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Synthetic diamonds assault jewelry market

08 october 2007

In September, the attention of Rough&Polished experts was attracted by the largest in the world plant put into operation in the USA to make synthetic diamonds. According to Rapaport, the plant may produce tens of thousands of diamonds in a year. It was immediately clear to the experts that the plant belonging to Gemesis Corporation (located in Sarasota, Florida) employed the Soviet technology called BARS, a press-free high-pressure split-sphere installation.

All diamond dealers know that in the early 90s the world diamond market saw the inflow of experimental synthetic diamond samples of jewellery or near-jewellery quality from the countries of the former USSR. These samples were then examined at reputable gemological laboratories and particularly at the Gemological Institute of America (GIA). It was stated that these crystals despite their immanent distinctions from natural diamonds (specific growth elements, catalytic residues, etc.) could be identified as imitations neither by ordinary diamond dealers nor so much by ordinary consumers of diamond jewellery.

The leader in the diamond industry - the De Beers Company – fearful of possible irruption of fakes developed two devices to detect synthetic diamonds: Diamond View and Diamond Sure. The “naturalists”, being adherents of natural stones, took their time getting ready for a war against synthetics. The “synthetists”, those in favour of synthetic stones, threatened to inundate the market with their products and to occupy up to 25% of the retail diamond market, which would be equivalent to $20 billion a year. This subject was highlighted in print media and at various conferences during the last years. Particular attention was paid to technologies alternative to BARS, for instance CVG and FG, which however were able to produce only brown (near-jewellery quality) diamonds. The “synthesizers” placed their main stake on BARS.

Technology
In 1989-1991, the scientists of the Institute of Geology and Geophysics belonging to the Siberian Branch of the Academy of Sciences of the USSR developed a laboratory version of mainstream technology for manufacturing synthetic diamonds based on the BARS temperature gradient, the Russian abbreviation standing for “Split Sphere” Press-Free Installation. Scientifically, this technology is defined as “the method of diamond crystallization from carbon solution in temperature gradient environment in an iron-and-nickel metal melt under high pressure”. Essentially, this method employs press-free installations permitting to synthesize diamond monocrystals weighing over 0.5 carats from a special charge mixture. This unique process is going under the pressure of 60 000 atmospheres at 1800°C. In the center, there is a cylinder-shaped reaction cell of about 2 cm3 made of zirconium dioxide based ceramics. The cell is put into a cubic working body, which is contracted by elements made of BK-10 hard alloy. The octahedral cavity is contracted by 8 steel sectors. After assembly all this is enclosed into a washer-shaped barrel, its diameter being just a bit more than 1 meter. The barrel is then filled with oil, which after being heated starts to produce pressure growing towards the central cell. The central cell is heated via a coaxial graphite electric heater. Temperature is measured by way of a thermal couple with external automatic control.

In 1990 due to absence of necessary financing to complete the development of this technology and to make it commercial, the scientists of the Institute of Geology and Geophysics turned to Promstroybank of the USSR for assistance. The parties agreed to implement this project in Minsk with the participation of Byelorussian Joint-Stock Commercial Industrial and Construction Bank (its Chairman of the Board was N. Ya. Rakov), a subsidiary of Promstroybank of the USSR, as its partner and major investor.

In November 1990, the bank established the Adamas Company, a scientific-and-technical small-business enterprise, which in the course of three years was engaged in development works aimed at improving the production technology. Obtaining positive results for commercial production of diamonds, in April 1994 they set up Scientific and Production Amalgamation Almazot with participation of Adamas, Scientific and Production Amalgamation Monocrystal C, Production and Commercial Firm Imep, Sedtraf Company and Production and Commercial Firm Ebilit. The project made provisions for setting up 360 installations in a building of 12 000 m2 on a territory of 3.3 hectares. Putting into operation the first line for production of 0.5 – 1.2-carat diamonds would permit to turn out seven thousand carats of raw stones per year.

After the break-up of the USSR in 1990, the experts from Novosibirsk tried to launch production both in Siberia and in Moscow.

In 1998, this technology was passed over to the USA and to other countries (Belgium, Spain) and thus started to trot the globe.

Byelorussia
Byelorussian President Alexander Lukashenko took synthetic diamonds under his protection.

His country adopted a special national program to develop production of synthetic diamonds. In particular, it is codified in two documents: 1) Decree No. 668 of the Council of Ministers of the Republic of Byelarus as of May 21, 2003 “On additional measures to preserve and develop the synthetic diamonds production facilities of the “Adamas BGU” Scientific-and-Production State Unitary Enterprise and 2) Decree No. 1170 of the Council of Ministers of the Republic of Belarus as of October 22, 2005 “On some matters concerning the “Adamas BGU” Scientific-and-Production State Unitary Enterprise”.

In 2000, the company started to produce diamonds (there were 43 installations operating at that time). The company paid back 3.4 million dollars by way of supplying necessary equipment; they set up 120 installations for growing diamonds and completed the program aimed at improving the technology and expanding production capacity.

Nowadays the average monthly turnout of synthetic diamonds reached 750 carats. Vladimir Fedorchenko, Deputy General Director, told Rough&Polished that during the last year the quality (the share of jewellery-quality stones) of synthesized crystals doubled, while the output increased 4 times.

In autumn 2007, the state of affairs in this industry may be described as follows.

Since rough synthetic diamonds and polished synthetic diamonds do not fall under the law on precious metals and precious stones, the Byelorussians deemed it possible to introduce a simplified classification for their stones.   

According to their defects, raw diamonds are divided into 7 groups (See www.adamas.by) while polished diamonds are divided into 3 groups:
1)      free of any visible impurities
2)      containing insignificant impurities visible to the naked eye
3)      containing significant impurities visible to the naked eye

Due to absence of templates, the colour classification of diamonds was also simplified to fantasy-yellow-brown being the basic colour of crystals.

The following colours are possible after additional technological treatment:
-         light yellow;
-         lemon;
-         light green;
-         green.

According to Byelorussian estimates, the cost of a one-carat stone should not exceed 70 dollars per carat and for 3-carat stones it may go up to 300-400 dollars per carat. However, during the International Gemological Conference in Moscow on July 16-18, 2007 the Byelorussians quoted “higher prices as compared to the prices for natural diamonds of similar colour and size” (this information was provided by Yu. Shelementyev, Deputy Chief of the Gemological Centre of the Moscow State University).

USA
In 1998 N. S. Patrin, V. V. Kachalov, A. P. Novikov, Yu. L. Gorban, all of them former executive officers of Adamas BGU, who emigrated to the USA, were invited to Gemesis to organize a production line. The company was incorporated in 1996 and was dedicated to production of synthetic stones. Its founder, Brigadier-General Carter Clarke, invited experts from the CIS and paid $170,000 for three BARS installations. He secured scientific support from the University of Florida in Gainesville.

Almost 10 years were spent to build the plant and to put it into operation. Judging by the ads on their company site, they manufacture yellow diamonds of bright shades. Mass media report that   special collections with synthetic diamonds were put on sale by several jewellery firms. Thus, Pintura Diamonds announced the release of Val Collection. The South-African Cultured Diamond Company is promoting the Savannah brand based on combination of yellow synthetic diamonds and 18-carat white gold. Tyrin Rose, orthopedic shoes designer, fell for synthetic diamonds and created a jewellery collection on their basis.

However, there is no data on retail sales published in mass media or on the company’s site.

Russia
ZAO High Optic Technologies (HOT) was incorporated in 1999 in Moscow on the basis of DUKS, a military plant (former Kommunar). There is no information about HOT in Internet. The company’s Commercial Director Andrey Kostyayev flatly refused to disclose technical capacities of his firm and would not let visitors to the workshop. However, he explained for Rough&Polished that white transparent diamond crystals are produced exclusively for the purposes related to science and technology. The company does not plan to supply such monocrystals for jewellery. This is a principled position. According to Mr. Kostyayev, “as far as the transparent monocrystals are concerned, there is nothing which can prevent from passing off synthetic stones as natural ones, especially high-class synthetic stones which are virtually undistinguishable from natural diamonds. Unfortunately, we have had unpleasant incidents because of indecent customers who violated contract terms. For us it is more profitable to produce monocrystals doped in volume – by the way, no one is trying to pass them off as natural ones. Once we polished our low-nitrogen transparent monocrystals for our own collection – they passed their certification at reputable laboratories (in Europe and in the USA as well). Their colour was in the D-F range. Their size was 0.5-1.2 RB, their clarity was VVS1-SI1. The certificates were issued as for natural stones.

 

World park of BARS installations in 2007

-         Gemesis (USA): 100

-         Adamas (Minsk): 60 (+ about 100 half-assembled)

-         HOT (Moscow): 30

-         Institute of Monocrystals (Spain): 6

-         Novogema (Novosibirsk): 5

-         Diamond High Council of Belgium: 1

-         others: up to 10

Total: about 300

It takes approximately 100 hours to synthesize a 1-carat diamond in the BARS installation. It is quite possible to complete 6 cycles in a month, producing 6 carats of diamonds. One year will yield 70 carats. Thus, the production capacity of the world diamond-manufacturing machinery park equals to 20 000 carats per year. Approximately, this amounts to 10 000 carats of bright yellow diamonds belonging to the 0.5-carat group. It is estimated that modern installations and technologies of diamond synthesis permit commercial production only of bright yellow crystals. The most popular white diamonds are so far defying their commercial output. Of course, 10 000 carats of yellow diamonds are a negligible quantity for the world jewellery market. If we assume the average price of synthetic diamonds to be 1000 dollars per one carat, it means that maximum wholesale revenue will amount to 10 million dollars, which does not exceed 0.1% of the world diamond market.

However, what is the future of the synthetic trend in the world market of jewellery diamonds?

In the first place, it should be noted that synthetic diamond adepts are keeping a very low profile and this gives a solid ground for suspicions.

Secondly, the myth of utterly low-priced synthetic diamonds has been dispelled: they are not cheaper than their natural analogues. The high price of synthetic diamonds proves that reconstruction of natural conditions, which existed in magma pockets of ancient volcanoes (the birthplace of natural diamonds), is very difficult in modern environment; obviously, the processes going on inside BARS installations are unstable, non-reproducible and uncontrollable.

Thirdly, investors were not enticed by the opportunities connected with synthetic diamonds. One year ago, Gemesis, which depleted the resources of its owners, announced an IPO. However, it never went in for it. Danielle Rossingh, an analyst of Bloomberg, told Rough&Polished that despite their basic intention they did not manage to decide as to when, where and how it could be done.
Rough&Polished