Nothing yet cast in stone’- Ter Haar, regarding sale of the rare Okavango Blue. The country’s oldest diamond mine, Orapa, on Wednesday stunned the world by unveiling an exceptional 20.46 carat blue diamond, a find so rare it challenges the iconic Hope Diamond. And for once, Batswana will be direct, biggest beneficiaries of the discovery Staff Writer, MBONGENI MGUNI writes
From the time the mammoth Lesedi la Rona was unveiled in 2015, as the second largest rough diamond in history to the time it was finally sold in 2017, Batswana questioned what their actual benefit would be in all the fuss.
Although it has propped up the economy and indirectly benefited citizens for decades, the diamond industry has always been out of reach of the ordinary Motswana.
Where diamond’s economic predecessor, agriculture was a hands-on soil-under-the-nails industry, the shiny stones are the preserve of fewer citizen workers and even fewer buyers unseen and unknown by Batswana.
When agriculture was the economy’s primary sector, all citizens participated to various degrees, with the produce supporting families and sending children to school.
Diamonds, meanwhile, are far too expensive for ordinary citizens to purchase and yet their sales in far off markets and to far off consumers, largely determine the economic fate of Batswana.
Unlike the agrarian era, most Batswana cannot ‘touch and feel’ this key economic sector, and with the entry barriers to the diamond industry simply impossible to overcome, citizens have found themselves beholden to government, which since the beginning of the diamond era in the 1970s, has managed their interests indirectly, through its shareholding in Debswana and De Beers.
Lucara brave attempt to explain the ways in which Batswana would benefit from Lesedi la Rona’s sale, such as royalties and taxes, was generally met with the cynicism of people, who have long resigned themselves to the belief that the diamond sector is detached from their lives.
Lucara’s Karowe Mine has since then uncovered other exceptional stones, but each announcement is somewhat of a non-event for ordinary citizens, for whom the discoveries are a reminder of their separation from the sector.
Okavango Diamond Company, the state-owned rough diamond trading company, is hoping to chip away at these perceptions, when it hits the road with its 20.46 carat exceptional blue diamond unveiled this week.
The stone was originally unearthed in the last quarter of 2018 and is not only the rarest stone ever discovered at Orapa but ironically, was found at a time when mining activities were preparing to shift to a different zone, under the Cut 3 project.
By 2022, mining activities at Orapa Mine will shift to Cut 3, which is a deeper, wider area than the current mining zone.
The rare blue diamond, which has been named Okavango Blue, was therefore literally found hiding at the bottom of Orapa Mine.
With Orapa Mine giving Batswana the gift of its lifetime, Okavango Diamond Company MD, Marcus ter Haar is eager for the opportunity to turn perceptions around.
“A layman Motswana won’t wake up tomorrow and have a transformation in his life, but the benefit of Okavango Blue being sold through a government-owned entity is ultimately that all the proceeds generated through the sale of the stone will end up in government coffers,” he told Mmegi on Wednesday.
“Those funds will then be used for all the development efforts that we know government does.
“There’s no private investor nor interest that accrues any benefit from the sale of this stone.”
Batswana may not touch Okavango Blue, but can rest assured that the proceeds of this particularly exceptional find touches their direct interests.
Ter Haar is therefore eager to ensure that the right value is extracted from Okavango Blue. This is critical as the diamond industry remembers the troubles Lucara had in disposing of Lesedi la Lona at its expected price.
The giant stone was initially expected to fetch $70 million, but with buyers balking amidst whispers of sinister industry conspiracies, Lesedi la Rona eventually sold for $53 million.
“Part of the reason we have this hiatus between the unveiling and when we will sell, it is to give us time to discern the best sales methodology,” explained ter Haar.
“It could be a private buyer, unsolicited offers, solicited offers, partnerships, jewellery houses or auction and we want time to consider the best route.
“Our instinct is an auction because that’s the methodology we believe in that’s how we sell our rough diamonds and that’s perhaps foremost in our mind. It then becomes a question of timing.
“An auction helps with a collection of buyers competing to outbid each other and the value outcome of an auction elevates the price you can achieve.”
Okavango Diamond Company expects to hit the road soon, conducting an international promotional marketing campaign, both physically and digitally, targeting high net worth buyer and collector markets such as New York, London, Geneva, Hong Kong and others.
As exciting as this route to value extraction sounds and as beneficial as it would be for Batswana, Lesedi la Rona is a cautionary tale about taking exceptional stones to global auctions.
Lucara’s former CEO, William Lamb previously
For a diamond, which at some point was even expected to sell for $80 million and which was insured for $120 million, Lesedi la Rona’s dramatic failure at the London auction is a warning for Okavango Blue. “The auction room had two types of buyers; wealthy private investors interested in the diamond as a personal asset and traders, or middlemen interested in the diamond to cut and polish it for jewellery,” Lamb told Mmegi a few years ago.
“Of these two, the traders were more sophisticated and understood the value of the diamond. The investors waited to take their cue from them.
“If the private person wanted to understand the value, they would see it from how the traders were bidding. “When we started and got to $50 million, we should have seen bidding very quickly rising up and that intensity would have helped the private buyers understand the value of the diamond.
“That was missing.”
According to Lamb, the traders not only plotted in advance to push down Lesedi la Rona’s price, they also sent negative signals into the market as a protest against Lucara choosing to sell Lesedi la Rona via auction.“Two weeks before, the traders began talking Lesedi la Rona down. They were saying buyers would only get a 25% yield from the stone, which was not true; even Sotheby’s expected between 30% and 40%.
“If you did not want the stone to be bought by the private investors, then that’s what you would do. They did not like the public auction as they said they would have to pay Sotheby’s also. “They did not like the public nature of the auction, with their names up in lights.”
Okavango Blue’s path to giving maximum returns to Batswana will have to navigate these booby traps.
Ter Haar said nothing was yet cast in stone.
“We haven’t predetermined how we will sell it nor who we will sell it to, but hopefully in the promotional marketing activities we are planning for the next few months, we will tease out those interested parties,” he told Mmegi.
“This is the first time we have done this and we are learning a little bit as we go, but the point of the PR and marketing exercise is to expose it to whoever could be interested around the world.”
Should the hijinks be taken out of the equation, Okavango Blue is expected to take its place amongst the historic and iconic blue diamonds of all time, rivalling even the legendary Hope Diamond. While smaller than the 45.52 carat Hope Diamond, Okavango Blue has a purity rating of VVS2, the third highest and rarest, while the Hope Diamond has a lower ranking of VS1.
“The Hope Diamond if you look at the cut, is not as precise or beautiful as ours and the quality is lower even though the size is bigger than ours,” ter Haar said.
“A collector would look at the beauty of the diamond and say it may be smaller, but because of the colour and clarity and unmodified cut that represents value to a buyer.”
The fate of the Okavango Blue will be determined in months to come. Ter Haar hopes it will enter its final home intact and not broken into pieces of jewellery, in order to preserve its iconic status. Lesedi la Rona, originally a mammoth 1,109 carat rock was last week unveiled as a 302 carat diamond by its buyer, after further hi-tech polishing to remove natural ‘impurities’.
Lamb had told Mmegi he hoped the stone could be sold and preserved in its natural state for history.
Ter Haar has similar hopes.
“Sentimentally, if you look at the stone, it’s truly iconic and for me to do anything that would alter the shape, the colour would be almost blasphemous. “I would certainly want to see that stone retained in its current form and I’m sure the ultimate buyer would also.
“That’s where the beauty lies and that’s why the beauty exists in the stone.
“At worse, potentially the stone could be set in a piece of jewellery, which might be at the request of a buyer. “Often when you are presenting a stone at an auction, it’s presented as a piece of jewellery in a ring or pendant and that might go to enhance the attraction of the stone, giving the buyer the picture of what the diamond might look like as a worn piece.
“That would probably be the only modification of any sort that I would endorse, but ultimately it’s not my call.”