The recent auction of the 10.10 carat De Beers Millennium Jewel ended with a stunning 32 Million US, earlier this month in Hong Kong. The stone recalls sweet memories in my head of the great branding efforts of the Diamond Syndicate. The stone brings back sweet memories in my head of the great branding efforts of the great diamond syndicate. Do you still remember The Millennium, when De Beers’ ambitious marketing managed to lift the spirit of the whole diamond industry?
In 2011, the Oppenheimer family sold its 40% stake in De Beers to Anglo American Plc for $5.1 billion dollars. This deal gave the company an $11 billion dollar valuation. At that time, AAL – Anglo American had a capitalization of about $40 billion dollars and earned roughly $7 billion each year. Today, after a 100% increase in Anglo American total capitalization, the whole company is worth only $7 billion, including De Beers as well.
The ‘comment of the day’ when the Oppenheimer family sold its stake to AAL was that “The market is very, very strong. Demand will outstrip supply.” We see what happened there. It was a great move for the Oppenheimer Family, but didn’t translate as well for the diamond industry.
Since that time, the mere idea of a successful diamond brand became like an orphan adopted by metal miners. Today, these precious stones are looked at as commodities whose value is connected to the success of precious metal mining. Hence, the excitement of everyone in the industry when we see super stones appear at auction.
The important stones that appear at auction have a remarkably big effect on the diamond industry. So when we saw two important blue diamonds up for auction within a month, everyone woke up and smelled potential. The 10.10 carat fancy vivid blue, internally flawless diamond was officially the most expensive diamond ever sold in Asia.
The second magnificent blue is an absolute gem. In fact, Christie’s called it the "gem of gems." The Oppenheimer Blue is a 14.62 carat, Vivid Blue diamond. It is the largest fancy vivid blue diamond ever offered for auction, with an estimated reach of $45 million!
It will probably set a new world record, but more importantly it will bring back again the Brand of Diamonds and remind the world of De Beers in the limelight. Marilyn Monroe is no longer with us, but perhaps the music will start once again, ‘Diamonds are a girl’s best friend.’
I wrote just a few months ago about how today, diamond prices are actually interconnected to the price of Iron Ore. Perhaps it might sound a little strange. But Iron Ore prices are the most important indicator of the Asian economy, particularly the Chinese one. Iron Ore Price has gone up over the last month by 19%. It is currently trading at $56. Granted, it is still far away from the $175 it was at not too long ago, but the world is not coming to an end in the Middle Kingdom. The Chinese have firmly decided to get the show and the economy back on the road.
The first sign in prosperity is iron production. The road from there to buy color diamonds is still long, but every big journey starts with a small step. If The Chinese economy is back on the road, the mood in the market is on its way back to normal.
Leibish Polnauer, President and Founder of Leibish & Co. Fancy Color Diamonds