GIA is to close its lab in Ramat Gan, Israel, saying it is no longer “financially sustainable”.
The facility, which opened in August 2012, will close by the end of this year. Submissions will be sent to GIA labs elsewhere, with no additional shipping costs, the lab said in a press statement.
GIA was not able to say at this stage which other labs it would use (Dubai is the closest), or how much extra time that would take.
“Despite reductions in operating costs and reduced staffing through attrition, the laboratory is not financially sustainable,” said GIA, which grades the majority of the world’s polished diamonds.
“The GIA laboratory in Ramat Gan, Israel, will end operations by the end of 2024 due to changes in the global diamond industry that resulted in significant declines in submissions from local clients over the last several years.”
GIA closed its Antwerp lab in July 2022, citing “limited demand for services and financial performance that did not support continued operations”.
It also has labs in Bangkok, Hong Kong, Mumbai, Surat, Tokyo, Carlsbad, New York, Dubai, Gaborone and Johannesburg, according to its website.
From 17 November submissions to the Ramat Gan laboratory will be sent elsewhere. “GIA is working to establish a third-party process to accept submissions from walk-in clients in Ramat Gan for service in other GIA laboratories,” the lab said.
Since early 2022, the price of polished natural diamonds has fallen approximately 40% and the industry is being buffeted by negative economic headwinds, an excess of mine supply and too much stock in the cutting centres. However, there is one statistic that cannot be ignored: around 50% of Diamond Engagement Rings purchased in the United States now contain a Lab Grown Diamond (LGD). Is this just another cyclical downturn or are we in the middle of a major structural change?
Diamonds were once the preserve of royalty and the uber-wealthy, but the diamond market has evolved over the past 80 years into more of a mass market product with democratisation of the diamond consumer. Since the late 1970s most polished diamonds below 5 carats were priced against the 4 ‘C’s’ (carat, clarity, colour and cut), which led to standardised pricing in the form of polished diamond pricing lists. Up until the turn of the century these lists were primarily available in the wholesale market, but the arrival of internet pricing soon gave the consumer access to that same standardised pricing. In a world where everyone knows the price of everything, branding is the only differentiator. Without a differentiator, commoditised products end up selling for the lowest price.
It was why one of the questions that De Beers tried to answer when it changed its business model 25 years ago was: “How do you take a necessity (the diamond) priced like a commodity and market it as a luxury priced like a brand?”
Unfortunately, that question remains unanswered. The industry did create hundreds of so-called ‘brands’; origin, cut, settings, etc; the problem was that very few of them were real “brands”. If something does not sell at a premium, it’s not a brand, and most natural diamonds sell at a discount, yet the more that the industry was unable to achieve a premium, the more it becomes fixated with talking about the “product” when the luxury world has spent the last 25 years talking about “values”.
The challenge for most jewellers is not making a sale, it is making a reasonable margin. Ask a jeweller what they are selling and if they reply “VS1, G-H colour, loose polished, 1-caraters” then the most relevant word in their business will be “discounting”, because what they are selling is a commoditised version of “crystallised carbon.” There is no differentiator.
The LGD industry realised that to succeed it simply needed to persuade consumers that natural diamonds and LGDs were the same – “optically, physically and chemically”, but to also position them as “slightly cheaper”. They could then ride on the back of 80 years of De Beers diamond advertising differentiate themselves by claiming that LGDs were “conflict free”.
A larger “ethical” LGD for the same money as a natural diamond or pay less for the same size, created a money printing machine for everyone involved. And it’s no surprise that LGDs real success has been in the United States, because historically America has always been a “discount market”, and “larger for less” plays to that tune.
If all you want in a diamond is the sparkle, then they are in essence the same. Except there is a very real difference between the two, which is why some LGD executives insist on calling natural diamonds “earth mined” diamonds, because “natural” is exactly what differentiates them. The story of their age, rarity, origin; their social and economic contribution but above all, their “social purpose”. It was the failure of the natural diamond industry to tell that story which opened the door to LGDs.
When LGD production exploded, wholesale prices collapsed to around a 95% to 98% discount to their natural diamond equivalent. Prices vary according to quality, but anecdotal evidence suggests that today in the wholesale market, it is possible to buy a single polished LGD for $150 a carat, buy in volume and its possible to pay as low as $80 a carat.
Many retailers have also dropped their LGD prices, but by no means as far, and even pricing LGD at a 20-40% discount to their natural diamond equivalent can still leave a very significant margin. Pandora will sell you a 1-carat LGD ring for $1,950. Helzberg Jewellers (a Warren Buffet company) will sell you a similar LGD for $1,999. It’s very likely that some in the LGD industry are making a gross margin of 200%, some much more for a product that Signet Jewellers sensibly cautiones it customers “Their relative abundance may not ensure the value will hold over time”.
Whatever happens to future LGD retail prices, the category has got itself into the American consumer psyche and that won’t easily change, although there are also two sides to this story. I heard of a jeweller who was recently asked by a HNWI to make a replica of her 8-carat natural diamond ring so she could wear it travelling. The original ring cost $500,000 but he sourced an equivalent LGD for $5,000, and apparently she was absolutely thrilled with it. The question is, will she buy natural again? On the other hand, if in the future a consumer could buy (for example) a 2-carat LGD engagement ring for below $200, how pleased would their fiancé be to receive it – Walmart recently had a 2-carat LGD ring for sale for only $257. How romantic!
The US bridal market (size over quality) is dominated by larger, lower quality diamonds. Since similar sized LGDs are cheaper (or you get a much better quality LGD), either that market disappears, or demand only reappears aner prices have fallen sharply (already happened). It is also likely that LGDs will replace small, lower quality natural diamonds in fashion jewellery – as they may replace the smaller stones in high-end pieces of natural diamond jewellery. Diamond mining companies whose profitability rely on these categories of diamonds probably need to find a new value proposition, or their days may be numbered.
For those in the natural diamond industry who can adapt, there is huge potential. For those that don’t, as the saying goes, “Kodak never saw it coming either”.
Except Kodak did see it coming; they just didn’t know what to do about it. Kodak was killed off by digital photography which ironically, they invented, patented, but didn’t know how to exploit it, so they franchised the technology and made a fortune until their patents expired, and then went bust. Have LGDs done the same to natural diamonds? “No”, the opposite; their success is forcing a complacent industry to change. Have they changed the paradigm? “Completely”.
New Delhi: India’s lab-grown diamond industry is facing challenges such as significant fall in prices, eroding consumer interest and competition from imports, think tank Global Trade Research Initiative (GTRI) said Sunday, adding said that though India faces the issue of production overcapacity, it continues to import in large amounts and this issue needs deeper investigation.
To address these challenges, the government needs to take certain steps such as setting clear and consistent rules to standardize quality, certification, and market practices; issuing a Quality Control Order to check quality of imports; and investment in research and development to improve production processes, reduce costs, and enhance the quality of lab-grown diamonds.
As per the report, India’s lab-grown diamond industry is facing a major challenge, with prices falling by 65% in the past year to Rs 20,000 per carat from Rs 60,000 due to local overproduction and oversupply from abroad, which points to problems like overproduction, high imports, and lack of regulation. The number of units producing lab-grown diamonds in India has increased to 10,000 units, leading to over supply and tougher competition.
The industry lacks clear regulations checking such practices, making it hard to ensure quality. Lack of proper certification, and low trust market operations could slow down the industry’s growth, according to GTRI founder Ajay Srivastava.
He added that 98% of India’s imports of rough lab-grown diamonds come from Hong Kong (63.7% or $728.2 million) and the UAE (28.5% or $326 million).
In FY24, India imported rough lab-grown diamonds worth $1.14 billion and exported cut and polished ones worth $1.3 billion.
Natural diamonds cost around Rs 3.5 lakh per carat and this price drop is making it difficult for manufacturers to repay loans taken for purchasing lab-grown diamond making machines, putting them under financial strain, GTRI said.
GIA says it has expanded its new verification service – aimed at combating “cloned diamond” fraud – to all its labs.
The Report Confirmation Service was launched last month in New York to identify lab growns being submitted for regrading as natural diamonds.
GIA says the service is now available at all locations. It will accept walk-in and courier submissions, will turn around loose diamonds in as little as 15 minutes, and will, initially, make no charge.
The service is available for GIA-graded diamonds with and without inscriptions. An original GIA cert is helpful but not essential.
An increasing number of lab growns are being fraudulently submitted for re-grading. They are cut to match the specifications of natural diamonds that have already been graded and inscribed with either with a GIA number (genuine or fake).
“Combatting this fraud is vital to protecting the public and ensuring their confidence in gems and jewelry – this is GIA’s mission,” said GIA president and CEO Susan Jacques.
Gemological Science International (GSI) has issued a warning to the trade after coming across a “notable increase” in jewelry set with pink, yellow and brown lab-grown diamonds posing as natural.
The jewels, which have been submitted to the lab for grading, often contain synthetic stones mixed in with natural colored diamonds, Debbie Mazar, president and cofounder of GSI, explained Tuesday. Many of the undisclosed synthetics were type IIa, with a single nitrogen atom, and ranged in size from melee to 1 carat.
Additionally, some of the lab-grown diamonds were intentionally cut to mimic natural ones, GSI noted. The GSI observed several with fractures, pinpoint clouds, polish-overs and distinct brown grain lines, features found in natural diamonds, which would potentially enable the fraudulent stones to pass standard gemological evaluation, GSI said.
“The challenge arises as most jewelry-screening equipment in the market is designed to screen white, near-colorless diamonds,” Azar explained.
The advanced technology in diamond growth is contributing to increased success by growers in replicating natural diamonds more and more, GSI added.
GSI’s warning comes on the heels of several from other labs. In December, Italian grading lab Gem-Tech cautioned that it had encountered a number of lab-grown stones circulating bearing fraudulent inscriptions from the Gemological Institute of America (GIA) for natural stones. Last month, the International Gemological Institute (IGI) examined a 6.01-carat lab-grown with a GIA laser inscription for a similarly cut natural, while the GIA reported it was taking steps to combat the recent influx of lab-growns bearing fraudulent inscriptions from the lab by offering same-day report verification.
The International Gemological Institute’s laboratory in Tel Aviv recently detected a 6-carat lab-grown diamond that someone apparently was hoping to pass off as a natural stone.
The 6.01-carat, pear-shaped synthetic diamond was fraudulently inscribed with the Gemological Institute of America report number for a G-color natural diamond of the same size and shape, but with a few key differences, IGI said in a news release issued Tuesday.
First, the lab said, photoluminescence (PL) spectroscopy, which is now widely used by grading labs to separate natural diamonds from lab-grown stones and to identify diamond treatments, shows a wavelength peak of 737 nanometers in the diamond (see chart below).
This is an indicator that the diamond was grown in a factory using the chemical vapor deposition process.
IGI photoluminescence spectra The photoluminescence spectra for the 6.01-carat lab-grown diamond recently examined by the International Gemological Institute
Second, when examined under a microscope, IGI graders saw a carbon inclusion where the feather was indicated on the clarity plotting diagram in the GIA report.
They also noticed a cloud inclusion, resulting in IGI giving the lab-grown diamond a lower clarity grade than VVS1, the clarity grade of the natural diamond.
Lastly, there was a discrepancy between the depth of the diamond IGI examined and the depth noted on the GIA report.
“Everyone in our industry must be vigilant,” said IGI CEO Tehmasp Printer, who took over as head of the lab in October after Roland Lorie retired.
“As attempted fraud increases, the need for ongoing verification is a necessary step to protect consumers from purchasing misrepresented gems and jewelry.”
Hong Kong authorities have arrested four people suspected of running a money-laundering syndicate that falsely declared synthetic diamonds as natural.
The operation, which authorities codenamed “Gem Crusher,” was the first money-laundering case using transnational diamond trading the Hong Kong Customs and Excise Department has detected, the government organization said Thursday.
On December 19 and 20, customs raided eight premises across multiple areas in Hong Kong, including residential and business locations. So far, authorities have frozen HKD 8.2 million ($1.1 million) in assets belonging to those in custody.
Hong Kong customs officials were alerted to the scheme earlier this year and launched a financial investigation, exchanging information with authorities in India, the department explained.
Members of the crime syndicate had established diamond-trading companies in both Hong Kong and India. Throughout 2021, the syndicate exported low-value lab-grown diamonds from Hong Kong to India with fictitious declarations presenting them as high-value naturals.
The purpose was to “transfer significant amounts of suspicious funds from India to Hong Kong,” authorities alleged. The suspects laundered around HKD 500 million ($64 million), the department claimed.
During the raid, customs seized a “large quantity of suspected synthetic diamonds, a small quantity of natural diamonds, about HKD 1 million [$128,055] in cash, a number of mobile phones, computers, company [seals], checkbooks, bank cards, bank documents and trading documents” from the four suspects, authorities said.
The four men — believed to be the “masterminds, ring leaders and members” of the syndicate — were arrested on suspicion of “dealing with property known or reasonably believed to represent proceeds of an indictable offense.”
The investigation is ongoing, and further arrests cannot be ruled out, customs noted.
Italian gemological lab Gem-Tech has warned the trade that a number of lab-grown diamonds circulating in the country are being sold as natural.
Three stones were submitted to the lab accompanied by certificates from the Gemological Institute of America (GIA) stating they were natural, Gem-Tech said last week. Gem-Tech weighed the stones and found them to be nearly identical to those recorded on the GIA certificates. The stones also had laser inscriptions with a visible GIA logo that matched those the lab had seen before from other GIA-graded stones, Gem-Tech explained.
However, further investigations indicated the stones had been fraudulently paired with the grading reports, while the inscriptions appeared to be forgeries.
When the Italian lab exposed the diamonds to ultraviolet light to detect fluorescence, it discovered that the stones were inert, whereas the reports described the level of fluorescence as “faint.” The diamonds were then checked using spectrophotometric analysis and displayed a distinct greenish coloration and other characteristics commonly found in synthetics created using chemical vapor deposition (CVD).
Once the lab checked the report numbers against the GIA website, it realized they were issued for other, natural, stones that were just slightly different than those submitted to Gem-Tech.
“Gem-Tech has seen this happen before,” the lab said. “It would not be the first time that malicious individuals obtained reprints of authentic reports and paired them with stones other than those described.”
Although there were only three stones submitted, Gem-Tech believes there might be more, it told Rapaport News.
“The client who submitted them for identification reported that these stones were not the only ones being offered,” the lab added. “Other dealers have mentioned that these three synthetic diamonds, identifiable by their report data, have been presented in other parts of the country.”
The Gemological Institute of America (GIA) has cut some 20% of the workforce at its Carlsbad, California, headquarters amid a prolonged slowdown in the industry.
In late July, the lab let 151 employees go, primarily in its laboratory, as well as some in corporate positions, Stephen Morisseau, the GIA’s director of communications, told Rapaport News Sunday. The lab made the layoffs as a result of a drop in the number of diamonds submitted for grading.
“Many organizations in the global gem and jewelry sector are experiencing a downturn due to economic conditions affecting the global gem trade,” Morisseau explained. “Due to those economic conditions, there has been a decline in demand for GIA’s gem identification and grading services, which led to the difficult decision to reduce staffing.”
The layoffs will bring the GIA’s total workforce in Carlsbad to 600, according to The San Diego Union-Tribune, which was the first to report the story. Globally, the lab has approximately 3,500 employees.
“The reductions will not affect our ability to advance our important consumer-protection mission, nor to meet the needs of our clients,” Morisseau added.
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.
