(pro.rbc.ru) - According to the Ministry of Finance of the Russian Federation, the number of instances with synthetic diamonds passed off as natural diamonds has increased dramatically in the jewelry market. However, this is a problem not only for Russia. This last August, the Gemological Institute of America (GIA) received a parcel of small diamonds, in which only one turned out to be natural, while the remaining 1092 stones were synthetic. The GIA called this a precedent, as previously it received parcels where artificial stones were admixed to natural stones, and not vice versa.
“Until recently, neither the state agencies, nor the jewelry community held forth the problem,” said Alexander Shaburkin, General Manager of Rough&Polished. - In any case, there was actually no information about such incidents in mass media. The fact that there are more and more attempts to pass off lab-made rough and polished diamonds as natural and that there is no widespread access to devices, which can identify counterfeits, has started to be discussed quite recently.”
However, the authorities, jewelers and diamond miners can be understood in this regard, because if consumers will get wary of buying fakes and thus refuse to buy anything at all, this could be catastrophic for the industry taking into account the declining sales since 2014. However, the situation changed literally in the course of the past six months, as the synthetic theme was initiated by De Beers, the world’s most famous diamond mining company, which controls 40% of this market.
In May this year, De Beers announced that it would be selling not only natural diamonds, but also lab-made stones. To do this, De Beers has launched a separate brand, Lightbox, which started to sell jewelry with synthetic diamonds. The company is positioning such ‘trinkets’ as bijouterie, which can be worn every day or be given as gifts to children on holidays.
In Russia, this news caused not only heated discussions in the professional environment, but also made the authorities and diamond mining monopolist ALROSA to stir their stumps. At the same time, Russian jewelers not only highly appreciated the prospects of De Beers’ new initiative, but also spoke openly for the first time about fakes, as well as about the threat to the mining industry.
“The development of diamond synthesis techniques and the reorientation of synthetics producers from industrial diamonds to jewelry in the medium term create a deadly threat to Russia’s ALROSA, which, unlike De Beers, almost completely ignores the new trend in the diamond market,” said Sergey Goryainov, analyst at Rough & Polished. “About 80% of ALROSA’s product mix consists of small-sized rough, which will be squeezed out of the market by cheaper synthetics in the coming years. In this case, the profit-earning capacity of ALROSA will decrease significantly and most likely the company will cease to exist in the form in which it exists today.”
It can be said that at this stage the world jewelry community and diamond miners almost lost the fight with their shadow, that is with synthetics. Perhaps, only De Beers will be able to withstand, however only if it is supported by other players - jewelers and government agencies. Meanwhile, according to the news coming from the United States, synthetic diamonds were finally legalized. In July this year, the Federal Trade Commission (FTC) expanded the definition of diamond, and now a cut diamond of artificial origin has also become a diamond for the FTC. Earlier, this definition included only natural cut diamonds.
Speaking at the Moscow Financial Forum held in September, Alexey Moiseev, Deputy Minister of Finance of the Russian Federation said that complaints about admixing synthetic diamonds were more and more frequent. “I am not against synthetics as such, but my position has been and remains unchanged: consumers must know what they are buying. It is absolutely unacceptable to sell synthetics under the guise of natural stones,” said Alexey Moiseev expressing the position of the regulator on this issue.
At the end of May, the Ministry of Finance proposed to control the circulation of synthetic stones, and the draft of a new federal law was published on the federal portal of draft regulatory acts. The new law intends to introduce control over the circulation of synthetic stones in the jewelry market, as well as to regulate their importation into the territory of the Eurasian Economic Union and prohibit the use of the classification applied to natural stones for grading synthetics.
Man-made diamond producers suggest that lawmakers follow the path of De Beers. “We need to form a new direction, we need to form a marketing strategy, we must openly enter the market with synthesized stones, so that this is not a threat to natural stones, but on the contrary, a niche and a business, which will make it possible to generate additional profits,” says Maxim Bord, CEO of AdamasInvest from Belarus.
However, Russian diamond miners still more rely on state aid. ALROSA, the country’s diamond mining monopolist was pro-active in joining the experiment initiated by the Ministry of Finance aimed at strengthening the control over the circulation of precious metals and gems and offered the ALROSA Diamond Inspector – the first domestic device capable to detect synthetics - to the Assay Chamber. “As an experiment, the Assay Chamber will take on lease a few dozens of diamond detecting machines from ALROSA to carry out inspections. In this way we want to protect the market from admixing,” said Alexey Moiseev in his speech at the Moscow Financial Forum.
