Unsold £53m diamond suggests market has reached a tipping point

NEW YORK, NY - MAY 04:  Guards stand next to the 1109-carat rough Lesedi La Rona diamond, the biggest rough diamond discovered in more than a century, at Sotheby's on May 04, 2016 in New York City. The stone was found by Lucara Diamond Corp. last year at its Karowe mine in Botswana. The diamond, which is nearly the size of a tennis ball at 66.4 x 55 x 42 mm and is believed to be about 2.5 billion to 3 billion years old, was named  "Our Light" in the local Tswana language. Lesedi La Rona will be offered at auction in London on June 29 and be on display at Sotheby's New York. The diamond could sell for $70 million or more.  (Photo by Spencer Platt/Getty Images)

The failure of the largest diamond discovered in over a century to sell at auction suggests the market could have reached a “tipping point”, a leading industry expert has claimed.

At 1109 carats, the Lesedi La Rona diamond – which is the size of a tennis ball – was the second largest diamond ever discovered in the history of the world.

Auction house Sotheby’s hoped to fetch $70m (£53m) for the stone but it failed to secure a buyer after bidding stopped at $61m (£46m).

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Tobias Kormind, managing director of 77Diamonds.com, said it was a surprise that the piece didn’t sell.

“Given that it is the second largest rough of gem quality ever to be found (the Cullinan was the largest at 3,106ct), and its smaller cousin, the Constellation from the same mine in Botswana sold in May 2016 for $63m (£47m), this diamond, which is 36% bigger than the Constellation, should have far exceeded the Constellation’s per carat price of $77.6k ($58.5k), reaching at least $86m (£65m) to match.”

Mr Kormind speculated that diamond cutters might have assessed the rough and weren’t convinced they could get a large enough single diamond out of it to make it worth a higher price. On the other hand, he said, this explanation would contradict pre-auction rumours that the rough was likely to yield a 400+ct D flawless diamond, which would be the largest purest diamond in existence and likely to fetch in excess of $200m (£151m).

It now looks likely that Sotheby’s will be be stuck with the diamond or help diamond producer Lucara sell it privately to cut their losses.

Either way, Mr Kormind thinks its failure to sell last week is significant. “The format of a public auction will probably not be used any time soon to sell another large rough. The market may have reached a tipping point and demand for large rare stones might just be saturated or the market instability with Brexit may have just caused this to be a case of bad luck or bad timing,” he said.

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