News Archive: November 2006
Think pink November 24, 2006
Nov 24th 2006
From Economist.com
A fairy-tale diamond returns to the market
JEWELLERY-auction catalogues, like small children, save the best for last. Among the final lots listed for Sotheby’s forthcoming three-part jewellery sale in New York is a gem the size of a postage stamp. Place your hand alongside the life-size photograph in the catalogue and you can see that the simple, platinum-mounted gem stretches well below the knuckle. Hard to imagine wearing it.
Yet even more impressive than the size is the colour, a cool delicate pink, Sugar Plum Fairy rather than Barbie doll.
Unusually for a large gem, this jewel would suit a girl just as well as it would a woman. Which Sotheby’s hopes will add to its appeal.
In the past few years young women in Hong Kong and China have been avid buyers of pink diamonds, gradually pushing up the prices. The bigger the stones, the more they are coveted. A one-carat gem sells for $30,000-40,000, a ten-carat for $150,000-175,000 per carat. A pink diamond this size―28.03 carats―is expected to fetch $250,000 a carat.
Natural pink diamonds are unusual. High-pressure heat treatment can give a very faint pink, though the result is more often a yellow or a green. This stone is a rare freak of nature, the largest fancy intense purple-pink diamond to be graded by the Gemmological Institute of America. It was probably found in Brazil, or, very possibly, Angola. It was faceted in New York, its rectangular cut determined to maximise the beauty of the stone and minimise waste. The finished gem has been graded VS2: not flawless, but good enough for imperfections to be visible only to a trained eye, through a 10x loupe.
If you need to ask the price ...Sotheby’s is keen for prospective owners to know that this diamond can hold its head high among other pinks in history. Some of the most famous are the “Agra”, which weighs 32.24 carats; the “Darya-i-Nur” (Sea of Light), part of the crown jewels of Iran, which is estimated to weigh between 175 and 195 carats; and the “Williamson Pink”, a brilliant-cut stone of 23.60 carats, which was given to the Queen of England, then Princess Elizabeth, on her wedding in 1947.
The impressive narrative in which Sotheby’s cloaks the gem echoes the firm's handling of its most important pictures. It has already been presented to select clients in Hong Kong, Geneva, California and Florida. For six days before the sale it will be exhibited in New York. The current owner wishes to remain anonymous, and it is being made clear that the next owner will have to be very rich indeed. The catalogue entry concludes with the unforgettable words: “Estimate on request”.
What Sotheby’s does not say is that this stone has already failed to sell once. Two years ago it was brought into Sotheby’s Geneva office, where most of the auctioneer’s biggest, and certainly its most anonymous, jewellery sales take place. The gem was taken to Dubai and Abu Dhabi, where HSBC Private Bank helped Sotheby’s arrange a discreet showing to a number of potential buyers. On May 18th 2005 it was put up for auction as an unmounted gemstone, of interest probably to few outside the trade. The bidding failed to reach the reserve of $7m.
Eighteen months on, Sotheby’s has changed its pitch. The reserve has dropped $500,000. The stone has been mounted as a ring. Private buyers have been trying it on. The marketing has reached out to Palm Springs and Palm Beach. As the market bubbles up and buyers swarm towards prime assets, this makes perfect sense. Much money has already been made this year, and Wall Street bonuses are still to be paid out. If all goes well, listen out for the rumble of other sellers, rushing for the bandwagon.
The fancy intense purple-pink diamond, lot 393, will be sold in Sotheby’s “Magnificent Jewels” auction in New York on December 6th, estimate $6.5m-7m
POSTSCRIPT: The pink diamond failed to reach its reserve. Bidding stopped at $5.7m.
Still a rebel's best friend November 09, 2006
Nov 9th 2006 | KONO, MONROVIA AND SEGUELA
From The Economist print edition
The trade in conflict diamonds
AT A huge open-pit diamond mine near the rebel-occupied town of Seguela in northern Côte d'Ivoire, labourers toil under a fierce sun as a rebel soldier circles the perimeter of the pit. “We have taken over the mine to provide security,” says another rebel official, as a gang of miners looks on, bemused. Whatever the rebels' explanation for their presence at the lucrative Bobi mine, UN experts say that, in fact, mines like this one near Seguela are producing diamonds worth up to $23m that are being smuggled to Mali and Ghana, violating UN sanctions and helping to fund the rebels' war effort.
Rebel use of the mines is another setback for attempts to control the flow of “conflict” or “blood” diamonds that have helped to fund some of the bloodiest wars in Africa, and particularly in countries such as Sierra Leone and Liberia. On September 29th the World Diamond Council, an influential industry group, suggested that all Ghanaian rough-diamond exports, worth $34m last year, be suspended to ensure that Ivorian diamonds were not being illegally exported too.
Global Witness, a pressure-group, has said that the Kimberley Process, the certification procedure agreed in 2003 by 70-odd governments in partnership with the industry and some NGOs and without which countries cannot legally import or export diamonds, now risks becoming “little more than a paper-pushing exercise”. And if all this were not bad enough for the diamond industry, it is bracing itself for yet more bad publicity: the release of the film “Blood Diamond”, starring Leonardo DiCaprio as a diamond-smuggling mercenary in Sierra Leone's 1991-2002 civil war, when rebels hacked off the limbs of their victims in bloody battles to control the country's diamond-producing areas.
The self-regulating Kimberley Process has failed to interrupt the myriad diamond-trading networks that operate across the loose borders of west Africa. In Sierra Leone, for instance, official exports last year stood at about $140m, up from a paltry $1.2m in 1999. The Kimberley Process may have encouraged many diamond miners to sell to authorised dealers, but experts believe that between $30m and $160m-worth of diamonds are still smuggled out of the country each year. Meanwhile, an unknown quantity of diamonds is smuggled into Sierra Leone from neighbouring countries, for certification by the Kimberley Process.
Nor is Sierra Leone's diamond industry benefiting its people as it should. In a country where corruption was widely blamed for the onset of war, the arrest of the son of the mineral-resources minister on suspicion of diamond-trafficking is a worrying sign. The government has resisted use of a digital-mapping system that could improve its poorly administered concession-licensing. Over 2,000 small licences, some of them fronts for government officials, go virtually unmonitored; the system seems incapable of picking out illegal dealers and agents. Meanwhile, the government collects only an estimated $7m from licences, royalties and taxes on diamonds.
While Sierra Leone struggles to control its diamond sector, neighbouring Liberia, also recovering from civil war, complains that it is being unfairly punished for its slow implementation of Kimberley Process recommendations. “This country is desperately in need of revenue and illicit mining will continue, you cannot control it completely,” says Eugene Shannon, Liberia's new minister of mines. Exploration companies claim there are significant deposits to exploit (thereby helping to replenish the government's coffers), but they must instead wait for the lifting of UN sanctions, which the Security Council has just extended. The minister's attitude annoys campaigners wanting more effective curbs on conflict diamonds. Liberia's government needs all the money it can get.