August 3, 1999
Tempelsman Talks Diamonds
Professional Jeweler: Has your company's position on disclosure changed as a result of the World Federation of Diamond Bourses' resolutions regarding disclosure in writing of any diamond treated or processed to enhance color?
Leon Tempelsman: Not really our basic position from day one has been that business at the end of our century has been affected by change in the form of flourishing new technologies. Our industry has largely been insulated from change and has not liked it. For example, people did not like price lists, but can they now live without them? Change is a manifestation of consumers' desires and we cannot overcome that. We have worked with General Electric for many years and when the GE POL process was stumbled upon, we saw immediately it had an important bearing on our business. We saw it as something we had to do to enhance and protect our business. So we did a lot of research with GE and satisfied ourselves that the claims were true regarding the irreversibility of the process, that the diamonds were all-natural and fundamentally indistinguishable and required no care or maintenance.
We know our business commitment to integrity requires us to be up-front and place a mark on the girdle that is readily identifiable. We have always been for disclosure so I have no problem with the disclosure resolutions.
Professional Jeweler: Do you think the same sort of technology that discovered how to whiten diamonds may someday find a way to identify them gemologically?
Tempelsman: If I were to tell you that, I could walk to the window of a 20-story building, step out and fall upwards. GE is convinced the process is completely irreversible and indistinguishable.
Professional Jeweler: There is a fear among dealers that this new process could affect the market for certain categories of stones. What do you think?
Tempelsman: Technology will have an impact and will change things and while I cannot minimize the psychological impact of change, I believe the industry will move on. New sources globally will have a much, much bigger impact on the market than this product will. Think about this: what if GE had licensed this technology to other entities? Would they have necessarily taken the responsible strategy that supports disclosure?
The product comes in broad ranges of color from D-M primarily, clarities of FL to I1 primarily, and in sizes of 0.33 carat to over 10 carats. We are dealing mostly with fancy shapes for technical reasons. As you can see, the broad scope has a tendency to disperse economic impact. It will be like a drop in the bucket.
Professional Jeweler: We've heard asking prices for GE POL diamonds have dropped. This raises the fear that lower prices would be an incentive for the unscrupulous to erase or polish off the diamond inscriptions. Is your company standing by its commitment to sell the diamonds at prices normally asked for [non-processed] diamonds of corresponding color?
Tempelsman: It's simple. The market tells you what the price is. Actually the industry should want the price to stay the same for that very reason. Our policy is not to discount one penny more than necessary. So far we have been pleased with the receptivity and feel fortunate with good demand. But we are also looking at other steps such as specific packaging and marketing. Here is a high-tech product for people who are techies. There's an argument we could even sell these diamonds for premiums; that, of course, would be in everyone's interest.
Professional Jeweler: Can you tell us how big the GE POL business is?
Tempelsman: We started selling in June and so far there is hardly a meaningful database. In relation to an $11 billion global polished wholesale diamond market, and a $48 billion retail diamond market, the percentage we are talking about is pretty insignificant.
- by Robert Weldon, G.G.