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‘Our technologies – CVD machines and growing technology – are game changers’, asserts Arnaud Flambeau, Executive Chairman, 2DOT4 Diamonds LLC

31 october 2022
arnaud_flambeau_xx.jpgArnaud Flambeau is the Executive Chairman of ‘2DOT4 Diamonds LLC’, Dubai, a fully integrated lab-grown diamonds company. The Company provides rough 'as grown' diamonds, in-house polished IGI certified loose polished diamonds and high-quality seeds.

Arnaud started his career in the jewellery business in 1993 at European Gold Company CLAL, where he was in charge of international brands like Cartier or VCA and their subcontractors.

Later he joined Scintilla Monaco as CEO and a shareholder to develop new lines for the Asian and European markets. He opened offices in Monaco, Dubai and Tokyo. He was appointed as a Board Member at the Dubai Diamond Exchange from 2007 until 2013.

Here, in an exclusive Interview, Arnaud Flambeau elaborates on the future plans for '2DOT4 Diamonds'.

Some excerpts ...

Please give an overview of ‘2DOT4 Diamonds’ from the inception of the company; technology incorporated; production plans; and future expansion …if any.

2 DOT 4 is a fully integrated cultured diamond company. We are developing our reactors, we are growing our rough with a proprietary tech, and cutting and polishing our seeds and diamonds in-house.

We have two main departments in the company:

- 2DOT4 systems which is developing and producing our CVD Machines, and which will offer the CVD Machines to the global market,

- 2dot4 diamonds, which is growing rough stones, producing diamond seeds, cutting and polishing stones and selling to our clients.

We also have an R&D department which is working on our next generation CVD Machine and in parallel working on growing tech. for the gem industry and other industries.

We plan to install +200 reactors in our facility in the UAE and develop an education centre for our future clients, to add value to our proposition and to help our clients grow. We truly believe that education is a must, i.e., when we sell our CVD Machines, we will also educate our client’s staff about growing, which is unique in the market. Same for our retailers, we will immerse their staff into the cultured diamond processes from A to Z.

Expansion-wise, we want to duplicate our UAE centre of excellence where we see a demand and potential to grow. We want to bring “the mine to the consumers”. We are looking at other MENA countries and Europe.

About your product, can it differentiate from the products of existing umpteen lab-grown diamond (LGD) companies cropping up globally?

We see that our vertical business model and product offer is unique on the market today. We manufacture our CVD machines through our R&D and have our growing technology. And that makes a big difference. LGD is a technology business where R&D and the capacity to innovate are keys to success.

We are seeing two markets for Cultured Diamonds. One is a mass market with post-treated diamonds with lower quality and a lower value and an 'As Grown White Colour diamonds' market. The 'as-grown colour' diamonds are better in terms of brilliance and colour shade and are thus selling at better prices. We target jewellery manufacturers and retailers who want to offer the best to their clients just as for mined diamonds. No post-treatment, only white shade and VVS clarity. This is our standard and the market standard for high-quality stones.

Our technologies – CVD machines and growing technology–is a game changers. We truly believe in quality and set a new standard to be genuine in the eyes of consumers. We want the consumer to be proud to wear and be adorned by our diamonds.

With this new standard, we are confident that the consumer will go for our cultured diamonds instead of similarly priced earth-mined diamonds with far lower size and quality.

And our approach to the market is to bring the “Mine” to the regional market where the stones are sold. We bring value to the region where we are producing and selling, and by doing this we will be able to lower our carbon footprint.

What’s the total production the company is aiming for, say, a year from now… in size, colour, etc.?

What will be the plus points of ‘2DOT4 diamonds’ to stand out in a crowded marketplace?

We want to have around 200 reactors in the UAE and produce around 40,000 ct of rough stones every month… part for our loose stone production and part for the rough market.

We target in rough from +6 ct. Only 'as grown colour' G+ and clarity VVS. Our Polishing Department will also make only Ideal or Excellent cuts. We will also offer our CVD machines globally. This will help us to have better R&D through higher production of machines.

For the crowded market, we don’t see it as being “crowded”, we see it as booming!!! The actual consumption is skyrocketing for the gems market and is boiling for industrial applications.

The cultured diamond gem suppliers are focused on North America, but the adoption rate is growing very quickly in other regions too. So, we don’t see any issues of over-capacities for at least the next decade.

For us, it is very simple for the end consumer: for an identical price (for the whole stone), the consumer will have the choice between a large size, top colour and clarity cultured diamond or an off-white earth-mined diamond with lower clarity and smaller size…

In the end, a diamond must be beautiful and impressive… and cultured diamonds are beautiful, impressive and reasonable in terms of price.

Then the Industrial segment is also a great potential for technology. And our CVD machines are designed to be polyvalent, which opens several growth areas and makes the potential for this even more interesting.

If your marketing schemes are chalked out already, will it be globally or selected LGD-consuming countries initially? What steps do you intend to take?

We are targeting the MENA region first for the gem market, and for the CVD machine, we are going global.

Our centre of excellence, in Dubai, is a perfect marketing and selling tool with education programs for our client's staff and a lot of PR around it to add value to our products for the end consumers. Education is important to help the market grow and our office has been designed for it.

While demand for LGD-studded jewellery is picking up all over the world, LGD growers/producers are also increasing in large numbers. Businessmen foresee a glut in LGD inventory, price dipping and demand slowing down in the future. Your comments.

Yes, the number of growers is increasing but it is completely normal for a market that, 5 years ago, represented a near 0% of the global diamond market and is now over 15%... Competition is increasing but the potential is huge and the growth is just at its initial stage.

A price drop is normal also, when a market starts to enter a mass consumption phase, the prices get aligned with the consumer’s capacity to buy… and we are still linked with the mined diamond prices which I guess in a few years will no longer be the case. We are industrials and prices will be as for any other industrial market depending on costs/quality instead of volatile data… Take the example of the watch industry, you have competition, it is made by men through industrial processes, but the final price is very different between brands or manufacturers/quality/marketing.

In addition, there are 3 factors that will stabilize the prices:

- The human factor: you need very skilled staff to grow diamonds and it is very difficult to find and of course will be more and more expensive. This is a resource which is not at all limitless.

- CVD Machines: even if many analysts on paper think that we can produce a limitless number of machines, it is in reality very different. There are less than 20 machine producers (including us) with very limited capacities. The components of our machines are difficult to find and not only produced for our machines but for many different markets. So, producing large quantities with a limited number of machines will be a challenge… we see a large gap between needs and possibilities.

- CVD or HPHT are not only for gems by far. A large chunk of machines will be dedicated to industrial applications like semiconductors, optics, and batteries … there is a new application every day. Any Cultured diamond producer will have the choice between many different markets and so it will limit the output for the gem industry.

And last, I don’t see the demand fading for cultured diamonds. The consumer is adopting it more and more, and I don’t see the market being limited at 15-20% of the global one… why? As for the pearl industry, it will become used by all the different players or brands… macro wise, as for the pearls with depleted natural oysters stock, the closure of the mines is a certainty. From a consumer point of view, as explained earlier, we have a no-brainer offer which is particularly interesting to the new generation of consumers…

The LGD sector is already facing competition from the natural diamond industry. But, with colour gems capturing the imagination of jewellery connoisseurs of late, what competition do you anticipate later? Your thoughts...

I would say the earth-mined diamond industry is facing competition by LGDs and not reversal. The growth of cultured diamonds in the wedding market is a good example. Cultured diamonds are beautiful, genuine and valuable for consumers. Again, take the example of the pearls. Nowadays cultured pearls are found in collections of all brands. The ones from the south sea or Tahiti are considered luxury products. I see a very true comparison between both cultured and grown when it comes to human hands and the natural process…

In the future, I guess that the high-end market will also adopt it, making very large sets with very interesting designs which include coloured cultured diamonds…

Of course, we will face competition in the gem market, but if we follow high standards in production, branding and marketing, our market shares will be limitless in a jewellery market, which has a positive future.

Aruna Gaitonde, Editor in Chief of the Asian Bureau, Rough&Polished