(Minews) - The world’s biggest diamond producers, increasingly threatened by cheaper manmade stones being passed off as the real thing, held a private meeting this week to create their first-ever industry association.
Representative from eight companies, led by industry giants Anglo American Plc’s De Beers unit and Russia’s Alrosa AO, got together at fellow diamond miner Rio Tinto Group’s London headquarters on Tuesday to discuss setting up the group, according to people familiar with the talks who declined to be identified as the discussions weren’t public.
The famously secretive diamond industry has lacked coordinated leadership since De Beers’s monopoly over the supply of gems ended after it lost a 10-year legal battle with the U.S. over price-fixing in 2004. The proposed association would 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 organizations,” Rio Tinto said in a statement e-mailed to Bloomberg News, 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 the discussions with industry participants.”
Subjects discussed included diamond marketing, industry research and the threat to consumer confidence from undisclosed synthetic stones entering the market, De Beers said Thursday in an e-mail.
The group will have an initial budget of $6 million a year, according to the people. Petra Diamonds Ltd., Gem Diamonds Ltd., Lucara Diamond Corp., Dominion Diamond Corp. and OAO Lukoil were also represented at the meeting, the people said.
Key ChallengesOne of the key challenges the industry plans to confront are undisclosed manmade diamonds entering 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, chief executive officer of Lucara, said by phone Thursday. Lamb was at the meeting and said the rise of manmade stones was one of the topics discussed. A producers association would help to formalize an industry response to questions from consumers and investors on the issue, the executive said.
“There was an agreement that it was time that we had something like this in place,” Lamb said.
Undisclosed MixingThe Times of India reported last month that 110 manmade diamonds were discovered in a parcel in the Indian city of Surat, the world’s biggest cutting center. The undisclosed mixing of diamonds has been discovered on several occasions in the nation with India’s Gem Jewellery Export Promotion Council starting the Natural Diamond Monitoring Committee to combat the issue.
“This is a positive development helping to share the burden of combating manmade diamonds and better ensure producers act for the health of the market,” Investec Plc said Friday in a note to investors.
As well as the undisclosed manmade diamonds issue, the group will look to promote the industry and provide more information to consumers and industry participants, the people said. The move follows De Beers’s first publication of its Insight report in September, a compendium of information in an industry where reliable data is hard to come by.
The group, as yet not named, also plans to help manage relationships with governments and industry groups and lay out best practices for health and safety, environmental management and supply-chain integrity, one of the people said. The group also plans to provide an industry annual report.
Spokespeople for Gem Diamonds and Petra declined to comment. Dominion, Lukoil and Alrosa spokespeople weren’t immediately able to comment as well.
