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Podcast Episode 4: The Ins and Outs of Natural Diamonds

7/22/2022

In this episode, we talk to Christophe de Borrekens, an accomplished professional in the diamond industry, residing in Antwerp Belgium. We speak about the history of natural or mined diamonds and the importance of Antwerp as the world’s diamond capital. Christophe also discusses ethical sourcing of mined diamonds, the Kimberley Process, and the case for natural diamonds as the preferred diamond investment in the long-term.


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Show Transcript

Troy Olson: Welcome to the Modern Jewelry Podcast. This is your host, Troy. Today we have a very special guest who's joining us, Christophe De Borrekens from Antwerp, Belgium. Christophe, welcome.

Christophe de Borrekens: Hi! Thanks for having me.

Troy Olson: Yeah, reaching out from across the world here, this is so great to have you on the call, So today we're going to be talking about natural diamonds, the ins and outs. First off, I’d love for you to tell me a little bit about yourself and give me just a brief background of your history with precious stones.

Christophe de Borrekens: I’ve been in this industry for 25 years now. It’s actually my first real job. My family is not from the diamond industry so I have no background in the diamond business. I was always fascinated by diamonds because it's kind of magic to hold diamonds - they’re mysterious for people who are not part of that industry. So I felt very attracted to join the industry and then got the opportunity to start working for a Belgian company. It was the fourth generation of diamond manufacturers - which is quite exceptional because they had been in business since 1912. They taught me how to look at diamonds, how to trade them, how to understand diamonds, how to read the diamonds etc. I then worked my way up from a diamond trader to being a partner in the business.

Troy Olson: Great, and tell me a little bit about your job and what you do today. I know you mentioned to me that you definitely do a lot of travel.

Christophe de Borrekens: Yes, one of the nice things about our industry is that diamonds are being traded all over the world. We work with so many different cultures, so many different people, so it brings a lot of diversity to my job. Like I said, initially I started to trade diamonds then I started selling diamonds on the market. That’s also very international because we have a very multicultural diamond community. Then I started traveling because the company I'm working with now, when I joined, was really a mid-sized company with one head office in Belgium and they did everything based out of Belgium. So I chose to travel a lot and then as I grew with the company we opened an office in New York, we opened up an office in Hong Kong, a partnership in India and that’s how I got to deal with many different people and deal with a variety of clients. That’s one of the great things about the job is that we meet so many people and so many interesting people. That’s why it’s exciting.

Troy Olson: That is, yeah thank you for all that background. So you know diamonds and other gems have probably been around for as long as human history and have been popular. Why have diamonds become so popular in human history?

Christophe de Borrekens: Yes, it’s difficult to say but actually the first trace of diamonds being used by humans goes back to the fourth century before Christ. At that time diamonds were traded because of their look, their hardness and the reflection of light. Because of all these parameters it very quickly got a certain value. It was also used, because of its hardness, as a tool to make things. It was even used as a talisman. People even believed it had medical powers. I think it always spoke to people’s imagination because of its hardness and its reflection of light, so that’s how diamonds became really appreciated by human kind. But it's only been since the 1800’s that it really became a valuable commodity. When European women started wearing diamonds at important social events and then across the Atlantic around 1930-1940 - it actually really took off when the Debeers launched its ad campaign featuring Hollywood stars with the very famous slogan, “A diamond is forever”. From that point onward the diamond market really took off as a component for jewelry and ever since then, it has been part of our culture associated with jewelry and with ultimate luxury - everything that goes along with it.

Troy Olson: Great! So as far as just precious gems in general, are diamonds more rare than other gems or just because of their brilliance and beauty, is that what makes them more popular?

Christophe de Borrekens: I think it’s a bit of a combination of both. Initially I’m sure it's about its brilliance and beauty and over the years we noticed it’s a rare thing, a diamond. It takes from when it’s found in the Earth, it’s between 150- 200 kilometers that the diamond is being found and the tremendous pressure and extremely high temperatures, it takes a diamond to form itself from 1 billion to 3.3 billion years. So you can imagine that it’s not every other year that we would get a lot of new diamonds.

Troy Olson: Great. And that leads to my next question I was going to ask you, which is, where do natural diamonds come from in general today?

Christophe de Borrekens: Yes, so actually it comes from many different countries. I would say what’s interesting to see is that actually you have diamonds being found in the northern hemisphere and diamonds which have been formed in the southern hemisphere. Initially a diamond when it’s completed I would say, when it’s fully formed, it has a crystal form. We noticed that the diamonds in the southern hemisphere have a more rounded form and this is because in the northern hemisphere, the Earth’s layers are more stable and the diamonds remain locked in the soil. While in the southern hemisphere, the diamonds come out of Kimberlite pipelines but they have been eroded by rivers and landslides and rounded the diamonds a bit more. But in terms of countries, in the northern hemisphere it comes mostly from Canada, Russia, Persia in the whole sense of the country like Siberia and then in Southern America, Southern Africa and also Australia, even though the biggest mine in Australia closed a couple of years ago and there hasn’t been a new mine found since.

Troy Olson: Now is there a way or would you be able to identify where a diamond is from by its composition or is a diamond a diamond no matter where you find it?

Christophe de Borrekens: Well on one hand a diamond is a diamond. The characteristics are the same, the hardness is the same. Each and every diamond has the same characteristics but you can tell from the color of the diamond and the form of the diamond where it comes from. For example, I said that diamonds formed over the years in sea beds or river beds are more rounded because of their journey across the earth in the water and the diamonds from the northern hemisphere have been locked into soil so they are still a crystal. Another thing which is quite interesting is that, for example, diamonds from Russia and Canada on average have more fluorescence than the diamonds,for example, in Africa. And then they have some other parameters like in certain countries like Zimbabwe, it’s mostly more yellowish diamonds. Yes, they say you can determine a region where a diamond comes from but you can not really determine that it comes from this country or that country or this diamond pipeline. You can relate it to certain regions but not really to a specific country or specific diamond pipeline.

Troy Olson: Got it, and you used a term that I wasn’t familiar with. What is fluorescence score? Is that what you said?

Christophe de Borrekens: Yes fluorescence, let’s say diamonds. When you shine a diamond with a black light you see some fluorescence coming out of the diamonds. It shines in the blacklight so that’s basically it. That’s all natural, it hasn’t been manipulated by mankind, it’s just on the Earth. Some diamonds have that speciality to have fluorescence and some don’t have it. That’s one of the beauties of nature.

Troy Olson: Got it. So is that necessarily a good thing or a bad thing, or just something that the average person wouldn’t even notice?

Christophe de Borrekens: Well it is a good thing or a bad thing it can be exploited commercially in the sense some big jewelry brands don’t want any fluorescence to be in the jewelry so they want us to give them diamonds without fluorescence. But let’s say earlier years, maybe 100 years ago or 50 years ago, people even paid a premium for fluorescent diamonds. So I think it’s very much related to fashion and i'm sure that if tomorrow a big brand is going to create a piece of jewelry with fluorescence and they’re going to advertise it and they’re going to make a whole marketing campaign about it, I’m sure that it might turn the trends - and that would maybe the first diamond that’s worth more than a non fluorescent diamond all of the sudden. With today's rates it may be worth a little less than a non fluorescent diamond. But I would say it’s more a state of mind based on marketing and by trends than by really enhanced characteristics of the diamond. It’s not that the fluorescent diamond will be weaker, might break or might be more ugly, no. It’s nothing like that.

Troy Olson: Understood, so it just is what it is, right?

Christophe de Borrekens: It is what it is, yes.

Troy Olson: Which is your perception of it. I'm so grateful you brought that up because my next question relates to things being ethically sourced. You know that’s been a big concern or in a lot of marketing for diamonds and gems and jewelry in general. So how can someone buying a diamond be sure that it was ethically sourced? I would love for you to help me understand what ethically sourced means to you.

Christophe de Borrekens: Mm hmm, well I think that to start with, I think that 98% of the diamonds reaching the market, or maybe even more are ethically sourced. It’s unfortunately a minority of people who bring certain value to the market who spoil the name of an entire industry so that’s always very sad that the whole industry has to suffer for a very limited number of people who are misusing the industry to finance war or conflict in the world. It’s very sad. Most of the diamonds that reach the market are being ethically sourced. Now how do we ensure that? In the 2000’s, actually in Kimberly, that's the region in South Africa, a delegation of diamond producing countries came together and they wanted to have the diamonds traced from the mine to the consumer. So that’s how the Kimberly process certification came into place. It was put in place to enable us to trace the origin of the diamond, to make sure it didn’t come from a conflict zone. Also, Antwerp has had a leading role in putting the Kimberley posters certificate together. So that’s the name of it, it’s the Kimberley process certificate. Every rough diamond is accompanied by that Kimberley posted certificate so if you have an ethically sourced diamond you have to have that Kimberley posted certificate and if you don’t have that Kimberly certificate the diamond isn’t sourced ethically. You have to know that all the big diamond centers like, for example, Antwerp, if a diamond comes to Antwerp without being accompanied with a certificate, it’s immediately ceased and it’s taken off the market. So it’s something that doesn’t happen anymore nowadays. Also, for example, which is important to know, if someone needs a diamond and it’s not an ethically sourced diamond and it’s not Kimberly process compliant, not only the diamond will be ceased but also in our company they will come in and seal the safes and we won’t be able to trade anymore so it’s really very, very strict- especially in Antwerp. In fact, it is the most strict of the diamond centers. But all this to say that the industry has a real will to make it a clean industry and to kick out the bad influences, the bad people, because we really want to have a clean industry. So I would say that the Kimberley certificate was put into place in the 2000’s. Then next to that was that they obliged the clients and the site owners, and gave them certain best practice principles to expect. So they went one step farther than the Kimberly posted certificate - at that time saying to all the site owners, that also child labor is not allowed in the factories, we had to do to respect the laws which is obvious but at that time it was not as obvious for everyone. The environments, the factories, had to be clean, it had to be a nice work environment. And then in 2005, I think, the Responsible Jewelers Council took that over and they even refined the system and I would say that ethically sourced diamonds is a work in progress as the law evolves. Also our chain is being more and more controlled now we also not only check the origin of the diamonds, but when we get paid by clients we also have to check the origin of the finance of the clients to make sure that, let’s say, even an ethically sourced diamond can not be bait later on by inefficient money or by somebody with some fiscal issues. He cannot use that to pay with his diamonds and I think that’s important. I think that’s the only way for the industry to get well perceived by the consumer because we are a very sensitive industry due to the nature of our public. With one hand full of diamonds you can go all over the world and you can put it in your pocket, you can avoid taxes, you can also, due to the agenda of our industry of our product, we attend to attract people with bad intentions. Therefore it is very, very important that we are very strict and that we control ourselves and I think that has been put in place with the Kimberly Process certificate and that has been developed further by the Responsible jewelers Council. And, as I said, this is a work in progress, it’s a slow change and as the environment changes, the holes in the history will also change.

Troy Olson: Thank you for all that information Christophe and just for our audience, it’s called the Kimberley process and Kimberley is spelled K-i-m-b-e-r-l-e-y and it looks like the website is Kimberleyprocess.com and I can see just doing a quick search on Google that there’s lots of information about it. I mean, to me this seems like, gosh I wish every industry would do something like this, you know, to ensure things are ethically sourced. It almost seems like this is setting, you know, setting the standard for what we should do for all products and, you know, all things so great! So, could you provide your customers or people with any specific origin details for a specific diamond or how does that work?

Christophe de Borrekens: Yes we do, and there is, ok for a very small diamond we can’t really provide the mine where the diamonds are coming from but for larger stones we are able to determine which mine the diamonds are coming from and I think that’s now a will from the industry to enhance the traceability. I know that GIE is working on a new program where you will have the whole chain to which the diamond went, so let’s say: they will know from which mine it came, who polished the diamond, who then traded the diamond and to which shop it went and so that consumer will be able to know the full detailed history if the diamond.

Troy Olson: I know a lot of companies are starting to use technology, like blockchain. I wonder if it’s related. You know, to have this identification that can’t be changed or altered in any way because it’s on a, you know, a public ledger basically so maybe it’s something similar to that. So to shift gears a little bit, tell me, how did Antwerp become the diamond capital of the world?

Christophe de Borrekens: Well actually, Antwerp has been synonymous with quality diamonds and superior craftsmanship, highest compliance schools already since 1447 so indeed we found documents dated from 1447, it’s a decree, a kind of code of conduct in which it was described that traders were not allowed to trade with false diamonds. So it was quite interesting that already back then there were very, very strict rules and Antwerp already created, I would say, a very legal structure within which we were supposed to trade diamonds or not to trade diamonds. And then actually Lodewyk van Berken lived in Antwerp, in the 15th century, he’s actually an inventor of the methods of how we get diamonds and how we even still get diamonds today. That is with a disc, olive oil and diamond powder. And because you have to know diamonds is the hardest material, it is a hardness ten and the only way to cut a diamond is to cut it with another diamond. So, there’s no way to cut a diamond with a weaker material than diamonds. So, Lodewyk van Berken, was then the person who invented the system of how to polish diamonds and now to cut and polish diamonds the way we do it today. And then due to the Spanish occupation, the Scheldt river that came to Antwerp were closed for all traffic and trade, so then for one century, the diamond industry moved to Amsterdam. That’s the capital of Holland, the country just above Belgium. And then slowly from the 17th century onwards, the diamond traders came back to Belgium and in 1919, that’s maybe another milestone, Marcel Tolkowsky, set the parameters for the ideal cut and parameters were set to offer the maximum light performance from the diamonds. So let’s say when we use these parameters, in today’s dates, we have the optimal light performance coming out of the diamonds and we still use these parameters today. And in 1988, DeBeers asked Gabrieal Tolkowsky, the son of Marcel Tolkowsky, to cut two of the largest diamonds ever found, so far. So one diamond was the Centenary diamond. It was a diamond of 273 carats, D flawless. And then the second one was the golden jubilee that's a diamond of 545 carats and that has been cut in a cushion shape diamond and to today’s date it’s still exhibited in the grand palace in Bangkok. So that’s a bit of the history of Antwerp as a diamond center, yeah how it came to what it is today.

Troy Olson: Well that’s amazing. I never really thought about if you had a diamond that large, I'm sure there’s not a lot of places you can take it to have it cut and shaped and everything. It makes sense you would want to go to, you know, the person or the place that has had the most experience and it seems like Antwerp is just really important to the diamond industry.

Christophe de Borrekens: Yes indeed and given today's date we have the best technology, the best, well, the most know how and especially the largest diamonds and the most expensive diamonds come to Antwerp and you have to know that about 86% of all the diamonds, which are being traded in the world, pass through Antwerp. 50% of all the polished diamonds are also traded in Antwerp. So that’s quite a lot - and this really means that Antwerp, still today, is the main diamond hub. We can still call it the diamond capital of the world.

Troy Olson: Yeah absolutely. Wow I had, I had no idea that it was that significant. So in recent years, what have been popular trends that you've seen in the natural diamond world?

Christophe de Borrekens: Yes, I think there were two trends. I think one one hand, it adds luxury to your jewelry, like brands who really want to have a high-end and position themselves as high-end jewelers. Of course they still work with natural diamonds. And then the other trend is that some people, they want to diversify people who have, I would say, a lot of assets. They want to diversify their assets and start investing into investment diamonds and that's mostly expensive diamonds, rare diamonds. And these diamonds have appreciated a lot over the last few years.

Troy Olson: Got it. So I've read that a blue diamond is the most precious gem in the world, you know that's based on the value for one carat. Are the prices of colored diamonds increasing in their popularity also?

Christophe de Borrekens: Yes, well actually I think even just as far as the color is concerned, the red diamond is even more expensive than the blue diamond. But, you were right to say that the blue diamond is more expensive, in the sense that a diamond is always a combination of the color, the clarity, the cut and the size. So that these parameters, with that in mind, are the value of these diamonds. So I think that the blue diamond was the most expensive diamond ever sold, but in general, we can say that all the purple, pink, blue and green colors are expensive first off and then mid range colors are intense yellow, vivid yellow and orange colors and then the cheaper colors are grown, gray and I would say fancy yellow.

Troy Olson: Got it. Well I'll definitely take your recommendations or your expertise over, you know, an article that I can find on Google, so thanks for that info. So we have spoken about lab diamonds or lab grown diamonds in a previous podcast. I would love to hear your comments and thoughts on this, relative to the industry.

Christophe de Borrekens: Yes indeed the lab coat diamond is there and I think it will evolve as two different products, that they will be a clientele for both the diamonds. For sure the lampoon diamonds, I think, are there to stay and there will definitely be a public for it. But I would describe a natural diamond more as an investment. Lab grown diamonds are more, what I would describe as, an expense. Why would I say that is that, like we said briefly earlier. Today there is a limited amount of diamonds. The base has been warning the clients for the diamond gap there, which is going to come and we see now the first signs of the diamond gap which will happen in the sense, like I said, the Argyle mine in Australia closed down and they didn't open the new mines. In general, we have no new mining projects coming up. The Diavik mine in Canada is expected to close down in five years from now. Botswana is expected to have extracted all these diamonds by 2035 to 2040 and we don't have any new mining projects coming up next to it. So all the indications are there, that there will be a shortage of diamonds and whoever says shortage will increase the price, so I think that diamonds are a kind of safe haven investment. It's not something that you really have to buy to make profit, like on the shares on the stock market, but I think it's a nice way to diversify your assets in the long term. Based on what I just said, I think it will really appreciate in value, while lab grown diamonds, the more we produce the more the cost of manufacturing becomes cheaper. So the market price will go down if lab grown diamonds don't have a resale value. Diamonds, natural diamonds, will always have a resale value, which I think might go up over the years to come.

Troy Olson: Thank you for that insight, I love your perspective on that. For someone shopping for an engagement ring or another diamond gift, can you make the case for why natural diamond is the best investment?

Christophe de Borrekens: Yes, I think it's very personal. It depends from person to person, but it reminds me that I read once that diamonds became the symbol of eternal love, because of Greek mythology. It’s because Cupid's house was set to be with diamond tops and these diamond tops had the magic power to bring hearts together. I think a diamond took one to three billion years to grow on Earth, it’s something given to us by nature. I think that symbolic part is there, it’s hardness, the longevity of a diamond. Yes, I think it can be most associated with true love. Which is genuine, which is not something that you can make up. It's something that has to grow and that takes time to grow and I think the symbolism can be quite important there. And then besides that, the symbolism of a natural diamond, you also have the investment part which I think is also important and is always going to keep some value in natural diamonds. So the combination of both makes me think that you have nothing else than a diamond to give as an engagement screen.

Troy Olson: Great. Well thank you, Christophe, all this information that you've given me really opened my mind and educated me so much about, you know, diamonds and natural diamonds, so thank you so much. So last question, how do you see the diamond market evolving in the next coming years?

Christophe de Borrekens: Yes I think that, like I said, in the diamond market you will have to distinguish the markets. One for the lab grown diamonds and one for the natural diamonds. It goes back to what I said, I think that the diamond market will flourish, especially taking into account that there will be a shortage at some point later. We expect the shortage to come, so it will in a bit, especially when you see what's happening nowadays. We are very nervous about the volatile environment that you see in the world - in Ukraine, you see Russia, we had COVID. It’s very uncertain times and I think that it can give people the feeling that investing in diamonds, maybe diversifying your assets. It’s also very easy to take with you. You can take it everywhere with you. The logistics are easy and actually we see, because strangely enough, in your home in between the lockdowns, we sold more diamonds in 2021 than we did in 2018, before the pandemic. So i'm quite positive for the future of the of the diamond industry in general and I think, as long as mankind will be around, there will always be people who will like to to be associated with having a natural diamond.

Troy Olson: It makes sense, you know, in our world today when people are, you know, creating currencies and non fungible tokens and things that, you know, are hard to even understand. Just thinking about a natural diamond and that it took billions of years to be made and, you know, so much goes into it, I can see why people would want to put, you know, their investment there. Christophe, thank you so much for your time today. I'm very excited to be able to share this episode with our listeners. Just speaking to our listeners, I encourage you to definitely subscribe, check out our other episodes and hopefully this has all been very informative for you, as it has been for me, so thanks again Christophe.

Christophe de Borrekens: Thank you.