The world’s second-largest diamond could retain more value if left in its rough form, according to the head of Lucara Diamond Corp., the miner that unearthed the 2,492-carat stone earlier this month.
“Because of its significance to Botswana, we need to look at the best route to market for the stone, and you never know — it doesn’t necessarily mean that a stone of [that] size should be cut,” said Lucara CEO William Lamb on the newest episode of the Rapaport Diamond Podcast, which comes out next week.
The rough, which the company discovered at its Karowe mine in Botswana on August 19, falls into the category of “legacy stones,” Lamb explained. This refers to diamonds worth $10 million and above.
Importantly, these items are not subject to the long-term supply arrangement Lucara has with HB Antwerp. While the deal entitles the Belgian manufacturer to buy all of Lucara’s 10.8-carat and larger stones, Lucara can get permission from the Botswana government to classify a given diamond as a legacy stone, exempting it from the agreement.
As a result, Lucara has alternative options for selling this diamond.
“There’s a long way to go to understand what the ultimate solution for the stone is going to be,” Lamb reflected. “We’ll engage the government, we’ll engage HB, we’ll engage others to see what the market generally feels. A lot of people think that because we have an agreement with HB, they are the only people that we speak to. That’s not true.”
The as-yet-unnamed stone is the company’s largest find, beating out the 1,109-carat Lesedi La Rona. After recovering that latter stone in 2015, Lucara tried auctioning it in its rough form at Sotheby’s in 2016, but it failed to sell. The process reportedly sparked tension with diamond dealers, who viewed it as an attempt to bypass the traditional trade. It eventually sold to Graff for $53 million the following year.
Finding a collector to purchase the uncut Lesedi La Rona at Sotheby’s would actually have protected the value of Lucara clients’ large polished stones, Lamb believes. Selling it as polished might have decreased such stones’ scarcity on the market, but presenting it as a different type of asset would have sidestepped that problem.
“In an unpolished form, it holds untold potential,” he declared on the podcast. “You cannot unpolish it.”
At the time, the diamond industry “didn’t see it that way,” the executive acknowledged. However, “we’re going to learn from our mistakes when we look at how the [2,492-carat] stone is going to be sold [and] who it’s going to be sold to,” as well as what kind of messaging Lucara will use to promote it. “This is a great ‘good news’ story to bring the focus back to natural diamonds.”
One potential destination for the diamond is a museum — an option that also arose with the Lesedi La Rona. “A lot of these museums…have fairly wealthy endowment funds [that] will look to purchase these items of antiquity to put on display,” said Lamb.
However, “nothing is defined, and the path forward will be determined in collaboration with the government of…Botswana,” a Lucara spokesperson said in a separate statement to Rapaport News Wednesday.
It’s too early to say what the quality of the stone is, added the Lucara CEO, who had yet to see the diamond in person at the time of the interview. However, he admitted that it did not appear to be as stunning as the 813-carat Constellation, which sold for a world-record $63.1 million — or $77,649 per carat — in 2016.
The Constellation’s quality was so high that “you could read [text] through [the] stone,” remarked Lamb. The newer diamond “does seem to have more of a color to it, but again, [what matters is whether] you can find the right buyer, [someone] who is looking for…the largest stone in living memory. When we pulled out the Lesedi, we would say there was not a person alive who had seen a stone of this size. [The latest] one is just that next step up.”
Image: The 2,492-carat rough diamond. (Lucara Diamond Corp.)
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