Will New Synthetics Group Provide Impetus to Natural Diamond Industry?

Finance and Trade
14/02/2016 16:44

The natural diamond trade should welcome the establishment of the International Grown Diamond Association (IGDA) announced last week even though it may actually serve as a wake-up call for the industry, writes Rapaport's Avi Krawitz. The new body could provide a formal channel of communication in the synthetic – or lab-grown – industry, particularly over the threat of undisclosed synthetics being mixed into parcels of natural diamonds. "One can only hope the IGDA will self-regulate as much as the natural diamond industry does, and incorporate the requirements for disclosure and documentation into its mandate. After all, a synthetic diamond found to be sold as a natural diamond also diminishes consumer confidence in its product. For now, there is no indication that the IGDA will take on such a role. A spokesperson explained to Rapaport News that the group is not a policing body.

"As synthetic producers become more organized, so will awareness of their product. Ultimately, their aim is to increase market share in the diamond jewelry space. Certainly, the appeal of synthetics is well known. They’re marketed as ethically-sourced and environmentally friendly gems, while arguing that natural diamond mining harms the environment and has a history of funding conflict and human rights abuses. Lab-grown diamonds are also more affordable than their natural counterparts. The IGDA might also argue that synthetics are a necessary product that will compensate for the expected long-term decline in natural diamond supply. The natural diamond industry, of course, has a robust rebuttal on each point. As one of the most highly self-regulated industries in the world, it has curbed the flow of conflict diamonds, while organizations such as the Responsible Jewellery Council (RJC) have come a long way to ensure there is a clear code of practice for the diamond trade. Mining companies have also made great strides in providing for the betterment of local communities around their mines with tens of millions dependent on the diamond mining sector today."

The natural diamond industry will need to carry out a campaign to remind consumers of its unique proposition. "The Diamond Producers Association (DPA), established last year, is mandated to do just that, increase generic marketing to promote diamonds at a consumer level and conduct research to gain a better understanding of the general market, along with threats such as synthetics. One of the interesting developments to monitor in the coming year or two will be the effectiveness of the DPA and the IGDA in their respective activities. It seems they’re trying to achieve the same thing for their respective products. Starting from a lower base, the IGDA might have more to shout about. At least, the creation of a global body representing the sector should be viewed as progress. It will be left to the natural diamond industry to engage with the association and push its own agenda to mitigate the threat posed by synthetics," he concludes.