De Beers Hasn’t Found Undisclosed Synthetics in Pipeline

After using its new synthetic melee detector on a large amount of samples, De Beers found no undisclosed lab-grown diamonds.

“We have not detected one in all the parcels we have screened,” said CEO Philippe Mellier in a conference call following the release of the company’s financial results. “We are talking about thousands of parcels.” 

Industry fears over undisclosed synthetics have grown in recent months. Last week, China’s Shenzhen Daily said the local Gold & Jewelry Industry Association advised traders “to be cautious and keep their receipts and quality inspection certificates to avoid being cheated by sellers of synthetic diamonds.”

One lab “found more than 200 CVD diamonds during regular sample checks in May and June,” according to the report. “Most of the synthetic diamonds were 0.30 carats.”

Mellier said that while the company is “not downplaying the risk of synthetics…we have [not] seen them so far. Our trials have not detected one.”

The synthetic melee detector is still in its test stages, and has been lent to some sightholders for test purposes. 

Mellier also reiterated that De Beers does not plan to market synthetic gems, despite owning one of the largest producers of industrial synthetics, Element Six.

“We are in the natural diamond industry,” he said. “And we are in the synthetic diamond industry for other applications.”

Mellier also addressed concerns that banks were no longer willing to finance the diamond industry.

“I know Bank Leumi has announced its intention to withdraw but we haven’t see a tidal wave of banks leaving the industry,” he said. 

He added that “some [diamond] margins are good, some are under pressure,” but said De Beers’ prices are “pretty much in line with the polished market.”

Mellier also said the company has seen “growing strength” in U.S. polished diamond sales in 2013. Chinese demand was also expected to growth but the Indian domestic market remains “a bit of a problem,” Mellier said. “We are expecting growth over last year.” 

The remarks came after De Beers reported flat sales results for the first half of the year. Overall sales for the first six months  totaled $3.3 billion, about the same as last year. Rough diamond sales were $3 billion, also even with last year.

After a 12 percent decline in De Beers’ rough diamond prices during the second half of 2012, prices increased by 6 percent in the first six months of 2013, a De Beers statement said.

Mellier said that the relocation of De Beers’ sales and aggregation function to Botswana was proceeding “ahead of schedule,” with many London employees opting to move.

A statement also said that both the Forevermark brand and De Beers Diamond Jewellers retail chain have seen sales growth.

JCK News Director