Abstract:
This paper considers the development of synthetic gem quality diamonds and the potential impact on
Botswana, the world’s largest producer of mined diamonds by value. The paper considers the rapid growth of
CVD diamonds in the past 20 years and argues that there is reason to believe that given the market conditions
prevailing in the mined gem quality diamond industry, synthetics do constitute a serious threat to the industry.
There is consideration of the price decay function in light of the experience of synthetic industrial diamonds
as well as the impact on mining tax revenue. There is an analysis of the various actors in the diamond industry
and their response to synthetics. Policy responses to the threat of synthetics are considered in the final sections.
While the diamond and jewellery industry has responded to the threat of synthetics, there has been no attempt
to address the most serious risk, which is the possibility of a sudden and catastrophic loss of confidence by
consumers in the long term market value of diamonds. The paper argues for mandatory global documentation
and disclosure of mined and synthetic diamonds.
