Traders of mined diamonds are divided over how to best respond to the growth of their laboratory-grown counterparts. Last week, India’s Bharat Diamond Bourse (BDB) became the second exchange to ban trading of man-made diamonds, ignoring a section of the industry that prefers greater engagement with producers and jewelers of synthetic stones to ensure proper disclosure and transparency.
The World Federation of Diamond Bourses (WFDB) isn’t opposed to trading in synthetic diamonds as long as they are fully disclosed, it said after BDB’s prohibition order. Production of gem-quality lab-grown diamonds will jump to 2 million carats by 2018 from 360,000 carats last year, according to a forecast from consultancy Frost & Sullivan.
Unlike mined or natural diamonds, there isn’t a structure within which their synthetic cousins can exist. Each bourse is left to set its own policy to govern the trade of lab-grown stones, as long as they remain within the regulations of the umbrella body WFDB. The Israel Diamond Exchange was the first to disallow trading of man-made gems on its floors in 2014.
The Indian exchange’s decision “is another sign that bourse leaders don’t understand that the best way to avoid unethical practices is to encourage traders to deal with full disclosure and transparency,” Thierry Silber, chief executive officer of Diamaz International, an Antwerp-based supplier of natural and lab-grown diamonds, wrote in an email to Rapaport News.
“Rather than banning the trade of lab-grown diamonds and forcing their trade into dark corners, industry leaders should support the establishment of a lab-grown diamond association, which would open the door to a legitimate product and make sure that it is sold transparently,” he said.
The biggest issue with lab-grown diamonds is non-disclosure. Roland Lorie, co-chief executive officer of International Gemological Institute (IGI), said IGI still encounters regular occurrences of non-disclosed small lab-grown diamonds mixed with natural stones at its grading labs – albeit in very small quantities.
The industry has long argued for four steps to safeguard the natural diamond market. Differentiate natural diamonds from their lab-grown counterparts, detect them when mixed with earth-mined stones, fully disclose them to traders and consumers and properly document their details. To combat non-disclosure, the Gemological Institute of America (GIA) has made its DiamondCheck machines available at global bourses, while De Beers and HRD Antwerp brought their respective melee screening devices to market.[one_third_last]
“By banning the trade of synthetics, the industry is alienating a legitimate part of the business.”