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Discussing synthetics on the sidelines of RJC Annual Meeting in Moscow: Customers should know what exactly they are buying

25 may 2018

Last week, the Responsible Jewellery Council (RJC) Annual General Meeting was held in Moscow with the conference organized within the framework of it on the issues related to the synthetic diamonds and the need to set distinction between the markets of mined rough diamonds and synthetic stones. The RJC comprises about 1,000 companies from various segments of the diamond market, including ALROSA, De Beers, Dominion Diamond Corp., Rio Tinto, and Lucara Diamond Corp.

The event was opened with the presentations made by Sergey Ivanov, CEO of ALROSA, Alexey Moiseyev, Deputy Minister of Finance of Russia who supervises the industry, and Hilde Hardeman, the Chair of the Kimberley Process (KP).

The CEO of ALROSA that joined the RJC two years ago emphasized the importance of the business responsibility and the social and ecological issues and once again stressed the “ALROSA’s commitment to promoting responsible business practices in the industry and its readiness to take the lead in resolving industry-wide problems”.

“We share the RJC values and are ready to help the organization in its further development,” ALROSA’s CEO said.

As was told earlier, ALROSA today is the only Russian company–member of the RJC. This year, Peter Karakchiev, Head of the International Cooperation Department of ALROSA and also a member of the Board of Directors of the World Diamond Council (WDC), was elected as Vice Chairman of RJC.

Alexey Moiseyev, Deputy Minister of Finance, noted in his presentation that holding the RJC meeting in Russia witnesses the important role of the country in the global diamond market and its wish that all the market players would do their business honestly, responsibly, observe the legislation, implement social programmes and provide decent working conditions, would be environment friendly and – which is most important – would ensure that all the products they sell have a guaranteed provenance.

Hilde Hardeman told that the process of restructuring and revising the KP procedures was still going on. She noted that the Kimberley Process Certification Scheme kept on working on weeding out the conflict diamonds from the global supply chain, that mining of precious stones and metals should bring benefits to the producers and not to the militant groups. She also stressed the importance of countering the illegal penetration of the synthetics into the market.

The topic of the conference were synthetic diamonds, the need to detect them, differentiation of the natural diamonds and synthetic markets. Andrew Bone of RJC was a moderator, and the main participants were the newly elected RJC vice-president Peter Karakchiev (ALROSA), Jean-Marc Lieberherr (DPA), Tom Moses (GIA), Didier Backaert (Bonas&Co., Ltd.), and Thierry Silber (Diamaz International and Madestones).

The common opinion was expressed that the natural and synthetic diamonds would exist on the market and both of them would have their niche and customers, but there should be a border between them, the tools should be used to clearly define and separate them. As Tom Moses of GIA has justly noted, some are afraid of the term ‘synthetic’ itself, but there are also some other terms approved by the USA Federal Trade Commission, including simulants (lab-grown diamonds, fianites (cubic zirconia)), etc.

Asked by Andrew Bone about the volume of the synthetic diamonds produced, Didier Backaert of Bonas&Co., Ltd. answered that the volume was rather big: from 2 mn carats of good quality, flawless, to the total of 4.4 mn carats annually. These diamonds are made in China (using HPHT) and India (where several facilities are put into operation and the production grows rapidly), in Singapore, the USA (rather stable production), and also in Russia (rather good quality stones produced by HPHT).

Thierry Silber emphasized the advantages of the synthetic diamonds that are not a substitute for the natural diamonds but are produced for younger consumers, and the synthetic diamonds have vivid, intensive colors and are cheaper.

Jean-Marc Lieberherr stressed that a consumer should have a choice and he or she should know for sure what exactly he or she is buying. This is necessary so that to maintain the consumer trust – nobody is interested in losing it.

The participants in the conference agreed that it is necessary to indicate the polished diamonds origin – it is mandatory by the legislation in France only (and now in Russia, too), in other countries there is no such a requirement.

An important subject was touched upon: the testing equipment, how soon and how often will it be introduced in the industry; its accuracy and value (US$4,000 – 5,000 for a good quality device); training the personnel to operate the equipment and the cost of training; testing the samples – is a complicated project important for the industry, the results of which will be published in December this year.

According to Thierry Silber, there exist associations of the synthetic diamond producers and the cooperation with them – that is lacking due to no confidence in each other - is of importance. Other participants in the conference agreed with him: the synthetic diamonds are not competitors to the natural diamonds and the cooperation is required “to make sure that we will not only maintain the market share but also increase it”. Tom Moses is sure that antagonism will hurt everyone - that is why it is better to talk about the advantages both products have and explain the difference between them to the consumer. The synthetics also have their valuable features: they are a product of high technologies created by a man. According to Lieberherr, people look at the synthetic diamonds from the wrong angle, they are the product made by other industry, they are in ‘different leagues’ and have a different consumer.

As for large producers of the synthetic diamonds, they use seven different terms to designate their types; each producer tries to confuse the consumer that is why it is necessary to meet and work out general definitions to clearly differentiate between the diamonds: lab-grown, synthetic, cultivated and so on.

Peter Karakchiev (ALROSA) informed about the work in the Kimberly process on the promotion of the initiative for creating the harmonized system for the description and coding of the synthetic and natural diamonds using a six-digit unified code at the level of the world customs organization instead of a seven-digit one. this is a very critical area of activity, but the problem is that the revision of the customs codes in all the customs organizations will be completed by 2022 only. At present, in all the EC countries, there exist their own statutory regulations in this respect. The introduction of two different customs codes would make the tasks significantly easier. On the US market, the Diamond Producers Association (DPA) has already started the work to promote the interests of the natural diamonds, revise the provisions for their compliance with the standards by the Federal Trade Commission. And within the framework of the interaction with the top diamond manufacturers and cutters in India and China, the work will be done on establishing the national legal regulations in the sense of regulatory requirements and standards.

Hilde Hardeman informed about the results of her recent visit to India and that the equipment for the detection of the stones could be installed in any trade location in Mumbai, and each customer for US$1.5 could check the authenticity of the stone being sold (up to 1.5 carat). In India, the nuclear physics specialists were involved for the creation of the powerful and inexpensive equipment designed for the detection of stones.

The issue was touched upon whether the synthetic diamond industry can organize itself and unite to form associations to ensure transparency of its products. A consumer should know what he or she gets - a new environment-friendly product less expensive and more affordable - and he or she can make a choice. There are many lower-quality natural diamonds on the market, so maybe, it is better for someone to buy a synthetic diamond that will look more beautiful.

Peter Karakchiev emphasized that there should be a level playing field. The only problem is the fraud facing every sphere of business. Both products can and will coexist peacefully, the synthetic diamonds will find their niche on the market. However, such a company like ALROSA, for example, should support the people in the area where the company is based, take care of the nature, and so on – it is important for the company not to lose its consumers.

Thierry Silber has made an accent again on the need to ensure the detection of synthetic diamonds and maximum transparency on the market and responsible business practices. He introduced his company, Diamaz Int.&Madestones, as an ideal example of coexistence of both products. It has been engaged in polished diamonds since 1997, and several years ago, it has made a special brand of synthetic diamonds. The consolidation of the ethical methods and principles of transparency is important. And it is the consumer who will have the final say.

After the conference, a promotional video about the new ALROSA Diamond Inspector device was presented to the participants in the conference. It is a small-size, portable and convenient piece of equipment to be used at small-scale enterprises as well. It was jointly developed by the ALROSA’s and TISNUM’s specialists to identify stones in large quantities. It can help a buyer to check the genuineness of the gem he or she is purchasing.

Galina Semyonova, Rough&Polished