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Believed to be the largest uncut Diamond in the World, it fails to sell at a London Auction after Brexit

By 19.09 September 20th, 2018 No Comments

On Wednesday 29 June 2016 the world’s largest uncut diamond found in more than a hundred years, the Lesedi La Rona, went on auction at Sotheby’s Auction House in London. This choice of a public auction, instead of traditional invitations to enter sealed bids, was made by the owners, the Lucara Diamond Corporation, and was the first time that an uncut stone of this magnitude went on auction. Lucara wanted to capitalise on the boom in gem prices and hoped to sell the stone directly to a wealthy buyer for a private collection. To the amazement of Sotheby’s and the bidding audience, this 1.109 carat tennis-ball sized white diamond did not reach the unspecified minimum acceptable bid reserve price! The pre-sale estimate was at least $70 million, but the bidding ended when the highest bid reached was $61 million, $68.3 million with buyer’s premium, $68,300 per carat is a high price to pay for an uncut diamond!

The uncut stone was withdrawn from the auction, and is currently retained by the Lucara Diamond Corporation. The Corporation may partner on the stone or hold a regular tender or perhaps display it in a museum. They have yet to decide the best way forward.

The auction was a gamble for both Lucara and Sotheby’s and perhaps Britain’s vote to leave the European Union may have affected the bidding interest. Potential bidders had a chance to view the stone in advance, but evidently they did not think that the diamond justified such a high price, even if it was cut into smaller stones.

David Bennett, Sotheby’s chairman of jewelry, had called the diamond “the find of a lifetime.” In a statement on Wednesday evening after bidding ended, Sotheby’s said, “Every aspect of tonight’s auction was unprecedented. No one alive today has ever seen a gem-quality rough diamond of this incredible scale; no rough diamond of importance has ever before been offered before at public auction; and no diamond — polished or rough — has ever been estimated at this price level”.

This unique rare stone, thought to be more than 2.5 billion years old, was discovered in November 2015 at the Lucara Diamond Corporation’s mine at Karowe in Botswana. The rough stone, named the Lesedi La Rona, meaning ‘Our Light’ in Setswana, the language of Botswana, has the potential to be the largest high quality diamond to have ever been cut and polished. Previously, in 1905, a 3,106.75 carat diamond was found at the Cullinan mine near Pretoria in South Africa: this stone yielded nine polished diamonds, now found among the Crown Jewels of Great Britain, as well as many smaller stones.

What was the reason that this unique sale failed? We can only speculate on why this auction bet did not come to fruition. Wealthy buyers may have felt intimidated that diamantaires did not exhibit clear bidding leads, and another possibility is that stocks and financial assets had been volatile after the Brexit vote. David Bennett suggested that “the market instability with Brexit may have just caused this to be a case of bad luck or bad timing”, while Tobias Kormind of online retailer 77 Diamonds said “the bullish gem market may have reached a tipping point and demand for large rare stones might just be saturated”.

Diamond analyst Paul Zimnisky told the CBC that the recent Brexit vote likely affected the market for the stone. “I think it was definitely the referendum that passed in the U.K. When you look at the potential bidders of a stone that’s close to a hundred million dollars, you know these are wealthy individuals and investors who have a lot of exposure to financial assets that sold off last week with that news”.

Lucara’s CEO and President William Lamb said “We understand that it is not easy to see the true value in a diamond when the only mechanism is to value the polished. The historical significance of the stone seems to have been missed based on the bids offered”. When asked what role he thought Brexit or other global economic situations might have had on the outcome, he said, “We cannot say. In today’s volatile times, there is always some level of economic uncertainty. Saying this is the reason the auction did not conclude with the sale of the stone would be incorrect, although it may have in some way played a small part”.

The record price for a rough stone was set in May 2016 when Lucara sold an 813-carat diamond at a private auction for $63 million, which is approximately $77,500 a carat.

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