TECHNOLOGY: Cleaning Up The Diamond Industry
Recent Western Cape Business News
An estimated 17%, and perhaps as many as 27% of the diamonds on sale in South Africa are the so called “blood diamonds” from conflict regions in Africa, accoring to an analysis of over 2000 diamond and gemstone specimens using a new DNA fingerprinting technique developed by Cape Town-based corporate company DiaLab Pty Ltd.
The DNA fingerprinting system allows an analysis of gemstones to a level which was previously unheard of. Stones can now be compared and checked for authenticity and other elements such as clarity, cut and colour by experts across the world within minutes. More importantly, the DNA fingerprinting authentication process is revealing more about the stones than it was previously possible to know, especially when it comes to treated diamonds.
The result is that many “excellent” gradings have been proved to be not quite as good as they purport to be, which means the stones have been overpriced, causing inflation.
The findings haven’t made the company popular with many diamond sellers, especially as this is an industry where inflation is roughly 15 to 19% higher than anywhere else in the world. The factors that contribute to the problem are a lack of control in grading and laboratory systems and a lack of more effective control over illicit trade.
“We’re sitting on a time bomb. We’re taking the lid off wide scale corruption in the South African diamond industry,” says Baron Baretsky, a Dialab spokesman.
Diamonds are sold with certification but in some instances the certification is not worth the paper it is printed on because the grading systems in use are not adequate to distinguish synthetically produced carbon-based diamonds from natural, carbon based stones.
The problem that we have globally is that there is no real way to link the certificate to the stone, other than clarity, cut and colour and those measures are all subjective.”
The DiaLab system is taking a huge step forward by pioneering the DNA fingerprinting of diamonds. The new certification process provides in depth reports that mean that a particular certificate can be indelibly linked to a particular stone. There is no more ambiguity, and no more room for fraud.
The forensic machines, each costing over R3.5 million, are the same as the ones used in the top forensic labs around the world. Coupled with the bespoke software that DiaLab has developed, they deliver information about each stone that is beyond anything that has been possible to obtain before.
The results are disturbing. Besides the high percentage of conflict diamonds in circulation, DiaLab revealed that many of the diamonds and gems on sale in South African jewellers are not properly certified and the certification might contain misleading terms to avoid full disclosure of treatments.
The DNA analysis allows for a detailed chemical analysis of every component of the stone, and it is clear which are man-made and which have been chemically coated so that they appear to be better than they are. Techniques, which remain secret within big diamond mining companies, are used to alter the surface of low-priced brown diamonds so that they appear white.
Brown diamonds, for example, are chemically altered and then certified and classified as white. The consumers are being cheated and until now there has been no system in place to detect it. It is not necessarily that some laboratories are being dishonest, but technically one can only tell the difference with DNA testing and DiaLab is one of only five labs in the world that can do this kind of detailed analysis.
An additional problem is that the diamond graders in Africa are mostly trained in-house by the laboratories where they are employed but they are not internationally certified. In order to be a diamond grader, the grader must be certified by either HRD Antwerp or the International Diamond Council (IDC). If a diamond grader is trained to consistently give diamonds a higher grading then they would not meet the international grading standards.
The fact that there is no proper industrial control on laboratories or the trade of such certifications exacerbates the problem. Several recent fraud and corruption cases pertaining to diamond certification in South Africa are only the tip of the iceberg.
Some synthetic stones will pass every single test, with the exception of the DNA analysis including the industry-standard thermal conductivity test.
That is why we have to have a minimum regulation. We need a proper certification which is stringently enforced, such as that which exists in Europe through the Industrial ISO Board and Belec in Belgium. The problem is that the industry in Africa has been protecting itself by building the test equipment that is able to test only what they want to find.
According to Dialab, there are a rapidly growing number of cases cases where people have discovered that their diamonds are not authentic as stated on their certification. For example, some stones had treatments or colour enhancements that were not disclosed.
In spite of the fact that the Merchandise Mark Act 17 of 1941 declares that the falsification of information on certification is fraudulent, fraud does still occur. For example, many gemstone certificates declare that the gems are natural, but also include the letters NCNA. This stands for ‘natural colour not authenticated’ and disguises the truth about the stone.
According to international laboratory rules and the Diamond Commission rule 4.12 and 4.28, all disclosure of any treatment must be done, so scientific laboratories or gemological institutions may not use such a term to avoid the testing.
So far, in all the cases that DiaLab has found, the jewellers who have sold stones that are not authentic have returned their customers’ money straight away. The company is hoping that the diamond buying public will become more aware of what they are buying, and take steps to ensure that they only purchase properly certified stones.
Dialab is determined that this kind of corruption is going to end, and is subsidising 95% of the costs so it can provide a service for consumers to have their diamonds authenticated, for as little as R100 per stone.
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