A Diamond is a Diamond?

Retired Brigadier General Carter Clarke, 77, founded The Gemesis Corporation in 1995. The company, based in Sarasota, Florida, is the first to commercially produce gem-quality synthetic diamonds grown using the High Pressure- High Temperature (HPHT) process. Martin Rapaport interviewed Clarke to get an insider view on this new facet of our industry.

Martin Rapaport: How do you make your synthetic diamonds?

Carter Clarke: We make our Gemesis-created diamonds similarly to how the earth makes them, with high pressure and high temperature. We apply considerable pressure — approximately 850,000 pounds per square inch — and about 1,600 degrees centigrade of heat and grow them over a period of about three-and-a-half days. There are three parts in the core that goes inside the growth vessel: graphite — which is a source of carbon — a metal catalyst and a diamond seed, which can be a synthetic or natural diamond. When you apply the pressure and heat, the metal melts and the carbon atoms from the graphite source filter down, atom by atom, through that molten metal, and start to grow on the diamond seed, which is, of course, carbon. The seed attracts the atoms from the graphite and it grows in layers until the carbon source is exhausted.

We have 24 diamond growth vessels in Sarasota, Florida, growing diamonds up to approximately 3.50 carats in size. We may be able to expand the size up to about 5 carats in the present machines. We are concentrating on the larger sizes right now because demand in the market is for over a carat, cut and polished. So we’re growing an average of 3 carats in rough.

MR: How many carats do you produce a month?

CC: Right now, we’re producing about 200 stones, which is around 600 carats.

MR: What color and clarity are these diamonds?

CC: The colors are very nice intense or vivid yellows. We don’t make fancy lights or even the fancy yellows. We’re basically in the intense and vivid areas. We have done some colorless, but we are staying with the yellows now because they are a major trend in the industry. Our next development effort will probably be into the blues.

The clarity is normally VS to SI. We’re not going to send out any imperfect clarities. Sometimes, we grow a VVS, and occasionally an IF.

MR: Have you sent any of these diamonds to grading laboratories?

CC: Yes. We normally send the larger stones to the European Gemological Laboratories (EGL) for certification. Of course, they know we have grown them. On occasion, our customers have sent them to Gemological Institute of America (GIA), and it has been able to identify them. Almost 100 percent of the time, the stones can be identified using the De Beers DiamondSure machine that identifies their photoluminescence.

MR: Are your diamonds magnetic?

CC: Some are, some aren’t. It depends on how much of the metal remains. Most of the metal is on the exterior of the diamond and gets polished off. Occasionally, there is some inside and, if sufficient, it can be detected magnetically.

MR: How did you discover the process?

CC: This technology was offered to me in Russia. I’ll never forget the date, it was December 5, 1995. A Russian scientist asked, “Are you interested in diamonds?” Frankly, I thought he was going to ask me to invest in a natural mine somewhere in Siberia. Instead, he introduced me to another scientist who showed a blueprint of a device that would create diamonds. Initially, I was very skeptical about it.

MR: How reliable is the process? Is the color consistent?

CC: It’s taken us from that time — December 1995 — until now to be sure that we can make these diamonds consistently in the proper size and quality. We would have liked to have made them much sooner than this, but it’s taken us almost eight years to perfect the process to where we now get consistent growth,consistent quality and consistent color.

MR: What is the cost to create a carat of these diamonds?

CC: We don’t discuss our costs, but it’s not inexpensive. This is a very delicate process with about 500 parameters that have to operate properly for the diamond growth to be correct and produce the size and quality we want. This is not mass production; each stone is individually grown and each machine has its own identifying characteristics. There is still some black art associated with all of this. You can’t just turn on a switch and these things grow and come out the way you want them to. It doesn’t work that way.

MR: What price do you charge for the diamonds?

CC: We price our stones to maximize value to the consumer. We compare them to other stones. We are well below prices for similar intense and vivid yellows from a mine, which are extremely expensive. We are slightly below prices for colorless G/ VS qualities. We are priced above the treated and the radiated stones, and we’re well above simulants such as cubic zirconia and moissanite.Our goal is to expand the market for high-quality yellow diamonds by making them available to people who otherwise couldn’t afford them.

MR: How are your prices compared to HPHT-treated diamonds?

CC: If you are referring to yellows, we’re typically priced a little bit above those. People show them to us and say they can buy cheaper, but when we look at them, they’re nowhere near the color or the clarity that we have. The color is so important in a yellow. We have vivids and intense colors, rather than the washed-out colors. Most of the HPHT that I’ve seen have a greenish tinge to them.

MR: How do you distribute your diamonds?

CC: Our production is still very small. With all of the publicity that has come out, we’ve had inquiries all across the board, from consumers, retailers, jewelry manufacturers and jewelry designers — virtually a cross-section of the industry.

Our marketing plan is to establish a network of medium to high-end independent retailers across the U.S. that will form a “retail partnership” with us. We will support them and some of their advertising and help train their people on site. Retailers would be dedicated to selling our diamonds and explaining what they are to consumers.

There has been a great deal of recent publicity about our product. We have been featured on “The Today Show,” CNBC,CNN-FN, “ABC Good Morning America” and “ABC World News Tonight.” As a result, consumers are becoming aware that our product is available.

MR: Are you concerned that your diamonds may be sold without proper disclosure?

CC: I’d like to make it clear that we are very concerned that our diamonds are NOT passed off as naturals. We will take every precaution to make sure that this does not happen.

We are very proud of what we make. This is in essence the first mine of gem-quality diamonds that is above ground. We don’t want anyone to misrepresent the fact that our diamonds are made by man in a laboratory-controlled environment. We will be marking our larger diamonds and all our advertising will clearly disclose that our diamonds are laboratory-created. We want the retailers we deal with to be very reputable and make very clear disclosure.

We feel there is a strong market segment for our diamonds. We are expanding the accessibility of fine yellow diamonds. We are not detracting from anybody else’s sales. Customers who otherwise could not afford a high-quality yellow diamond now will be able to have one. We want all of our larger stones to be certified. Right now, we’re using European Gemological Laboratory (EGL).

So we certify, we mark, we advertise and we are very strong in our desire that these diamonds be sold for what they are: a high-quality diamond, made by technology, in a laboratory-controlled environment.

MR: So, you want to disclose that your diamonds are man-made?

CC: Yes. We have to do it and we definitely want to do it. It is a Federal Trade Commission requirement that there be some identifier along with the word diamond that indicates that this is a stone that’s not mined from the ground.

MR: What are you doing to prevent misrepresentation?

CC: First of all, we will be identifying all our diamonds properly in all of our advertising. Two, we want them certified by a reputable gem lab. Three, we want to mark the diamonds so that they are easily identifiable. And number four, probably the most important of all, is that we want to deal only with reputable jewelers that will sell the stones for what they are and sell them only to people who are not going to set up a secondary market for them and pass them off for naturals.

MR: Is detecting synthetics very easy?

CC: No; sometimes they get misidentified even in the labs. Surprisingly, we have had that experience even though we tell the lab they are lab-created when we send them in, so there should be no question concerning source. There are two or three techniques to identify a lab-grown diamond. Normally, the retailers are not able to do that themselves, but at the labs, it is possible, but not 100 percent!

MR: Are you concerned about competition from other synthetic diamond producers?

CC: I have a different philosophy than many others. Competition will be beneficial to the extent that it extends the acceptance of our product in the marketplace. I didn’t notice IBM going out of business when many other computer manufacturers came into the marketplace.

I’ll give you a good example of what we want to do. We want to be like Mikimoto. Mikimoto set a standard in the cultured pearl business. When you walk the streets of New York, the only pearl brand you see is Mikimoto. There are many other pearl manufacturers in Japan, China and the South Seas, but Mikimoto has established itself as the high-end quality brand for cultured pearls. And that’s what we want to do.

We want Gemesis to be known as the top of the line. We want to stay ahead of the marketplace as best we can with our research, with different colored stones, with bigger sizes. Our goal is to establish the high-quality standards and remain there. We expect competition. I don’t think there’s any doubt that as we become more successful, other people will come in. I think competition will be beneficial and encourage us to maintain a high standard.

MR: What’s the name of your brand?

CC: We call our product the “Gemesis cultured diamond.”

MR: How long will it take to increase your production ?

CC: Our production increase will be strictly based on consumer demand. We have had over 4,000 inquiries in the past four weeks alone. As our product becomes more known and demand increases, we will increase our production capacity to match. We only have 24 machines now, but we are ready to put in up to 250 machines at our current facility.

MR: You have used the term “cultured diamond.” Is this like cultured pearls that are differentiated from natural pearls?

CC: Yes, that’s the idea behind it. The reason we selected that term was that we felt it would be more easily understood by the consumer, because they are familiar with what a cultured pearl is. The word cultured is well understood. We wanted consumers to be able to easily understand what our product is. The Federal Trade Commission (FTC) has indicated that the word “synthetic” is misleading because most people think that “synthetic” means “fake.” Well, this is not a “fake” diamond; it’s a diamond made in a lab rather than in the ground. We wanted a word that would be easily understood by the consumer and be accepted by the consumer and all indications are that that’s what is happening. I might add that while the FTC has neither approved nor disapproved the use of “cultured,” the commission did state that there was no evidence that such usage was misleading. After all, that is the crux of the matter.

MR: What have consumers been telling you?

CC: By and large, the consumers are happy that they can get a high-quality yellow stone at a price that they can afford and that we’re making those diamonds more accessible. The primary response we’re getting is “Finally, I can afford one.” I got one call from a Coast Guard seaman, who said “my bride-to-be has always wanted a yellow diamond. I would have never been able to afford one, but now you can help me out.” These are the kind of responses we’ve had.

MR: Do you think that consumers are going to care about the fact that these diamonds are man-made?

CC: So far, the indication is no. CNBC did an online poll and 71 percent of nearly one thousand respondents said it was perfectly acceptable to them. The response was “a diamond is a diamond.” In Wired Magazine, there was a jeweler out in Utah who made the comparison that “If you grow an orchid in the steamy jungle in Central America or you grow one in a hot house in California, it’s still an orchid, it’s still beautiful and the people that wear it still love it — where it came from is not an issue.” I agree with that.

When people ask me about acceptance, I think sometimes they forget to realize that we are in the technology age. Consumers are used to having technology bring them advantages that they otherwise couldn’t afford. It wasn’t many years ago that there weren’t any computers in the home, or cell phones. Whether it’s in the home environment, the office environment or the pleasure environment, technology has brought a higher level of acceptability of luxury items to many Americans. This is exactly what we’re doing. Our diamond technology is just another example of bringing better things to people.

MR: Are you going to be selling directly to consumers?

CC: No. Our program is to go through established retailers that have an established consumer base. If we deal with a reputable retailer, we won’t have a misrepresentation problem and that is our primary focus right now — to go through the retail chain. We want to work with the jewelry industry. We’re not trying to work against them. We feel that there is a specific market segment for our product, something that is not available today, something that can add onto the business of a retailer, add onto his revenues and his bottom-line profits. If we establish ourselves with the right retailer, we will get the right response from him.

MR: Are you interested in developing your diamond-production technology for the computer industry?

CC: When we introduced this technology to scientists at the University of Florida, where they were doing Chemical Vapor Deposition (CVD) of polycrystal diamonds, their response was, “My gosh, this has great applications in the electronics field, particularly semiconductors.” Ultimately, electronics might be another source of revenue for us but it’s a long-term process. Our current objective is to establish a firm business with a solid source of revenue and a positive cash flow.

MR: What do you think about the CVD process?

CC: We are very familiar with that. CVD is a process more applicable to the electronic field than the jewelry field because those diamonds that are grown are very flat. However, you could cut them into melee and use them for accessory pieces.

MR: Will CVD diamonds compete with yours?

CC: They might, particularly if they ever grow larger diamonds. Even if they are competition in the melee field — that’s fine, that’s what I said earlier, competition will expand the knowledge of this new category of product.

MR: Who owns your company?

CC: I founded it with my long-time partner, Tom Buffett, who was a very successful U.K. businessman. Most of the people who own shares are old friends of ours. We had a public company prior to this, and many of the investors in that public company invested with us. Gemesis is owned by just a small handful of private investors.

MR: How many people work for you?

CC: We have about 22 employees. It’s not a very labor-intensive process. The apparatuses are all computer-controlled now, which is something good old Yankee ingenuity has brought to the process.

MR: Where do you cut these diamonds?

CC: We cut them all over the world: the better ones in New York, and some of the smaller ones in India. We have cut in Israel, Thailand and even in Vietnam, which surprised me since I was in the Army there.

MR: You were a general in the Army?

CC: Yes, I was in the Army and retired early as a brigadier general. I had an entrepreneurial itch that I had to scratch.

MR: Is Gemesis profitable yet?

CC: No, but we hope to achieve profitability this coming year. Up to now, it’s been mostly research and development. We are just making the transition from a developing company that’s had to develop a product, and get the quality, consistency and yields that we needed. That takes a lot of money, time and effort. We now have a product that is gaining great acceptance here and so we expect to move to profitability.

MR: How do you think the diamond industry is going to develop around your product?

CC: I don’t see us having a major impact on the diamond industry as a whole. Those who resist change may not welcome this new category of product. Certainly, though, we should have a very positive impact on the jewelry retailer, who can expand his business, and on the consumer, who will have unique access now to high-quality yellow diamonds.

MR: Do you like the jewelry industry?

CC: I love it. It’s one of the most fascinating things I’ve ever been involved in.I liked and enjoyed the military. Since my dad spent 39 years in the Army, I was familiar with it. But this is so different and challenging.

Let’s put it this way, what other material in the whole world would you rather be making than a diamond? I couldn’t think of any. That’s what got me excited when I was flying back from Moscow to New York after the Russian first showed me the blueprints of this diamond-making vessel. At first, I was very, very skeptical and I thought, “I’m not going to get involved with this thing.” By the time I landed in New York, I was saying to myself, “I wonder if that vessel, or apparatus as he called it, could really make a diamond.” And then I got to thinking that if it could, what a wonderful thing to get involved in. So that’s how it all progressed. In retrospect, this is what the American entrepreneurship is all about, isn’t it?

MR: Do you have any message to the diamond trade?

CC: I want the trade to understand that we don’t feel that we are in opposition to them. We want to be a respected member of the jewelry industry. We will do everything necessary to maintain the integrity and the high standards of that industry.

By Martin Rapaport
Posted: 10/8/2003 1:25 PM

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