The international gem trade can be a shady business. In a quiet corner of a busy London pub, a trader, who asked to remain anonymous, tells C&EN about passing off synthetic gems, made in a manufacturing plant, as natural.

“This is worth more than $500,000,” the trader says, flashing a hand upward to reveal a gold ring clasping an emerald the size of a sugar cube. “Well it would be, depending on whether you consider it real or fake.”

The trader admits to buying synthetic gems—which can be 30–40% cheaper to produce than natural gems—and then selling them to jewelers as natural. The trader is unwilling to discuss specific deals, as this could bring some heat from previous customers.

Scientists have been able to make synthetic diamonds and other precious gems for decades, but in the past couple of years, technologies such as the one used to make the London trader’s emerald are enabling the production of jewelry-quality synthetic gems that are identical to natural gems at the molecular level.

Output is in the tens of thousands of stones per month, and rising. Seeing a threat, established natural gem producers are taking a raft of approaches to defend against synthetics, including using ultraviolet scanners that can identify synthetic gems and cataloging natural stones. The fight to defend the natural gem industry—and especially the lucrative diamond sector—is fully under way.

“Improved technology and economics, and potentially more receptive consumers, have propelled lab-grown diamonds into a serious potential disruptor of a jewelry category that has existed for more than a century,” stated Morgan Stanley analyst Neri Tollardo in a 2016 report.

A handful of synthetic gem technologies are in play. Two of the most successful are chemical vapor deposition and high-pressure and high-temperature (HPHT) processes.

Thailand-based Tairus, which was cofounded by Russian businessman Walter Barshai in 1989, has developed a hydrothermal HPHT process for making synthetic emeralds and other gems.

In Tairus’s California factory, low-grade emeralds are heated to about 600 °C at 54 atm, at which point they are melted along with color-inducing impurities, such as vanadium and chromium, found in natural emeralds. A seed emerald placed in the reactor attracts particles of the same type, and the growth process begins, layer by layer. It takes about four weeks.

“Raw materials are not expensive, but we put in a lot of labor to get it all ready for production,” Barshai says. “We constantly work on improving our know-how. This involves sourcing new, up-to-date materials.”

Tairus cuts about 40,000 stones per month ranging in size from 1–20 mm. An advantage Tairus has over gem miners is that its stones can be made to order, Barshai says.

The layering process does create growth lines, but according to Tairus, depositing thinner layers at a slower rate by adjusting pressure and temperature makes the lines less defined and more difficult to detect.

“The growth lines are what tend to give it away,” confirms the London jewel trader. “But one needs to look for them. They are not so apparent.” The trader claims to sell synthetic stones that pass authenticity tests carried out by an independent gemological laboratory. “Of course, my supplier from Asia sends hydrothermal gems to jewelers the world over, and no doubt they are sold as original,” the trader says.

Barshai doesn’t rule out the possibility that some Tairus gems are resold as natural. “But a good gemologist should be able to distinguish our stones from other stones,” he says. And the firm sells its gems with documentation that shows they are laboratory grown.

Other synthetic gem producers include the San Francisco-based start-up Diamond Foundry and the jewelry maker Swarovski. Diamond Foundry started producing synthetic diamonds in July 2015 using a process based on atomic layer deposition, a variant of chemical vapor deposition. “It’s a process that builds the diamond lattice atom by atom in a reactor, which creates a ‘sun on Earth’ plasma with very high temperature,” says Chief Executive Officer Martin Roscheisen. Batches take two weeks to make.

Established by a group of engineers, Diamond Foundry touts a high-temperature reactor composed of 350 precision-engineered parts. The design is the result of tens of thousands of software simulations, Roscheisen says.

Diamond Foundry is targeting the high-end jewelry market with large gems—and at scale. “We have the largest American operation by a factor of 10,” Roscheisen claims. He is bullish about the value of the firm’s stones. “They are the same price in retail. Some say they ought to be more expensive—akin to organic food.”

One of the biggest threats to the mined diamonds sector, though, could be from Chinese producers making midsized, so-called melee synthetic diamonds between 2.5 and 3.5 mm in diameter for jewelry applications, Tollardo stated. The Russian diamond miner Alrosa is one of the firms most at risk from such a threat. By 2020, it could see up to a 20% drop in pretax profits as a result of synthetic diamonds, according to Morgan Stanley.

Synthetic diamond producers are not just targeting the jewelry market but also developing even higher-purity diamonds for use in semiconductors, in optoelectronics, and in electromechanical systems.

“Some companies are looking to produce synthetic diamonds for the semiconductor industry, and they stop off into the gem market on the way to raise capital,” says Samantha Sibley, technical educator for the big diamond mining firm De Beers.

De Beers makes synthetics, but only for industrial applications. Element Six, a De Beers subsidiary, generates $400 million in sales annually from synthetic diamonds for abrasion-resistant tooling and other uses.

Element Six is serious about developing high-purity diamonds for electronics applications. It has a team of 120 scientists and engineers based in Harwell, England, and an annual R&D budget of about $30 million.

But De Beers, which commands close to one-third of the natural uncut, or rough, diamond market, has no intention of giving up its share of the jewelry market to synthetic diamond producers. In a bid to protect its turf from unscrupulous synthetic diamond sellers, De Beers has become a developer of UV scanners for detecting synthetic gems.

“We want to ensure consumers are buying what they think they are buying,” Sibley says. At the firm’s technology center in Maidenhead, England, about 50 staffers are involved in the development of new UV scanning machines as well as other diamond-related technologies.

De Beers launched PhosView, its latest scanner for weeding out synthetic diamonds, in September 2016. The size of a cappuccino machine, the scanner exposes gems to UV light. Once the UV light is switched off, synthetic diamonds tend to emit a phosphorescent glow, which appears as a turquoise color. This compares with a much weaker phosphorescence in a small percentage of natural diamonds. The firm has already sold more than 100 units at $4,500 each.

PhosView can scan diamonds between 0.6 and 6.4 mm. The scanner has not been designed to identify other synthetic gems such as rubies and emeralds.

A limitation of PhosView is that it only picks out synthetic diamonds made using HPHT processes. De Beers has other larger scanners, including those fitted with mini spectrometers, that can identify synthetics made by both main methods, but these can be up to an order of magnitude more expensive, putting them out of reach for many small players in the diamond supply chain.

And although such machines can detect synthetic diamonds, when it comes to scanning high-volume, small diamonds such as those produced in China, the cost of detection “could become expensive relative to the value of the diamonds,” Tollardo stated.

Scanners alone cannot protect the natural diamond and precious gem markets. Thus, mining firms are also cataloging their larger stones and marking them for authenticity. But the precious gem supply chain is long, creating opportunities for ethically dubious synthetic gem traders to introduce their wares.

Although the illegal London gem trader represents the darker side of the threat facing the natural gem industry, a bigger challenge may be the legal sale of synthetics. This is because public perception of natural gems is changing as human rights activists and synthetic gem companies emphasize differences in social and environmental footprints.

“We can grow stones by synthesizing the same chemicals present in natural emeralds, but without blowing up the earth, polluting it with toxic chemicals in order to wash out soil, without moving mountains, cutting trees, and without exploiting labor under horrific conditions,” Tairus’s Barshai says.

Mined diamonds continue to be tainted because of the harm they cause, argues Lucy Graham from Amnesty International’s business and human rights team. A 2015 report from the group identifies human rights abuses, smuggling, and tax dodging throughout the rough diamond supply chain.

Celebrity endorsement is spreading this message. “I’m proud to invest in Diamond Foundry Inc.—cultivating real diamonds in America without the human and environmental toll of mining,” states actor Leonardo DiCaprio on the home page of Diamond Foundry.

A likely scenario is that synthetics will carve out a niche in the market, Tollardo stated. Synthetics are estimated to have about 1% of the global rough diamond market today. In the next few years, he forecasted, synthetics will take about 5% of the $17 billion market. Synthetic gem producers would have to invest $1.2 billion in production facilities to take that bigger share, Tollardo added.

Synthetic gems are already cheaper than mined gems, and the cost of making them will only fall as processes improve. That result is bearable for natural gem companies as long as their products are perceived as authentic and rare. But if the perception becomes about sustainability and social impact, the natural gem industry could find itself between a rock and a hard place.