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World’s third largest diamond discovered in Botswana

While demand for such gems is currently down, for the country of origin a discovery such as this is good for publicity: Dr Petré Prins – MD, Prins & Prins Diamonds.

NOMPU SIZIBA: Botswana Diamond Mining, Debswana, which is a joint venture between the Government of Botswana and De Beers, announced that it had unearthed the third-largest diamond known to man. This apparently happened on June 1, but was announced only this week. Botswana’s President Mokgweetsi Masisi got to touch and feel the gem yesterday in Gaborone. The stone is 1 098 carats, and now tongues are wagging as to what it could be worth. Whatever it retails for, the Botswana government will get a cool 80% of the sale proceeds.

Well, to speak to an expert on this latest find, I’m joined on the line by Petré Prins. He’s the managing director at Prins & Prins Diamonds. Thank you very much, Petré, for joining us. This is a very exciting development for Debswana and even for a diamond expert like yourself looking from afar, as this of course is a rarity.

Dr PETRÉ PRINS: Nompu, thank you very much for the opportunity to comment. This is certainly quite extraordinary. It is the third-largest rough gem-quality diamond that’s ever been discovered.

NOMPU SIZIBA: So what do you suppose will be the process now? With the impact of Covid-19 and all of that, will there be a virtual auction from Botswana with the diamond being transported to its destination only once it has a buyer? How does this all work?

Dr PETRÉ PRINS: One can look at the past. A very, very similar diamond which was discovered about four or five years ago, also in Botswana, went through quite a traumatic process in trying to find a buyer. Normally what happens is that the owner will approach an auction house, and the auction house will take quite a commission. What happens is that different auction houses compete to sell a diamond like this. For the previous, the second-largest diamond ever discovered, which was called the Lesedi La Rona, Sotheby’s bid to sell the diamond. They had a reserve price at the auction and the reserve price wasn’t reached. I think what happens is the auctioneer then has to buy the diamond at what he guaranteed would be the minimum price.

The previous diamond I just mentioned still reached the expected reserve price; I think the auctioneer had to take possession of the stone. Then a year later Laurence Graff offered a ridiculous price and got it for $53 000, whereas at the auction there had been a price of $61 million for this this, the Lesedi diamond. So it’s a complex process; it is not easy to know the best route to go with something so unusual. Obviously, being such a major stone, it’ll take some time before you get the right buyer.

NOMPU SIZIBA: That’s very interesting. But of course the economic circumstances are a bit different right now. We’ve got the Covid-19 pandemic but we’ve learned that, even though there’s been terrible economic upheaval for most people, the ultra-wealthy have actually won big on the stock markets and therefore become super, super rich. So if there are people who have that kind of appetite I suppose they could very well get a buyer.

Dr PETRÉ PRINS: Yes. You’re quite right. Covid didn’t affect these super diamonds and their pricing. What has affected the price? I think why they couldn’t reach the $61 million or whatever they wanted for the previous big one was that in the past few years a large number of these super diamonds have been discovered – which was never really thought possible.

It has to do with the fact that mining technology and the recovery technology have changed so that they have been able to uncover these huge diamonds in the past five years. So we can expect similarly large diamonds to be discovered in the future. It all has to do with how people mine the diamonds. Normally a miner has to crush the ore. The rollers have to be set at a certain width, and anything bigger than that will be crushed. Obviously in the past they didn’t expect these big diamonds and they probably crushed some of the big ones into smaller pieces. But with the new technology they can discover or recover the larger stones. In the past few years we’ve probably had six or seven of these huge diamonds coming to the market.

NOMPU SIZIBA: You’ve given me a sense that my next question is going to be a tough one to answer. What sort of money do you think this particular gem is going to fetch?

Dr PETRÉ PRINS: This gem looks very similar to the second-largest stone ever discovered. That was also discovered in Botswana. It was called the Lesedi La Rona. That was just a few carats bigger than this one. This is a very similar type of diamond. It is also a very clear, perfectly colourless stone with good clarity. So one should expect that, because of the same size, the same quality, it should reach more or less the same price.

For the previous one, a similar stone, [Laurence] Graff paid $53 million. So I would expect this stone to reach a similar amount.

NOMPU SIZIBA: Something similar, yes. But ultimately for a rich person or an organisation that buys a stone like that, what is its utility? I suppose you could treat it like a piece of art, put it on a nice little thing, and people can look at it and say, “Isn’t that nice”. But what is the utility otherwise?

Dr PETRÉ PRINS: There’s no utility apart from “I want to have the biggest cut diamond”. People are prepared to pay money for that. Also I must admit these enormous super diamonds, these huge ones, are called ‘Type 2a’ diamonds, and they originated or crystallised in the mantle about 600 kilometres below the surface. That is far deeper than any other diamond. Most diamonds crystallise at about 180 to 200 kilometres. These huge diamonds that they’ve discovered recently come from very deep [below the surface]. They are very pure, very white, and that makes them quite unusual. Investors and people who want to own something unique, and who’ve got the money, will pay for it.

NOMPU SIZIBA: Absolutely. And then just in terms of the impact for Debswana, which is jointly owned by De Beers and the Botswana government, if everything goes contrary to what you expect, and it’s not a long process and they do manage to sell the diamond, presumably that’s going to be very good news for them, because Debswana I understand hasn’t been mining as much volume in recent times. The Botswana government, like all the governments in our region here, has been hit hard by the Covid-19 pandemic.

Dr PETRÉ PRINS: Quite correct. You’re quite correct. Production has not been wonderful because the demand is not there at the moment. And with the Indian cutting factories all closed down during Covid there’s really a scarcity of good-quality stones. You can’t fight it. For these super-diamonds it must be accepted Covid or anything like that would influence their pricing. But for a country like Botswana a discovery like this is good for publicity reasons. Obviously Botswana will get, as you said, 80% of the return. It won’t make a big difference to De Beers. But for Botwana as a country, I think it’s fantastic.

NOMPU SIZIBA: Petré, thank you very much for your time, sir. That was Petré Prins. He’s the managing director at Prins & Prins Diamonds.

 

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So Nompu, did Laurence Graff buy the 2nd biggest diamond for $53 000 or $53 million ($53 000 000)? Just a tad of a difference in your numbers quoted?

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