Original article from jckonline.com
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, however, the stone, discovered at the Cullinan mine in South Africa, was a 29.62 ct. piece of rough, which was purchased by Cora International for $25.6 million at a February 2014 tender.
But what happened in between? How is cutting such a rare and valuable stone—one significant enough to be exhibited at the Natural History Museum of Los Angeles County—different from cutting any other stone?
Below, Cora chairman Ehud Laniado gives JCK an exclusive look at the process.
Bidding on the stone. 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. Even though the Blue Moon was a straightforward stone, there were a few options, and we added them up.
We basically estimated the value of the end product, how much it will be worth at transaction prices on the market. We estimated the polished will reach from $40 million to $45 million. 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? There’s a bit of psychology involved. In the process of making the offer, our price varied from $22 million to $32 million. In the end I decided to go with $25.5 million. But I thought maybe our competitors would think the same way, so I added a little more. We heard the bid below us was around $400,000 lower, which is minute at that level.
The way I look at it is: If I win, I’m happy. If someone else wants to invest more, they’re welcome to it.
Figuring out 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.
So here is the deduction: If I want the maximum yield, I would choose the 14 ct. emerald. But then I have a problem: Will the stone be flat, or will it be very high? And the main question: How will the color be reflected back? With an emerald we could gain two carats, but it would be an SI stone, and it might be out of proportion. If the facets on the top are a little bit flat that will influence the reflection of the light.
Then we considered an 8–10 ct. round stone. The round stone reflects light the best. But we thought about what would happen if the stone comes in deep. There is no way to go back and remake the stone.