Ignorance on Synthetics is No Excuse: Philippe Mellier

De Beers Group’s CEO, Philippe Mellier, reminded sightholders this week that a consumer’s desire for diamonds is the only source of value for the diamond and jewelry industry. Therefore, De Beers view of synthetic diamonds remains as always — it is possible that appropriately disclosed synthetics can find a happy and legitimate place in the diamond and jewelry industry, primarily in the low-value, under $200 market; however, passing off a synthetic stone as a natural diamond threatens consumers’ confidence in diamonds and the practice is unethical and fraudulent.

Mellier stated that De Beers believes undisclosed trading of synthetic diamonds is confined to a very small portion of the global industry, but because there is heightened concerns across the trade recently, the company developed a guide to help understand synthetics, what to look for and how to protect the pipeline.

‘’You value what it means to be a sightholder of the De Beers Group of Companies. It is a signature of confidence for your clients, partners and lenders. We therefore have a shared responsibility with you to protect the reputation and goodwill of De Beers and our sightholders,’’ he said.

Highlighting the main points, Mellier confirmed that all rough diamonds sold by De Beers are natural. De Beers also has the technology to detect all synthetics. ‘’De Beers has invested heavily over decades to develop technology that enables us, and you, to detect all types of synthetics. And we are continuing to invest to ensure we remain several steps ahead of synthetic production technology,’’ Mellier said. Leading laboratories have De Beers synthetic detection equipment, he reminded sightholders.

De Beers is currently testing a new Automated Melee Screening (AMS) machine that it expects to roll-out in the first half of 2014; meanwhile, sightholders can test samples of melee parcels with DiamondSure to reduce the risk of purchasing undisclosed synthetics, Mellier added.

While the diamond firm’s best practice principles (BPPs) prohibit the sale of undisclosed synthetics, expect De Beers to enhance these measures to ensure appropriate systems and controls are in place to protect sightholders from inadvertently trading in undisclosed synthetics.

‘’De Beers will work with industry bodies to identify entities that have sold undisclosed synthetics. This will help discourage non-disclosure,’’ Mellier said. ‘’Selling one product by misrepresenting it as another, as in the case of undisclosed synthetics, could be illegal and may be a criminal offense in some jurisdictions to be addressed by law enforcement authorities.’’
De Beers expects to create a sightholder advisory panel with a mandate to develop clear and pragmatic guidance on operations to mitigate risk and protect the business from nondisclosed stones.

Until the panel is announced, De Beers reminded sightholders that synthetic rough diamonds are easily identifiable, so the focus turns to polished goods. Purchased polished diamonds from primary source manufacturers and request assurances that the diamonds are natural. ‘’However, the longer the pipeline the bigger the risk. Purchases from secondary sources (i.e. not the polisher of the goods), increases the opportunities for synthetics to be substituted for natural diamonds or spread across parcels sold to unsuspecting clients,’’ Mellier warned.

Testing all diamonds inhouse or sending them to a lab, will provide greater confidence in purchasing. ‘’Once assured or tested and in your possession, your diamond stock is vulnerable to ‘swapping’ on the factory floor. Effective security and monitoring processes will protect the value and integrity of your stock,’’ Mellier added.

Should undisclosed synthetics appear, De Beers warns firms to take immediate action, report it to relevant organizations, including bourses, trade associations and potentially law enforcement agencies. De Beers sightholders are contractually obligated not to sell undisclosed synthetics and doing so is a material breach of the BPPs and places the contract at great risk. ‘’Ignorance cannot be an excuse and we must all take the necessary steps to protect our reputations.

‘’More needs to be done and the technologies team at De Beers is producing more screening equipment like the AMS and will launch further technology in the years ahead. I would like to thank you for your support thus far and would value direct engagement with you to get your views and discuss ideas on how we can continue to safeguard consumers’ confidence in diamonds,’’ he concluded.