GIA President's Address to the Rapaport International Diamond Conference, Technology: Friend or Foe

by GIA

Good Morning.

The phone rang and my assistant came in and whispered: someone from the Today Show wants an interview with you. The producers were putting together a segment on synthetic diamond, a direct result of the recent article in Wired magazine. I agreed to take the interview and share what GIA has done for years in synthetic diamond identification. The producers were really more interested in market dynamics and De Beers’ reaction to synthetics than identification, but to their credit, they wanted to understand whether these new materials could be identified and whether consumers could be protected. During the interview, I assured them that we could identify them, and that consumers would be protected.

Ladies and gentlemen, this interview may have been more challenging if it had been about High Pressure-High/Temperature (HPHT) treatment. While we at GIA can identify the vast majority of HPHT treated diamonds, the public’s confidence could be severely shaken by the prospect of taking otherwise inexpensive brown rough and transforming it into colorless or fancy colored diamonds.

At GIA, we are constantly striving to stay one step ahead of the new technologies that are infiltrating the diamond trade – some overtly, some covertly. One of these new technologies, the Internet, has had an effect on diamond merchandising. Others can be found in mining and exploration, which have brought new discoveries that have had a major impact on diamond supply. But today I will speak of technology as it affects two areas of particular importance to the diamond market – synthetics and treatments – and their potential impact on the stability and prosperity of the trade as a whole.

In 1988 – 15 years ago – I wrote a diamond article in our Gems & Gemology journal where I said (and I quote):

“Although it may not be obvious how scientific challenges can affect the economics of the diamond industry, the mere mention of synthetic gem diamonds is usually enough to upset any dealer. High technology will surely play a role in the diamond business in the 1990s and beyond.”

I went on to say that synthetic diamonds could become an attractive option for jewelry in the future. That was, and still is, contingent upon an advance in financing and technology to a point that makes commercial production of synthetics a viable option. Then again, the right price points must reach all the way to the retail level to make synthetic diamonds attractive to consumers. Fifteen years later – in 2003 – this seems plausible, if not probable.

The Wired article on synthetic diamonds I referred to has garnered a lot of attention from other publications and the major television networks. It should. Gem synthetic diamond is an intriguing product, and the finished goods are certainly attractive. And why not? They have all the same optical, physical and chemical properties as natural diamond. Visually – even to the most experienced gemologists – they may be indistinguishable from natural diamond.

Fortunately, for seven decades, we at GIA have stayed well ahead of the technology curve on synthetic diamonds. Our first encounter came in the 1930s, when a claim was made that synthetic diamond had been produced. Through good science and hard work, our founder Robert M. Shipley and his genius son, Robert Jr., proved the claim to be false. It was the first real test of our scientific ability, and the first real benefit of GIA’s research.

Finally, in 1955, when General Electric scientists did create the first-ever synthetic industrial-quality diamonds, we soon studied them. It was after this that the famous Morris Zale worried that synthetic diamonds would impact the market and jeopardize the natural diamond trade. He diversified into other industries, like shoes, before eventually settling back into diamonds and diamond jewelry as the best avenue for his marketing expertise.

When GE announced the first cuttable gem-quality synthetic diamonds in 1970, we quickly provided identification criteria, and we continue to use many of these same criteria even today. Then, in the 1980s, when Sumitomo Corporation started selling gem synthetic diamond crystals for use as “heat sinks” in electronic equipment, we broke the news to the world with an in-depth article that clearly characterized the material and provided conclusive identification of it. The following year, we worked intensely with De Beers’ research staff and reported on their synthetic diamonds, all produced for experimental purposes and not for commercial sale. Since then, we have reported regularly on synthetic diamonds in Gems & Gemology, including a comprehensive wall chart for the separation of natural from synthetic diamonds in 1995 and a landmark 1996 article by De Beers researchers on their detection instrumentation. To this day, we continue to keep the trade and the public informed – and confident – about our ability to detect gem synthetic diamonds. These include the new Gemesis synthetics and the new Apollo single crystal synthetics grown by chemical vapor deposition (CVD).

The good news is that we can identify these gem synthetic diamonds. Most of the material marketed to date is still relatively small and yellow in color. And, the sum of all commercially produced gem synthetic diamonds is still a minute portion of the entire worldwide diamond market. Frankly, we rarely encounter synthetic diamonds among the items submitted to our laboratory for reports. I would even hazard a guess that most jewelers still have never seen a synthetic diamond.

But does this mean we can sit on our laurels and disregard synthetics? To the contrary, we must work harder than ever to stay ahead of technology.

For years we have stated that there is nothing inherently wrong with synthetic diamonds. They are attractive and will no doubt find a market niche if they can be produced in sufficient quantities and at acceptable pricing to warrant the huge investment necessary to create and sustain demand. Our view has remained consistent: The key is proper identification and separation from natural diamond, as well as full disclosure in the marketplace. While the barrier to commercially produced gem synthetic diamond has been broken, our ability to identify the product has not. It is critical that we keep it so.

Ultimately, though, the case for laboratory grown diamonds will not be played out in a trade conference such as this, but in the marketplace and in the mind of the consumer. We must always remember that consumer confidence is the key to the success of the diamond industry. Anything that shakes that confidence will shake the market and, ultimately, the industry itself.

This leads to the second part of my technology topic: diamond treatments, and, specifically, high pressure / high temperature treatment. In March of 1999, when LKI and GE first announced their application of technology to whiten diamonds through a then-undisclosed process, we knew this treatment had the potential to seriously disrupt the market. We stepped in strongly and persuaded GE and LKI to submit all their HPHT-treated diamonds to GIA for testing, identification and grading. They agreed, and this has allowed us to create a database of some 15,000 GE-processed diamonds and develop appropriate identification criteria, too. We have shared this information in Gems & Gemology, through lectures at industry meetings and in our education courses and via our website, available to anyone.

However, nearly five years later, there remains considerable concern over HPHT diamonds. This is primarily because rogue treaters refuse to disclose the treatment, thus jeopardizing the integrity of natural diamonds. In effect, they are playing Russian roulette with your business.

This concern isn’t new to those of us who have lived with treatments in the colored stone industry for decades. We have many examples to illustrate the devastating effect that undisclosed treatments can have on the gemstone marketplace.

In 1997, the emerald market collapsed because of problems with oiling. Although the trade had long held that the use of “traditional” oils was acceptable, the introduction of new, unstable fillers severely damaged consumer confidence and made disclosure essential throughout the trade. As a result, the market for natural emeralds has yet to regain its 1997 price levels.

The integrity of the ruby market has also suffered in recent years. According to The Guide’s Gem Market News (July/August 2003):

“When you combine an increase in availability with an increase in treated ruby, the formula adds up to lower prices. The slide in ruby prices began in the 1990’s when a new deposit of rubies from Mong Hsu began to appear in the market in large quantities. . . .

Soon, however, the word got out that they were heating these rubies to higher temperatures than ever before. To protect the rubies, borax was used. The borax melted into a glass-like substance that filled fissures in the stone and sometimes left a residue on the surface. As concerns rose in the industry over the new treatment and how to classify the residue, prices started to slide even more. In a few years, prices of rubies in the upper end had dropped by nearly half. The news got worse when further analysis revealed that the rubies nearly melted from this high temperature. The resulting residue is usually synthetic corundum and a glass-like compound inside the stone.”

Interestingly, as the temperatures used to heat the materials increases, the gap between treated natural corundum and synthetic corundum is narrowing. A treated sapphire that has been heated to such high temperatures that fractures are healed and new material crystallized onto surfaces no longer corresponds to any natural sapphire created at temperatures attained in geological environments. In other words, some heated natural stones are being re-crystallized into partially synthetic material. A very scary thought for natural stone dealers.

And yet another case: In 2001, a flood of beautiful orange to orangy pink “padparadscha” sapphires entered the market, disclosed only as “heat treated.” It was several months before researchers were able to prove that the colors had been produced by beryllium diffusion treatment. This treatment is more insidious than others we have seen. It diffuses light elements, which are very difficult to detect with standard analytical equipment, into sapphire at close to its melting point. The discovery that the treatment was actually a form of diffusion – with, in many cases, the apparent color produced by a surface-conformable layer of color -- led to the collapse of the very market that the treaters sought to create.

As was inevitable, this debacle has caused some buyers to only consider sapphires and rubies with no evidence of treatment, and to discount all those with any evidence of treatment. GIA and AGTA stood tall against the treaters. They finally agreed to disclose the procedure, but only after the market – their market – for these attractive sapphires had disintegrated. Worse yet, this new diffusion process has caused the price of regular heat-treated sapphire to drop precipitously. One dealer told me he lost a million dollars in the value of his heat-treated sapphire inventory, which included no diffused stones.

Just last weekend, I attended meetings where a new form of treated corundum had been identified, this time on the coveted blue sapphire. Ladies and gentlemen, treaters and their technology are pushing the limits of what can be done to natural gemstones and are therefore jeopardizing the entire ruby and sapphire market.

But what do all these colored stone examples have to do with the sacred diamond? Hopefully, the colored stone trade’s experience with treatments will help diamantaires anticipate how consumers and retailers will react when they are confronted with treated diamonds. I know as well as you do that the wheels of the international gem and jewelry industry ride on diamonds. More than 50% of the average jeweler’s business is dependent on diamonds. Diamonds are the mainstay of the business. Without them, there would be no jewelry industry as we know it today.

When GE and LKI first introduced their HPHT product, they tried to sell it at a premium over untreated diamonds. Their argument: it was rare Type IIa diamond. Their thesis didn’t hold water in the marketplace. The goods are now discounted well below untreated material.

But is GE the real culprit? I don’t think so. There is no stopping technology. GE knew that, and so did LKI. What they didn’t know was the reaction the industry would have to the introduction of their product, and the time it would take for people to get comfortable with this new reality.

Ultimately, the bad guys in this are the rogue treaters, the ones who seek to make a quick buck by introducing treated diamonds into the marketplace with no disclosure. In the process, they put at risk the very foundation, the very core of the trade itself: that is, the integrity of natural diamond, and, in turn, the confidence of the consumer.

So what can we learn from these episodes of treatment, lack of disclosure, and market decline?

The answer: DISCLOSE OR BE DISCLOSED. It is inevitable that, over time, any doctoring of diamonds will be found out and will, if not properly disclosed, negatively impact both the proponents of the treatment and the diamond and jewelry trade as a whole. The harm that can be caused by either passive nondisclosure or willful intent to deceive is irreparable.

It can be argued that technology is both a friend and a foe. It is a foe if you see it as a problem. A friend if you see it as an opportunity. A more balanced approach might be to accept technology as a given, and to work with it to minimize the harm — and maximize the help — it can give the market. It is folly to wish technology away, just as it is futile to try to eradicate it. We must accept it, and with it, the challenges it may pose.

At GIA, we have always believed that the technology used to create new synthetics and treatments would eventually also yield evidence for their identification. Indeed, the technology of diamond identification can – and must – keep pace with the technology of treatments and synthetics.

And what do these developments and challenges mean to a laboratory that is entrusted with the responsibility of identifying these and other treated or synthetic diamonds?

The role of the gemological laboratory has changed in many ways over the past decade. Not only have the techniques and instrumentation for gem identification become more advanced, but the methods and steps in diamond grading have also become much more extensive and sophisticated. The new developments in diamond treatments and advances in synthetic diamond growth methods have made it necessary for a gemological laboratory to utilize more sophisticated detection instrumentation and highly skilled staff as it continually modifies the screening and separation methods used to identify such diamonds.

While I cannot speak for other laboratories, the GIA Gem Trade Laboratory is constantly improving its servicing procedures to meet such challenges as coatings, irradiation, laser drilling, synthetics, fillers, and now, HPHT treatment. More than a dozen detection techniques and instruments have been added to this process at GIA in the last five years alone. Nevertheless, we believe that with solid research, with continued cooperation from the trade, and with flexibility and ingenuity, we and other well-equipped gem laboratories will be able to continue to meet the needs of both the trade and the public.

In effect, if you think you are sending your diamonds to GIA for grading alone, think again. Identification as to natural, untreated origin may be the greatest benefit we provide. And that takes research and long-term commitment.

In closing, just as the debate on human cloning rages in the medical field, so will the debate over sophisticated synthetics and treatments continue in the diamond industry. There is no right or wrong answer for gemology. It is not a moral issue to synthesize or not to synthesize, to treat or not to treat. But it is a moral issue to disclose or not to disclose.

At GIA, we urge full disclosure and openness to dialogue as soon as a new synthetic or treatment is developed, and long before it is introduced to the market. Many synthetics manufacturers have come to us before release of their products to avoid the disruptions that such introductions have caused in other industries. With the manufacturers’ support, we reported on the growth and identifying characteristics of GE, Sumitomo, Russian, and, most recently, Gemesis synthetic diamonds before they entered the jewelry marketplace — as we also did with synthetic moissanite. As a result, professional gemologists have long known the distinctive features of these various materials and the means to identify them.

We applaud those manufacturers who are willing to work with the research laboratories to make this information available throughout the industry. This is the only truly enlightened approach to avoiding problems like the one we currently face with HPHT treatment. Doing the right thing for the industry and the public will inevitably be the right thing for the commercial success of all stakeholders in the business. Because of this, and because of the values that have always been the hallmark of the diamond and jewelry trade, I urge us all to do the right thing.

Thank you.