LAB GROWN DIAMONDS OVERVIEW

Transcription

1 LAB GROWN DIAMONDS OVERVIEW For centuries, people have mined the earth and searched the most beautiful crystals that nature produced. It is possible for diamonds to grow on the earth, not in underground, by replicating the crystallization process of carbon under the natural environment. This diamond has the benefits of being environmentally friendly, not related to conflicts, and being a sustainable source for the next generation. Diamond, mined from general underground, goes through various suppliers until it reaches the hands of consumers from the mine and it is almost impossible to identify the place of origin. However, our Lab-Grown Diamond enables complete tracing by ensuring transparency of production. This is nothing but real diamond, just as the ice in a refrigerator is the same as ice of the winter lake. And it is possible to provide a complete and reliable sense of security. Diamond is made of pure carbon regardless of the production environment. Scientists and diamond research institutions around the world conducts rigorous tests and research about Lab-Grown Diamond and spent a lot of time conferring its characteristics. All results shows that Lab-Grown Diamond is the same substance with diamond mined from the underground. 1

2 LAB GROWN DIAMONDS COMPARISON WITH NATURAL DIAMOND Lab Grown Diamond is the diamond produced on the earth. It is totally different from diamond substitute stones (cubic zirconia, moissanite, crystal etc.) so-called [imitation stone / pseudo stone], is the same substance with the same scientific, physical and optical properties as natural diamond found in the mine. Lab Grown Diamond and natural diamond are made from the same raw materials. The only difference is the environment that they are created. Since the first time GE Corporation succeeded in generating Lab Grown Diamond in 1956, the technology for producing Lab Grown Diamond has made great progress day by day. Although it was mainly used for industrial use as the main application, in recent years the development technology of jewelry quality diamonds has been remarkable, colorless and transparent very high quality diamond can also be produced. Lab Grown Diamond mainly in America has established a position as a jewelry use, and attracts attention as a future jewelry material. There are two types of Lab Grown Diamond production methods, HPHT method (high temperature high pressure method) and CVD method (scientific vapor deposition method). Chemical Formula Thermal Conductivity Crystal Structure Mohs Hardness Density [g/ cm3 ] Refractive Index Optical Dispersion Natural Diamonds C High Cubic Lab Grown Diamonds C High Cubic Cubic Zirconia ZrO2 Low Cubic Moissanite SiC High Hexagonal Natural Diamonds Lab-Grown Diamond Cubic Zirconia (CZ) and Pseudo Stones = EQUIVALENT DIFFERENT 2

3 LAB GROWN DIAMOND WHAT ARE LAB GROWN DIAMONDS Is it a synthetic a diamond? - No! The meaning of "synthesis" is that (1) two or more things are combined and become one. (2) to make a compound from two or more elements. To be referred to as a synthetic product, it must be a substance resulting from "synthesis" "mixing" "chemical reaction" of two or more different components. On the other hand, Lab Grown Diamond is produced purely by carbon. Since diamond grown by CVD and HPHT grows only with carbon, it can not be called synthetic diamond. Is it an artificial diamond? - No! Except for the development environment, there is no physical and chemical difference between natural diamond and Lab Grown Diamond at all. Orchids are beautiful flowers that grow on any continent on earth. Of course it is also possible to grow in a managed greenhouse. Can you call this artificial flower simply because this orchid has grown in the greenhouse rather than in the Amazon rainforest? Likewise, Lab Grown Diamond also creates a natural growth environment under control, creating products that are rare, beautiful and sustainable. Facilities that grow Lab Grown Diamond are sometimes called "diamond greenhouse". Lab Grown Diamond is similar to the diamond mined from the underground. Is it a fake diamond? - No! The test-tube-baby born by in vitro fertilization is exactly the same as an ordinary baby. Likewise, diamond grown in the lab has exactly the same characteristics as diamond grown in the underground, there is no difference between the two. It is completely different from pseudo stones such as cubic zirconia, moissanite, white sapphire, and it is diamond. 3

4 THE JAPANESE DIAMOND MARKET 4

5 MARKETING DEBEER S JAPAN MARKETING CAMPAIGN In 1967, DeBeers started advertising campaign in Japan Diamond engagement ring and the price of 3 months salary are established In 2000, the peak of diamond engagement ring in Japan In 2005, ads discontinues by Supplier s of Choice An ad depicting the happiness and emotion of the next morning of a woman who was gifted diamond engagement ring. Called forth an echo in Japan immediately after the opening, the design used in the ad made a big hit In order to see the future, it is necessary to follow the transition of the market of Japan's diamond engagement ring. What is indispensable on that is the existence of DeBeers. DeBeers is the world's largest diamond mining company, and more than world s 80% was said to be DeBeers mine diamond at the time when diamond import started in Japan. Under such circumstances, DeBeers launched DIC (Diamond Information Center) which is the company specializes in promotion, and started advertising promotion in Japan from ] Connected with Yuinō (engagement gets) which most of spouses were conducting at the time, they radicated the diamond engagement ring for Yuinō and the image that its price should be 3 months salary. The peak sales of the diamond engagement ring in Japan was around 2000, but at that time it was common to explain in detail and sell diamond to the customer. After that, DeBeers changed its direction to the SOC (Supplier of Choice) strategy, steering the direction to provide sales promotion tools only to limited enterprises. With this, the general diamond ads are discontinued, and at the same time the value of diamond is no longer being appealed, which has led to a drop in the acquisition rate. 5

6 MARKETING YOUNGER GENERATIONS ARE LESS ATTRACTED TO DIAMONDS Sense of distrust towards diamonds Blood diamond Terrorist's financial resources Environment destruction" Deforestation due to mining "Second-hand diamond" Reflux of secondary circulation products + Disappointment in diamonds "Price collapse" Collapse due to discount competition "Reduced quality" Inexpensive inferior diamonds "Decline in value appeal" Discontinuation of enlightenment activities Among the young generation, diamonds are less attractive. One of the factors is a drop in the recognition of the diamond engagement ring accompanying the end of DeBeers' advertising campaign, but in addition, an increase in sense of distrust of diamonds is raised. Younger generations tend to seek rationality and ethics for purchasing, but the same is true for diamonds. In the diamond industry, especially in overseas, the blood diamond," which is said to be a source of terrorists' funds, and natural destruction such as deforestation caused by mining in any diamond has been regarded as a problem. Also, due to the "purchasing boom" in recent years, a large number of private owned diamonds have been re-emitted to the market. Although they are second hand diamond, it is said to be secondary distributed diamond" and is traded at a much lower price than the new diamond. When this re-inflows to the market, it is impossible to distinguish diamonds that do not degrade at all with new ones, and destroying the price alignment of the market. The existence of this used diamond is now known by consumers, and low price diamonds are accompanied with the worry that customers may be tricked to purchase them. In addition, the number of suppliers who sell low-quality diamonds rapidly increased due to consumer budgetary declines, and more consumers think that engagement rings are not necessary if they have to buy bad looking diamond. 6

7 MARKETING Growth of crystals and other jewelry Increase in marriage budget Steady growth of crystal jewelry and other imitation stones Changes in marriage expenses (metropolitan area) RECRUIT ZEXY DATA ,200,000 5,000,000 4,800,000 4,600,000 4,400,000 4,200,000 4,000, While natural diamond buying is taking hold, sales of jewelry using crystal and cubic zirconia are showing steady growth. Looks beautiful" and "no insecurity" are becoming the big reasons when you compare with natural diamonds in the same price range. Swarovski and others in particular succeeded in establishing a brand image and gained the support of young people as the position of jewelry that shines beautifully with high quality. In addition, the cost of marriage has been increasing in recent years. This means that there are an increasing number of couples who are adamant to marriage, but most of the budget will be devoted to the wedding itself and honeymoon. It s not that consumers are not having a budget but rather, while the overall budget is on the rise, it is clear with a great proof that how value appeal are not made to the consumers with big budgets if you compare with the situation which the slump in diamond engagement ring continues. From this, we can see that there is a potentially large demand and possibilities by "appeal of diamond of beautiful material" and "reaching appropriate targets". 7

8 CONFLICT DIAMONDS Key Word Back to the source + Technology Professionally Differentiated products Material Type HARD SOFT HARD SOFT Selling goods Selling memories Goods + Memories In the diamond jewelry industry for the past 10 years, the keyword "selling memories rather than selling goods" has been popularized, and left the value of materials behind and devoted to create stories. The result is the slump of the diamond engagement ring and consumers who are less attracted to diamonds. The story is still an important element for jewelry, which is an emotional value product. But what supports that emotional value should be the value of a reliable material. In the future era, we think that "selling goods + selling memories is absolutely necessary. The keyword is back to the source + technology". We have once returned to the time to pursue the value of the material, but we need to differentiate the evolution of technology as the difference. By technology "having the beauty of high quality diamonds" "eliminated all the unreliable elements of diamonds" sales of new diamonds will be the pillar of this project. 8

9 GLOBAL DIAMOND MARKET 9

10 CONFLICT DIAMONDS Conflict Diamonds Diamond mining by anti-government organization Mining by slaves Child labor problem Local security deterioration Diamonds mined by anti-government organizations are included in diamonds in general circulation. It becomes a source of funding for anti-government organizations and causes new disputes. In addition, the diamond production area is controlled in search of new sources of funds. One of the big problems of diamonds in the world is "conflict diamonds". It is called diamond war which involves more than 12 diamond producing countries in Africa. In Angola, civil war has been spread for more than 20 years since 1975, and the source of funding for the army was a river that had diamonds. It is said that in the neighboring Congo of Angola, troops of Congo, Namibia, Zimbabwe, Angola, Uganda, and Rwanda intervened to use diamond as a funding source, and the general public died more than 100,000 people. In the civil war in Sierra Leone, government forces and anti-government organizations fought a fierce battle over the control of the diamond mine, and 80% of the population lost their homes. Neighboring Liberia has bought diamonds from anti-government organizations, and it seemed that they were exporting to all over the world under the plea of "Fair Trade Diamond" of their country. It is said that there are many such "conflict diamonds" even now. Although a certification system to exclude the conflict diamond called the Kimberley process has been created, it is said that the complete eradication involves a major problem as the Liberian example shows. 10

11 ENVIRONMENTAL DESTRUCTION ISSUES Environmental Impact Other major problem related to natural diamonds is environmental destruction. Diamond mining methods are roughly divided into three types 1. Pipe ore mining method 2. Sludge ore mining method 3. Washing the bottom of the river method Both of the first two methods require large-scale machines and mining of huge area, excavation and so on. Each company controls the re-greening of the mining site, but there are no concrete arrangements and it is a voluntary effort, so challenges remain. Washing the bottom of the river method is a primitive way that local residents dig in the river gravel in Africa, Brazil etc. Of course the consideration for the environment is very low, and the mining area is not being managed either, so it is not uncommon to be left untouched after the mining is over. Such land can not be used for agricultural purpose, but it is mostly left in a state like an artificial pond. 11

12 GLOBAL DIAMOND MARKET LAB GROWN DIAMONDS 12

13 LAB GROWN DIAMOND Synthetic Diamond / Laboratory-created / Laboratory-grown / Man Made = Lab-Grown Diamond Diamonds Similar Imitation Stones Lab-Grown Diamond Natural Diamond HPHT Method Synthesis Unprocessed Diamond Cubic Zirconia Moisannite Crystals CVD Method Synthesis Processed Diamond Natural Diamonds Lab-Grown Diamonds Chemical Formula Thermal conductivity Crystal Structure Mohs Hardness Density [g/ cm3 ] Refractive Index Optical Dispersion C High Cubic C High Cubic Cubic Zirconia ZrO2 Low Cubic Moisannite SiC High Hexagonal Currently, Lab-Grown Diamond is attracting great attention in the world s diamond market. It is completely different from diamond substitute stone (cubic zirconia, moissanite, crystal etc) which socalled [imitation stone / similar stone], and the artificially grown diamond. The difference between natural diamond and Lab-Grown Diamond is only in the growth environment, and the physical characteristics such as element, thermal conductivity, hardness and refractive index are all the same for natural diamond and Lab-Grown Diamond. In 1956, GE company succeeded in generating Lab-Grown Diamond. Since that time, the technique of generating Lab-Grown Diamond has achieved great development day by day, and mainly used as industrial diamond. In recent years it is also possible to produce Lab-Grown Diamond for jewelry quality, and to create very high quality diamonds that are colorless and transparent. There are roughly two types of Lab-Grown Diamond production methods, HPHT method (high temperature and high pressure method) and CVD method (scientific vapor deposition method). 13

14 LAB GROWN DIAMOND Diamond Type Diamond Type I Includes Nitrogen as Impurity Type II Almost No Nitrogen included Type Ia Type Ib C C C Type IIa a C C C Type IIb C C C Nitrogen is paired or is present as a group (Aggregation) C N C C C C C B C C C C C C C C C C Type IaA C C C C N N Type IaB C N C N V N Part of natural diamonds and all of synthetic colorless diamond C C C C N C Pure Carbon Crystal with No Impurities Diamond is a crystal of carbon, but natural diamond growing in nature grows including impurities in many cases. Most of them grow by incorporating nitrogen which is an element common to the earth. Diamond containing nitrogen is classified as type I (type 1), and diamond containing no nitrogen at all and containing a very small amount of nitrogen are classified as type II (type 2), but 98-99% of natural diamonds are classified as type I. Very rarely there is type II natural diamond, but it is said to have outstanding beauty because it is a crystal of pure carbon containing almost no impurities, and especially those with large size are more expensive than type I diamond and is traded at high prices. On the other hand, colorless Lab-Grown Diamond produced in a completely controlled environment are pure carbon crystals in which "all" do not contain impurities at all in this type II. 14

15 LAB GROWN DIAMOND Lab-Grown Diamond Manufacturing Method HHPHT method Lab-Grown Diamond Pressure atm Temperature 1400 Material Carbon Catalyst Metal Belt Press Bars Press Cubic Press Diamond is a crystal of carbon, but natural diamond growing in nature grows including impurities in many cases. Most of them grow by incorporating nitrogen which is an element common to the earth. Diamond containing nitrogen is classified as type I (type 1), and diamond containing no nitrogen at all and containing a very small amount of nitrogen are classified as type II (type 2), but 98-99% of natural diamonds are classified as type I. Very rarely there is type II natural diamond, but it is said to have outstanding beauty because it is a crystal of pure carbon containing almost no impurities, and especially those with large size are more expensive than type I diamond and is traded at high prices. On the other hand, colorless Lab-Grown Diamond produced in a completely controlled environment are pure carbon crystals in which "all" do not contain impurities at all in this type II. 15

16 LAB GROWN DIAMOND Lab-Grown Diamond Manufacturing Method CVD method Lab-Grown Diamond Energy from Microwave Hydrogen gas + methane gas Diamond Film Diamond Base Synthetic Diamond Diamond Base Another growth method developed recently is the CVD method (chemical vapor deposition method). The temperature is relatively high, C is required but high pressure is not required. It grows diamond as a layer in the base in the chamber, and diamond grows little by little on the base by applying energy from microwaves to carbon containing methane gas. There are advantages in that it is possible to grow diamond on a wide range on many of the bases, and since the amount of scientific impurities can be finely controlled it is possible to grow diamond with its characteristics freely changed. It is mainly suitable for growth of relatively large diamond (0.20 ct or more), and the growth of high quality diamond is possible. 16

17 LAB GROWN DIAMOND World s Response to Lab-Grown Diamonds America's largest grading agency The largest grading organization in Europe Synthetic Diamond Report Lab-Grown Diamond Certificate Japanese grading agencies do not issue Lab-Grown Diamond certification Distribution of Lab-Grown Diamond has already started in America, and Lab-Grown Diamond has issued certification showing quality to consumers, like natural diamond. At America s largest and most authoritative grading institution "GIA - Gemological Institute of America, the certification of Lab-Grown Diamond is issued, and even in "HRD Antwerp of Antwerp Belgium, which is Europe's largest and most prestigious, is issuing the certification of Lab-Grown Diamond. This is a proof that Lab-Grown Diamond has the same mineral / jewelry value and similar beauty as natural diamond. Moreover, in the market, it is the proof that Lab-Grown Diamond has demand as a stone with beauty. Meanwhile, at the Jewelry Grading Association Council, which is a Japanese industry group, has taken the stance of "only the natural with respect to 4C grading of diamonds", and publication of the certification of Lab-Grown Diamond is not permitted. Even if we look at the global trend, we must say that Japan is far behind from Global Standard. But it can be said that there is a chance because of it. 17

18 LAB GROWN DIAMOND Issues with Lab-Grown Diamonds Brought to America New York grading agency AG & J as natural diamond Melee size (extremely small size) diamond. Out of 4,566 pieces, 243 pieces were Lab-Grown Diamond The company that produced Lab-Grown Diamond shifted to the production of jewelry use. there shifted to production for jewelry. Partially put into natural diamond. Production of extremely small size Lab-Grown Diamond, which is said to be star size and melee size in China in recent years, has increased due to low production cost of Lab-Grown Diamond by HPHT method, and cost of equipments dropped than before. This is, legitimately circulated on the market as Lab-Grown Diamond, and there is a situation in which it is intentionally put (mixed) into a lot of natural diamonds. Melee size is usually not checked by a grading agency, so manufacturers and retailers are possibly selling Lab-Grown Diamond as natural diamonds without knowing. Currently China is the world's largest "industrial" Lab-Grown Diamond producing country, but the demand for industrial Lab-Grown Diamond has declined due to the global recession, and many of enterprises are switching to Lab-Grown Diamond production of "jewelry use"melee size. 18

19 LAB GROWN DIAMOND Response to Melee size Lab-Grown Diamond It is manufactured by HRD Antwerp of Antwerp, Belgium Screening device for Lab-Grown Diamond "M-Screen" Utilizing some of the mineral characteristics of diamond, screening device specializes in melee size that sorts out with high speed between natural diamond which can be confirmed and diamond with possibility of being Lab-Grown Diamond. Regarding melee size Lab-Grown Diamond mixed up problems, efforts are being made centering on overseas grading agencies. Especially the technique which is recently drawing attention is called screening. Screening uses some of the mineral features of diamonds to sort out between diamond which can fully be recognized and Lab-Grown. In HRD Antwerp of Antwerp, Belgium, we developed a high-speed screening device for melee size called M-Screen, allowing the precise and smooth check to be possible. Currently, many companies conduct similar checks on diamonds by themselves, especially implementation is progressing among large companies. In addition, HRD Antwerp and GIA have a system that can carry out melee check service by bringing in. 19

20 LAB GROWN DIAMOND The situation and recognition of Lab-Grown Diamond between Japan and the West Japan The West Research Manufacture World s top level of scientific research in universities and research facilities. No manufacture or sale of synthetic diamond for jewelry at the private company level. Technology development and manufacture in each company. Each company manufacturing jewelry use Lab-Grown Diamond and selling as synthetic diamond. Response of Markets Labels as Lab-Grown Diamond = imitation, and refuse even touching. Focus on how to eliminate. Do not issue certificates. Lab-Grown Diamond develops with a sense of ethics in each company as a new market. Try to coexist with nature. Issue certificates of Lab-Grown Diamond. General Consumer Although concerned about Lab-Grown Diamond which is sold as natural diamond, there are many consumers who accept favorably for ethical and eco-friendly Lab-Grown Diamond and high quality and low price diamond. Waiting for the purchase intention as diamond that has new value. The perception of industry as Lab-Grown Diamond differs greatly in Japan and the West. In the Japanese jewelry industry, refuses the position of Lab-Grown Diamond as counterfeit of Natural Diamond" and focuses on how to not deal with synthetic diamond. In the domestic grading agency, grading of Lab-Grown Diamond isn t even done. This means that we can not deny the possibility that Lab-Grown Diamond are mixed in products sold as natural diamond. Also in Japan, the name Lab-Grown Diamond which is internationally common, isn t even used, and still it is common to call "synthetic diamond". Meanwhile, in Europe and the United States, they are developing with benefits like selling jewelry of Lab-Grown Diamond as ecologically clean new diamonds, and even authoritative grading institutions issuing certifications of Lab-Grown Diamond. The way that consumers think would not basically change whether they are in Japan or Europe and the United States. However Japanese industry groups deny, we believe consumer trends will surely assimilate with Western consumers. On that premise, the current situation is that the Japanese jewelry industry is going against the global trend. 20

21 LAB GROWN DIAMONDS SUPERIORITY NATURAL DIAMOND COMPARISON 21

22 SUPERIORITY OF LAB GROWN DIAMONDS Diamond s Purity Purity The Centenary Mined Diamond Lab-grown Diamond Type 2A is 2% or less High purity Type2A The Taylor Burton cts D Flawless cts D IF Centenary Famous as a diamond cts D Flawless given to Elizabeth The world's largest and highest Taylor for her birthday quality diamond Polished by Gabi Tolkowsky The Cullinan The Koh-i-noor Raw stone weight 3106 cts World largest as gemstone Currently owned by the British royal family 105 cts The world's oldest high quality diamond Currently owned by the British royal family As mentioned above, diamonds are classified into several different types, but type 2A is the rarest and high purity diamond. While less than 2% of diamond mined from underground belongs to this Type 2A, 100% of the colorless Lab-Grown Diamond of jewelry quality belong to this Type 2A. Unlike many natural diamonds including impurities (nitrogen), Type 2A is pure carbon crystal, and it has high scarcity and releases pure beauty. Historically precious and famous diamonds, The Centenary diamonds, The Cullinan, The Taylor Burton diamonds, The Koh-i-noor diamonds, etc. are all Type 2A diamonds, and all colorless Lab-Grown Diamonds belong to the same category. Type 2A diamonds are traded at a higher price than common diamonds due to their rarity, high purity and glow. 22

23 SUPERIORITY OF LAB GROWN DIAMONDS Confirmation of Origin Mined Diamond Lab-grown Diamond Origin warranty No Yes Especially in the present age, the origin of diamond (place of origin) is a very important point for consumers, but in natural diamonds it has always been the topic of debate. This means to guarantee that it is not derived from sources that people generally feel resistance to accept or or illegal sources. Many diamond companies claim that they are responsible about the supply source to the consumers, but its guarantee is not completely traceable. Because Lab-Grown Diamonds are grown and supplied in controlled laboratories, it is possible to guarantee a complete supply route. Lab-Grown Diamond has a complete certificate of place of origin, and the transparency of the route from production to consumers is ensured. This system allows consumers to understand the origins of diamonds. 23

24 SUPERIORITY OF LAB GROWN DIAMONDS Non-Conflict Diamond Mined Diamond Lab-grown Diamond Conflict Diamond Possibility No Conflict diamonds or blood diamonds refer to diamonds mined in conflict zones, and the benefits gained by diamond mining are used as funds for disputes in that area. Governments and anti-government organizations that manage mines mine and sell diamonds to continue war and use them as funds for weapons and personnel. In the early 2000s, these conflict diamonds were mainly mined from the African region such as Sierra Leone, Angola, Liberia, Cote d'ivoire, Congo, Zimbabwe and so on. Conflict diamonds are estimated to be 4-15% of the global annual diamond production, driving more than 3 million people to death and creating soldiers and millions of slaves as labor. These diamonds may still be distributed in the world diamond market as well. Lab-Grown Diamond is completely different from natural diamond mining, and scientists and engineers with advanced technology develop diamonds in modern facilities. The working environment and infrastructure are the same as those of computer microchip manufacturing factory and it is possible to guarantee 100% conflict free. 24

25 SUPERIORITY OF LAB GROWN DIAMONDS Impact on the Environment - Impact on Soil Mined Diamond Lab-grown Diamond Soil (1ct/per) 9.1m m2 Natural Water (1ct/per) 2630l 0.6l 1280 : 1 Overall comparison The area actually represents the entire soil that damaged by work such as coal mine, construction, excavation. Both natural diamonds and Lab-Grown Diamond cover all the elements necessary for production, but Lab-Grown Diamond only affect one to 1281(1/1281) compared to natural diamonds on soil and natural water. 25

26 SUPERIORITY OF LAB GROWN DIAMONDS Environmental Impact - Exhaust Gas Mined Diamond Lab-grown Diamond Carbon Gas (1ct/per) 57000g 0.028g Nitrous Oxide(1ct/per) 42Kg Kg Sulfur Oxides (1ct/per) 14Kg 0Kg : 1 Overall comparison Compares the greenhouse gases released in the production process. Greenhouse gas is gas that absorb and release the heat in the atmosphere and affect the climate pattern and cause global warming. In the emission of carbon gas, nitrous oxide and sulfur oxides, the amount of greenhouse gas emitted by Lab-Grown Diamond is one to 1.5 million (1/1.5million) of natural diamonds. 26

27 SUPERIORITY OF LAB GROWN DIAMONDS Environmental Impact - Energy Usage Mined Diamond Lab-grown Diamond Energy (1ct/per) mn Joules mn Joules 2.1 : 1 Overall comparison It is a comparison of the direct and indirect energy consumption consumed in the production process. Direct consumption refers to what is supplied directly from various energy sources for the production process and indirect consumption includes electric power from other various sources used in the process. Energy used includes energy from various sources such as natural gas, petroleum, diesel fuel, coal, hydraulic power, and etc, however, energy required to produce Lab-Grown Diamond is less than half compared to natural diamond. 27

28 SUPERIORITY OF LAB GROWN DIAMONDS Environmental Impact - Water Resource Usage Mined Diamond Lab-Grown Diamond Water Usage (1ct/per) 480l 70l 6.9 : 1 Overall comparison Natural diamond mining requires a lot of water resources, which is much more than the amount required by many chemical facilities. Many diamond mining companies do mining activities in Africa, but Africa is particularly poor in water resources and consumption of water resources is much more damaging than in other areas. In the process of producing Lab-Grown Diamond, there are no problems such as water consumption or water pollution caused by waste water. Compared to the production of the same diamond of the same quality, Lab-Grown Diamond s water consumption is about one seventh. 28

29 SUPERIORITY OF LAB GROWN DIAMONDS Environmental Impact - Safety Mined Diamond Lab-Grown Diamond Injured (100ppl/yr) 人 0 Sick (100ppl/yr) 人 : 0 Overall comparison Risks in the mining of natural diamonds cover a wide range of fields such as blasting, mining labor accidents, equipment accidents, diseases caused by occupations such as tuberculosis, hearing loss, blindness, or increased risk of developing cancer. On the other hand, Lab-Grown Diamond s production facility is modeled on highly managed semiconductor production facility and etc., and employees are not threatened by life threats or exposed to diseases caused by occupation. It goes without saying that the risk is zero, compared with natural diamond mining. 29

30 SUPERIORITY OF LAB GROWN DIAMONDS Purity Type 2a Conflict Free Eco-Friendly L. G. Diamond Supply Stability Guarantee of Origin Price Advantage 30

31 FUTURE OF THE DIAMOND MARKET 31

32 SALES OF LAB GROWN DIAMONDS The influence of Lab-Grown Diamond on natural diamond market Distinction between Lab-Grown Diamond and natural, 100% grading possible Separation and coexistence, occurrence of synergies Development and growth of new market Lab-Grown Diamond Increased consumer choice Ethical diamonds Visual beauty Price merit Natural diamond Rarity and uniquness A miracle that nature has nurtured Sense of status Price Premier Some people think that Lab-Grown Diamond will destroy the market of natural diamonds, but Lab- Grown Diamond should rather activate the diamond market as a whole. Synthetic ruby and recrystallized ruby are distributed much cheaper than natural ruby, but the natural ruby market does not disappear, and rather, the value of natural ruby continues to rise. As long as the distinction and grading of Lab-Grown Diamond and to natural stone are possible, it is unlikely that the market will be destroyed by mixing the two. Rather, each market should expand and create a new market. Lab-Grown Diamond and natural diamond, each has its characteristics and its demand. 32

33 MISSION STATEMENT 1. Re-positioning of Diamond Jewelry Too high end Luxurious things can not be enjoyed in general To have the potential that anybody can purchase Freedom of selection spreads Even though natural diamond itself supports a part of its value by expansiveness due to its scarcity, but because of that, retailers naturally have high thresholds due to "luxury" and "expensiveness, so jewelry with visible luxury becomes very expensive inevitably. Applications and expressions are limited to a certain extent on a commercial basis, and people who can enjoy them are also limited. For that reason many people are have used small one-grain-stone jewelry and inexpensive imitation stones (such as cubic zirconia, crystals, and etc) in order to satisfy their wishes. However, the sparkle of diamond is not there. The repositioning of diamond jewelry enables to have the casualness even it is real diamond, and the design that could not be realized due to price constrains. Moreover, we will provide very large potential, such as use in products (apparel, tableware and others) that we could not use until now. 33

34 MISSION STATEMENT Special Situation Casual Situation Special Special occasions such as bridal. Jewelry to purchase, expensive and luxurious, usually limited to lifetime opportunities. Usual Proposal of new diamond jewelry that colors everyday life. Even it s luxurious, can wear without pressure. Natural diamond jewelry is basically a product of Special Day". Jewelry to wear on the day of taking a spotlight once in a lifetime, it is the best accessory to produce the best moment. However, that special feeling, and the height of the thresholds limits the occasions of wearing. Even the diamond engagement ring, there are quite a lot of people who are not using it since it s tucked away. The new value we offer is a diamond jewelry that closely accompany not only in its Special Day" but also in everyday life where there is nothing special, even on Usual Day". On Special Day" provides the jewelry with gorgeousness that is appropriate for that special day, and on Usual Day provides the diamond jewelry with brightness that adds sparkle to everyday life. To provide a new occasion of use of diamond jewelry. That is one of our business missions. 34

35 MISSION STATEMENT 3. Valuation of Lab-Grown Diamonds as Fashion Use of real diamond s sparkle is not limited to jewelry. Looking back on the history, diamonds were used for a wide variety of things, such as swords, canes, book covers, cigarette containers, and they were enjoyed. Currently the diamond's brightness is almost limited to jewelry only, and not used for nothing else. However, decorating your favorite items with diamonds can be imagined as the new utility value of modernity as a diamond's fashion. Since it can be deployed variously out of the frame of jewelry, it is not an overstatement to say that its use is infinite. Lab-Grown Diamond realizes the new way of enjoyable use by unleashing from the constraint of "jewelry". 35

36 MISSION STATEMENT 4. Purchasing Process and Channel Change "O2O" - Sales through web-offline collaboration "New Channel" - Development Unfettered by Existing Distribution Basically, sales of diamond are done at physical stores by face-to-face with customers, and it has believed so thus far. But now most of the products in the world are sold on the internet. It is said that jewelry can not be sold on the web, but web sales are common in America where the world's largest diamond consuming country. Japan will surely become part of its trend in the future. By utilizing the O2O strategy by Webstore and the virtual 3D conversion technology of diamond by Sarine Technologie, we realize overwhelming superiority by creating a buying experience that only Web sales could provide and not at all inferior to physical stores. We also pursue the possibilities of diamond business by the new channel that is not restricted with existing jewelry distribution, such as collaboration with fashion distribution. 36

37 LAB GROWN DIAMOND Escape from Values and Preconceived Ideas Lab-Grown Diamond Synthetic Diamond Lab-Grown Diamond Negative Image imitation Catchpenny Positive Image Real Pure (Beauty) Reasonable Ecological Ethical In the diamond industry, there are some people who show the rejective reaction because of a negative image in the sound of the name synthetic diamonds". We will convert synthetic diamonds into positive image as Lab-Grown Diamond and try to escape from existing stereotype. It is a diamond that creates images of new values by realizing cleaner, more ecological, and reasonable price than natural diamonds. 37

38 LAB GROWN DIAMOND Superiority of Lab-Grown Diamond Pureness Generation of pure and beautiful diamond crystals without impurities Reasonable Price Providing at reasonable prices compared to natural diamonds Eco-Conscious No impact on the environment due to advanced technology generated by energy saving Conflict-Free Guarantee complete dispute free by consistent management and production at American factory Sustainable Considering nature and the environment, possible to leave natural resources to future generations Sustainable Supply Stable supply of quality of demand is possible by production control The advantages of Lab-Grown Diamond are mainly as follows. Diamond as pure and very beautiful crystals - "beauty" Costs less than half of natural diamonds - "Price benefit Diamonds unrelated to conflict and environmental destruction - "Ethical" Production system according to demand - "Supply stability" Natural diamonds which are natural resources and be mined do not have stable output per fixed mine, and the quality of diamond mined can not be predicted, so returns on mining costs are unstable. As a result, natural diamonds are priced in anticipation of it, which making it more expensive. In addition, it is not uncommon for opportunity losses to occur because diamonds that are consistent with market demands are not always calculated. On the other hand, the correlation between Lab-Grown Diamond and diamond production costs and returns (deliverables) are completely decided and very clear cost management is possible. Moreover, by controlling the developmental state, it is possible to create the desired quality (color, clarity, size), and it is always possible to provide things that are consistent with market demands. In short, it will be a very efficient business. 38

39 Lab-Grown Diamond Pure Diamond - Proposal to the New Generation Natural Diamond Visibly not Beautiful Social Environmental issue Concern About Secondary Distribution Distrust Towards Pricing Change the Values Pure Diamond High Quality Eco Ethical Distribution management diamond Reasonable The reason of the fact that younger generation is less attracted to diamonds is an increase in distrust of jewelry. Younger generations tend to require rationality and ethics for purchasing. As mentioned earlier, the current natural diamond industry has problems with price uncertainty, environmental problems, conflict diamonds and numerous problems. In addition, in a recessionary state, you can sometimes find some diamonds that are not visibly beautiful in the shop because of the influence of manufacturers pursuing "low quality low unit price" products in response to falling customer price. In addition, many privately-owneddiamonds have been re-released to the market due to "purchasing boom" in recent years. Although it is about used diamond, it is said as "secondary circulation diamond" and is traded at a much lower price than the new diamond. When this re-flows into the market, diamonds that do not degrade at all will be impossible to distinguish from new ones, and destroys market price biosynthesis. The existence of this used diamond is known by consumers, so they are always worried that they are forced to buy this second hand diamond when buying low price diamond. Dispensing all negative images, proposes the new values such as "Pure Diamond" proposes new value of "high quality" "reasonable and easy price" "ecological and ethical" "stable supply" to the new generation. 39

40 VALUE OF LAB GROWN DIAMONDS Type Ⅱa - Premium Diamond As mentioned earlier, there are several types of diamonds, but among them it is said that "type 2A diamonds which contain almost no impurities exist in nature only about 1%, so the rarity is high. Also, "beauty" is enhancing its value in addition to its scarcity. Its beauty, described as "pure ice-like transparency" attracts people and has higher quality than colorless diamond of "Type 1A. Particularly large "Type 2A diamonds are traded in auctions, and are traded at premier price in auction houses such as Christie's and Sotheby's. Our pure diamonds have mineralogically equivalent beauty with diamonds traded in those auctions, which enables the supply of very rare quality diamonds in nature. International Diamond magazine RAPAPORT May, 2014 Issue Diamond Type Feature 40

41 VALUE OF LAB GROWN DIAMONDS TypeⅡa Christie's auction winning bid price RAPAPORT May, 2014 Issue 41

42 VALUE OF LAB GROWN DIAMOND Type Ⅱa Christie's auction winning bid price RAPAPORT May, 2014 Issue 42

43 LAB GROWN DIAMONDS CLARIFICATION OF CATEGORIES 43

44 CLARIFICATION OF CATEGORIES Differentiation Compartmentalization with Natural Diamond In order to secure the superiority of Lab-Grown Diamond against natural diamonds, it is essential to guarantee and clarify that it is clearly different from natural diamond. If you can not know easily that diamonds themselves are different from natural diamonds, as well as incorporation into natural diamonds, the superiority of synthetic diamonds will be lost. In Lab-Grown Diamond, we mainly aim to clarify and differentiate Lab-Grown Diamond by the following two methods. Girdle Inscription Using a laser to mark the girdle as "Lab-Grown Diamond" Guarantee the identity with the report and etc. by engraving with the number Exclusive certification (diamond report) Adopt a diamond report of a public appraiser's organization Proof that clearly shows it is different from natural diamonds 44