Back in 2012, we first heard the words “synthetics” and “trade” being used in the same statement. During this time, some of you remember that IGI had uncovered a large number of synthetic diamonds that some had hoped to be passed off as natural stones. The market read about these incidents, but ultimately brushed it aside without a further thought, and everyone has continued with business as usual.
However, our hopes and assumptions did not correlate to the reality. A few years later, we are now hearing about more incidents than ever, and reading at least 5 articles per week on the issue of Synthetics on anything from new production methods, to new suppliers, to new scandals.
Why?
The rising noise brings about two perspectives.
The Economic Reality:
The 2008 financial crisis established an economical hangover in our industry that one cannot ignore.
Examples include:
- Tightening corporate lending
- Manufacturing margins being squeezed out
- An out of sync pipeline - rough and polished prices ever more distant from each other
- Increased marketplace volatility
This turbulent market environment has led to the growth of many mid-stream industry players and has led to the so called engine of the diamond pipeline, its manufacturers, to either downsize, shutdown, or even worse, become fraudulent. Unfortunately, some found that synthetic fraud was the only way to both stay afloat and keep margins high!
The Political Reality:
In 2008 when the financial crisis started spreading worldwide, the US started losing its political grip on many African countries, including diamond producing countries. The causes were numerous, one of them being the retreat in investments.
Up came China like a bullet train, quickly establishing its political and economic influence to satisfy its thirst for commodities.
The US indirect response was an interesting one. New stringent and rigid rules to highlight the need for transparency and to combat corruption. Acts that further damaged the US's own blue-chip companies’ competitiveness in Africa.
From a diamond perspective, the USA remained the most prominent protagonist when it comes to spreading the endless blood-diamond notion.
This, irrespective of all the industry bodies and initiatives created over the last 15year to eradicate exactly that notion!
On August 27th, 2015 Times Magazine front page - Blood Diamonds. This at a time where many more important subjects would be seen fit to receive such coverage. Politically fuelled? Probably! Most experts on African affairs see it as a sly dig aimed at the Democratic Republic of Congo for heading east rather than west.
Isn’t it a bit ironic to see this sudden media promotion of synthetic diamonds in the US or as they like to call it lab-grown diamonds? At a time when the US are struggling to regain its political and economic grip on Africa.
From both points of view, one can quickly conclude how the word synthetics is not here to leave quite yet.
To safeguard the image and growth of our industry we must all contribute to a greater sense of transparency, in the form of diamond testing and traceability. We must also communicate worldwide the economic contribution of diamonds towards the many local communities.
Mining companies, diamond manufacturers, wholesalers and jewellery manufacturers must ensure the full transparency. This will essentially give retailers, who contain the biggest marketing firework, the most powerful tool --- consumer awareness and assurance.
We live in a competitive world, in which we all strive for results. Foul play however, in the shape of synthetic malpractice, ultimately will damage our long-term performances and more importantly our industry.