Fear and Trembling in Carlsbad: The Diamond Business in 2018

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Over the course of this still-young millennium, whose first few years saw the 2006 movie Blood Diamond, the global diamond trade has fallen into a fugue state, searching to find its identity. Retailers and dealers alike have wandered a new sociological and technological landscape, seeking what they vaguely sense is still there — the place of diamond in today’s world.

For the past three years, marketing masters and full-fledged futurologists have dissected millennials like an alien species in seminars at the annual jewelry trade show in Las Vegas, as jewelers anxiously tried to follow their operations. Some wondered not how much, but if, the members of this big amorphous demographic wave value jewelry. What is the role in their lives of a traditional thing of value? A non-renewable luxury item? Mined at what environmental cost, at what political cost, most famously to the 300,000 to 400,000 artisanal miners in the ravaged west African coastal nation of Sierra Leone, the scene of the aforementioned movie?  

We’ve been told at these seminars that this brave new generation values experiences over things. So, might tattoos, say, supplant jewery in satisfying, with less harm to the earth and its people, the need to psychically armor the human form? Surely undergoing that is a more intense personal experience by some standard.

(Just now, on a jewelers’-only Facebook page, I read all the way through a thread almost 500 posts long, begun by someone whose premise was “The trend of falling jewelry sales is due to people not loving each other much any more,” going on to say that tattoos were “a practice only of felons and sailors back in my day” and to express several other delightful biases. Thankfully, it can be reported that many jewelers young and old disagreed with him.)

In the scheme of things, nothing is as “thing-y” as diamond. The hardest thing, so it takes the best polish (only possible from another diamond). The most durable thing — from one to three billion years old, it is the oldest thing most of us will ever hold in our hands. As the single element of carbon locked into the crystal system (cubic) of the highest symmetry, the purest thing. The most transparent, the most colorless thing. The brightest, most fiery, most lustrous thing in the natural world.

For all these qualities, nothing else in the world has been more idealized than this quintessential substance. In utter silence, for thousands of years, diamond has shined forth meaning, a tangible sign of love, wealth and power. It captured our imagination thousands of years before we knew how to unlock the fire of its optical properties.

But how much more there is to diamond than beauty, durability and a degree of rarity! It is probably the most versatile and, therefore, studied stuff on earth. Because of its hardness, it has been used for centuries as an abrasive in cutting, drilling, grinding and polishing. Because it is so stable and has the highest thermal conductivity of any material at room temperature, this so-called supermaterial is the best thing available for wear- and corrosion-resistant coatings, laser systems, heat sinks in electrical circuits and quantum computing. Every car, every airplane, every cell phone demands some caratage of industrial diamond to manufacture.

(When the first philosopher-scientist Francis Bacon asked, “Shall we not discern as well the riches of nature’s warehouse as the beauty of her shop?” he might well have had diamond in mind as the apotheosis of the marriage of entrancing natural form with economic function.)

The first synthetic diamonds were created as tiny crystals in the 1950s, using graphite as seed material in large presses under high pressure and temperature that approach conditions deep within the earth. In 2015, only 127.4 million carats, or a little more than 1/4 of a ton, of diamond were mined from the earth, of which 44% (56.5 million carats) was of industrial quality. This was not nearly enough; that same year, 4.43 billion carats were manufactured artificially.

It was just a matter of time before improvements in the creation of industrial diamond would lead to the synthesis of gem quality diamond, that is, stones large enough and fine enough in color and clarity to use in jewelry. These pioneer synthetic diamonds appeared in the 1990s. They were “fancy” yellow, due to nitrogen atoms scattered in their crystal lattices. These are the most common impurity in natural diamond, but impart a distinct yellow body color. Getting them to aggregate into pairs so as not to do this is far easier over many millions of years than in the weeks it takes to grow them aboveground.

Getting rid of nitrogen altogether was the big trick, and the grail of colorless diamonds at larger sizes began to appear in the early 2000s. So did another technology, chemical vapor deposition, which was revived from the 1950s and refined. This process uses microwaves to spark growth on a diamond seed plate, much like 3-D printing, from a carbon-bearing plasma such as methane. Although its growth rate is slower, it produces virtually nitrogen-free diamond over larger areas, at much lower energy cost, than the high-pressure, high-temperature method can (although the older method can turn out larger crystals).

Over the past five years colorless gem-quality diamonds produced by both methods have fully entered the jewelry market. At small sizes, they are especially hard and uneconomical to detect and have not always been disclosed to the retail trade, but their greater challenge is to the value of traditionally produced diamond. Coming now, they have created a new diamond product for a new generation of consumers: free of any stain of politics and leaving a relatively tiny environmental footprint.

Beyond which, this man-made product is of consistently high quality and increasingly cheaper than natural diamond. According to one industry observer, the retail price in November 2018 of a typical one-carat diamond produced artificially was about 58% of a comparable high-quality mined stone, down from 71% at the start of 2018. This is a startling rate of change in the slow-moving diamond business.

DeBeers’ announcement at the Vegas trade show that this venerable godfather of the diamond industry was about to enter the retail gem-quality synthetic diamond business further shook the jewelry world, conferring an air of Armageddon to the show.

Their new “Lightbox” subsidiary prices synthetic diamonds up to one carat, set in sterling silver, at $800 per carat (retail price), less than one-fourth of the current synthetic market. Was this a strategy to draw a sharp line between the synthetic product and natural diamond, as DeBeers argued, or a move to seize lab-grown market share, as talk at the show had it? Or both? Time alone may tell.

Of more than casual important is what to call this new product. For more than a year, DeBeers had been promoting “Real is Rare” as this generation’s successor to “A Diamond Is Forever.” In July, with major industry associations arrayed on each side, the mined diamond industry was perceived to have lost at least a symbolic battle to the growers, when the Federal Trade Commission revised its long-standing rule that defined diamond as only a “natural mineral.”

Therefore it is fair to say that any diamond, regardless of origin, is real. The FTC continued to require diamond manufacturers to make clear that their product is not mined, but removed the hated term “synthetic” (which means “fake” to most consumers) from its list of recommended descriptors for the artificial product. At this writing, “lab-grown” has won the day throughout the diamond business.

This past October, I was one of 800 diamond and gemstone industry members from 36 countries at the Gemological Institute of America’s Symposium, held every few years at GIA’s world headquarters in Carlsbad, California. The issue uppermost in everyone’s mind was the full arrival of lab-grown diamonds in the marketplace — how to distinguish them from natural mined diamonds, and what they mean for the future of the diamond business.

There I met some of the world’s leading materials scientists, who gathered privately before the conference to present to GIA new approaches for peering down into the microcopic, even the molecular structure of a particular diamond, so as to commit this “DNA” to blockchain technology — thus to assure the end user of that stone’s natural origin and render it traceable from mine to market — including, for instance, its freedom from bloodstain, worker exploitations and negative environmental impact.

At the scientific sessions, some of the world’s preeminent gemologists from GIA and research laboratories elsewhere brought us “street level” gemologists news of their latest techniques and instruments to separate the lab-grown from the natural material. We are still mastering the science behind diamond synthesis, and much of the information we got was well over our heads. Both the gemology and the jewelry trades remain in hot pursuit of affordable black-box solutions. One speaker reported that some twenty to thirty such instruments are presently on the market, costing as little as $500 up to nearly $100,000.

I have spent much of this year reading the current literature and studying the stones themselves. Presently I utilize low-tech, but effective, tools, like ultraviolet fluorescence, inclusion microscopy and distinctive strain patterns visible in polarized light, to remain on my guard. Hearing about present theory and practice of separating natural from lab-grown diamonds was certainly useful; even the most diagnostic instruments, spectrometers of various sorts, used by themselves, only offer a degree of certainty, albeit a very high one.

But even if they are mainly available only at the advanced gemological level, we have the tools and knowledge we need to determine the natural or created origin of a diamond. It is essential to the natural diamond trade to have this capability in order to maintain trust in the value of diamonds.

Symposium ended with CEOs from DeBeers, Signet, Blue Nile, Christie’s and the Chinese retail jeweler Chow Tai Fook engaging in a panel discussion about the future of the jewelry business. Over them and their audience, questions about the new category of lab-grown diamond hovered like a cloud. The panel members spoke in reassuring terms of the economic and social importance of traditional diamonds: their benefits to the mining communities where they are extracted; andtheir use as markers of life’s journey and stores of wealth to be passed from one generation to the next.

Lab-grown diamonds might assume these characteristics in some measure, as well as have beauty and durability, but they will never be rare. They will simply be, in Bacon’s words, one of those “worthy effects” of science, “endow[ing] the life of man with infinite commodities.” As long as they can be distinguished from natural, at whatever technology necessary, the natural will be valued more greatly. This was soon proven after synthetic ruby first appeared in the late 1800s and again around 1920 when Mikimoto developed the cultured pearl.

Some observers say the effort to synthesize diamond in gem-quality is merely a step towards the real goal, learning how to raise its purity for industrial purposes. It may also be a step towards understanding the nature of value. The things we desire the most carry stories. The diamonds we draw from the earth are old; ultimately their structure reflects their age in a subtle way that synthetic ones do not. As long as we can tell the difference, we will care. It is embedded in our nature.

Meanwhile, diamond growers work to refine their product every day. This race has gone on for a long time. As far as we know, there is no end to it. The race itself increases knowledge and provides benefits. Whoever is ahead at a certain time must better understand what Bacon said: “Nature, in order to be commanded, must be obeyed.”