Despite all the grumbling over price lists and grading reports, the diamond industry has had it relatively easy. While the colored-gem market has been roiled by treatments and synthetics, the diamond scene has had to deal only with fracture-filling and the occasional simulant like cubic zirconia and moissanite. But now all that is changing.

Recently, noted diamond dealer Lazare Kaplan International threw the industry for a 10-power loupe with a mysterious process that purportedly improves a diamond’s color and brilliance. The company won’t describe the process, citing a confidentiality agreement with the process’s developer, General Electric. (GE won’t comment, either.) But most experts think the process is annealing, a high-pressure, high-temperature treatment that improves a diamond’s color and sometimes its clarity. (LKI denies that clarity is affected.) Whether or not that’s what LKI is doing, many think that annealing, as well as the manufacturing of synthetic diamonds, are two nettlesome developments that the industry will have to deal with sooner or later.

Dr. Kurt Nassau, a noted New Jersey gemologist who has studied treatments for years, says both processes can be done right now. “The question is: Can they be done economically?” he says. At least one company, Ultimate Created Diamonds of Golden, Colo., says they can. Company president Alex Grizenko says he’s producing a regular supply of fancy-colored synthetics and is beginning to produce color-treated natural whites and fancy colors. Grizenko believes in full disclosure and will laser-inscribe the stones at the Gemological Institute of America’s Gem Trade Lab. He and Lazare Kaplan may not be the only ones playing with color. In the wake of LKI’s announcement, other companies have claimed similar color-treating processes.

All of this means that diamond handling will get a lot more complicated. The industry’s easy ride may be getting bumpy.

Annealing. So what are these two processes? Annealing is a fancy term for a high-pressure, high-temperature treatment that scrambles a stone’s crystal structure. “It’s like ironing a shirt,” Grizenko says. “It’s wrinkled, but you put a little heat on it and it straightens out.” While annealing can boost color grades by taking color away, Grizenko says it can also induce color and increase clarity grades. If it’s not done properly, color and clarity grades can suffer.

Heat treatments of gemstones are generally disclosed, and most think an annealed diamond would have to be, too. But detection may be a problem. LKI officials maintain their process will never be detectable. They say that, for all the industry knows, color-treated stones may already be on the market. GIA officials aren’t so sure there will never be a way to detect annealing but concede it’s a challenge. “One can tell if something’s been heated, but it’s tough to tell if it’s done by man or done in the earth,” says Dr. James E. Shigley, GIA’s director of research. “There may be some physical damage to the gemstones caused by the heating, but in some cases there’s not.”

Annealing has been around for years, but Russian scientists have been largely frustrated in their attempts to bring it to the market. For one thing, it isn’t easy. Applying high pressure sometimes destroys the stone. “You are dealing with very valuable material and really walking a fine line,” Grizenko says. Recently, Russian scientists were able to produce a stream of color-improved stones, but at the expense of clarity, according to Mark van Bockstael of Antwerp’s HRD Institute of Gemology.

Grizenko claims he’s overcome all that and will sell annealed stones later this year, at 10% to 15% below the “street value” of untreated diamonds. He says his process works mostly for off-color stones. “In the middle of the alphabet you can increase the color grade quite a bit,” he notes, referring to the D-through-Z color-grading scale. “When you get closer to near-colorless you can’t go up that many steps, two or so.” He says that some of his big successes involved adding color. “We take these M-color stones and make them this glorious peridot green,” he says.

Synthetics. Annealing is often linked to manufacturing synthetic stones because it involves similar technology, which mimics the high pressure and heat found underground in nature. There’s one big difference. Annealing changes a stone’s molecular structure but doesn’t add anything artificial to the stone. By contrast, synthetics are all artificial—although they are diamonds, just grown in the lab, not in nature.

Synthetic gem whiz Tom Chatham first made them an issue in 1993, when he announced ambitious plans to mass-produce synthetic near-colorless gems. Those plans have been shelved for now—although Chatham says he’s still interested—but at the time, they received extensive publicity, including a segment on NBC’s “Dateline.”

No one doubts that synthetic diamonds are possible. Most industrial diamonds are synthetics, since they can be produced more reliably than naturals. But most synthetics are brown and yellowish, unsuitable for jewelry. Companies have produced near-colorless gem-quality stones, but no one seems to have done it on a large scale. “It’s hard to produce a high-quality synthetic diamond,” notes Shigley. “They tend to be more included and fractured.”

In fact, some think mass-producing near-colorless gem-quality stones is impossible. Even Grizenko, who is producing blue, red, and pink synthetics—and selling them at “a fraction” of the cost of naturals—does not think it’s possible to mass-produce near-colorless synthetics economically. “It’s hard to grow a good white, because you have to carefully control for things like nitrogen,” he observes.

But Chatham is convinced it will happen some day. Last year, General Electric—now Lazare Kaplan’s partner—approached him about marketing near-colorless synthetics. The talk went nowhere, mostly because General Electric didn’t seem to know the jewelry industry, Chatham says. (A manager from the company’s superabrasives division did not return phone calls from JCK.) “I’m positive there will be white synthetic gems one day,” says Chatham. “If not me, someone else will do it.

De Beers has done a good job keeping this cat in the box, but the lid’s been cracked open.”

For now, there are only fancy-colored synthetics on the market, and a pretty limited number at that. The industry doesn’t seem worried about synthetic fancy-colored stones, since most colored diamonds are sent to labs anyway to document origin of color.

But near-colorless synthetics are another matter. Even though diamond dealers don’t think gem-quality near-colorless synthetics will hurt the market for naturals—just as the market for emeralds, rubies, and other colored gems hasn’t been damaged by synthetics—detection could be a big problem. Like synthetic moissanite, synthetic stones fool a thermal tester into reading “diamond” because that’s technically what they are. But visual detection of synthetic diamonds, unlike moissanite, isn’t easy. “It’s a little harder to detect,” Shigley says. “To me the features seem fairly distinctive, but I’m a little biased because I’ve seen a number of samples.” (For a list of the identifying characteristics of synthetics, see “How to Detect Synthetics,” p. 127.)

All this has led industry leaders to call for a synthetic-sniffing “black box” along the lines of a thermal tester or the new moissanite detectors. One has been developed—sort of. De Beers recently introduced Diamond Sure, a machine that’s inexpensive and easy to use but still has some kinks. (Synthetics are also said to be detectable by the SAS2000 Spectrophotometer, available from Adamas Gemological Laboratories in Boston. But at several thousand dollars, the machine isn’t likely to be a mass-market item.) Diamond Sure’s drawback is that it refers a certain number of stones, Ds and Es, to a second machine called Diamond View. Unfortunately, Diamond View is expensive and requires more skill to use, which means it will end up in far more gem labs than jewelry stores. Jewelers could lose time sniffing out these “false positives,” although scientists note that most Ds and Es are sent to labs anyway.

Since synthetics are not a big problem right now, De Beers isn’t yet selling the two devices. They have instead been loaned to gem labs for educational reasons—and as a precaution, to prevent the industry from being thrown for yet another loop.

How to Detect Synthetics

According to Dr. James Shigley, the Gemological Institute of America’s director of research, visual clues for fancy-colored synthetics include:

• Uneven color zoning. Synthetic color is deeper in some areas than others and marked by sharp boundaries.

• Opaque, black, elongated inclusions that have a metallic luster in reflected light. Because of their metallic nature, many synthetic diamonds are attracted to magnets.

• Unusual graining, with cross or stop-sign patterns that tend to follow the color zoning.

• A stronger fluorescence to short-wave than long-wave ultraviolet light. (Most natural diamonds exhibit the opposite.) The fluorescence also shows a pattern, with some parts of the diamonds more fluorescent than others.

If the synthetic diamond is colorless, all these properties apply except for color zoning. Also, when examined under an ultraviolet lamp, the colorless synthetic continues to glow for about a minute after the lamp is turned off.