The world’s second-largest diamond could increase in value if left in its rough state, says the head of Lucara Diamond Corp., the miner that unearthed the 2,492-carat stone earlier this month.
“Because of its importance to Botswana, we need to find the best way to market the stone. And you never know if the stone is the right size or not. That doesn’t necessarily mean that a stone of that size needs to be cut,” said Lucara CEO William Lamb in the latest episode of the Rapaport Diamond Podcast, out next week.
The rough diamond, which the company discovered on August 19 at its Karowe mine in Botswana, falls into the category of “legacy stones,” Lamb said, referring to diamonds worth $10 million or more.
Importantly, these items are not subject to the long-term supply contract Lucara has with HB Antwerp. While the contract entitles the Belgian manufacturer to purchase all 10.8-carat and larger stones from Lucara, Lucara can seek permission from the Botswana government to classify a particular diamond as a legacy stone, thus exempting it from the contract.
Therefore, Lucara has alternative options for selling this diamond.
“There is still a long way to go before we find the final solution to the stone,” Lamb said. “We will involve the government, we will involve HB, we will involve others to see how the market generally responds. A lot of people think we are only talking to HB because we have an agreement with them. That is not true.”
The still-unnamed stone is the company’s largest find, surpassing the 1,109-carat Lesedi La Rona. After Lucara found the latter stone in 2016, the company attempted to auction it in its rough form at Sotheby’s, but was unable to sell it. The move reportedly sparked tensions with diamond dealers who saw it as an attempt to circumvent the traditional trade. It was eventually sold to Graff the following year for $53 million.
Finding a collector to buy the uncut Lesedi La Rona at Sotheby’s would actually have protected the value of Lucara clients’ large polished stones, Lamb believes. Selling it in polished condition might have reduced the rarity of such stones on the market, but presenting it as another type of investment would have avoided that problem.
“In its raw form, it has unimagined potential,” he explained in the podcast. “You can’t make it raw.”
At the time, the diamond industry “saw it differently,” the manager admitted. “However, we will learn from our mistakes as we look at how the (2,492 carat) stone will be sold and who it will be sold to,” and also what kind of message Lucara will use to promote it. “This is a great ‘good news’ that will put the focus back on natural diamonds.”
One possible destination for the diamond is a museum – an option that was also considered at Lesedi La Rona. “Many of these museums … have quite rich endowment funds that will try to purchase and display these antique items,” Lamb said.
However, “nothing has been decided yet and the way forward will be determined in cooperation with the government of … Botswana,” a Lucara spokesman said in a separate statement to Rapaport News Wednesday.
It’s too early to judge the quality of the stone, added the Lucara CEO, who had not seen the diamond in person at the time of the interview. He did, however, admit that it doesn’t look as stunning as the 813-carat Constellation, which sold for a world record price of $63.1 million – or $77,649 per carat – in 2016.
The quality of the Constellation was so high that “you could read (text) through (the) stone,” Lamb noted. The newer diamond “seems to have more color, but again, (what matters is whether) you find the right buyer, (someone) looking for… the largest stone ever. When we pulled the Lesedi out, we said there was no person alive who had ever seen a stone of that size. (The newest) is just the next level.”
Image: The 2,492 carat rough diamond. (Lucara Diamond Corp.)
Stay up to date by signing up to our diamond and jewelry industry news and analysis..
