The Letseng mine in Lesotho has become the source of many large diamonds
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“I could show you my email,” volunteers William Lamb, the chief executive of Lucara Diamond. “I get three offers a week on that stone. I’d love to say we’re going to sell it next week, but we have to find the right buyer.”

Mr Lamb is referring to the Lesedi La Rona — at 1,109ct, the second-largest gem-quality rough diamond ever discovered. Lucara unearthed it, and its attempted sale at Sotheby’s in June 2016 was meant to represent a peak in the market for enormous stones: the first time one had been sold in public. Instead, when bidding stalled at $61m, falling short of an undisclosed reserve — Sotheby’s presale estimate was in excess of $70m — it exposed the risk and the difficulties of the market for outsize gems.

Mr Lamb says there are several reasons he has not yet sold the stone. No actionable offer has yet met his financial expectations — something he attributes to a lack of similar stones setting price precedents. The only gem-quality rough diamond larger was the 3,106.75ct Cullinan Diamond found in 1905, and that was given to Edward VII.

Mr Lamb claims there has been interest from outside the diamond industry, but these offers are difficult to accept because of the due diligence into buyers’ backgrounds that is required to ensure their legitimacy and the transparency of their funds: “We can’t do the paperwork, we need to dot the ‘i’s and cross the ‘t’s.”

One expects such exuberance about the Lesedi La Rona (below) from the person selling it, but Lucara’s competitors, who also have large stones to sell, are of a similar mind. “I don’t think they’ll have a problem selling it at the right price, some of our buyers would love to buy it,” says Brandon de Bruin, group sales and marketing executive at Gem Diamonds, which controls the Letseng mine in Lesotho, the source of several large diamonds. “The reserve on the auction was high, which is why it didn’t get over. We have never had an issue [selling a big diamond] — the larger, the better. When we find a diamond over 200ct, my phone starts ringing immediately.”

Pictured above: the 342ct Queen of Kalahari, the 813ct Constellation, the 1,109ct Lesedi la Rona and the 3,107ct Cullinan Diamond, with a standard engagement ring for size comparison

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Larger diamonds fetch higher prices per carat, in part because of the stones’ rarity. Gem Diamonds sold a large white rough diamond at $70,000 per carat, according to Mr Bruin, while a top-quality 1ct white polished diamond is available on the consumer market for about £14,000.

Gem Diamonds found fewer stones weighing more than 100ct in 2016 than they expected and its average price per carat fell from $2,299 to $1,695, reflecting the importance of size. In May 2015, it had unearthed a 314ct rough diamond, and it was bought the next month through a partnership agreement, which usually involves working with an external cutter and sharing the profits. Then in July a 357ct rough was unearthed and by September it had changed hands for $19.3m.

A public auction, as with the Lesedi La Rona, was a break from the traditional way of buying large rough diamonds, and David Bennett, worldwide chairman of Sotheby’s jewellery department, says it has “no plans at present to offer more rough diamonds at auction”.

The 1109-carat rough Lesedi La Rona diamond on display at Sotheby's, New York in May, 2016 © Getty

The more established model for mines is to sell rough gems to a select group of buyers at invitation-only tenders and auctions; the buyers will then cut and polish the stones, ready to sell to manufacturers and retailers. De Beers Group, for example, generally sells to just 84 approved companies, known as “sightholders”.

Caroline Scheufele, co-president of jeweller Chopard, followed this pattern in 2016. She bought a 342ct rough diamond, later named the Queen of Kalahari, not directly from Lucara — which has been lucky in having a mine that produces so many large stones — but through Antwerp-based Taché Diamonds. Ms Scheufele was involved in every stage of buying and cutting the stone, and even travelled to the mine to see it.

“It is pretty much a closed circle,” says Ms Scheufele of rough diamond buyers. “We need the expertise. I am an expert on cut diamonds but not rough diamonds. It is a different business altogether. Rough diamonds don’t get bought by private people. It is really a very confidential business, with only a very few big companies, some that have been in the diamond business for more than 100 years.”

One of the more recent entrants to trading and manufacturing is Antwerp-based Safdico, co-founded in 1999 by diamond magnate Laurence Graff, who claims to have owned nine of the 18 largest diamonds found this century. Another name important in rough diamond sales is South Africa’s Golden Yellow Diamonds, which last year bought a 32.3ct rough pink diamond from miner Petra on behalf of the MA Anavi Diamond Group for $15m.

Caroline Scheufele with the Gardens of the Kalahari

In January 2017, Chopard unveiled the stones produced from the Queen of Kalahari (many are usually cut from a large rough, rather than one enormous stone). They had elicited 23 cut and polished diamonds, the largest a 50ct round brilliant, set into a six-piece suite of jewels (above). Singer Dame Shirley Bassey performed “Diamonds Are Forever” while she wore one of the pieces.

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While Chopard had the funds to buy the Queen of Kalahari from Taché, the process of evaluating, cutting and selling such large diamonds may take years, which can place a burden on cash flow. An alternative route for jewellery houses is to win the marketing rights to large stones bought by the rough buyers’ clique. The dealer remains the owner until the point of sale, while the jeweller takes on the cost of cutting and polishing, as well as marketing to build hype around the gem and find a buyer. Once a deal has been struck, the jeweller and dealer will split the profits.

De Grisogono has been working in this way since entering into a partnership two years ago with rough diamond trader Nemesis International; de Grisogono founder Fawaz Gruosi describes this as “revolutionary”. It has since acquired the marketing rights to the $63m Constellation (below), the world’s third-largest gem-quality rough diamond at 813ct, and the 404ct 4 de Fevereiro, (“February 4”).

Nickola Polak, Fawaz Gruosi, John Leitao & The Constellation, Paris Biennale Press Conference

“We now have privileged access to the best stones in the world, without having to go through large numbers of middlemen,” says Mr Gruosi. “Previously the only companies that could access these stones were those with mines themselves, or you had to go through a raft of traders, which made the stones much more expensive.”

Desire for such stones is relatively new, says Johnny Velloza, chief operating officer at Gem Diamonds. He suggests that demand for enormous rough diamonds stirred in the late 1990s as wealthy investors started to view the gems as collectors’ items. This is a hypothesis supported by sales at Sotheby’s. “I can still vividly recall bringing the first cut diamond over 100ct to auction — that was back in 1990 and it was unheard of in those days,” says Mr Bennett. “Since then, I have sold seven diamonds over 100ct and each one has had a unique and powerful appeal for collectors.”

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Such demand has stimulated new ways of getting the diamonds out of the ground. “Traditionally, the methodology was that you would recover as much as you can as cheaply as you can,” says Mr Velloza.

The process of liberating diamonds from the rocks that hold them is brutal: the rocks are blasted with dynamite, drilled, put through a series of crushers and grinding mills, and transported roughly throughout. Despite their reputation for toughness, diamonds have a crystal structure and as such are fragile; Mr Lamb at Lucara suggests anyone sceptical of this should try taking a hammer to their diamond ring.

When there was a smaller market for ultra-large diamonds, this rough extraction was satisfactory, but now mines are investing in reducing breakages through better detection to preserve larger stones. Lucara, like other diamond mines, is focused on using X-ray transmission machines (XRT) to better identify diamonds.

Karowe diamond mine, Botswana © Lucara

At Lucara’s Karowe mine, where the Queen of Kalahari was found, ore is trucked in from the mines, dropped on to a heavy-duty sorter, run through a primary crusher and evaluated by a coarse sizing screen. Then the first X-rays take place, with any diamond-bearing kimberlite rock sent for hand sorting; the rest is crushed ever smaller.

Mr Velloza says that modern XRT machines can process up to 400 tonnes of rock an hour, allowing miners to use it earlier in the process.

“As little as 10 years ago, it was more like 10 or 15 tonnes an hour,” he says. “The progress is phenomenal.” Gem Diamonds estimates that it processes 100 tonnes of ore for every 1.5ct of diamond found.

Processing lots of large material has become easier; what remains difficult is X-raying ore that has been made smaller by crushing, as it calls for higher resolution technology.

Lucara is in the process of improving the capabilities of its XRT machines. Currently these are capped at 8mm but the company expects to be able to scan material 4mm thick by the second quarter of 2017.

Innovation is also afoot at Gem Diamonds, the miner. It is now working on two new types of technology that it claims will “almost eliminate breakage” in diamond mining, according to Mr Velloza: “We’ve got it to work on a lab scale, but the challenge is to scale it up to an industrial level.”

He estimates the technology is about two years away from fruition, but it could ultimately mean that enormous rough diamonds become a more common phenomenon.

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