Association for Diamond Producers

World’s biggest diamond producers recently met in a private meeting to create their first-ever industry association. The meeting was held to discuss about the increasing threat caused due to cheaper man-made stones.

Representatives from eight companies, led by industry giants Anglo American’s De Beers unit and Russia’s Alrosa, got together at fellow diamond producer Rio Tinto’s London headquarters last week to discuss setting up the group, according to people familiar with the talks who declined to be identified as the discussions are not public. The famously secretive diamond industry has lacked co-ordinated leadership since De Beers’s monopoly over the supply of gems ended after it lost a 10-year legal battle with the US over price-fixing in 2004.

The proposed association will represent the vast majority of the world’s diamond supply. “A meeting was held to assess the need for a producer association similar to other commodity-based organisations,” Rio Tinto said, declining to name all the participants. “The idea of the body is to promote the interests of diamond producers and the diamond sector more generally. We will continue discussions with the industry participants,” it added.

Subjects discussed had included diamond marketing, industry research and the threat to consumer confidence from undisclosed synthetic stones entering the market, De Beers said. The group will have an initial budget of $6 million (about R72m) a year, according to the people. Petra Diamonds, Gem Diamonds, Lucara Diamond, Dominion Diamond and Lukoil were also represented at the meeting, the people said.

One of the key challenges that the industry plans to confront is the entrance of undisclosed man-made diamonds into the supply chain. While laboratory diamonds are nothing new, technological leaps have allowed manufacturers to produce larger numbers of gem-quality stones cheaply, with traders able to attempt to pass them off as mined, or natural, stones.

“Synthetics pose one of the more noticeable threats,” William Lamb, the chief executive of Lucara, said on Thursday. He was at the meeting and said the rise of man-made stones was one of the topics discussed. A producers association would help to formalise an industry response to questions from consumers and investors on the issue, Lamb said. “There was an agreement that it was time that we had something like this in place.”

The Times of India reported last month that 110 man-made diamonds were discovered in a parcel in the Indian city of Surat, the world’s biggest cutting centre. The undisclosed mixing of diamonds has been discovered on several occasions in the nation with India’s Gem Jewellery Export Promotion Council is starting the Natural Diamond Monitoring Committee to combat the issue.

Courtesy: Bloomberg