Rapaport Rejects 'Ethical' Claims of Synthetic Diamond Producers, Draws Battle Lines

In-depth
04/04/2016 09:35

Martin Rapaport has written an in-depth diatribe rejecting the claims of sythetic diamand producers that their product is more ethical than naturally mined diamonds, exposing the value proposition of synthetic diamonds as a ruse and calling natural diamond miners to join together to aggressively market and natural diamonds and attack synthetics. It is nothing less than a call to arms for the natural diamond industry, and he goes so far as to call the way synthetic diamonds are marketed as "evil".

Rapaport does not reject synthetic diamonds as such, writing, "As one who creates and supports fair, transparent, competitive, efficient markets, it would be wrong to criticize synthetic diamonds because they are not natural diamonds. Markets and consumers should be offered the broadest basket of products and services. New sustainable products should be encouraged and rewarded. After all, aren’t synthetic diamonds good if they breathe new life into an old, staid, traditional, declining diamond market? If there are good reasons to support synthetic diamonds, then what’s the problem? What’s wrong with synthetic diamonds? Unfortunately," he writes, "in spite of the positive comments detailed above, the way synthetic diamonds are currently marketed and sold is fundamentally unethical, dishonest and misleading. Essentially, the current market for synthetic diamonds is evil and consumers that buy them are suckers." These are stong words to say the least. 

The core issue is that, "Those that market synthetic diamonds, claiming that they are a more ethical alternative to natural diamonds, are making false claims that threaten the lives and livelihood of millions of artisanal diggers. One and a half million diamond diggers and the seven million people they support rely on the sale of their natural diamonds to sustain their lives. Those that market synthetic diamonds as an alternative to fair trade and development diamonds are taking bread out of the mouths of the poorest people in the world." Rapaport therefore calls for creating a system of fair trade natural diamonds and aggressively excluding 'dirty' diamonds from entering the natural diamond pipeline. "Make no mistake about it, the issue of dirty diamonds is on the front line in the battle for diamond consumers. If the natural diamond trade is to survive the attacks by the synthetic trade, it is vital that we honestly and transparently communicate the origins of our legitimate socially responsible diamond sources. ... We must do everything we can to document socially responsible diamonds and exclude dirty diamonds from our distribution channels. We must proactively push dirty diamonds into the gutter where they belong. We must name, shame and blame those that deal in them," and singles out Zimbabwe as a target of criticism.

Rapaport also forcefully attacks the value claim of synthetic diamonds, stating it is imperative that Millennial consumers be made aware that because they are man-made will be produced in ever-greater quantities, eventually driving down their prices into the neighborhood of cubic zirconia, synthetic diamonds will rapidly decline in value. "Synthetic sellers make a big point about disclosing that their synthetic diamond is exactly the same as a natural diamond. That is not true. Natural diamonds have natural scarcity, which enables them to be a store of value. Synthetic diamonds have no scarcity and are not a store of value. Consumers think they are buying a diamond with all of its attributes. They do not realize that they are buying something that does not hold value ... The fact that consumers are not fully and fairly informed about the fact that synthetic diamonds have unlimited supply and therefore cannot serve as a store of value is dishonest. Providing consumers with partial information under the guise of being totally transparent is a scam."

Finally, Rapaport calls on natural diamond miners to aggressively promote the virtues of natural diamonds and not to shy away from attacking synthetics: "If the mining companies do not move forward quickly and decisively to promote and protect the societal role and market for generic natural diamonds, their assets will consist of nothing more than big worthless holes in the ground ... The challenge to our natural diamond trade is real and dangerous. It’s high time for the mining companies to get real and aggressive and honestly market and promote natural diamonds. Anything and everything that is good about natural diamonds needs to be communicated. But that is not enough. We must trump the synthetic competition and get into a real battle. We must attack the dishonest way synthetic companies are communicating about ethics and diamond value. Consumers need to be warned that synthetic diamonds do not store value and that their prices will collapse in the years ahead." He also makes it clear that much more money needs to be made available for these efforts. "The $6 million budget for the Diamond Producers Association (DPA) is too little, too late. Perhaps, just enough to develop a strategy, but not enough to do anything. We need at least $200 million for generic diamond marketing and promotion."

His message to mining companies is indeed clear: "We need a full-blown campaign for generic diamonds and the diamond dream. And we need to attack synthetics. Without aggressive and timely marketing and promotion of generic natural diamonds, your sales and revenue will drop to the point where your mines will no longer be profitable. You will go out of business."

He closes with two letters - one of his own and one by Ian Smillie, Chairman of the Diamond Development Initiative - to Leonardo DiCaprio, who has invested in a synthetic diamond company that widely promotes them as an ethical alternative to natural diamonds. These letters ask him to recognize that no claim of synthetic products as ethical can be made when their success equates to depriving of their livelihood millions of people in some of the poorest nations of the world.