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Diamonds lose sparkle

THE international diamond market is reported to be decidedly nervous over the enhancement treatment by General Electric which can produce high-grade precious gems from low-quality stones.

This was highlighted recently at an international symposium held by the Gemological Institute of America in San Diego in the United States.

Diamonds are important to WA. The Argyle diamond mine in the Kimberley – a joint venture between Ashton Mining and Rio Tinto – is the largest producer of natural diamonds in the world.

It is responsible for about one-third of the world’s diamond production.

In 1998-99, the value of diamonds sold from WA was $589 million.

A report by South African stockbroker BOE Securities analyst Hilton Ashton said the trade was “extremely concerned” about the treatment of natural diamonds by GE, resulting in so called Pegasus diamonds.

GE-processed stones are sold by Pegasus Overseas Limited, a wholly-owned subsidiary of Lazare Kaplan International – hence the name Pegasus diamond.

LKI has agreed to inscribe ‘GE POL’ on the girdle of the stone to denote that the diamond has undergone the GE process.

The GIA will also make a statement on each grading report stating that “this diamond has been processed to improve its appearance by General Electric”.

“Our understanding is that the process involves heat and pressure, although GE has not disclosed the method used,” Mr Ashton said.

“We have not established exactly what change is achieved by the process, but we understand it adds value to the diamond by turning a stone of roughly US$20 per carat into a US$100 per carat stone.”

The figures given by Mr Ashton are unconfirmed estimates.

GIA researchers have compiled demographics on hundreds of GE-treated diamonds ranging in size from 0.3 carat to 7cts, with most in the 1ct to 3cts range. The symposium was told it appears GIA has not yet found a way to positively identify GE-processed diamonds.

The GIA is in contact with General Electric but has not been told about the methodology.

While most of the processed diamonds examined by the GIA have fancy shapes, many diamonds have a clarity level of internally flawless to SI, and are coloured mostly D to H.

“The fact that the GIA cannot identify processed from unprocessed diamonds is of concern to the industry,” Mr Ashton said.

The GIA laboratory has identified several diamonds, previously inscribed GE-POL, which had been resubmitted for grading with the inscription removed.

This is clearly fraud and concerns arose as to the extent of this practice.

“Collectively, these issues could dent confidence in the diamond industry,” Mr Ashton said.

“Therefore, it is of utmost importance that either the GIA or De Beers finds a method of positively identifying GE-processed diamonds.

“We understand that De Beers developed similar technology twenty years ago, so it is not inconceivable that the company will soon find an identification method.

“Until then, market participants will remain nervous about the potential damage to the image of individual diamonds and the industry generally,” he said.

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