As our readers probably know, osmium is one of the platinum group metals (PGM) that is relatively rare, not very useful, and it gave a name to a German light bulb manufacturer Osram. What you probably don't know however, is there exists an organization that decided to create a whole new market for osmium from scratch, and more or less take it all to itself.
What diamonds have to do with osmium, you ask? It will become clear later in the article and, spoiler alert, the diamond market is again targeted to pitch a new product to potential buyers.
I came across this topic when researching PGM markets for one of my previous articles published in Rough&Polished and it is surprising how long it stayed under the radar. The organization in question not only has a presence in more than a few countries across different continents, but seems to constantly be on the move and pushing its newly-created asset to investors and consumers alike.
Introducing the Germany-based Osmium-Institute.
The Institute
First, I have to briefly dive into the history of osmium, our asset in question. It is a hard, brittle, bluish-white metal which is the densest naturally occurring element. Osmium is also one of the least abundant stable elements in Earth's crust, with an average mass fraction of 50 parts per trillion in the continental crust. Unlike the rest of PGMs, it didn't find any substantial use, and is utilized primarily for very hard and wear-resistant alloys, and earlier in light bulbs with osmium-tungsten filament, giving the Osram company founded in 1919 a part of its name. Osmium is usually produced commercially as a by-product from nickel and copper mining in a form of powder, and it is toxic to humans.
However, the story of osmium as an investment asset (and the story of the Osmium-Institute) began much later. In 2013, a group of scientists in Switzerland found a way to crystallize osmium, a process that renders it non-toxic and safe to handle. The new invention needed a commercialization, which didn't take long to kick off. Ingo Wolf, a German scientist and serial entrepreneur, took upon himself the task of bringing a new osmium product to people.
According to Bloomberg's article and interview with Mr. Wolf, he bumped into the secret future laboratory collaborator at a Munich commodities conference in 2013, and next year with a signing of an exclusive contract, the business was born, and not just any business. It's a whole Osmium-Institute! But it gets better. There's an Osmium World Council, too!
Sounds professional and official, similar to industry-wide trade organizations, like, for example, the World Diamond Council. But there's a problem. There is no other company in crystallized osmium business apart from Mr. Wolf's Osmium-Institute and its exclusive contract with the secretive Swiss lab.
"Wolf guards his proprietary method so closely that he implores me not to disclose his chemist partner’s name or their lab’s location in Switzerland," reads the Bloomberg article.
Why be so pompous? Why the Institute, and why the World Council? The answer is quite simply marketing.
The Pitch
You see, if you want to sell a new product, you need to pitch it to consumers. The product is flat discs and sheets of crystallized osmium ranging from a couple centimeters in diameter that cost anywhere from $2700 a piece. They can be cut into shapes to be used in jewellery thanks to an effect proudly called the "Osmium sparkle" and directly compared by the Institute to the diamond sparkle, in favor of the former of course.
Let us sum up the features of the product. It is relatively new and seemingly innovative, it is rare and expensive, and it is a novelty item that no one has found a real use for yet. Creating an "Osmium Trading Ltd." or something just would not cut it, but you know what will? The Osmium-Institute (yes, with a dash). Add the Osmium World Council in the mix for good measure. Who would not trust the favorable opinions about osmium from organizations with such prominent-sounding names?
But do not just take my word for it, let us go on a tour across the Osmium-Institute's website together, it is spectacular. A first-time visitor is presented with pictures of women holding something that looks like small pieces of 100-grit sandpaper. Scrolling down the somewhat barren page we mostly find the information on how to become an osmium reseller but are immediately notified about the fact that the Osmium-Institute "is a way to ensure a standardized trade with crystallized osmium" and "osmium can only be placed on the international market" by the Institute with the main goal being "maximum security for end customers and jewelers".
The security and certification of bespoke osmium discs seems to be a big deal for the Osmium-Institute. Basically every website connected to Mr. Wolf's organization in one way or another (of which there are quite a few) mentions the meticulous process of documenting every single piece of crystallized osmium - which is produced in one single lab, and distributed by one single organization. Also for security purposes, the production process was never patented, according to the Institute. There is virtually no chance of counterfeits ever appearing on the market in these conditions. Because the Osmium-Institute is the market.
Enter the 'Osmium Diamonds'
What comes to mind when you think of something that is rare, expensive and also sparkles brightly? A lot of people would naturally think of diamonds. Now, imagine you have a new product that you desperately need to sell to customers that can be described in a similar manner. However, it's not enough to just compare it to diamonds - it needs extra features, it needs to be "Diamonds 2.0" if possible.
Just in March this year, when I was writing my previous article mentioning crystallized osmium, one of the Institute's main websites was talking about (and offering) 'Osmium Diamonds', a term that unfortunately was all but removed from it since. There is one passage where it stayed however and in my opinion, it is brilliant.
A section of FAQ titled "What are diamonds worth, anyways?" is a usual story about the diamond industry's shortcomings and a poorly-executed effort to convey the fact that natural diamonds are becoming worthless thanks to lab-growns. To top it off and add credibility to the whole passage, the Institute makes a very scientific calculation on how to create enough carbon for a synthetic diamond by breathing (!), the point being that everything can be made into a diamond, while the supply of osmium is finite.
"For this reason, it is simply better to buy the unforgeable and unmistakable osmium diamonds," it says about identical-looking discs of crystallized metal produced in a lab.
The Worth
Okay, the supply is osmium is, in fact, low and finite. It is also extremely rare and not much of it is produced every year. Let us look at some osmium market trends however.
There are none. Osmium trade is obscure and almost nonexistent apart from sales directly from producers to laboratories and manufacturers for highly specialized applications. There is no open market for regular osmium due to its biological toxicity and a lack of commercial uses. Some earlier accounts suggest that its price was lower than that of gold, while others say there were no notable price fluctuations for years.
Still, according to one research, osmium market may actually grow in the coming years with a CAGR of 3.8% to reach $856 million by 2030. By comparison, the world diamond market is expected to grow by a smaller figure of 3.2% a year. The value of the 'worthless' diamond industry however may reach $123.8 billion by 2030.
Let's forget about the market for regular osmium for now, and instead look at what the Osmium-Institute has to say about prices. After all, they have their own unique product. In June this year, the Institute announced a 35-percent price decrease for their crystallized osmium products, calling it a 'fork' (a term most commonly used in cryptocurrency market) and citing improved production methods as the reason for the discount. This kind of reminds me of another industry of lab-grown products that we are all too familiar with and which, notably, also faces big discounts.
No One Asked For it
I get it, the Osmium-Institute's game may be a long-term one. It is possible that in 50 years, the price of osmium will skyrocket. Maybe in 70 years a cure for cancer will be developed based on osmium. For now though, let us just concentrate on facts at hand.
The product - crystallized osmium - was created but no specific use cases were found. A shrewd individual(s) saw an opportunity to commercialize it, securing all supply of the product in their hands. An organization that has access to all of the supply of the product was established with a purpose of promoting it, thus creating an artificial market by a virtue of marketing for a product no one needed. If a diamond industry pulled this marketing game off once, why can't they, right?
And this is where both the Osmium-Institute and lab-grown diamond companies make a mistake. You cannot really prosper for long if a core message of your business is the criticism of an existing market you are trying to compete with. For now, 'Osmium Diamonds' seem to be little more than expensive novelty collectibles.
Theodor Lisovoy, Editor in Chief of the European bureau, Rough&Polished
