Shifting ground rocks diamond industry

Antwerp’s Square Mile is an assortment of tired office blocks and shops. Groups of men talking business congregate in the streets. But the main clue to what brings them to the city is the heavy security at the entrances to the rundown buildings.

Inside, they will pore over rough diamonds – gems that could easily be mistaken for lumps of glass or stone. Some will spend hours using high-tech equipment to analyse their potential. Others use a handheld loupe, or magnifying glass, to eyeball what polished stones they think they can cut from the misshapen rocks.

“It is like a piece of art,” says Johnny Kneller, chief executive of Safdico, the diamond manufacturer that was cofounded by Laurence Graff and that is part of his high-end jewellery and retail empire. “Then there is the commerciality. You can choose to give up weight because you like the product.”

The Lesotho Promise, a 603-carat stone from Gem Diamonds’ Letseng mine, sold for $12.4m and was cut into 26 stones for one necklace, now on sale with a rumoured price tag of $75m. Another, the 478-carat Light of Letseng, produced the first flawless round brilliant cut to exceed 100 carats.

Many cutters and polishers have left Antwerp but about 80 per cent of the world’s rough diamonds still pass through the city. This year has been a difficult one, both for the miners and the diamentaires who transform rough stones to polished ones.

The economic slump has hurt demand for jewellery while a squeeze on financing has limited diamentaires’ ability to stock up on rough stones. Rough diamond prices, estimates Royal Bank of Canada, are down about 15-20 per cent this year after a volatile 2011, when prices leapt sharply only to plummet.

The diamond industry also faces a period of considerable change.

Soaring demand from China, where the share of brides receiving diamond engagement rings has risen from about 1 per cent in the early 1990s to 31 per cent in 2010 – a similar pattern to the US in the 1940s – means a buoyant outlook despite the short-term ructions. (more)