Stardate 20040210.1741

(On Screen): Lloyd writes:

I thought of you while reading this piece in Wired on manufacturing diamonds and the implications for semiconductors, among other areas of interest.

I'm not sure this report is quite as revolutionary as Wired would like to pretend.

There are some myths about diamonds which DeBeers has been very careful to promulgate. One is that diamonds are rare. They're not, really. Based on supply alone, if diamonds were traded in an uncontrolled market, they would be considered no more than semiprecious, costing little more than the legendary cubic zirconium. There are huge natural sources of diamonds in many places in the world. By comparison, there are only a couple places where emeralds can be found, and opals are nearly as rare. In a free market where price was controlled by supply and demand, emeralds and opals (and rubies) would be vastly more valuable per carat than diamonds.

And in fact, in the 19th Century after the South African minefields were first opened, the world price for diamonds collapsed as a result of over-supply. That was when the DeBeers cartel was formed, with the deliberate goal of manipulating the diamond market.

DeBeers controls the world supply (via ownership and exclusive contracts) and keeps prices artificially high through artificial scarcity. The actual production of diamonds each year is much greater than what DeBeers sells into the jewelry business, and they have vaults in Brussels full of unsold diamonds which have accumulated over decades. DeBeers has to buy every diamond produced anywhere and pay an attractive price, because if they did not those producers would dump those diamonds into the retail business and prices would collapse. So DeBeers buys them all, and stores the excess ones in said vault.

Another little known fact is that "natural" diamonds you see in jewelry stores aren't usually quite as natural as you might think. A lot of gem-quality diamonds undergo various kinds of treatments before being cut and sold. One particularly common treatment is to expose them to gamma rays, because it brings out certain colors in the stones or makes existing colors far more rich and intense.

DeBeers has faced many threats in its time, and some came close to sinking it. When the USSR opened up the Siberian diamond fields, there was a period in which DeBeers was being forced to buy so many diamonds at wholesale that it was costing them more than they were getting from their more limited retail sales, and as a result they began to bleed cash. Nor could they increase retail sales, since it would cause prices to plummet.

There was also an investment bubble in the 1970's. For a while, large diamonds were being sold to investors rather than for use in jewelry, but eventually the bubble burst and as those investors began to sell those diamonds again, the price of gem-quality diamonds dropped quite a bit.

Artificial synthesis is another threat to DeBeers, but it's not a new one. General Electric started synthesizing diamonds in the 1950's, and there has been some production of synthetic diamonds ever since.

It's actually quite difficult to tell them apart from natural stones. One of the reasons that cut diamonds look the way they do is because diamond has a really high index of refraction. That refers to the degree to which light bends when entering or leaving the crystal, and the actual number is the result of a moderately complex calculation based on entry and exit angles. (DWL!) In general, the higher the index, the more "sparkly" the cut stone.

For water, the index of refraction is about 1.33. Glass ranges from 1.4 to 1.8 depending on the formulation. Cubic zirconium is around 2.17, and diamond is about 2.41. Since the index of refraction of a given stone can easily be measured directly, cubic zirconium can readily be differentiated from diamond if you have the right equipment.

But synthetic diamonds are genuine diamond and have the same index of refraction and the same hardness. There isn't any easy way to differentiate them from natural stones. As I recall, the usual way to tell them apart is to look for microflaws of various kinds in the crystalline structure. That's because natural stones have such flaws whereas synthetics are perfect. (In other words, you can tell them apart because the synthetics are better.)

GE never made much of an attempt at the gem stone business. For publicity purposes they produced a few large stones, but I don't think they ever really considered producing them in quantity for jewelry. (I remember seeing photographs when I was a kid.) But they did and do sell synthetic diamonds for industrial use as an abrasive. (They sold off that business in 2003.)

The basic technology involved was more difficult back then, and I don't know that 1 carat gem-quality stones cost as little as $100 to synthesize, but I do know that the cost was far lower than the going market price for equivalent natural d