“But when you’ve gotten the science dead right, and you combine that with some very exacting software, you’ve got some very ironclad evidence that can make a very big difference to a very big value chain.”
Watling was a young scientist working in chemical laboratories in Western Australia in the late 1970s when he first discovered there were certain geographic markers in naturally occurring products.
Using a laser ablation machine, and a process known as “laser ablation inductively coupled plasma-mass spectrometry”, Watling could conduct micro-scale sampling of gold nuggets or diamonds, and like a fingerprint, he found specific elements that were unique to the mineralisation area they came from.
Fortunately for Watling – and the police – his discovery came at time when theft was rife. Gold was “falling off the back of trucks” in greater numbers every year during the ’80s and ’90s, and police were hunting what was estimated to be around $200 million in stolen gold every year.
Watling, attaching himself as a working scientist to several universities, began his career helping police track down stolen gold and diamonds. Investigators would seize the precious commodity and bring it to Watling to see whether or not it came from where the charged person might suggest.
He remembers the Karpa Spring Gold Salting Case in 1990, where three plucky prospectors mixed gold into drill wells near Mr Gibson and claimed they’d found a strike length of 1500 metres open in all directions.
They sold 30 per cent of their company for $6 million before the buyer smelled a rat, and Watling was ultimately responsible for proving the “spiked” gold was from another area entirely.
That same year, Watling began helping police investigators solve the Argyle Diamond Case, where Lindsay Roddan, a former horse trainer, stole $2.5 million worth of diamonds.
That was a tricky one, remembers Watling, as one of Roddan’s partners was Argyle’s security chief and a former high-ranking Victorian police officer, who had allegedly corrupted the police investigations.
“Fortunately, the majority of gentleman who are persuaded to steal things don’t really know a huge amount about science,” says Watling, “so we were able to prove things like that over and over again.”
While Watling and his technology spent the 1990s and 2000s being called on as an expert witness in West Australian criminal courts, provenance of precious metals and stones was gaining international attention.
In 2006, the Leonardo DiCaprio movie Blood Diamond provoked a wave of criticism around the human rights abuses in diamond mines controlled by militia and terrorist organisations in Africa.
The film also forced western consumers to reckon with their inadvertent funding of civil wars, genocide and slavery through the purchasing of diamonds.
As a result of growing awareness, the diamond industry – featuring Russia’s Alrosa and South Africa’s De Beers, along with leading NGOs and the UN –set up the Kimberley Process Certification Scheme to prevent conflict diamonds from entering mainstream supply chains.
The 2006 movie ‘Blood Diamond’ helped to wake up comsumers to the importance of ethically sourced diamonds.
Unfortunately, the Kimberley Process was widely regarded as too narrow. Focusing only on country of origin, not mine of origin, it only covered the trade of rough diamonds, and focused on conflict diamonds that were used to fund wars and ignored broader concerns about indigenous land rights, child slavery, environmental sustainability and mine worker safety.
And lastly, it had no scientific methods to test or verify diamond origin claims.
“Combine all that with the fact that synthetic diamonds had come on the scene in a big way and diamond traceability kind of failed, ” says Ben Cleary, portfolio manager of the natural resources fund at Tribeca Investments.
While NGOs quit the Kimberley Process in droves, and the reputation of the certification collapsed, the consumer expectation for ESG-centric processes didn’t.
Fast forward to 2021, and environmental, social, and governance (ESG) concerns now dominate investment theses and have carved clear consumer patterns across markets. Lab-grown diamond demand is growing, with Bain & Company reporting Chinese manufacturers are ramping up production by as much as 60 per cent to keep up with Millennial demand.
But since lab-grown diamonds are often indistinguishable from their natural peers, and Tiffany & Co. and Cartier have long marketed their diamonds alongside the Kimberley Process, there has been a gap in trusted third-party authorisation for the diamond supply chain.
This is where SCS Global and Source Certain hope to fit in. Earlier this year, SCS Global launched its sustainable diamond certification standard SCS-007, quickly signing up a suite of lab-grown diamond producers, and using Source Certain’s tried and tested technology to verify the stones.
“The remarkable thing about the evolution of this technology is not only can we test gold or diamonds, we can test the seeds of pearls right down to the day they were put into the muscle to grow or where exactly vegetables or steel comes from,” says Watling, who has also traced element fingerprinting of Australian ochre to establish the provenance of authentic indigenous artworks.
“I’ve just always been a scientist tinkering around in the background, but now it seems that has met a very real commercial application.”