Armed with inexpensive, mass-produced gems, two startups are launching an assault on the De Beers cartel.

By Joshua Davis

Aron Weingarten brings the yellow diamond up to the stainless steel jeweler's loupe he holds against his eye. We are in Antwerp, Belgium, in Weingarten's marbled and gilded living room on the edge of the city's gem district, the center of the diamond universe. Nearly 80 percent of the world's rough and polished diamonds move through the hands of Belgian gem traders like Weingarten, a dealer who wears the thick beard and black suit of the Hasidim.

David Clugston Yellow diamonds manufactured by Gemesis, the first company to market gem-quality synthetic stones. The largest grow to 3 carats.

"This is very rare stone," he says, almost to himself, in thickly accented English. "Yellow diamonds of this color are very hard to find. It is probably worth 10, maybe 15 thousand dollars."

"I have two more exactly like it in my pocket," I tell him.

He puts the diamond down and looks at me seriously for the first time. I place the other two stones on the table. They are all the same color and size. To find three nearly identical yellow diamonds is like flipping a coin 10,000 times and never seeing tails.

"These are cubic zirconium?" Weingarten says without much hope.

"No, they're real," I tell him. "But they were made by a machine in Florida for less than a hundred dollars."

Ian White A microwave plasma tool at the Naval Research Lab, used to create diamonds for high-temperature semiconductor experiments.

Weingarten shifts uncomfortably in his chair and stares at the glittering gems on his dining room table. "Unless they can be detected," he says, "these stones will bankrupt the industry."

Put pure carbon under enough heat and pressure - say, 2,200 degrees Fahrenheit and 50,000 atmospheres - and it will crystallize into the hardest material known. Those were the conditions that first forged diamonds deep in Earth's mantle 3.3 billion years ago. Replicating that environment in a lab isn't easy, but that hasn't kept dreamers from trying. Since the mid-19th century, dozens of these modern alchemists have been injured in accidents and explosions while attempting to manufacture diamonds.

Recent decades have seen some modest successes. Starting in the 1950s, engineers managed to produce tiny crystals for industrial purposes - to coat saws, drill bits, and grinding wheels. But this summer, the first wave of gem-quality manufactured diamonds began to hit the market. They are grown in a warehouse in Florida by a roomful of Russian-designed machines spitting out 3-carat roughs 24 hours a day, seven days a week. A second company, in Boston, has perfected a completely different process for making near-flawless diamonds and plans to begin marketing them by year's end. This sudden arrival of mass-produced gems threatens to alter the public's perception of diamonds - and to transform the $7 billion industry. More intriguing, it opens the door to the development of diamond-based semiconductors.

Diamond, it turns out, is a geek's best friend. Not only is it the hardest substance known, it also has the highest thermal conductivity - tremendous heat can pass through it without causing damage. Today's speedy microprocessors run hot - at upwards of 200 degrees Fahrenheit. In fact, they can't go much faster without failing. Diamond microchips, on the other hand, could handle much higher temperatures, allowing them to run at speeds that would liquefy ordinary silicon. But manufacturers have been loath even to consider using the precious material, because it has never been possible to produce large diamond wafers affordably. With the arrival of Gemesis, the Florida-based company, and Apollo Diamond, in Boston, that is changing. Both startups plan to use the diamond jewelry business to finance their attempt to reshape the semiconducting world.

But first things first. Before anyone reinvents the chip industry, they'll have to prove they can produce large volumes of cheap diamonds. Beyond Gemesis and Apollo, one company is convinced there's something real here: De Beers Diamond Trading Company. The London-based cartel has monopolized the diamond business for 115 years, forcing out rivals by ruthlessly controlling supply. But the sudden appearance of multicarat, gem-quality synthetics has sent De Beers scrambling. Several years ago, it set up what it calls the Gem Defensive Programme - a none too subtle campaign to warn jewelers and the public about the arrival of manufactured diamonds. At no charge, the company is supplying gem labs with sophisticated machines designed to help distinguish man-made from mined stones.

Ian White "I was in combat in Korea and 'Nam. You better believe that I can handle the diamond business," says Gemesis founder Carter Clarke, center. His lieutenants have 27 diamond-making machines up and running -- with 250 planned -- at this factory outside Sarasota, Florida

In its long history, De Beers has survived African insurrection, shrugged off American antitrust litigation, sidestepped criticism that it exploits third world workers, and contended with Australian, Siberian, and Canadian diamond discoveries. The firm has a huge advertising budget and a stranglehold on diamond distribution channels. But there's one thing De Beers doesn't have: retired brigadier general Carter Clarke.

Carter Clarke, 75, has been retired from the Army for nearly 30 years, but he never lost the air of command. When he walks into Gemesis - the company he founded in 1996 to make diamonds - the staff stands at attention to greet him. It just feels like the right thing to do. Particularly since "the General," as he's known, continually salutes them as if they were troops heading into battle. "I was in combat in Korea and 'Nam," he says after greeting me with a salute in the office lobby. "You better believe I can handle the diamond business."

Clarke slaps me hard on the back, and we set off on a tour of his new 30,000-square-foot factory, located in an industrial park outside Sarasota, Florida. The building is slated to house diamond-growing machines, which look like metallic medicine balls on life support. Twenty-seven machines are now up and running. Gemesis expects to add eight more every month, eventually installing 250 in this warehouse.

In other words, the General is preparing a first strike on the diamond business. "Right now, we only threaten the way De Beers wants the consumer to think of a diamond," he says, noting that his current monthly output doesn't even equal that of a small mine. "But imagine what happens when we fill this warehouse and then the one next door," he says with a grin. "Then I'll have myself a proper diamond mine."

Clarke didn't set out to become a gem baron. He stumbled into this during a 1995 trip to Moscow. His company at the time - Security Tag Systems - had pioneered those clunky antitheft devices attached to clothes at retail stores. Following up on a report about a Russian antitheft technology, Clarke came across Yuriy Semenov, who was in charge of the High Tech Bureau, a government initiative to sell Soviet-era military research to Western investors. Semenov had a better idea for the General: "How would you like to grow diamonds?"

Keith & Mary ...

My interest in gemstone stamps originates from my 25 year involvement with the jewellery industry (and I imagine many of the gemstone stamp collectors you sell to have a similar business background), so it was with interest that I read the article your email pointed to.

It is an unfortunate part of human nature (and the jewellery industry), that so many of the public think that buying a fake is just as good as buying the real thing. You wouldn't do it with wine or with perfume or with stamps! If you want a real diamond (or other coloured stone), you pay for it. If you want the fake you can pay for that too, but like everything in life, you get what you pay for.

What the article didn't say (typical of journalism which is often part fact part fiction), it is relatively easy to tell the 2 stones apart if you know what you're looking for, even without the so-called "expensive equipment from DeBeers".

I'm not on a campaign to stamp out counterfeiting (a problem you face equally in the stamp, coin and numismatic business), I just request that you be careful with the abuse of information that affects others.

Regards
Gordon S.

Mary ... Further to my comments on the Synthetic Diamond story, here is an article from the President of the Gemological Institute of America, based in Carlsbad, CA. It further explains the situation, from the most prestigious gemological organisation in the world.
Regards Gordon S.

The recent article on synthetic diamonds in Wired magazine (September issue) has garnered a great deal of attention by the major print media and television networks over the past several weeks.

Gem synthetic diamond is an intriguing product, and the finished goods are certainly attractive materials. They should be. They have all the same optical, physical and chemical properties of natural diamond. Visually – even to the most experienced gemologists – they are indistinguishable from natural diamond.

Fortunately, we at GIA have stayed well ahead of the technology curve on synthetic diamonds for seven decades. Our first encounter came in the 1930s, when a scientist claimed he had created synthetic diamond. Through good science and hard work, GIA founder Robert M. Shipley and his son Robert Jr. proved the claim to be false.

In 1955, General Electric Co. scientists created the first-ever synthetic (industrial quality) diamonds, which we later characterized. And when GE announced the first cuttable gem-quality synthetic diamonds in 1970, we quickly provided identification criteria. Then, in the 1980s, when Sumitomo Corp. started selling gem synthetic diamond crystals for use as “heat sinks” in electronic equipment, we broke the news to the world with an in-depth 1986 article that clearly characterized the material and provided for conclusive identification of it. The following year, we worked intensely with De Beers’ research staff and reported on their synthetic diamonds, all produced for experimental purposes. Since then, we have reported regularly on synthetic diamonds in Gems & Gemology, including a comprehensive wall chart for the separation of natural from synthetic diamonds in 1995 and a landmark 1996 article by De Beers researchers on their detection instrumentation. To this day, we continue to keep the trade and the public informed—and confident—about our ability to detect gem synthetic diamonds, with an article in the Winter 2002 G&G (months before the Wired article) characterizing the new Gemesis synthetic diamonds and an August Insider report on the new single-crystal diamonds grown by chemical vapor deposition.

I hope that the media reports on synthetic diamonds mention the fact that the major laboratories can conclusively identify gem synthetic diamonds, that most of the material produced is still small and yellow in color, and that the sum of all commercially produced gem synthetic diamonds is but a minute portion of the entire worldwide diamond market.

For years, we have stated that there is nothing inherently wrong with synthetic diamonds. They are attractive and will no doubt find a market niche if they can be produced in sufficient quantities to warrant the huge investment necessary to create and sustain demand at appealing price points. Our view has remained consistent: The key is proper identification and distinction from natural diamond, as well as full disclosure in the marketplace. While the barrier to commercially produced gem synthetic diamond has been broken, our ability to identify the product has not. It is critical that we keep it so.

(Comments taken from the GIA Newsletter. Visit: GIA).