Group of Seven nations and the European Union are discussing ways to track Russian diamonds across borders, a move that could pave the way for restrictions on their trade in future, according to people familiar with the matter.
Previous EU attempts to sanction Russian gems have run into resistance from importer nations such as Belgium who argue that the effort would be futile because transactions will simply shift elsewhere without a mechanism to trace precious stones.
A diamond’s origin is clear at the start of the supply chain when it is issued a certificate under the Kimberley Process, which was designed to end the sale of so-called blood diamonds that financed wars. But after that they can become difficult to track.
Cut and polished stones are often intermingled at trading houses and the original certificate will be replaced with “mixed origin” documentation, making it near-impossible to keep track of where Russian diamonds are eventually sold.
The US has sanctioned the Russian mining giant, Alrosa PJSC, which accounts for about a third of the $80 billion global trade in rough diamonds. But the measures have had limited impact as much of the trade flows through other markets such as India.
The people with knowledge of the G-7 and EU discussions said a solution is not imminent, because tracing polished diamonds in a global market is extremely complicated. Still, two of the people said the G-7 could issue a statement on the matter as early as next week as part of the effort to maintain pressure on Russia as its war in Ukraine approaches the one-year mark.
Martin Rapaport recently released an incendiary memo to the diamond and jewelry industry calling on them to stop doing business in lab-grown diamonds (LGD), which he characterized as “synthetic” and “fraudulent.”
He also claimed those selling LGD were “operating dishonestly and unethically” and trading short-term opportunities at the expense of those that are “certain and sustainable.”
Rapaport is the ultimate industry insider, and there’s no question about which side his bread is buttered on. As chairman of The Rapaport Group, his company is a portal for information about and services to the diamond industry, including the Rapaport Price List, which it claims is the industry’s primary source for diamond price and market information, and an online diamond trading network, RapNet.
In a request for comment, a Rapaport representative shared the memo but added no additional comment.
Rapaport wrote:
“The greatest challenge facing the diamond trade is greed. Our trade is willfully destroying the underlying value of diamonds as a store of value through the marketing, promotion and sale of synthetic diamonds as a replacement for natural diamonds”
And he added, “Essentially, the diamond industry is trading short-term, unsustainable profits for the reputation of diamonds as a store of value.”
Then he went further, “Many – if not most – in our trade are operating dishonestly and unethically by failing to make full disclosure about the value retention of synthetic diamonds.”
And his memo concluded, “The Rapaport Group does not facilitate the sale of synthetic diamonds in any way. We believe they are a fraudulent product because of how they are sold. They are also a threat to the fundamental message of diamonds.”
This memo followed a submission to the Responsible Jewellery Council (RJC) in December 2021, where he pointed to Zales, James Allen, Jared, Diamond Direct (all Signet brands) and Brilliant Earth as not providing full disclosure about the LGD jewelry they sell. “Consumer expectations are not being managed honestly by unethical retailers,” he claimed.
According to lawyer Milton Springut, partner at Moses Singer, Rapaport’s disparaging and potentially injurious claims against lab-grown diamonds and the parties who do business in them probably don’t violate federal or state liability laws.
But Rapaport’s words are ill-chosen, and his claims are without merit, according to experts I spoke with.
Synthesized But No Less Real Lab-grown diamonds may be synthetic, as in made by man, but they are just as “real” as a natural diamond, as defined by the FTC. A diamond, no matter its origin is “a mineral consisting essentially of pure carbon crystallized in the isometric system. It is found in many colors. Its hardness is 10; its specific gravity is approximately 3.52; and it has a refractive index of 2.42.”
While lab-growns that meet the above criteria can be labeled as a “diamond,” the FTC also ruled that their man-made origin must be clearly disclosed.
So it requires marketers must precede the word “diamond” with “equal conspicuousness” such words as “‘laboratory-grown,’ ‘laboratory-created,’ ‘[manufacturer name]-created,’ or some other word or phrase of like meaning, so as to disclose clearly the nature of the product and the fact it is not a mined gemstone.”
It took a little while for some involved to find their footing under the new FTC guidelines, but now it seems all companies and retailers trading in lab growns have gotten on board and clearly, responsibly and honestly disclose the man-made, laboratory-grown origins of their stones.
That’s why Rapaport’s word choice of “synthetic” is over the line, implying that lab-grown diamonds are “simulants,” on the order of CZs or moissanite that may have a diamond-look, but are distinctly different in their physical properties and chemical composition.
“It’s an intentionally pejorative term because he is desperately trying to hold on to the tradition of mined diamonds,” said Marty Hurwitz, founder of market-research firm MVI Marketing LLC (THE MVEye) that specializes in the gem, jewelry and watch industries since 1987.
“One could argue using the term ‘synthetic’ may cause harm to lab-grown businesses, but it is clear that people who use the word are using it in a denigrating fashion,” he continued.
Hurwitz also notes the Gemological Institute of America (GIA), a non-profit educational and research organization that is the industry’s primary source for grading stones, doesn’t use the term “synthetic” any longer. It provided a limited grading program for lab-grown diamonds since 2007, then expanded and elevated it in 2020 as LGDs gained more industry and consumer acceptance.
GIA’s chief executive Susan Jacques described its decision as the natural evolution of the diamond market.
“We are responding to consumer demand,” she stated. “We want to make sure that consumers are educated, that we can protect their trust in the gem and jewelry industry as well as the products they are buying. As consumers adopt this new category, it’s important that we evolve with the new consumer.”
Value Is In The Meaning Rapaport’s rage against lab-grown diamonds seems to hinge on the fact that having an equivalent competing product in the market is causing the price of mined diamonds to fall. That’s the natural economic law of supply and demand.
And given that the prices of lab-grown diamonds are steadily falling, it is putting downward pricing pressure on mined diamonds too, reports diamond industry analyst Edahn Golan, though mined diamonds are experiencing a more moderate decline.
Then Rapaport goes one step further to claim that a mined diamond is a repository or “store of value” and that retaining, even increasing, its monetary value over time is part of the promise with purchase. This is patently false, both Hurwitz and Golan affirm.
“There is limited to no investment value in diamonds,” Hurwitz said. “Some categories of mined diamonds are investment grade and go up in value, but most diamonds depreciate faster than a car leaving the showroom. The average consumer has been fed a marketing myth, the greatest marketing story ever told. Most consumers never find out the truth because they don’t resell their diamonds.”
Golan added that jewelers have perpetuated the myth by offering a trade-in, so a purchaser of a $2,000 diamond ring can get that back in credit if they return to purchase a bigger, more expensive stone.
“I’m hearing the big trend in America now is for people who want to upgrade their engagement ring decide to keep their original stone and have it made into something else, like a pendant,” he said.
People hold onto their stone because of its sentimental, symbolic value, which is where the actual value lies, as Warren Buffett said, “Price is what you pay. Value is what you get.”
DeBeers tried to equate the two with its rule that a man should pay two-to-three months’ salary on an engagement ring. But ironically, that’s turned back on the industry because, with a lab grown, he can buy a bigger, more impressive stone that speaks even louder of his love for her when he pops the question.
Nothing Unethical, Fraudulent Or Dishonest Selling Lab Growns Rapaport goes too far when he suggests that there is something unethical, fraudulent or dishonest in selling lab-grown diamonds.
“The idea that diamonds are a store of value is a fundamental component of diamond demand. Consumers are being misled by retailers who sell man-made diamonds without full disclosure. The default assumption among consumers is that man-made diamonds will appreciate over time, even though the opposite is true,” he stated in his RJC filing.
One could argue that what is unethical, fraudulent and dishonest is suggesting that a mined diamond retains, even grows in monetary value.
“Rapaport is thinking like a diamond trader. Trading prices move up and down with the market. When they go up, it’s good; when they go down, it’s bad,” Golan said, noting that the increasing availability and consumer demand for lab growns is moving the needle for mined diamonds in the wrong direction.
Unlike traders, retailers think about cash flow, margins and turns. And this is where lab-grown diamonds have the edge.
“Jewelry stores hold loose diamonds on hand and the margins on loose natural diamonds is around 36%, while the margin for LGD was 54% at the end of December. And if it takes a retailer a year to sell a mined stone, but it only averages seven months to sell a lab-grown, a retailer will make more money at the end of the year,” Golan explained.
Hurwitz rhetorically asks, “Should we tell the consumers who are walking into our stores asking for lab-growns to go away? Should we say, ‘We don’t want to sell you this product that means incredibly high margins and profits for us and incredibly high value to you?’”
Retailers that trade in lab-growns are transparent and honest about the origin of their stones. The FTC requires it. There is nothing unethical, fraudulent or dishonest for a retailer to sell a customer what they want at the price they want to pay and to make money in the process.
“Half the diamonds are sold in the United States, and 50% of the business in the United States is bridal. The natural diamond industry is losing a chunk of that ‘Holy Grail’ to lab growns. The industry has to adapt to the changing world. It’s a combination of a cultural and business change that are driving each other,” Golan shared.
Can’t Turn Back The Clock “Rapaport has a tremendous self-interest in seeing the mined diamond business continue to thrive,” observed Hurwitz. “He’s trying to ensure that things never change. He wants to hold onto the tradition, but that’s futile.”
While Rapaport may be trying to valiantly to save the mined diamond industry, he may be doing more harm than good.
“The good news for the lab-grown diamond industry is that he appears to be going off the rails in his attacks, and as a result, fewer and fewer people are listening to him,” Hurwitz said.
“There is a consumer revolution happening because of lab-grown diamonds. As an industry, we must embrace the change and give consumers a choice.” he continued.
“Rapaport just wants to tell everybody that this product is good and that is bad. But the only voice that matters is the consumer. And the consumer is organically and very virally embracing this new product.”
Renani Jewels (India) has broken the dazzling Guinness World Records title for the most diamonds set on a watch in Meerut, India as verified on 29 December 2022.
The construction of this sparkly piece of jewellery started with hand drawn sketches to work out the design of the watch.
After the initial design was finalized, it was recreated in 3D as a computer-aided-design (CAD) and then printed.
All the diamonds were then meticulously placed onto the watch and it took five different forms of polishing to give it the desired look.
The watch is named Srinkia – the watch of good fortunes. Inspired by ancient Indian mythology, Srinkia means flower.
According to founder and CEO Harshit Bansal, it also signifies the Indian goddess of wealth and good fortunes – Lakshmi.
The end watch has 17,512 white diamonds and 12 black diamonds.
This beat the previous record set by Aaron Shum Jewelry Ltd. (Hong Kong) with 15,858 diamonds back in December 2018.
These diamonds were authenticated by an International Gemological Institute Lab (IGI) certificate to determine that actual diamonds were used.
The main challenge faced by Renani Jewels was the procurement of a huge quantity of diamonds with the same colour, size, shape and clarity.
To verify the record, each individual diamond had to be counted in the presence of a jewellery and diamond expert.
In accordance with GWR’s guidelines, the diamond had to be sourced from producers that are certified by the Kimberley Process Certification Scheme (KPCS), which prevents “conflict” diamonds from entering the mainstream market.
The end watch weighs 373.30 grams and is completely wearable.
Diamond records have proved popular in India, with the most diamonds set on a ring being broken by SWA Diamonds last May.
The new Tiffany Collection comprises 35 gems, including an unusual red stone, from the Argyle Diamond Mine in Australia.
About a year ago, a representative of the Argyle Diamond Mine — a site in Western Australia that was the pre-eminent source of pink diamonds until it closed in 2020 — approached Tiffany & Company’s chief gemologist with an unusual offer: the chance to purchase a collection of diamonds that were among the last stones taken from the mine.
The decision, Tiffany executives said, didn’t require much consideration.
“We had to do it,” Anthony Ledru, the brand’s president and chief executive, said in his bright office in New York’s Flatiron district. “It’s perfect with what we stand for.”
The purchase, which was finalized several months ago, involved 35 diamonds of various shades: pink, almost purple and even one red gem, an especially unusual color for a diamond. The gems, which had already been cut in various styles, “checked off all of those boxes: rarity, scarcity and beauty,” said Victoria Reynolds, Tiffany’s chief gemologist.
But the stones are small, ranging from 0.35 carats to 1.52 carats, considerably more petite than the statement-size gemstones frequently used in engagement rings and solitaire necklaces.
“These are small, there’s no doubt,” Ms. Reynolds said, “but for connoisseurs, collectors who understand how rare these are, it’s incredibly appealing.”
How much did the jeweler pay for what it now calls the Tiffany Collection? Mr. Ledru wouldn’t disclose the sum, but said it was “probably not enough compared to what it’s going to become in the next five, 10 years.” (He did note that it was Tiffany’s largest single purchase of 2022.)
Exactly how the diamonds will be used in jewelry hasn’t been decided, although Mr. Ledru said it was likely that they all would be used in one-of-a-kind designs. In the meantime, the diamonds are being shown to select clients in New York City and, next month, in Doha, the capital of Qatar.
The eventual prices are sure to be high. “You pay a premium for anything that says ‘Argyle pink diamond,’” said Renée Newman, an independent gemologist and author based in Los Angeles.
Two large high-quality diamonds – each larger than 50 carats – were unearthed in Yakutia on December 2, 2022, Bankers Day, “when Russian bankers celebrated their professional holiday,” according to Rough & Polished.
The two stones were extracted at Processing Plant No. 12 from the ore mined at the Udachnaya diamond pipe. One weighs over 67 carats, while the second diamond, a type IIa, weighs more than 52 carats,
Dmitry Amelkin, Alrosa’s Strategy Director, commented: “Finding two of these rare gem-quality diamonds on one and the same day is a unique coincidence. It is symbolic that this happened precisely on the Udachnaya diamond pipe, which has been accompanied by good luck since its discovery.
De Beers has made sharp price changes at this week’s sight, implementing deep reductions in larger goods and increases for smaller stones.
Prices fell by as much as 10% in 2-carat rough and above, with lower-quality items seeing the most significant drops, sources told Rapaport News Monday on condition of anonymity. Prices of diamonds under 0.75 carats rose by similar percentages, reflecting a market split that has persisted since late last year, insiders said. Sizes in between saw more modest declines.
“There have been quite wild increases and decreases,” one source said. “Not to say that they’re not justified, but it’s interesting that they’ve done that.”
De Beers declined to comment.
The adjustments follow months of sluggishness in larger, lower-quality rough as Chinese demand slumped during the country’s Covid-19 outbreaks and inflation dented mid-market US spending. Stones in the 3-grainer category and below have remained relatively strong due to steady sales of polished melee and Indian manufacturers’ efforts to fill factories with cheaper material.
De Beers kept its prices firm throughout 2022 despite the weakness in the larger categories, which constitute a significant proportion of its sales. This impacted profit margins at cutting firms, many of which perceived the miner’s rough to be expensive, insiders explained.
“These are the prices [at] which they should have been selling since October,” a sightholder commented. “It’s aligning with reality [rather than] reflecting a relatively poor end of year.”
De Beers is known for its reluctance to reduce prices during downturns, as was the case during the Covid-19 crisis. Now, as then, it has waited for a slight improvement in trading before taking action. China’s reopening has boosted sentiment, while the recent US holiday period was satisfactory, albeit slower than 2021’s record season.
The first sight of 2023, which runs Monday to Friday, comes amid uncertainty about the global economic situation, the Russia-Ukraine crisis, and the prospects for the Chinese New Year, which occurs on January 22.
It’s also a time of transition at De Beers, which is welcoming a new CEO, Al Cook, to succeed Bruce Cleaver on February 20 and is in the middle of negotiations with the Botswana government over an updated sales deal.
“Generally, things are a bit better than they were four or five months back, but that is because of low [polished] production, not because of an improvement of the market,” a manufacturing executive commented. “So the challenges remain.”
Sarine Technologies has agreed to acquire a majority share in New York-based Gem Certification and Assurance Lab (GCAL) amid a push to expand in the American market.
“At the beginning of last year, we started ramping up our activities in the US,” Sarine CEO David Block told Rapaport News on Thursday. “Due to that, the discussions with regard to this [deal] ramped up along with our involvement in the US market. This [deal] should be quite a significant jump in the scope of our business in the US.”
Israel-based Sarine has signed a nonbinding memorandum of understanding (MoU) to purchase the stake for an all-cash consideration, it announced in a statement on Wednesday. The parties plan to reach a final agreement in a few months once due diligence is complete, Block said. The companies have not disclosed the sale price or the size of the share.
GCAL will continue to offer its customers the same products and services as before the deal, and its executives will remain in charge, Sarine said.
However, while currently operating out of a single location in New York, GCAL will be able to implement Sarine’s e-Grading — an automated grading service using artificial intelligence (AI) — to develop the lab’s capabilities across the US and globally. The companies will begin integrating their technology and services even before the deal closes, Block explained. Sarine will continue to offer its services independently outside the US.
Founded in 2001 by Don Palmieri, family-owned GCAL is known for providing diamond certificates carrying a guarantee, rather than just reports that act as a description of grades. In 2021, it launched 8X, a cut-grading standard that it claims is more exacting than the industry’s triple Ex score.
“Sarine’s technologies will allow us to continue to abide by [our] key code of ethics while still expanding our services to meet the growing demand by consumers seeking confidence that their acquired products and services meet all norms of quality and sustainability,” said GCAL chief operating officer Angelo Palmieri.
Plummeting demand for cut and polished diamonds in the West and China has pushed some 20,000 workers out of work in the last one month in Surat, where 80% of the diamonds sold globally are polished.
Surat, the main centre of India’s diamond industry, offers employment to some 800,000 workers in its 4,000-odd cutting and polishing units. But work has been drying up, forcing the units to work at 60-70% capacity, said Damji Mavani, secretary of Surat Diamond Association (SDA). It also means fewer workers are needed.
“Fear is looming large in the diamond city of Surat whether the recession of 2008 will be repeated this year too,” said Bhavesh Tank, vice president of Diamond Workers Union, Gujarat. “Orders are fewer and so the workload is less. Therefore, the units are reducing workforce. Some units are cutting down work days so that they do not have to pay the workers on days when they are not working.”
According to Tank, nearly 20,000 diamond workers in Surat have lost jobs in the last one month.
The US is the biggest market for cut and polished diamonds, followed by China.
India’s diamond exports began slowing in November last year. According to data from the Gem & Jewellery Export Promotion Council (GJEPC), overall gross exports of cut and polished diamonds in the April to November period of FY23 declined by 5.43% from the year-ago period.
Another reason is the dropping price of the polished pieces. While the price of rough diamonds continues to be high, that of the polished ones have softened due to low demand, which is impacting the margins of diamantaires and forcing them to reduce workforce.
Mavani of SDA said the workers who have lost their jobs will find work in other areas. “There is a 30% vacancy in most of the factories,” he said.
However, there’s an air of uncertainty in Surat due to the fear of recession in the US, Europe and China. “We do not know when the situation will improve. It may take one year for a robust uptick in demand from overseas markets,” the SDA secretary said.
“With the pandemic in China making a comeback and there are no signs of respite from the war between Russia and Ukraine, inflation soaring in some parts of the world, we are out there for some tough times,” said Vipul Shah, chairman, GJE ..
Shah said the drop in price of polished diamond is eating into the margins of traders.
Traders said business in polished diamonds is also sluggish because of the seasonal lull, lingering economic uncertainty, and the slowdown in China. Although China eased its Covid-19 lockdowns last month, another outbreak stifled the recovery ahead of their Lunar New Year.
The start of 2023 marks a significant milestone in the digital transformation of the global diamond industry – the launch of the fully digital GIA Diamond Dossier, the most widely available diamond grading report in the world. The GIA Diamond Dossier is available for D-to-Z diamonds from 0.15 to 1.99 carats without colour treatments. Printed GIA Diamond Dossier reports issued before January 2023 remain valid.
Tom Moses, GIA Executive Vice President and Chief Laboratory and Research Officer, said, “The launch of the digital GIA Diamond Dossier report starts the conversion of all GIA’s laboratory reports to a modern digital format. This important change improves data security, offers efficiencies across the supply chain and reduces our reliance on paper.”
The first digital GIA Diamond Dossier report was issued at the GIA laboratory in Ramat Gan, Israel, on Monday, 2nd January 2023. More than 33 million printed GIA Diamond Dossier reports were issued since the introduction of the service in 1998.
Pritesh Patel, GIA’s Chief Operating Officer, added, “In 2025, when all GIA reports are digital, retailers and consumers will find greater convenience and a more immersive experience. Eliminating printed reports is an important advancement, reducing the impact of using, shipping and storing the nearly 40 tons of paper and plastic that go into printed GIA reports each year.”
The secure digital GIA Diamond Dossier is available in the reimagined GIA App or on computers, tablets and phones through the robust and secure online GIA Report Check Service and the GIA advanced application programming interface (API) for commercial users. The digital report service includes a Report Access Card with the report number, a QR code linking to the digital report and 4Cs information to embed into receipts, invoices and e-commerce sites.
The new GIA App is widely available for Apple and Android devices. The Android app for China is in development and will be available at a later date. The GIA Match iDTM inscription matching service is expected to be available in the first half of 2023, accessible exclusively through the reimagined GIA App.
Printed GIA Diamond Dossier reports issued before January 2023 remain valid.
Chroma Diamonds founded by Alexander Appels and Jan De Henau is a relatively new company in the Antwerp diamond district, which specializes in colored diamonds. Stymied by the relatively “subjective process of color grading”, the 2 have set out on a mission to develop a device that provides more objective measurements for the grading of colored stones.
The device will utilize AI gathering data points and becoming smarter with each new set of inputs. They believe with sufficient time the device would learn enough to be able to more accurately grade certain stones, especially in resolving cases where certain grading criteria place the value of diamond on the edge of a color category but not quite enough to satisfy it being classified in the next grade above.
“Customers come to us with high expectations. After all, the value of their diamond is determined by, among other things, the color and intensity of that color, and let it (partly) depend on the cut and the people in the grading office, we hear. Because it is they who assign the diamond an official color, and therefore also determine its value definitively,” explains Appels.
Though this idea is not new to the Diamond District the duo has taken things one step further receiving support from the innovation process of the City of Antwerp. They plan on using and testing the device in their own business first as proof-of-concept before taking it to the greater market.