I met Clark McEwen, chief operating officer of Gemesis, the synthetic diamond manufacturers, at the JCK Las Vegas show today. He had stated at a conference on synthetics in Mumbai a couple of months ago that Gemesis was expanding so rapidly, it added something like one production machine every two days. I remember marveling at the stated speed of expansion. So I asked him straight away what progress his firm had made in ramping up the production of synthetics towards what might be considered really commercial volumes.

By the end of the year, he told me, Gemesis would be producing in excess of 100,000 carats annually – and capacity expansion would continue unabated. Not such a great deal, you might say, given that the world’s natural rough diamond production is in the region of 160 million carats annually.

But McEwen gave it some startling perspective. Of BHP Billiton’s 5 million carats annually from its Ekati mine in Canada, only some 10,000 carats are in sizes of 2 carats or larger. He should know, he used to work for BHP Billiton. If one extrapolated those numbers for the whole world’s production, he went on, one could see just how little of the world’s rough diamond production was of stones of that size.

Later, I did the arithmetic in my hotel room. The BHP Billition Canada production of 2-carat+ stones works out to 0.2%. If one applies that to global production, just 320,000 carats of natural rough comes out of the mines each year. At the rate they’re expanding, Gemesis could equal or surpass that figure by the end of 2008. Of course, the natural diamonds are overwhelmingly whites while Gemesis’ production consists overwhelmingly of yellows.

Still, its worth considering the following – the major part of the total value of the world’s rough diamond production comes from the larger and better colour/clarity stones. Polished intense yellow synthetic diamonds made by Gemesis, McEwen had stated at the Mumbai conference, sold on average at 70% below the price of natural yellows!

One exhibitor at the JCK Luxury show that ended yesterday had a dazzling display of large, intense yellow stones. The largest was a stunning 38-carater. I asked the exhibitor whether he was worried by the influx of lab-grown intense yellows into the market. He said he wasn’t, because his customers were a discerning lot, and wanted only the natural stones.

That’s great. But what would happen if there are as many large, intense yellows floating around the world’s markets as there are of large naturals of every colour?