Diamonds are a man-made friend
It's a scene of modern-day alchemy: machines using pressure and heat to create yellow diamonds. Sarasota's Gemesis Corp. is hoping to master the process and carve out a niche for itself in the diamond market.
By HELEN HUNTLEY, Times Personal Finance Editor
© St. Petersburg Times
published August 24, 2003
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SARASOTA - It's a scene reminiscent of an old science fiction movie.
In one corner of a mostly empty warehouse, 23 black caldrons stand in neat rows on metal platforms. Glowing red gauges record the apocalyptic conditions inside the vats, where tiny crystals grow at temperatures of 2,300 degrees Fahrenheit and under pressure of as much as 850,000 pounds per square inch. Pumps hiss as the pressure rises and falls.
Gemesis Corp. is behind this scene of modern-day alchemy, turning graphite into yellow diamonds that it hopes will find a niche in the $9-billion-a-year U.S. diamond business. The marketing challenge is daunting, but then so was learning how to make diamonds in a lab.
In nature, diamonds form under extreme heat and pressure deep in the Earth and are brought close to the surface through volcanic action. No one really knows how long it takes; most diamonds are thought to have formed hundreds of millions of years ago.
At Gemesis, 8,000-pound machines use oil and heavy anvils to apply the same forces to a small white ceramic cube placed at the heart of each machine.
Inside the cube is a carefully concocted sandwich of ingredients. At one end is graphite, a form of carbon, and at the other a tiny diamond used as a seed. Separating them is a metal solvent made from a secret recipe. When heat and pressure are applied to the graphite, carbon atoms break off and travel through the solvent to bond to the diamond seed, growing a crystal one layer at a time.
After about four days, Gemesis workers unload the machine, crack or smash open the ceramic capsule and remove the metal and the new rough diamond attached to it. Once the diamond has been sent out to be cut and polished, even jewelers will be hard-pressed to distinguish it from a gem cut from a rare yellow diamond found in nature. Chemically and physically it will be a diamond, and that's how it will show up on the diamond detection machines jewelers use.
Only more sophisticated machines used in gem labs can identify it as man-made through the presence of nickel, one of the ingredients in the metal solvent.
Gemesis says it is not trying to fool anyone. It calls its gems "cultured diamonds," analogous to cultured pearls.
"We're not trying to hide the fact that these are created," said Carlos Valeiras, company president. "The key in all this is that we're trying to make a new product accessible to a different class of buyer."
Accessible to a different class perhaps, but not to everybody. The suggested retail price for a 1-carat stone: $3,250.
Gemesis is just now trying to bring its yellow stones to market, nearly eight years after founder Carter Clarke caught the diamond bug.
A retired brigadier general, the 77-year-old Clarke is known in the Tampa Bay area as former chief executive of Security Tag Systems Inc., a St. Petersburg manufacturer of exploding ink tags that retailers attach to clothing to splatter shoplifters. Sensormatic Electronics Corp. bought Security Tag in 1993 and closed its local manufacturing plant. Clarke was an entrepreneur in search of bright ideas when he took a trip to Moscow in 1995.
He said he initially dismissed a Russian scientist who asked him "out of the blue" if he was interested in growing diamonds. The Russian claimed to have built a diamond-manufacturing machine.
"When I took off, I didn't have any belief in it," Clarke said. "By the time I got home, I said, "I wonder if this thing works.' " Clarke ended up buying three Russian machines for $57,000 apiece.
Small industrial diamonds are made relatively cheaply in large quantities. Companies such as General Electric manufacture them for use in products such as super-coarse drill bits. But reliable production of larger, gem-quality jewels has proven to be difficult and expensive.
"We have grown crystals in space that are easier than making these diamonds down here," said University of Florida engineering professor Reza Abbaschian, who led Gemesis' early research efforts. "It's a very sensitive technology. You have to have everything perfect in order to get the crystals right."
Gemesis will not say what it spends to make a diamond, but the Sarasota Herald-Tribune reported last year that private investors put up nearly $10-million to get the company launched. Gemesis said it no longer discusses that information.
There was constant tweaking of the machinery and the hundreds of variables that go into the diamond-making process. UF post-doctoral students worked on the effort, which was done under contract between Gemesis and the University of Florida Research Foundation, now a Gemesis shareholder. Clarke said many of the other shareholders of the privately held company are old friends who had been Security Tag investors.
"They thought I was crazy, but they did it as a favor," he said.
Now comes the equally daunting second stage: getting jewelers, and their prestige-conscious customers, to buy a cultured diamond.
Some signs are encouraging for the company. Demand for colored diamonds is growing, with celebrities leading the way. Actor Jennifer Lopez is sporting a pink diamond engagement ring, and basketball star Kobe Bryant gave his wife, Vanessa, a $4-million purple diamond after being charged with rape and confessing to adultery.
Gemesis and its diamonds were featured in the latest issue of Wired magazine and last week on CNBC. In an Internet poll promoted to CNBC viewers, 71 percent said they would buy a synthetic diamond.
Retailers aren't yet convinced. Two St. Petersburg jewelers took some of the Gemesis diamonds on consignment but said they have reservations about selling them to their customers.
"While this may be a diamond, test as a diamond and start from a diamond, there's been a shortcut there," said Jim Watters, vice president of Bruce Watters Jewelers. "I have a gorgeous selection of the natural fancy yellow stones. There's no hesitation in your presentation of them. This one you've got a little stumbling, and you have to start explaining this and that. I'm not so comfortable with this."
Gary Sanchez, president of Diamonds Direct, called the Gemesis diamonds "beautiful" but said he thinks they are priced too high to have wide appeal.
Some mined yellow diamonds cost several times Gemesis' suggested retail price of $3,250 for 1 carat. But Sanchez said that is the wrong comparison to make. He said the Gemesis stones will compete against less expensive white diamonds that have been treated to change their color.
"Gemesis has to find a way to make it for less," he said.
Gemesis has only a few small competitors, and like Gemesis, they have had their challenges, especially in trying to produce larger diamonds and those in colors other than yellow.
"Small and yellow can be grown quickly, but large takes a long time. It's like fine wine; you can't rush it," said Alex Grizenko, chief executive of Lucent Diamonds, a Lakewood, Colo., company that has been making yellow, blue and a few red diamonds for several years. Last year, it branched off in a new direction: memorial diamonds.
Lucent's blue diamonds use cremated human or animal remains as their source of carbon. People pay about $6,000 for a half-carat gem made from the ashes of a loved one or pet for more information see
www.lifegem.com) The setting is extra.
Grizenko said he welcomes competition from Gemesis.
"The marketplace is rather large," Grizenko said. "Everybody contributes toward spreading the understanding about what these diamonds really are."
It is still a stretch to call the diamond-making at Gemesis mass production. The process is labor-intensive and involves art and luck along with the science. The production goal is a rough diamond of 2.5 to 3 carats, which will be 0.75 to 1.25 carats after cutting. But roughly 10 percent of the time, no diamond grows at all.
The yellow coloring, which can range from pale yellow to almost orange, comes from nitrogen. Blue diamonds, which get their color from boron and take longer to grow, are still in the research stage at Gemesis but could be produced for sale next year. Gemesis also would like to grow larger diamonds but is limited by the capacity of its machines.
Last year, Gemesis decided it was time to go commercial. Valeiras, an aerospace engineer and former semiconductor analyst for Lehman Brothers, became company president. Gemesis and its 17 employees moved from Gainesville to Sarasota, where Clarke lives. There are now 18 employees, including three of the Russian workers who helped start the project.
The company's new home is a 30,000-square-foot building in Lakewood Ranch Corporate Park east of Interstate 75, with plenty of room to grow. The production warehouse has room for 250 diamond-growing machines and the site offers room for expansion to 600 machines if the demand for the product is there.
Security is a big concern, but not because of the diamonds, most of which are stored off-site. The real issue is keeping the process secret from competitors. Parts for the diamond-growing machines are ordered from 40 different vendors and assembled on site. The remains of the ceramic cubes are never thrown out with the garbage, lest someone go hunting through a Dumpster. No photos are allowed in the room where the cubes are put together and taken apart. And Gemesis chose not to apply for patents for its process because that would require disclosing secrets.
Of course, competitors have secrets of their own. Lucent is working with Apollo Diamond in Boston, which is making diamonds using a completely different technology known as chemical vapor deposition. So far that process has only produced small diamonds, less than half a carat, but the goal is to make large ones. Some of those diamonds are expected to be available early next year, price to be determined.
Ultimately the greatest promise for synthetic diamonds is in the semiconductor market, where diamond wafers might one day replace silicon chips. Diamonds can tolerate higher temperatures than silicon, which would give them an advantage for use in high-speed computers.
Synthetic diamonds have sparked some lively discussion on Internet bulletin boards frequented by jewelers and consumers who love sparkly stones. Some of those posting messages insist "people want the real thing," while others say they would be happy with a man-made diamond "that costs me only half an arm and a leg."
Diamond-lover Catherine Vacarciuc, who lives in Montreal and posts on DiamondTalk, was excited about the Gemesis diamonds until she heard their suggested selling price.
"I personally think that $3,250 is way too much to pay for a synthetic diamond, no matter what you call it," she said. "They are missing the point as well as overestimating the "cachet' their diamonds will have. Too bad. I was hoping Gemesis might allow the ordinary person like myself to be able to have a little more luxury in life."
Some diamond experts who have examined the Gemesis stones are more optimistic about the market for them.
"It's an exquisitely beautiful product that is comparable in every way to the natural at a fraction of the price," said Antoinette Matlins, author of Diamonds: The Antoinette Matlins Buying Guide.
However, she said, advances in diamond-making technology mean all diamond buyers need to verify that they are getting what they pay for.
"I would not buy any significant diamond - fancy or colorless - from this point on without proper laboratory documentation that it is natural if it's being represented as natural," she said. Even if a diamond comes with a lab report, she recommends having any diamond that costs $1,000 or more examined by an independent certified appraiser.
Sarasota gem appraiser Richard Sherwood said he expects the Gemesis diamonds to find a market niche without reducing demand for fancy-colored mined diamonds. He said a trained eye can distinguish a difference in coloring in the Gemesis diamonds, but that will not lessen their appeal for some buyers.
"Since I've acquired a taste for naturals, lab-created ones are like a good second-best," he said. "But I think they're going to be a tremendous success. I think these are going to help satisfy consumer demand for fine-colored stones at a reasonable price." Sherwood said synthetic sapphires, rubies and emeralds have been available for years, but people still buy mined gems as well.
Jewelry-quality synthetic diamonds are being produced in such small quantities today that they represent little threat to the traditional diamond market. But that could change as production increases.
Wired magazine reported that one diamond dealer has acknowledged selling a batch of Gemesis stones in India without disclosing they were man-made. Although their synthetic origin could be detected by a lab, small stones are less likely to be sent off for testing.
In some quarters, part of the appeal of synthetic diamonds is that they represent a step toward loosening the control the DeBeers Diamond Trading Co. has exercised over the market for years.
Gemesis founder Clarke said that when DeBeers heard about Gemesis, an executive met with him to check out the stones. Since then DeBeers has stepped up distribution of machines that can detect lab-made stones.
Gemesis president Valeiras said the company has been hearing from people who are excited about lab-made diamonds for political and environmental reasons. Although many diamonds are mined in Canada and Australia, diamond mining in Africa has a bloody history of civil wars and slave labor. And diamond mining is tough on the environment; about 250 tons of earth have to be mined to produce a single 1-carat diamond, according to the Gemological Institute of America.
Jeff Parker of St. Petersburg is among those who thinks Gemesis has a bright future. Parker, who formerly worked in commercial real estate, invested in the company three years ago and is trying to line up retailers to sell the stones. He also plans to sell them himself online (
www.accendocollection.com)
"It's a challenge," Parker said. "Any time a new technology comes along, there's resistance, but ultimately the industry will go where there are customers."
- Helen Huntley can be reached at
huntley@sptimes.com or 727 893-8230