ussia condemned what it called a push to “politicise” its diamonds over the conflict in Ukraine and said attempts to question its compliance with the international diamond certification scheme were “totally unfounded” and “far-fetched”.
The Kimberley Process, a coalition of governments, the diamond industry and civil society responsible for certifying diamonds as conflict-free, is split over a push by Ukraine and others to expand its definition of conflict diamonds to include those funding aggression by states.
The KP Civil Society Coalition (CSC) and some member states sought to discuss whether Russia’s diamonds were helping to fund the war in Ukraine during a KP meeting in Botswana last week.
“The Russian Federation absolutely condemns the orchestrated attempts of CSC, backed by absolute minority of some Western participants, to politicize the work of the Kimberley Process by deliberately distorting or even openly replacing its basic principles,” Russia’s finance ministry said in an emailed statement. It did not specify which principles it felt were being distorted or replaced.
The CSC did not immediately respond to an emailed request for comment.
The KP defines conflict diamonds as those that fund rebel movements seeking to overthrow legitimate governments, a narrow definition that many have sought to widen since the KP was founded in 2003.
Russia, which was KP chair last year, has “championed” work on revising the definition of conflict diamonds for the past five years, the finance ministry said, and it is committed to continuing talks on the definition.
“We therefore call on our opponents to refrain from further speculative accusations, abstain from political demagoguery and concentrate on the substantive work of the KP,” the finance ministry said.
The KP makes all decisions by consensus and the rift over Russia and Ukraine could jeopardise its effectiveness.
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China has joined Russia in opposing an effort to redefine conflict diamonds to include those sold by individual nations, as a rift between Western and pro-Russia nations jeopardizes the process for certifying rough diamonds as conflict-free.
Ukraine, Australia, Britain, Canada, the European Union, the United States and civil society groups were pushing to place Russia on the agenda at this week’s Kimberley Process (KP) meeting in Botswana and to broaden the KP’s definition, under which only gems funding rebel movements are “conflict diamonds”.
Russia, the world’s biggest producer of diamonds, has said the situation in Ukraine has “no implications” for the Kimberley Process.
China agrees that the Ukraine issue falls outside the scope of the KP, the country representative told the meeting, according to three sources. China joins Belarus, Central African Republic, Kyrgyzstan and Mali in backing Russia’s stance within the body, which seems unlikely to come to any agreement.
“It’s clear that this is posing really an existential crisis for the Kimberley Process,” said Hans Merket, a researcher at Belgian non-governmental organisation IPIS, who is a member of the civil society group.
“It has become impossible to even discuss the KP’s problems and shortcomings, let alone that there would be any room for convergence on how they can be addressed.”
China’s KP representatives did not respond to an emailed request for comment.
The KP certification scheme, designed to eliminate the trade in so-called “blood diamonds”, was set up in 2003 after devastating civil wars in Angola, Sierra Leone, and Liberia, which were largely financed by the illicit diamond trade.
The Kimberley Process Civil Society Coalition and some member states have been arguing to broaden that definition for years, but it is difficult to do as the KP makes decisions by consensus.
Jacob Thamage of Botswana, the current KP chair, said that more participants now believe reform is needed.
Small diamond miners want to lock arms with all stakeholders through the South African Diamond Producers’ Organisation (Sadpo) to recover a large number of lost jobs and to realise the full potential value of alluvial diamonds.
“The role of Sadpo is to take on those big conversations and make sure that we not only have the right regulations, but also the right and the best relationships between the key stakeholders, not just government, but also that the big licence holders like De Beers are built in, so that we can grow the sector together and create jobs,” new Sadpo CEO Yamkela Makupula told Mining Weekly in a Zoom interview. (Also watch attached Creamer Media video with introduction by Sadpo chairperson Gert van Niekerk.)
As has been reported by Mining Weekly, the average value of the mines in which Makupula is personally invested is around $3 000/ct and sometimes upwards of $3 000/ct.
Sadpo has regularly pointed out that alluvial diamond mining has the potential to uplift rural communities in some of the poorest parts of South Africa by creating much-needed employment along with wealth.
It is an organisation set on taking the burden of compliance, bureaucracy and organised crime off the shoulders of small operators to enable them to do what they know best – find diamonds.
There has been a 90% decline in the number of small South African alluvial diamond miners. In 2004, there were 2 000 of them employing around 25 000 people compared with the current situation of only 200 small operators employing 5 000 people.
Makupula spoke of most of the communities around the well-endowed Middle Orange River, for example, being doomed without alluvial diamond mining, which has a potential lifespan of another 100 years, especially in the West Coast, and contributes a reported 25% of diamond gross domestic product.
“We’re hoping with the new proposed policy that is coming from government that we can start looking into some of the quick wins,” Makupula said.
In the past few months, Makupula and Van Niekerk have been speaking to the key licence holders on the West Coast and found the biggest issue to be illegal mining.
“We’ve been on sites where you walk in with a licence holder who is not able to do anything,” said Makupula.
The licence holder would be with them but fearful because of the visibility of guns.
“It’s organised crime that is affecting a lot of people who ask how they are going to enter this industry when it’s that risky,” she said, adding that current bureaucracy results in it taking more than a year to go through a licence application process, at a cost of about R200 000, with no guarantee of operation owing to organised crime.
Mining Weekly: When will the sharp decline in small South African diamond mine operators be reversed from its lowly 200 operations employing only 5 000 people?
Makupula: We’re hoping with the new proposed policy that is coming from government that we can start looking into some of the quick wins… we need to be able to get to a point where the one blanket approach is no longer on the table. I’ll just give you an example where Sadpo got involved with a previously disadvantaged individual who was actually looking for a mining permit on a 5 ha farm. When we looked into the process, we found that he had to pay R130 000 to get the licence. It took him 13 months to 15 months and that was with Sadpo involved on a day-to-day basis, assisting. That needs to go on the table. Our people don’t have R200 000 odd that they can put up front before they even open doors. Those are the types of issues that we are having and that are now affecting the employment rate.
What steps are being taken to ensure that diamonds are recovered in a responsible manner that protects the environment?
Currently, I can safely say, from all the meetings that we’ve had with our members, that we are not using any chemicals to extract our diamonds. We have been very compliant from a health and safety perspective. Hence, you have not seen a lot of issues coming specifically from our sector. That for me speaks volumes and from a rehabilitation perspective, we’re very compliant. Whenever an issue arises, Sadpo quickly speaks openly to its members to ensure compliance when it comes to our health and safety.
What will Sadpo do to encourage operators to make use of state-of-the-art geological modelling, novel earthmoving and screening techniques, and the latest recovery technology?
I’d love to think that at some point we will get to where our members are using this modern technology because this beautiful technology has quick turnaround times and is coming right across the world. But the reality for us is that we’re dealing here with small operators, who, by doing things the old school way, have the opportunity to create more jobs in communities. But also from a funding perspective, this new technology and machinery needs a lot of upfront funding. Sadpo has been doing research with the Council for Geoscience to see how we ensure that proper due diligence is done in some of our own operations for us to still be able to use the state-of-the-art technology, but in a much more affordable way.
How large is your own shareholding in active alluvial diamond operations?
I am operating in the Middle Orange River. That’s where my operations are. I’m a 30% shareholder. It’s alluvial. I’ve been there now for a year and also with a tender house in Schwarzer-Reineke, where I’m also a 30% shareholder. In the Middle Orange River, we have about five to six operations. We are on the middle tier, plus 500 people from a job perspective, and so that’s where I’m at. It’s been exciting. I’m still a new player in the industry and enjoying the growth of it. I have been dealing with regulations for most of my career life, not just in South Africa, but also in Angola and Ghana. I’ve been dealing with communities of work as an economic adviser in Parliament, from a rural settlements perspective, advising traditional leaders, and various other committees. That’s where my background comes from and my personal belief is that the regulations, the policies, they’re as guidelines. They give an operator an understanding of what needs to be done to comply, but I’m a big believer for all of that to happen, it comes down to people and relationships, and we can grow this country, as long as we don’t do it dividedly.
ALLUVIAL SOURCE
In officially announcing her appointment as CEO, Van Niekerk described Makupula as an international businesswoman who is currently the head of Africa growth strategy of international law firm Diaz, Reus & Targ and a former partner at PricewaterhouseCoopers.
As has been explained by Nastoplex shareholder and CEO Lyndon De Meillon, the source of the diamonds in the alluvial terraces of the Middle Orange River is mainly Lesotho, where the highest value per carat kimberlites are situated, and also the famous kimberlites in the Kimberley area.
Attrition during river transport, De Meillon pointed out, had ensured that the best quality stones were preserved in the terraces downstream of Douglas.
The area is well known for its exceptional white stones and regularly produces the highest value per carat stones sold in the world on an annual basis.
It is also a source of colour diamonds, and pinks and vivid yellows are often also recorded.
In terms of carats per hundred tonnes, the deposits can only be described as ultra-low grade, and the operators in this area are a special grade of entrepreneur with a high appetite for risk, while being exceptionally skilled at low-cost earthmoving.
Laboratory grown diamond term is still a source of confusion for many diamond buyers and jewellers.
Natural Diamonds have been high coveted and sort after for thousands of years.
Diamonds have always been a status symbol for the elite and super wealthy, only becoming available to the general populations after large discoveries and marketing by the De Beers group.
The demand for mined diamonds has grown over the past century, At same time the source of new ground to mine has become ever increasingly hard to find or work.
This created the need for a scientific way to create alternatives. Enter Lab grown diamonds, or laboratory created diamonds.
Many Jewellers and most consumers are still confused about the process of creating a diamond, and how these stones actually differ from mined diamonds.
Laboratory grown diamonds are precisely the same in every way to mined diamonds but one. How the diamonds carbon bond grows under heat and pressure.
The growth structure of the carbon in natural mined diamond is haphazard and mixed with elements other than carbon. Nitrogen is the most common.
Lab grown are pure carbon for the most part, with distinctive growth structures visible under high magnification in gemological equipment available at the worlds notable laboratories.
How Can You Tell the Difference Between Lab Grown Diamonds?
Short answer is you can’t.
Lab grown diamonds are visually indistinguishable from natural diamonds, Not even and expert can tell the difference without gemological tasting equipment.
DTC Diamond View at the DCLA Laboratory Sydney
While some differences inn old HPHT Lab diamonds can be identified under a special microscope, there’s nothing obvious about a lab grown diamond.
So how can a laboratory tell the difference?
Almost all natural diamonds contain traces of nitrogen, This is actually what gemologists use to screen out potential lab grown diamonds for further testing.
The actual gemological test requires state of the art gemological equipment. No counter top testers can prove the origin.
Are lab grown as durable as natural ?
The fact is lab grown diamonds are identical natural diamonds in strength, most of which have no flaws which could cause durability issues.
So as to the question Is a Lab Grown Diamond a Real Diamond ?
Polished lab Grown Diamond at the DCLA
Answer is, Yes, lab grown diamonds are 100% as real as diamonds that have been mined from the earth.
Not only are they identical in every single way except origin, they have all the same optical properties as mined diamonds.
DCLA remains the only laboratory in Australia that guarantees, every diamond ever graded has been tested for origin and all known treatments.
Blue Nile, a market leader in online diamond jewelry, has combined with Mudrick Capital Acquisition Corp. II, a special purpose acquisition company (SPAC), to take the company public with an expected listing on NASDAQ in early fourth quarter 2022.
The company is valued at $873 million and is anticipated to generate some $450 million in capital before expenses, including $50 million in new funds from Mudrick and $80 million from sponsors Bain Capital Private Equity, Bow Street and Adama Partners and Mudrick Capital.
It’s not the first time Blue Nile has been down this road. Founded in 1999, it first went public in 2004, then private again when it was acquired by Bain Capital and Bow Street in 2017.
With 2021 revenues estimated at $566 million, Blue Nile is expected to reach $661 million to $773 million in 2023, according to a report released by Mudrick. Since 2018, the company has garnered 17% CAGR, including a 22% rise from 2019, and a +515bps rise in gross margin. With gross margins in the 30% range currently, the target operating model aims to increase it to 40%.
The Mudrick analysis sees the $320 billion global fine jewelry market ripe for disruption with Blue Nile’s track record in disrupting the U.S. $60 billion fine jewelry market proof of concept.
The fact that its founder Mark Vadon and the CEOs who followed him, including current CEO Sean Kell, didn’t come from the in-bred jewelry industry gave the company a leg-up when it came to disrupting the status quo.
MORE FOR YOU ‘No Christmas Trees, No Christmas Trees’ Another Shortage May Be On The Way The Grocery Business Is Going To Get Much More Competitive Costco Addresses Supply Chain Pains By Chartering Their Own Ships Blue Nile believes its uniquely integrated digital-showroom strategy is the secret sauce that will power the company forward into the new world of what fellow Forbes.com contributor Steve Dennis calls “harmonized retail.”
There are currently 18 Blue Nile showrooms with two more coming soon in Atlanta’s Lenox Square and Bloomington’s Mall of America. The showrooms are designed to take the friction out of the traditional jewelry store shopping experience and make the online virtual experience real.
“Buying diamonds is much harder than it needs to be,” CEO Sean Kell shared with me. “It’s confusing and intimidating and it’s very hard to tell the difference between one diamond and another. Our showrooms and website provide multi-touch integration in a low-pressure, learning environment.”
Blue Nile Houston Showroom’s interior COURTESY OF BLUE NILE
In the showrooms, customers can touch-and-feel diamonds and see them in different settings with orders placed there or later from the comfort of home. “It’s an ‘inventory-less’ showroom concept where you can see the differences between different sizes, cuts and settings, then you can order in the store, by phone or online for delivery,” he continued.
Virtually every diamond shopper these days starts their journey on the internet no matter where they end up buying. It’s almost required for consumers to master the 4Cs of diamonds – Cut, Color, Clarity, Carats. And because that first diamond purchase is often the most expensive one that an individual or a couple makes, shopping is often a stress-filled experience since consumers are stepping into unfamiliar territory.
“The diamond shopping journey is like the kids’ game of ‘Chutes and Ladders,’ where a couple of steps forward may send you sliding back,” Kell reflected. “It’s an extremely convoluted shopping journey where people may look at one or many websites, walk into one or many stores, then go back and do it all again. But what underlies it all is a thirst for knowledge and confidence that they are getting a good deal.”
When it comes to selection, Blue Nile is the hands-down favorite, with over 650,000 diamonds available, which is orders of magnitude higher than the handful offered by a typical independent jeweler and five-times more than digital competitor Brilliant Earth.
But with all that selection comes confusion. Blue Nile works to eliminate that through its showrooms, the customer-friendly website that makes it easy to select the right diamond cut, size and setting and by-appointment virtual showrooms where a personal jeweler working in a professional studio presents carefully selected items for customers to view online and discuss. Its call center also helps close the sale, with 35% of revenue connected with it.
“We see such a great opportunity to make buying diamonds and fine jewelry easier by inspiring confidence. Our personal jewelers take a consultative approach to help customers find their perfect jewelry item. It is a very different experience than shoppers may have in a higher-pressure, ‘old-school’ jewelry store approach.”
And because Blue Nile started under a B2C internet business model, it’s been able to keep costs low and transfer the savings along to the customer. Blue Nile prices tend to run 25% to 50% below that of traditional brick-and-mortar retailers. And it offers a price-match guarantee if the customer finds a similar quality and size stone for less.
“Everyone is looking for a fair price. Most people aren’t looking to pay the absolute lowest price, but they want a deal for really good quality. That’s what we try to do,” Kell explained.
And customers can buy with confidence with its 30-day return policy, lifetime warranty and its upgrade policy that allows customers to recover full value to move up to a more expensive diamond. “Our upgrade offering puts a new spin on the ‘diamond is forever’ notion,” he quipped.
Today Blue Nile boasts nearly three million customers and nearly one-third of its sales come from repeat customers. Its customer base skews 45 years and under for engagement rings – the typical first purchase – with ages skewing to 55 years and under for jewelry purchases. And incomes and net worth runs high for both buyers, $100k+ and $1 million+ respectively.
“After someone buys an engagement ring, they come back a year, two or three later for an anniversary gift. Diamond-stud earrings, eternity bands and tennis bracelets are our most gifted items,” he continued.
As for the future, Blue Nile plans to have 26 showrooms open by end of the year and another ten or so added in 2023. Showrooms not only provide a higher closing rate and increase the average order size compared to website-alone orders, but they increase overall sales in the trade area by 80%.
Continued expansion into international markets is also ahead as it currently ships to 44 countries, including China, U.K., Canada and Australia.
“We are very excited about our pending, plans to go public,” Kell concluded. “We think it’s a great opportunity for our business. And raising capital gives us a great opportunity to invest in our business and expand our showroom network. We already have a good business beyond the U.S., including China, Canada and Europe and see a big opportunity for us outside the U.S. Everybody all over the world wants great value and beautiful jewelry.
In 2018, the FTC permitted “a mineral consisting essentially of pure carbon crystallized in the isometric system” to be described as a “diamond,” whether naturally occurring or man-made. Ever since then, the jewelry establishment has been erecting barriers of entry for lab-grown diamonds into their lucrative $84 billion global market.
The Natural Diamond Council established the official party line, declaring “Crafted by nature over millions of years, natural diamonds are inherently valuable, rare and precious.” Lab-grown diamonds, by contrast, are cheap manufactured substitutes whose value is “tied strictly to the cost of production” and therefore have no lasting value.
With the most to lose, luxury brands, including Bulgari, Cartier and Tiffany (now an LVMH brand), stood firmly behind that barrier and held only natural diamonds were luxury.
But now the walls have been breached with LVMH Luxury Ventures, along with other investors, having completed a $90 million investment round in Israel-based Lusix, a pioneer in the lab-grown diamond (LGD) industry.
Lusix joins MadHappy, Gabriella Hearst, Versed and Stadium Goods in LVMH Luxury Venture’s portfolio. Its investment priorities are clear: seek out brands at the forefront of emerging trends and innovation in the luxury market.
Specifically, it invests in “Iconic luxury brands, recognized for their distinctiveness and the quality of their products and services, with significant growth potential.”
Lusix fits the bill. It is the LGD industry’s first 100% solar-powered diamond producer with its stones sold under the “Sun Grown Diamond” brand. It can grow both clear and custom-colored rough stones in its large-scale reactors and it is one of the industry’s leading producers of premium-quality diamonds.
“LVMH’s investment in the lab space is a statement that lab-growns are going into luxury in a big way,” shared Marty Hurwitz, founder of The MVEye, a research firm specializing in the jewelry market.
“Right now demand for lab-grown diamonds is through the roof and the only thing holding it back is supply. LVMH investment in Lusix will give them secure access to premium-quality supply,” he continued.
Lusix’s technology edge made it particularly attractive to LVMH. The company was founded by Benny Landa, who made his name advancing digital printing technology with his Indigo Printing Company which was eventually sold to Hewlett-Packard in 2002.
He then formed Landa Group, and under that Landa Labs, to explore nanotechnology research and applications. Lusix was spun-off in 2016 as a separate business headed by Landa and co-founder Dr. Yossi Yayon with a Ph.D. in physics and post-graduate work at the University of California, Berkley.
The $90 million investment will be used to bring a second 100% solar-powered facility online this summer.
Landa said in a statement, “We are thrilled and proud to welcome such high-profile investors, most notably LVMH Luxury Ventures, bringing their financial support and valuable industry insights. Their help will contribute greatly to our company’s success while the implications of this investment, both for LUSIX and for the lab-grown diamond segment, are profound – and so exciting!”
Without a doubt, this is exciting news for the entire lab-grown diamond industry which today is estimated to total just under $6 billion and before this announcement was predicted to double in size by 2025.
With LVMH now giving its official luxury imprimatur to lab-grown diamonds, it is safe to bet it will grow even faster than that.
“Lusix is going to double its production by 2023 which will accelerate the market even faster,” Hurwitz shared.
In a final note, Frédéric Arnault, LVMH CEO Bernard Arnault’s 27-year-old son and head of its Tag Heuer brand, was likely instrumental in getting his father to take a closer look at LGDs. Earlier this year, Tag Heuer introduced its first watch featuring lab-grown diamonds at the super-luxury price of $360,000.
“It’s not about replacing traditional diamonds with lab-grown diamonds,” he shared with Vogue Business. “We use what’s different and inherent to this technology, allowing us new shapes and textures.”
Frédéric understands what the next-generation luxury consumers want and that is being given the choice between natural diamonds with their attendant environmental challenges and lab-grown diamonds that are renewable and can be produced without the high environmental price tag.
Plus, consumers can get a bigger and often better quality stone at a lower price. That’s the kind of choice everyone wants.
