Sarine Technologies

[BRT]

the consumption of diamonds as jewelry is held up by a kind of illusion of worth. so my concern/interest is how that illusion shifts over time. lab diamonds are structurally and chemically the same as natural diamonds, but marketed as ethical/environmental/green. otoh, there's the 'diamonds are forever' mirage that's been strong thru the decades. the diamond you buy would represent the cause you stand for, at least in a some small way.

my 2c

[specuvestor]

I’m no expert in this but are women able to differentiate between lab and natural diamonds? That to me is the proof of the pudding

[CY09]

The difference between lab grown and natural diamonds is very hard to be distinguished unless a machine is used.

However mainstream jewellers have not started making jewellery with lab grown diamonds yet. In fact, lab grown diamonds cost only about half the price of those mined. IMO, Sarine products will not be affected by a shift to lab grown diamonds etc. Their main business after all is identification and processing of any diamonds. In fact the more diamonds are needed for identification, the more the potential demand there is for Sarine technology

[bardsmanship]

The difference between lab grown and natural diamonds is very hard to be distinguished unless a machine is used.

However mainstream jewellers have not started making jewellery with lab grown diamonds yet. In fact, lab grown diamonds cost only about half the price of those mined. IMO, Sarine products will not be affected by a shift to lab grown diamonds etc. Their main business after all is identification and processing of any diamonds. In fact the more diamonds are needed for identification, the more the potential demand there is for Sarine technology

Yep, it's probably impossible to expect regular women off the street to be able to tell whether a diamond is natural or lab-grown just by looking at it. There are many companies who have developed / are developing machines that can detect lab-grown stones however.

There is also an easier way to tell if a diamond is natural or lab-grown, and that is to see if it has a reputable grading certificate, e.g. one from the GIA or AGS. These grading labs don't grade lab-grown stones in the same way they grade natural stones, and the reports they produce for lab-grown stones state very clearly that the stone in question is "synthetic".

I wouldn't be so quick to conclude that Sarine's business won't be affected by a shift to lab-grown diamonds though. This is because 55% of their revenue is still from inclusion mapping products. There is a need for inclusion mapping of natural rough because the supply of natural rough is limited and the midstream's profitability is low, so it makes sense for them to use Sarine's inclusion mapping systems to maximize the utilization of the rough stones they purchase.

Lab-grown diamonds on the other hand can be produced in unlimited amounts, and so the technology gets good enough to produce stones of high clarity, there will be no need for inclusion mapping. So if, and this is a big if, lab-grown diamonds become a substitute for natural diamonds Sarine's business will definitely take a beating.

Not to toot my own horn, but I've thought about Sarine's business for a while and wrote about my thinking in more detail if anyone's interested: https://fundamentalsmatter.wordpress.com...onal-woes/

[BRT]

personally, it's not so much whether lab can be distinguished from natural or not, but will the fact that it's from a lab diminish its deemed worth? objectively it shouldn't, but just imagine the scene where someone who just got an engagement ring surrounded by admiring (kaypo) friends and relatives. the questions "how many C's? real or not?" are quite likely to arise. how you feel and how they feel when you ans the qn is tricky. at that point, it's probably no place to start educating the uninitiated about how lab/natural diamonds are chemically the same etc.

point being, these thoughts will go into the purchase process, not just by the receiver but also the purchaser. so i think the misconception of lab = fake is quite a strong defence for natural diamonds, so far.

[opmi]

I think most mass market customers will look at 1 C - carat...

>0.5C - PASSED...

[specuvestor]

What is the purpose of diamonds? Vanity. Same with branded bags.

Fake diamonds in the past is too obvious. So were fake bags. Now not so obvious. That's why affluents going much higher end to Hermes because you can't really tell a Prada from fake anymore but you can sort of tell if the person can afford Hermes Tai-tais are not going to ask for diamond grading certificates

That's the world of vanity they operate in. So if lab diamonds and real diamonds cannot be distinguishable, my guess is that it will have huge impact on diamond industry, provided the lab diamonds are able to break in. Sometimes it's mere politics, not quality. If lab diamonds manage to get a foothold in the market, I would say it WILL impact Sarine.

And we all know what is the value of diamonds in secondary market because of De Beers.

[Wildreamz]

To me Sarine is a classical example of "Too Hard", their success hinges on many external factors that are not within their control (changing consumer tastes, De Beers etc). I would avoid it personally.

[bardsmanship]

Sarine Announces Opening of Sarine Technology (Gemmological) Laboratory

Hod Hasharon, Israel, 14 January 2018 – Singapore Exchange Mainboard-listed Sarine Technologies Ltd (“Sarine” (U77:SI) and together with its subsidiaries, "the Sarine Group"), worldwide leaders in the development, manufacture and sale of precision technology products for the evaluation, planning, processing, finishing, grading and trading of diamonds and gems, announced today the opening of the Sarine Technology Laboratory.

Utilising Sarine's breakthrough artificial intelligence based technological solutions for the automated, accurate, consistent, digital, and objective grading of a polished diamond's Clarity and Colour, the Sarine Technology Lab will initially offer services in Ramat Gan, Israel, commencing in February. The services offered will include authentication of the polished diamond (as per diamond or simulant, natural or synthetic, treated or not) and the grading of its 4Cs, all using the latest state-of-theart technology. Sarine's digital 4Cs report will be customisable as to layout and design to reflect the retailer's branding message and can be fully integrated with the Sarine ProfileTM experience (light performance, imaging, Hearts and Arrows analysis, etc.) at competitive pricing. The services in Israel will be followed by the opening of a lab in India, planned for May.

Sarine has started operating their own gem lab - one of the things I was expecting after they announced their new colour and clarity grading machines (see thesis). This could turn out to be a good move in the long run, especially if they are producing their own diamond certificates since they would be making the entire fee instead of just a small cut. A cert typically costs about USD$50-100 per carat, and gem labs like the GIA are quite profitable - in 2012 this non-profit had revenue of $180.3 million, and a profit of $22.8 million (12.7% margin).

It's certainly possible that Sarine can capture a part of the diamond certification market, if their pricing is right - a lot of retailers are already issuing IGI certs even though IGI is widely known to be a second-tier lab, so clearly the brand name isn't THAT important. Rather, I believe Sarine could hold the upper hand in diamond certification since their turnaround time for grading a diamond could be much shorter than traditional gem labs employing human gemologists (1 month or more, especially for smaller stones).

This development also means that Sarine may finally be able to diversify their customer base from the midstream (low profitability) to the downstream (much better profitability). Their previous efforts with the Sarine Profile, while commendable, haven't made much of a difference because it's hard to create a new market where there wasn't one before. If their gem labs are able to gain traction in diamond certification it will probably be much easier to convince retailers to also pay for the Sarine Profile since these services are highly complementary. 

What's interesting though is the speed with which this has happened. I'd thought they'd spend more time persuading the mainstream gem labs like GIA, AGS and IGI to use their machines and reduce their reliance on human gemologists. Perhaps there is pushback from the gemologists? But there aren't any unions for these jewelry professionals that I know of. Hopefully the reason isn't that Sarine's tech is not up to scratch - that would go completely against what they previously announced regarding the accuracy of their new machines. Also worth considering is whether this move will alienate the aforementioned gem labs, some of which use Sarine's machines for measuring cut proportions. I don't think the impact will be that significant however since most of Sarine's revenue is from companies in the midstream.

Finally, it will be interesting to see the impact that opening these new labs has on Sarine's numbers. Setting up a new lab is supposedly not too capital-intensive, and Sarine usually generates plenty of FCFs so the cash outlay shouldn't be a problem, but I wonder what the operating costs are like, and what sort of volume their lab needs to start turning a profit.

[bardsmanship]

Some bad news: https://iiprd.wordpress.com/2017/10/18/s...ation-ors/

I am not a lawyer, but what I got out of the analysis is that a judge in India decided that Sarine's copyright on their Advisor software may not have been infringed on by one of their competitors in India, Divora Bhandari Corporation, which produces the Mandakini Work Manager software. The reasoning is that only the functional aspects of the software are the same, the implementation and source code may be completely different (to be evaluated by an independent expert). Only the expression of ideas is protected under copyright law, not the ideas themselves. However, since the extension files generated by the Mandakini Work Manager is the same as that generated by the Advisor, if Sarine has the relevant patent(s) they may be able to argue for patent infringement.

Another lawsuit that Sarine had against the same company: https://iiprd.wordpress.com/2017/10/18/c...-petition/

I was also able to find some of the court documents here: https://indiankanoon.org/search/?formInp...mostrecent