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Diamonds – A Dazzling Profitable Industry

Wednesday, April 11th, 2012
multicolored diamonds

Occurring naturally, diamonds have been sought after for their use in jewelry, in addition to their usefulness in industrial applications, owing to their molecular properties. The jewel in the crown, a girl’s best friend, a diamond is always forever. The diamond industry employs over ten million people across the globe, with a total production standing at more than $US13bn worth of rough diamonds per year. They are in great demand as they are rare and beautiful. About 30 percent of all mined diamonds enter the jewelry market where they are cut and polished and set or embedded in jewelry of all fashions. The remaining 70 percent go for industrial applications which include cutting and drilling.

Diamonds started forming inside the earth several billion years ago due to extreme heat and pressure. This environment forces the carbon atoms making up diamonds to uniquely bond in pyramids, resulting in a strong solid structure which can serve industrial applications. The diamond is the hardest naturally occurring material and it conducts heat effectively, which expands negligibly when subjected to high temperatures. It is resistant to most acids and alkalis.

The Diamond Pipeline

The diamond jewelry supply chain, called the diamond pipeline, comprises exploration, the mining process, sorting, cutting, polishing and making of jewelry until it reaches the consumers.

Gem quality diamonds are sent to diamond cutting and trading centers in Antwerp, Mumbai, Tel Aviv, New York, China, Thailand or Johannesburg. Experts in diamond cutting and polishing, known as ‘diamantaires’, cut rough diamonds into various shapes like round, oval, pear shape, heart shape, etc. They are polished and classified based on the 4 Cs – cut, colour, clarity and carat weight.

The diamonds are then sent to wholesalers or jewelry manufacturers in 24 registered exchanges or bourses across the globe. The final stage of the diamond pipeline is when diamond jewelry is sold by retailers to the consumer. The USA represents the largest market, forming 50 percent, followed by Japan (15 percent), Italy (5 percent), India (3 percent), China (2 percent), the Gulf (2 percent) and other countries (23 percent). Diamonds form an exclusive category of luxury goods and symbolize emotions such as affection, with many cultures considering them as the ultimate in jewelry.

The Australian Diamond Industry

Australia is known for the Argyle diamonds it produces. These diamonds are obtained from the Kimberly region in North Western Australia and are remarkable for their exotic colors and brilliance. The Argyle Diamond pipe was located after several attempts and studies by geologists in 1979. The mine is the largest natural diamond resource in the world.

The Argyle mine yields a third of the world’s annual supply of diamonds, which are comprised of 45 percent near gem quality, and 50 percent industrial quality diamonds. The gem quality diamonds include rare and highly valued pink diamonds, along with the brilliant champagne and rich cognac diamonds.

The 45 hectare Argyle diamond mine and the alluvial deposits in adjacent Smoke and Limestone Creeks yield the pink diamonds. The host rock for them is lamproite rock rather than the regular diamond hosting kimberlite rock.

The mine is also known for the high technology it uses. After removing the diamond ore by blasting, it is processed and screened and separated by gravity separation techniques. X-ray sorting is employed to finally recover the diamonds as it fluoresces under X-rays.

Argyle diamonds fall into three main categories: pink, champagne, and white diamonds. The 4C’s guide to quality and value applies to colored diamonds also. However, these are graded for their intensity of color, not lack of it.

Argyle diamonds are harder than other diamonds due to the complex atomic structure, which also gives the beautiful colors. About 70 percent of Argyle diamonds fluoresce blue in ultra-violet light, showing off dazzling visual blue arrays.

Sorting is done using a series of mechanical sieves and then the smaller stones are separated based on color and shape using hi-tech equipment. But final valuation is done by experts who are still preferred over any advanced machine, and who consider the clarity, size, shape and color of the diamonds.

Polishing of the stones is done in Perth, where both traditional methods and modern equipment are employed to convert the rough stones to sparkling gems. Laser devices, automatic bruiting and computerized polishing devices are used. Then the diamonds hit markets in Antwerp in Belgium and Mumbai in India.

Perth, the Western Australian capital city, serves as the centre for sorting, cutting and polishing, as well as the marketing centre for the Argyle diamonds.

Indian Diamond Industry

India was home to many diamond mines centuries back but has none now. It gave the world the most famous of all diamonds for its size, brilliance and beauty, the Kohinoor. Although the mines have dried up, the art of diamond cutting and jewelry fashioning is at its peak in India, mainly concentrated in Surat in Gujarat state.

India is the biggest diamond cutting center for small roughs for jewels, which would have otherwise gone for industrial use. The Indian diamond trade comprises more than $US4bn dollars in exports every year. The diamond trade is controlled by some companies and families belonging to Palanpur in Gujarat.

According to reliable sources, 8 out of 10 diamonds in the market are cut and polished in Surat. This industry grosses $US10bn in annual exports for India. The rough diamonds come to Surat as rough crystals retrieved from mines in South Africa and other African mines. From Surat they again set sail as smooth gems to Antwerp in Belgium, the seat of the international diamond trade under the control of Hasidic Jews and Jains from Gujarat.

Further giving a boost to the diamond trade in Surat, the Indian Diamond Institute (IDI) is opening a state-of-the art diamond and jewelry training institute called City Centre in Vesu in 2011.

The institute has been built at a cost of $US130mn and is being funded by the Indian central government under the ASIDE scheme. Equipped to train students in jewelry designing and manufacturing, the institute will leverage digital learning facilities. The course content designed to churn out artisans skilled in diamond grading, computerized diamond planning, jewelry casting and manufacturing, jewelry model making, gold assaying and refining, advanced jewelry designing, jewelry model making, jewelry business management, etc. The global economic downturn in 2008 had affected the diamond industry badly, and Japan’s polished diamond import market had just started to recover with imports reaching $US72mn in January 2011, an increase of 44 percent compared to January 2010.

Sparkle 2011, an event which took place in Surat, highlighted current industry problems due to rough diamond shortages, their high costs, recession effects, shortage of skilled labor and so on. Plans were drawn up to conduct short term upgrading courses to provide necessary skills for cutting and polishing the gems.

Training is also provided in diamond grading to employees in association with the Gemological Institute of America. The state government of Gujarat supports the efforts of the Surat Diamond Association, Surat Municipal Corporation (SMC) and Gems and Jewellery Export Promotion Council in tiding over the difficulties faced by the industry.

Thailand Diamond Business

Thailand specializes in producing exquisite diamond jewelry. The Thai diamond market abounds in oval cut diamonds, brilliant cut diamonds, princess cut diamonds, emerald cut diamonds and marquise cut diamonds. Buyers can find diamonds in varied colors such as yellow, pink, green, blue, red, black and white. The market here is very active, with trade worth several million dollars taking place daily.

The industry used to employ some 10,000 people before recession woes set in. Now the numbers have reduced considerably. Thailand imports rough diamonds mostly from South Africa which are then cut and processed and exported as jewelry. Diamond exports are lesser in value compared to imports as Thailand uses rough stones for its own industrial use.

Big and small jewelry factories in Thailand employ specialist designers. The manufacturing centers include small jewelry workshops to large factories where men and women assemble mid to high level diamond jewelry pieces.

According to the Thai Gem and Jewellery Traders Association, overall jewelry exports may reach their highest levels in five years. The annual export value stood at around $US10bn in 2010 which is expected to increase further, overriding exports of computers and automobiles. This burgeoning trade includes jewelry made with diamonds, rubies and sapphires of various hues. China and India lap up 30 percent of the total export market, the United States at 20 percent, followed by the Latin American countries. Thailand is famous for the high quality of diamonds it uses sourced from abroad and the unique sensational designs that skilled artisans create.

To showcase the indigenous designs and prowess in this field, gems and jewelry fairs are organized by concerned trade associations which attract a lot of foreign presence. The exquisite collections help jewelers garner huge export orders, thereby taking the Thai jewelry industry to new heights.

Hi-Tech in Diamond Jewelry Making

Apart from the hi-tech equipment used in the drilling of mines, retrieving of diamonds, X-ray sorting techniques and other polishing techniques, there are also complete manufacturing ERP solutions. DiaSoft is an inventory tracking and decision support system which computerizes the entire tracking process.

The Oracle 8i platform serves as an integrated diamond manufacturing management solution developed by industry veterans. The user interfaces are designed to be simple and the reporting process is flexible. The entire manufacturing management is greatly simplified by DiaSoft. However the product is highly complicated, incorporating all permutations, combinations and possibilities which are essential to cater to the needs of diamond manufacturers. It is truly a “digital nervous system” according to DiaSoft sources.

The Stock Tracking System uses a bar code-based tracking to capture data, which is then fed into the tracking system. This not only saves a lot of time and energy but also eliminates data capture errors, thereby enhancing the tracking performance. The tracking speed is improved by allowing forward-backward tracking of the diamonds. A packet of diamonds in the diamond pipeline can be easily tracked back to its original rough besides retrieving details regarding the entire diamond pipeline route. The software will reveal the name of each handling person, time and date of receipt of the stone, time and date of return of the stone, weight loss in the process, etc. Information is available for each individual diamond as given by the bar code on the packets.

A natural crystalline mineral, diamond is a transparent form of pure carbon denoting strength and purity. It may be the oldest thing many people own, as it was formed 3 billion years ago in the depths of the earth and brought up above by volcanoes. A few carbon atoms each bonded to four other carbon atoms forming a uniform cubic crystal structure gives rise to diamonds that display unique physical, chemical and optical properties. Coal is also made of carbon atoms but the bonds in a diamond make what it is, “King of gems.”

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