one company should hold a lock on the distribution of a mineral. In this instance, that company is De Beers, which controls more than 60 percent of the diamond market, worth $9 billion annually. The London-based company maintains its dominance over other competitors by ruthlessly hoarding a stockpile of diamonds estimated to be worth about $4 billion, and by forcing out rivals by controlling the supply.
Some critics say De Beers keeps the price of diamonds artificially high by using tactics similar to those of drug cartels. In fact, the Antitrust Division of the U.S. Department of Justice calls De Beers a cartel, and it actually indicted the company in a 1994 price-fixing case. To this day, the top De Beers executives do not set foot in the United States for fear of being subpoenaed.
Diamond have a tarnished history in Africa. So-called "blood diamonds" or "conflict diamonds" have been sold by African rebels to fund wars and revolutions. Diamonds have financed vicious wars and corrupt governments in Congo, Liberia and Angola. The most notorious case was perhaps the fighting in Sierra Leone in the mid-1990s. A group called the Revolutionary United Front maintained terror by hacking off limbs of local civilians, financing their operation with diamonds. Today, Liberia is known as a haven for money launderers who use diamonds to finance their illegal activities.
Although De Beers now says it no longer buys stones from mines in Africa that it does not own, diamond mining is still brutal, even without factional fighting. An article in the March 2002 issue of National Geographic Magazine characterizes modern-day African miners "as little more than slaves," many wading neck-high in muddy water, clenching air hoses in their teeth, in the hope of finding a big diamond through the gravel. Most barely find enough to pay for food.
An anti-artificial-diamond campaign
So when two U.S. firms found ways to produce large quantities of diamonds artificially, some people got excited, and De Beers got worried. So worried, in fact, that the company has created a campaign to warn jewelers and the public about the arrival of these new manufactured diamonds, which will cost one-third to one-half less than the real thing. Chemically and physically, they will be diamonds.
"This is a big change in the market, and could change things here in the jewelry business on St. Thomas," Sunil Mohanani, a certified gemologist, said. "It could be a threatening thing to the jewelry industry everywhere."
Mohanani added that some of his diamond suppliers are saying the development could "kill" the diamond industry controlled by De Beers.
The two U.S.-based companies are manufacturing diamonds using completely different techniques. One company, Gemesis, in Sarasota, Florida, received favorable publicity in Wired Magazine's September issue.
The article says that a retired Army general and a pioneer of anti-theft devices stumbled across an 8,000-pound machine in Russia that could mint diamonds by putting pure carbon under tremendous heat and pressure, the same way diamonds were formed deep in the Earth about a billion years ago.
The general, Carter Clarke, bought the machine, and, with the help of Florida researchers, launched an operation that houses 27 machines in a 30,000-square-foot factory, with another 223 machines planned.
Threatening the way customers think?
Gemesis is not trying to hide the fact that these stones are created, and that it's marketing them to a different class of buyer. Yet the company's owner admits he's going after some of the same market. "Right now, we only threaten the way De Beers wants the consumer to think of a diamond," Clarke said in the Wired article, adding that his current monthly output does not even equal that of a small mine.
"But imagine what happens when we fill this warehouse and then the one next door," he continues. "Then we'll have a proper diamond mine."
To date, Gemesis is able to turn graphite (a form of carbon) into yellow diamonds only. Blue diamonds, which take longer to grow, are still in the research stage and could be offered next year. The company hopes to capitalize on a growing demand for colored diamonds.
In an Internet poll promoted to viewers of CNBC, 71 percent of respondents said they would buy a synthetic diamond if it looked like the real thing and cost less.
Do these new synthetic diamonds pass muster? According to Wired, even gemologists will be hard-pressed to tell the Gemesis product from a rare yellow diamond found in nature. One Belgian gem trader was said to have mistaken the Gemesis-created stone for the real thing.
However, the Virgin Islands' Mohanani, who made a trip to Sarasota last week to see for himself, was not so impressed with this new "cultured diamond," as Gemesis is calling its manufactured stone.
"It was almost too perfect," said Mohanani, who manages Chalet D'Or Jewelers on St. Thomas. "Its yellow was too intense. It was so fancy a yellow that it's like buying citrine, " a quartz-based gemstone.
Mohanani said he came away disappointed from his visit with a Gemesis representative. "Unless they manufacture other colors and are able to produce stones over 1½ carats, I don't think jewelers here will want to get involved," he said. He also said the prices Gemesis is asking for its manufactured diamonds, more than $3,000 a carat, are too steep.
Others in the jewelry business locally were largely in agreement.
A jeweler at H. Stern who did not want to be identified said his store would "never carry anything but real diamonds."
A manager at Diamonds International, who also wanted to remain anonymous, said the store also would not carry synthetic diamonds. "Our customers don't want any man-made stones," he said. He also said a diamond-testing machine could detect a "fake" diamond.
A test-proof synthetic stone?
It is true that a sophisticated diamond tester in a gem laboratory can identify a Gemesis diamond as manufactured — by detecting the presence of nickel, one of the ingredients in the metal solvent used in the heat process.
But the second company that is manufacturing diamonds is reportedly creating a gem that cannot be distinguished from the real thing, even with a testing machine.
Apollo Diamond, based in Boston, recently received a patent to create artificial diamonds through a chemical vapor process. The company anticipates using these synthetic diamonds as a new form of semiconductor for faster microchips, but it plans on selling the stones in the jewelry market as well.
According to the company's Web site, "Apollo Diamond produc
es 100 percent diamond gemstones that match or exceed the purity and beauty of the finest naturally mined diamond gemstones in the world."
Mohanani sees the Gemological Institute of America stepping into the fray.
"I think you'll have more people asking for GIA-certified diamonds," he said, adding that the institute is working to develop a better system for verifying natural diamonds.
So far, though, very few gemstones are sent for testing by the GIA, and then only the larger stones. But diamonds less than a fifth of a carat make up a significant portion of the market, and most buyers will not know their origin.
Ironically, it may not matter if the new artificial diamonds look and feel like natural ones. Whether there is a retail market in the jewelry trade for diamonds produced artificially will be irrelevant if their manufacturers fail to convince wholesale suppliers to buy them.
The mystique of diamonds has been bred into the culture of societies since 400 B.C., when people of India were captivated by the magic of their fire and the brilliance of their sparkle. In the 20th century, those who profited from diamonds exploited their natural allure, and in the 21st century, there is little sign of that changing.
Mohanani acknowledged that "there are some customers out there who do not want to buy 'conflict' stones," a reference to the exploitation and violence connected with mined diamonds. But even so, he added, "most want the real thing."

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