Element Six's real hopes for artificial diamonds
By Peter Marsh
Published: July 7 2008 03:00 | Last updated: July 7 2008 03:00
Element Six - a company controlled by De Beers, the world's biggest maker of artificial diamonds - has set up a $100m venture fund to promote the use of these materials in areas from artificial hips and knees to electronics and water purification.
The Luxembourg-based company - in which the South African mining group holds a 60 per cent stake - plans to use the fund to take minority stakes in new businesses round the world that would exploit the unusual technical characteristics of artificial diamonds.
Artificial diamonds are among the world's most abrasion-resistant materials. They are also useful for their electrical conductivity and can be used as semiconductors in place of silicon.
"We see a great many commercial opportunities in artificial diamonds and hope this fund will help new ventures to grow in a profitable manner," said Christian Hultner, chief executive of Element Six.
The Luxembourg company - whose other shareholder is Umicore, the Belgian minerals group - hopes that its $100m fund will attract additional cash of about $400m in the next few years from investment groups and technology companies.
As a result of this programme, a total of about $500m could be made available to fund a series of about 15 start-up companies.
So far Element Six - which says it accounts for about a third of the world's $1.2bn a year sales of artificial diamonds - has placed investments of about $16m from the venture capital fund.
The money for the fund has come from Element Six's internal cash flow and has not required extra money raised from outside the group. The fund has financed three new businesses in the US and UK in fields that exploit the properties of artificial diamond in specific areas.
One company that it has backed is Advanced Oxidation, based in Cornwall in the UK, which uses the diamonds' unusual electrical properties to generate electrical current to degrade chemical pollutants, so potentially helping to clean up water supplies in developing nations.
Of the other two companies that the fund is supporting, one is also in environmental technology while the other is in electronics.
Other new businesses in which Element Six is examining the idea of investing its cash include companies that would exploit the artificial diamonds' nearindestructibility to form new artificial joints, a fastexpanding area of the medical device industry. Artificial diamonds also have a lot of potential in fields such as microwave generation, an area that possibly has applications in new generations of mobile phones.
The current use of artificial diamond is mainly limited to the field of cutting tools for machining and mining.
In spite of fears about a global economic slowdown, Mr Hultner says there is "no sign" of any reduction in the recent sales growth of the artificial diamond industry. "We are seeing a lot of interest in the applications of these materials," he said.
Mr Hultner's goal is to double the annual sales of Element Six - which this year are expected to be slightly more than $500m - by 2013.
Copyright The Financial Times Limited 2008
Hip joints that could last for ever
By Peter Marsh
Published: July 6 2008 23:29 | Last updated: July 6 2008 23:29
It could be the ultimate status symbol for people interested in leaving behind a permanent memory.
Artificial hips and knees made from artificial diamonds could be so long-lasting that an owner could stipulate that the devices be removed from their bodies when they die and passed on to their next of kin.
“We are talking here about the inheritance hip,” says Christian Hultner, chief executive of Luxembourg-based Element Six, the world’s biggest maker of artificial diamonds. The business is majority owned by De Beers, the South African mining group that is the world’s biggest supplier of natural diamonds.
Artificial diamonds are made by subjecting carbon atoms – found for instance in natural graphite minerals – to roughly 50,000 times the pressure of the atmosphere. This mimics the way natural diamonds are created in the earth’s crust through the compressing action of rocks over hundreds of millions of years.
The idea of using artificial diamond to manufacture key parts of artificial hips and knees – which are currently made from materials such as titanium, cobalt and ceramics – is among a series of new uses for these materials being considered by Mr Hultner.
Applications for artificial diamond – a material invented in the 1950s by scientists working at General Electric, the US industrial company – have started to surge in the past decade.
Mr Hultner is talking to at least one company in the US – which he is not prepared to name – that is looking at the idea of making new orthopaedic devices from artificial diamond as a way to make the products tougher and longer-lasting. This company could be among several into which Element Six is planning to inject finance, via a new $100m venture fund.
Mr Hultner says that the number of new applications for artificial diamonds is extensive. Most of the $1.2bn a year in sales of these materials goes into inserts to increase the hardness of cutting tools when, for example, used in tunnelling machines or metals shaping.
However, there are many new potential uses, says the Swedish engineer, such as in areas that use the material’s unusual optical or thermal properties – for example its use in generating microwaves or absorbing heat in electrical equipment.
Unlike natural diamonds, the properties of artificial ones can be specified by engineering design to make them potentially much more useful in a range of fields.
New techniques in which carbon atoms are built layer by layer to form the final material in vacuum chambers are adding to the ways the materials can be tailored to individual applications.
“People talk about diamonds being forever. But because the artificial form is so versatile you could just as easily say they are for everything,” says Mr Hultner.
Element Six expects to have sales this year of a little more than $500m, more than twice as much as in 2003. Of this year’s anticipated sales, some 80 per cent is likely to come from artificial diamonds and the rest from other forms of hard and tough materials used mainly in the machining and mining industries.
The company has plants in six countries, including South Africa, Ukraine, UK, Sweden, Ireland and China, and employs 3,800 people.
While the Luxembourg company claims to account for slightly more than a third of the world’s sales of artificial diamonds, two of its three closest rivals are owned by US groups – the Dover and Smith International engineering companies.
The third rival competitor is another US-based company, formerly owned by GE, which is now part of Sweden’s Sandvik industrial conglomerate.
The manufacture of top-quality artificial diamonds requires a lot of engineering expertise, plus high-technology equipment, which is one reason why the number of players in this field is fairly small.
Artificial diamond is highly expensive; while the lowest-quality material sells for about $500,000 a tonne, making it 500 times more expensive than steel. The most sophisticated form of artificial diamond sells for $30bn a tonne, or 1,000 times dearer than gold.
However, in most applications, tiny quantities of artificial diamond are normally required.
An insert made from artificial diamond for a cutting tool, for instance, is likely to weigh only 0.3 grams, costing about $100.
Copyright The Financial Times Limited 2008