By Charles WyndhamMay 18th, 2016
The unsurprising news being shouted from the rooftops is that De Beers has signed a 10 year marketing agreement with the Government of Namibia.
Of much greater interest to me was the price that the 815 carat stone from Lucara fetched, namely some $77,000 per carat or total price of $63 million.
This I did find surprising, surprisingly good.
I have only seen photos of the stone and spoken to one or two who have seen the stone and getting such a high dollar per carat per se is not that out of place, but when put together with the extreme size of the stone, the total price paid was extraordinary.
The general rule in diamonds is that the price increases exponentially as the size increases, but things do tend to plateau, as the size gets exceptional; the total sum of cash involved becomes a factor in the price.
In a market, which De Beers has described as being in a fragile recovery, no one can claim is the strongest it has ever been, an indication of which is the lack of liquidity and generally fairly weak prices overall, to achieve such a high price, I believe tells us, or me at least, just how remarkable our product can be.
I wish Lucara luck with their sale of their next cricket ball sized diamond next month at Sotheby’s in London.
If the result is another leap frog on the 800 carater, it really is a most positive signal for diamonds; positive in the sense that it confirms the underlying exclusivity and luxury of beautiful diamonds, creating a most powerful halo for the bulk of our trade.
I use the term bulk in relation to value not volume, as one of the key problems I believe is that diamonds are losing their exclusivity and vast quantities of junk are being churned out and sold as just that, junk.
I could not help but wonder what my friends at Gem Diamonds must have thought about the sale of the 800 carat stone and upcoming sale of the 1100 carater.
To my understanding Lucara and Gem nearly tied the knot a couple of times but each time the stumbling block was the wise refusal of Lucara to take on board the useless directors of Gem.
Gem with its Letseng mine as previously the highest purveyor of exceptional diamonds is sitting very much down the pecking order now, in fact rather a second class citizen.
I have no doubt that if Gem had been running the Lucara mine the 800 and 1100 carat stones would have been smashed into many more shiny pieces, which is what they achieve so successfully at their Letseng mine.
It would be interesting to speculate the shareholder added value if Letseng was run by the management of Lucara, I don’t think the result would be at all surprising, except from being surprisingly good.