JCK's Rob Bates writes the fascinating story behind acquiring and polishing the world's most expensive diamond, the Blue Moon, as told by Ehud Laniado, chairman of Cora International, which bought the stone. To recap: in November, Sotheby’s sold the Blue Moon, the 12.03 ct. internally flawless vivid blue cushion cut, for $48.5 million, setting a world record for a diamond at auction. Before that, the stone, discovered by Petra Diamonds at the Cullinan mine in South Africa, was a 29.62 ct. piece of rough, purchased by Cora International for $25.6 million at a February 2014 tender. Bates and Laniado take us through the process. The following excerpts are taken directly from Rob Bates' article: we recommend reading the original for the full account.
The tender is a big boy's game
When assessing the rough at tender, the main thing is to gauge the color and the recovery. That usually doesn’t take more than a half hour. Then you do the homework, thinking about all the options. We estimated the polished would reach from $40 million to $45 million on the market. You discount the possibility that you might be stuck with it. Then you subtract the duration of the process, the margin, your expenses. You take into account this is a high-risk process because you don’t know 100 percent how a natural material will behave. The tender is a big boy’s game. We knew our competitors are all professionals and would think similarly to us. We had to find the balance between offering the maximum and allowing ourselves margin and room for expenses. If you push yourself to the limit you think: Am I ready to take that risk?
Analyzing the stone
The Blue Moon is one-of-a-kind, and you have to reach a kind of a sweet spot or coefficient between several parameters. The most important is the color, and the reflection of the color back to the eye. The second is the yield of the rough, which effects your margin. The third is the purity of the stone, which is less important for colored diamonds but still a factor. We decided to make the ultimate product from all the models. We know there are very few people in the world that can spend money at that level. We decided a stone like the Blue Moon can never be a “but” stone. We don’t want any possibility that a client will say, “Yes, it’s a nice stone, but it doesn’t reflect light,” or “It’s a nice stone, but it’s flat.” We wanted to create the perfect model, even if it cost us some carats. We decided it was better to have a 12 ct. stone that went for $4 million a carat, than a 10 ct. stone that got $3 million a carat.
The anxiety of the cut
Our cutters are very well trained. Still, when holding a $25 million diamond, everyone is going to be to be a little nervous. For our polishers, there were two sources of anxiety. First, if you push the stone too much it might blow up and break on the wheel. So we were a little more hesitant, they used a little more calculation. But there is another level. You are talking about a rare item that the industry may never see again. Diamonds are a natural material. Nature can go against you. We were very certain about the weight. We were very certain about the purity. But the unknown is always on your mind. You don’t know how the natural material will react when you give it a new form. There is always that 5 percent that can go wrong. You can’t fight against Mother Nature. So that can create some butterflies in your stomach. But the cutters are all professionals. The discipline overtook the fear.
It is easy to say after it happened, but I did believe the stone would fetch $40 million to $45 million. I was very happy with the auction process. For that kind of stone, the auction houses know the real players, they know the right language to speak to them, they know who to invite. Of course, I am very proud of the Blue Moon. How often do you hold the most expensive stone in the world in your hand? A diamond like this, I don’t believe the industry will see again.