GIA Shares Findings On Pegasus Process

The Gemological Institute of America’s first published report on General Electric’s color-enhancing diamond treatment reveals that its top scientists can identify some of the stones.

They are supposed to be easy to spot: “GE POL” (for General Electric and Pegasus Overseas Ltd., the Lazare Kaplan subsidiary that’s marketing the stones) is inscribed on their girdles. But GIA has received about a dozen stones with the inscription polished off, leading some jewelers to worry that “de-inscribed” diamonds masquerading as natural stones are now in circulation.

In an upcoming issue of Gems & Gemology, GIA researchers share their findings from examining 858 GE-POL diamonds between May and July. The stones, ranging from .18 ct. to 6.66 cts., are primarily high-color, high-clarity fancy shapes. Most are type IIa, meaning they have no boron or nitrogen. Many display several unusual characteristics, including “subtle-to-obvious” internal graining, strain patterns with “moderate-to-intense” strain colors, and a lack of long- or shortwave ultraviolet fluorescence (which is characteristic of type IIa diamonds generally). Also noted were partially healed fractures and crystals with strain-halos more commonly seen in heat-treated sapphire. GIA noted that many of the stones look somewhat “hazy.” GE claims future generations of stones won’t have this characteristic.

GIA president William E. Boyajian says these characteristics could serve as a flag for de-inscribed diamonds. “If I were a jeweler, and I saw a high-color, high-clarity, fancy-cut diamond with no fluorescence, a slight haziness, and some of the other features that were written up in the article, I would send it in to our lab,” he says. He noted that GIA is continuing its research into other potential signs of treatment. “We’ve definitely made a lot of progress,” he says. “We can now make a statement that we can identify some of these stones, which is a big step.”

GE recently acknowledged the treatment involves heat and pressure (JCK, November 1999, p. 57). GIA grading reports note that the stones have been “processed” as opposed to “treated”—terminology GE insisted on. But Boyajian doesn’t know if GE’s recent revelation will change that. “The industry has traditionally viewed heat and pressure as a treatment,” he says. “Right now, it still says ‘processed.’ I don’t know whether that will change. But the key to the report is alerting the reader that this stone has undergone something unusual outside the normal processing.” GIA doesn’t grade treated diamonds, but Boyajian says it’s making an exception so that it can study the process.—Rob Bates

Where Do Diamonds Come From?

It’s commonly believed that most diamonds come from Africa or Russia. But now a scientist has raised eyebrows with his theory about the stones’ real origin: outer space.

In a recent article in Science magazine, Dr. Stephen Haggerty, a professor of geology at the University of Massachusetts at Amherst, takes issue with the belief that the carbon in diamonds derives from organic materials. “The carbon in diamonds predates animals and plant life by about 3 billion years,” he says. He believes supernovas—dying stars—were the actual carbon factories and notes that the carbon in diamonds is similar to that found in meteorites.

Dr. James Shigley, director of research at the Gemological Institute of America, says the theory is plausible. “I think it’s all speculation, but there’s evidence of diamond material in outer space, and micro-diamonds have been found in meteorites,” he says. “So it is possible that some of the material came from space.”

On the heels of this comes another Science article arguing that millions of carats of diamonds lie deep inside Neptune and Uranus. After performing experiments that simulate those planets’ atmospheres, University of California researchers concluded that a huge layer of diamonds might exist near the cores of both planets. They add that Jupiter and Saturn could also be diamond producers, but on a smaller scale.

It can’t hurt a diamond’s aura of mystery that it’s not only forever but also, perhaps, extraterrestrial.—Rob Bates

Oppenheimer: E.U. May Block Branding

De Beers officials recently acknowledged that “legal issues” could hinder any “branding” plan. Most analysts assumed they had in mind the United States, where De Beers doesn’t have an office because of antitrust concerns. But the real danger may be closer to home.

“There’s a very good chance that the European Commission might say that this is an abuse of your dominant position, because you are doing something for your sightholders that you’re not doing for the world at large,” chairman Nicky Oppenheimer told the London Financial Times. “So there are legal problems with this, which we are busy struggling with. I’m quite certain that we’ll come to an understanding.”

De Beers officials declined to elaborate on Oppenheimer’s statements. Rumors that the European Union was investigating De Beers surfaced last year but were later denied by an E.U. spokesman.—Rob Bates

Follow-Up De Beers’ Review Stresses Marketing

De Beers’ widely anticipated strategic review was scheduled to be completed last month (“De Beers’ Time of Reckoning,” JCK, October 1999, p. 124), but now company officials say it’s an “ongoing exercise.”

De Beers watchers had speculated that the review could lead to drastic action—including spinning off the Central Selling Organisation in London or reorganizing into a mining-only company. But De Beers seems to have discarded—or at least put off—those options for now and is looking to “do what we do better,” in the words of managing director Gary Ralfe.

What does De Beers do that it wants to do better? Market diamonds. “Instead of just selling the diamonds to our clients and saying, ‘That’s it,’ [De Beers may] help sightholders with their advertising—the promotion of the diamonds that they produce—and see if we can help stimulate demand,” Ralfe says. Some speculate that De Beers could give its clients marketing feedback the same way the Indo Argyle Diamond Council does.

In fact, De Beers now says it envisions a “partnership” with sightholders. But De Beers’ concept of “partnership” includes mutual cooperation and joint responsibility. Ralfe suggests that sightholders could shoulder some of

De Beers’ advertising and promotion burden. “We believe, in a business where very little advertising is done, other than by De Beers, we should be able to get our partners to advertise more so that diamond jewelry can compete with other luxury products,” Ralfe says.

De Beers already is encouraging sightholders to devote more attention to marketing. The most notable example concerns the limited-edition Millennium diamonds. De Beers is leaving their promotion to the 14 sightholders who were awarded the stones on the basis of marketing plans they submitted in advance. Recently, 10 of those sightholders held a press conference to promote the diamonds. What was noteworthy wasn’t the event itself—although the presence of supermodel Heidi Klum attracted a fair amount of coverage—but the sight of De Beers clients stepping out from the company’s shadow.—Rob Bates

Diamonds in the Pink

The 15th annual pink diamond tender by Australia’s Argyle diamond mine took place in New York City this fall and featured 47 fancy pinks, two unusual fancy violets, and two fancy reds—the company’s entire yearly production of important colored diamonds. A handful of U.S. diamond dealers, top-end jewelers and manufacturers, and a half-dozen members of the trade press were invited to inspect the stones, which ranged from .50 ct. to 2.76 cts. and totaled 52.61 cts.

Adding spice to this year’s collection was a .73-ct. emerald-cut diamond graded fancy red by the Gemological Institute of America’s Gem Trade Laboratory—a “straight red” in graders’ parlance. Only a handful of diamonds, possibly only a half-dozen, have ever been anointed straight red. Most “red” diamonds are modified by purple or pink, including another tender diamond, the .59-ct. oval graded “fancy purplish-red.”

Clarity grades ranged from VS1 to I2, but clarity seems to have little or no effect on the value of these rare diamonds, especially the “fancy deep” colors—the darker color hides most inclusions.

The New York viewing was only the second in as many years. The collection is also shown in Sydney, Tokyo, Hong Kong, London, and Geneva. Three U.S. companies bid successfully last year, and Argyle wants to find more U.S. diamond merchants to invite. “They should be willing to market the pinks and be able to explain the beauty and rarity of such gems,” says an Argyle spokesman. The company mentions Suna Bros. (“a terrific line of pinks”) and Alan Friedman & Co. in Los Angeles as firms that meet this standard. Other notables invited to this year’s tender were Marty Gruber of Nova/MWI in Los Angeles and Kwiat in New York.

“I’ve been excited by the beauty of colored diamonds for 30 years,” says Alan Friedman. “Before Argyle, you couldn’t match two stones even after looking at 500-ct. parcels.”

Of the 150 companies worldwide invited to the tender, 60 to 75 will attend one of the six viewings. About 25 will submit bids, and 10 to 15 will be in the running to take home some pinks. Successful bidders have four days after being contacted to deposit the cash into Argyle’s account.

Sticker shock may take longer to cure. In 1995, the average price per carat was more than $100,000. That was exceeded “quite nicely” in 1996, according to the Argyle spokesman, and prices set new records in 1997 and 1998.—Gary Roskin

Light Performance A Consumer Can See

GemEx Systems has created a countertop viewer that allows a jeweler to demonstrate how cut contributes to the brilliance of a diamond. The BrillianceScope Viewer “lets the consumer view the variations in light performance among diamonds. Brilliance, dispersion, and scintillation are all apparent, even to novices,” says Randy Wagner, principal developer of the machine.

The viewer, which will cost around $2,500, evolved from GemEx System’s digital “BrillianceScope,” a device that measures a diamond’s overall light performance and shows images that compare one diamond with another (JCK, May 1999, p. 44).

Wagner says the viewer impresses shoppers more than machines that just let them see “Hearts and Arrows” and other brands on superior diamonds. “For consumers, seeing ‘hearts and arrows’ is not the same as seeing a diamond’s actual ‘light performance.’ A consumer is much more likely to pay the difference for a higher-quality-cut diamond if he can see the difference in light performance.”

You can reach GemEx Systems at (414) 242-1111 or gemex@gemex.com or visit the company’s Web site at www.gemex.com.—Gary Roskin

GE Calls Disclosure Rule ‘Premature’

Among the more notable comments on the proposed revision to the Federal Trade Commision’s Guides for the Jewelry Industry (which would mandate disclosure of permanent treatments) was one from the General Electric company, inventor and owner of the decoloring process used on Lazare Kaplan’s “Pegasus” diamonds. In an eight-page document, GE counsel Barry J. Cutler said FTC should view “undetectable” processes, such as GE’s, differently from standard treatments. And he argued that FTC should postpone its ruling for the time being.

“[With] an undetectable permanent process that improves the color or brilliance of diamonds but does not physically add to or detract from their natural content, the absence of disclosure does not put the consumer at risk [the way non-disclosure of laser drilling does],” he wrote. “Such undetectable processes raise legal and policy issues, both for consumer protection and competition, that go beyond the record of this proceeding and one which there is not an adequate factual basis for the Commission, or anyone else, to make a knowledgeable judgment at this time.” Cutler also noted that GE’s commitment to disclosure, illustrated by its laser-inscribing the stones, relieves the need for any “urgency.”

Cutler declined further comment, saying his letter “speaks for itself.”

In response to GE’s comments, the Jewelers Vigilance Committee argued that the industry had thoroughly studied the issue and was in agreement on the need for a new rule. “The developing technology of new treatments in gemstones requires immediate attention,” wrote JVC executive director Cecilia Gardner. “A stone subjected to a treatment, no matter how beneficial, would inevitably be priced differently than the same stone with the same qualities and characteristics achieved without treatment. To avoid deception, this treatment must be disclosed.”—Rob Bates

De Beers Stops Buying Stones From Angola

After a spate of unflattering reports charging that diamonds are funding Angola’s bloody civil war, De Beers has placed an embargo on the purchase of all diamonds from the country. The company said it was also “ending its participation in all buying offices in Angola” and was “reviewing its buying operations in other West and Central African countries—namely the Democratic Republic of Congo and Guinea.”

The move comes as four European human rights groups called on the diamond trade to do more to halt the purchase of diamonds from rebel armies in both Angola and Sierra Leone. “Most people would be horrified to learn that their diamond jewelry had financed the purchase of landmines or guns in one of Africa’s brutal conflicts,” noted the British-based human rights group Global Witness.

As part of its sanctions against the UNITA rebels, the United Nations banned the purchase of Angolan stones that aren’t accompanied by a government certificate. But recent news reports say illicit sales continue and may outnumber official ones. The controversy has been reported in numerous British newspapers and the Christian Science Monitor. It’s also scheduled for an ABC News report.—Rob Bates