Considering that diamonds were formed in the earth’s mantle more than three billion years ago, they lasted quite some time. Today, however, this precious resource is becoming rarer. “They are not only rare, they are also difficult to uncover,” says Francois Graff, CEO of Graff Diamonds. “This is what makes them valuable. Approximately 250 tons of ore must be processed in order to produce a one-carat polished diamond of gem quality.” A natural wonder of the world, diamonds never fail to dazzle, fixed to a ring or strewn across a necklace chain. But what exactly happens to these luxurious uber-rocks between the mantle, mine and the market?
Predominantly mined in Russia, Canada, Australia, Botswana, Namibia and Congo, demand for diamonds has been and will remain strong, according to an insight report by the De Beers Group. Their alluring sparkle emanates a sense of romance and is a symbol of the eternal, not least because of its lasting source of value. But with increasing competition from other luxury categories such as travel, electronic accessories or designer fashion, the diamond industry is working hard to innovate and differentiate itself.
Enormous investments are made to explore, develop projects and infrastructure and train miners to mine in a safe and sustainable way. And even though technological innovation is used to help discover new viable sources of diamonds, their locations are often remote, previously underexplored and difficult to work in, such as near the Arctic Circle. That’s because colder countries such as Russia and Canada, explains diamond dealer Thelma West, usually produce better quality rough diamonds. But with all the difficulties, West notes that in today’s industry, increasing transparency ensures the terms are fair to all parties involved in diamond mining, from start to finish. After the stones are discovered, the shapeless rough diamonds of various colours and sizes head to the sorting office where their characteristics are analysed. Here their future shape, cut and size are predicted, before they go to the polishing factory, where the diamond as we know it is born. West explains: “After polishing, the bigger sizes are sent to a Gemmological Laboratory to determine the colour, clarity and ultimately the price. When a certificate is issued, the diamonds are then sold on to wholesalers and eventually jewellers who create the jewels you see in your luxury boutiques.”
The diamond market has been undergoing some change in the last five years, where growth was driven from emerging economies such as China and India as well as the US since 2010, while growth in Japan and Europe was below average, according to the De Beers report. And so the industry is looking towards China, which is still offering a tremendous growth opportunity. The report says: “[In China], penetration of diamond jewellery is still relatively low and consumers’ desire for diamonds is high. The situation in the US, a more mature market for diamonds, is different. Fine jewellery has grown more slowly than other luxury categories in recent years.” However, there are promising growth areas in the US too, not least in bridal jewellery, branded diamonds and diamond jewellery, typically for engagements or as a symbol of love, for milestones—celebrating success and achievements, and spoiling—a treat or present.
Another interesting point is that while more than one tenth of diamond jewellery sales in the US were made online in 2013, online is not yet a significant sales channel in China. However, the internet is used by a quarter of acquirers for research purposes before purchase. Therefore, online presence of jewellery brands and branding in general will play an even bigger role in future, while an increasingly fragmented retail sector with many different business models is failing to cover their cost of capital, according to De Beers Group.
While the market concentrates on branding by targeting the right audience, as well as innovation, by ‘recycling’ stones from old pieces of jewellery, thus giving them new life, working with these precious stones provides limitless options for the designers. “A diamond is a beautiful item on its own, but creating something around it to further enhance its beauty is very satisfying,” says West.
The most recent notable diamond cut and polished by Graff was the Letšeng Star. The 14th largest white rough diamond ever discovered was 550 carats, D colour and type IIA, the purest chemically of all diamonds and the rarest. Graff says: “It was uncovered at Gem Diamonds’ Letšeng Mine in Lesotho. To create the finest clarity and quality polished diamonds possible, its natural internal flaws and proportions were meticulously mapped into a specialised computer system to create a precise digital version of the stone. Following many hours of careful planning, the rough was cut using lasers and then polished by hand. The entire process took over 13 months to execute and at every stage the rough was reassessed and carefully inspected to guarantee absolute perfection. The result was a captivating collection of 27 pear-shaped diamonds, all D colour and flawless or internally flawless, totalling 168.73 carats.”
The rarest diamonds today are red diamonds, fetching the highest prices, followed by blue, pink, orange, green and yellow. The value of round diamonds is higher than most other cuts of the same colour and clarity grade because it loses the most material during the cutting process. On average, a round gem loses about 70 per cent of its weight, while other cuts lose less, according to West.
With diamond mining becoming more sustainable and the demand outstripping growth, the diamond’s sparkle is a light that keeps on shining.
“They are not only rare, they are also difficult to uncover… Approximately 250 tons of ore must be processed in order to produce a one-carat polished diamond of gem quality.”