Despite a growing number of undisclosed diamond mixing reports and negative publicity, a new study has found the prevalence of such instances may be exaggerated.

The study, which was undertaken by the Indian Natural Diamond Monitoring Committee (NDMC), concluded that due to the small number of synthetic diamonds produced, undisclosed mixing could only be occurring on a “fairly small scale”.

“Contrary to some previous publications, our research shows that [with] the current production technology, gem-quality synthetic diamond rough production is less than 350,000 carats compared to over 125 million carats of natural gem-quality rough,” a statement released by the Indian Gem and Jewellery Export Promotion Council (GJEPC) stated.

The GJEPC – in conjunction with numerous other international trade bodies – formed the NDMC in November last year following a number of reported cases of undisclosed diamond mixing in India, the largest supplier of diamonds to Australia and New Zealand.

The NDMC study, which was said to be “one of the most comprehensive studies ever undertaken in the sector”, involved eight countries across three continents. Participants were from various jewellery and gemstone sectors including manufacturers, retailers, equipment suppliers, testing laboratories, global trade bodies and legal companies.

Recommendations to prevent diamond mixing

In line with its mission to increase transparency in the diamond industry and promote fair trade, the NDMC used the information from its recent study to develop a number of solutions to safeguard against accidental or intentional mixing. These encompassed four main areas: regulatory; commercial; process; and technology.

At a regulatory level, the NDMC proposed a “more granular HS Code system [the Harmonised System is an international standardised code for classifying traded products] to track the global flow of synthetic diamonds” as well as a change to the Consumer Protection Act to “give greater protection to purchasers”.

It outlined plans to empower and encourage trade bodies to take direct action against perpetrators of diamond mixing, urging them to modify their constitutions to clearly outline the practice as unfair and to detail strict penal measures that would be enforced upon those found to be involved in such activities.

In addition, the NDMC recommended the global use of standard declarations with all trade invoices stating that diamonds were natural, and said it would implement “rigorous testing protocols for goods as well as a thorough ‘Know Your Customer’ process in line with the Prevention of Money-Laundering rules”.

Additional testing laboratories similar to the one situated on the Bharat Diamond Bourse (BDB) premises in Mumbai, were also expected to be set up soon. Such facilities are available for industry members wishing to test parcels or individual stones.

“We are confident that these measures will go a long way in safeguarding the interests of all value-chain participants, each of whom has a large stake in ensuring a transparent ecosystem,” the GJEPC release stated, adding that the committee would also be continuously monitoring the implementation of the solutions.

The news will be of interest to the local industry, especially given that earlier this year, a parcel of yellow diamonds that had been submitted to the Gem Studies Laboratory (GSL) for colour treatments was identified as being synthetic, even though the diamonds had been purchased as natural.