In the midst of a global pandemic, an economic recession, and with Argyle mine’s looming closure, one might expect the coloured diamond industry to be in dire straits. However, with fiat currency, stocks and property prices looking increasingly unpredictable, these rare fancy coloured stones continue to be safe bets both as investments and as feature stones for engagement rings and fashion jewellery. Here we speak to 5 major brands in the Australian coloured diamond industry to find out its current state and its future.
Pandemic brings mixed bag of results for coloured diamond industry.
Over the past few months, we’ve had some encouraging news in the fight to control coronavirus, with a decreasing rate of diagnosed cases, huge rates of recovery, and relaxed restrictions. However, the impact the coronavirus has had on the economy is evident in the 25% decrease in the Australian equity market since late February, as well as a plunging Australian dollar, which was trading at USD $0.65 at time of print.
While many of our respondents reported slower sales from the pandemic, they have all seen an increase in business, particularly with enquiries in investment stones. Lost River Diamonds is a Perth-based loose diamond supplier headed by general manager Troy Reany who said that he finished 2019 extremely strongly. Even though things have taken a hit across the board as a result of the coronavirus, his business has seen some people who are looking at Argyle pink diamonds as a vehicle for investment now that there is so much uncertainty in the more traditional sectors like the share market and real estate.
“We chose to specialise in coloured diamonds many years ago, so currently the state of the coloured diamond market has never been better,” he said. “Retail clients are more open and willing to consider coloured diamonds now than ever before.”
Leibish, KL Diamonds, and Australian Diamond Portfolio are three other brands benefitting from increased interest in pink diamonds. Leibish is an internationally recognised specialist and online retailer of high-end diamonds and jewellery, with expertise in natural fancy coloured diamonds and gemstones, headed by founder and president Leibish Polnauer.
“Fancy colour diamonds have a very different market to colourless diamonds and generally fared better than the general diamond market,” Leibish said.
“Like all businesses, the pandemic has slowed certain aspects of business, however our company is a 22-year old online establishment so we are very fortunate that our business is doing well.”
Based in Sydney, KL Diamonds is a jewellery workshop specialising in handmade engagement rings, and retailing in Argyle pink, champagne, cognac, chocolate and white diamonds. Head of KL Diamonds Kalleh Levonian said they finished 2019 strongly, with their customers requesting coloured diamonds that are of Australian origin.
“The pandemic has obviously impacted sales as both consumers and retailers were ‘waiting and seeing’, trying to estimate what the full scale and final impact would be on the economy, their jobs etc,” he said.
“But luckily, we’ve found consumers have started to reach out again as Australia has proved itself to be one of the lucky countries in this pandemic.”
Australian Diamond Portfolio is a full-service coloured diamond investment brokerage, and executive director Anna Cisecki reported a record year in 2019 with continuous demand that’s carried on into 2020. She said that ADP primarily works with investors, including SMSF trustees who are keen to invest in pink diamonds.
“Whilst COVID-19 has slowed down the diamond supply chain, it hasn’t stopped it,” she said. “More importantly, low interest rates, money printing and crashing share markets, coupled with the pending closure of the Argyle Diamond Mine have meant demand has soared – pink diamonds present an attractive, stable investment opportunity in today’s uncertain economic climate.”
Major Australian diamond and gem supplier Bolton Gems has also had sales and enquiries for unique stones growing in recent months despite slowing sales across the retail jewellery sector. Director Brett Bolton said that coloured diamonds are a favourite of his, and looking over sales and enquiries over the past 12 months, it seems many others are leading towards coloured diamonds as well.
“The pandemic may have slowed sales, and even stopped sales for some retail stores, but we have found in some cases the consumer has spent this time learning and researching about diamonds and more importantly coloured diamonds,” he said. “They are now looking at purchasing items similar to what they have found.”
Large requests for bigstones
The 2ct-plus coloured diamond market has also fared well, with investors seeking large unique coloured diamonds. While many of Leibish’s sales are for Argyle pink diamonds below 0.50ct (due to the high prices and rarity of the stones), he has sold many rare and large stones over his 40 years in operation.
“Some so rare they have been in the milliondollar range,” he said. “We just sold an FIP Argyle Tender stone over 2 carats.” Anna concurred that large pink diamonds are rare, and that for ADP clients, colour is king. “The richer, brighter, more vibrant the colour, the better the investment potential,” she said.” “With regards to shape, the higher quality goods are usually fancy shapes, cut to maximise colour and weight retention.”
Brett said that Bolton Gems have a lot of enquiries in the 2ct-plus range up to 5ct, more than they received as little as 5 years ago. “So for Bolton Gems, this is a growing market,” he said.
For Lost River Diamonds, it’s the large champagne diamond market doing well at the moment, with Troy seeing a definite trend towards well cut, lighter colours (around C2) in both round and fancy shapes. “These diamonds are quite affordable compared to white diamonds so we do get regular 2ct plus sales,” he said. Kalleh reported that KL Diamonds has received many requests for larger stones this year and as such, are keeping more stones 2ct-plus in stock.
Keeping up with demand
Supply and demand are a problem for every industry, but for the jewellery industry, this challenge is compounded by their product’s rarity and their inability to be mass produced on demand.
Brett understands this and remarked that in the jewellery industry, demand can outstrip supply very quickly. “Unlike toilet paper we cannot just produce more stones but also have to open the mines, cutting factories or jewellery benches for longer hours,” he said.
“Diamonds and coloured stones are unique in the cutting process: to give you some idea it takes out cutters around 4-6 times longer to cut a 1ct Australian Chocolate Diamond over an equivalent white diamond.”
Troy echoed similar sentiments about the challenges, but embraced it as an opportunity, particularly with Argyle pink diamonds. “I think the key is to find your niche within the market and then to make sure you are known for that,” he said. “Whether it be a particular colour are or size range – don’t try to do it all because it’s impossible.”
Fortunately for Leibish, they have access to a vast range of diamonds around the world. “Despite the vast majority of our diamonds belonging to us, our website is also a portal for different vendors from many countries,” he said.
“We have over 300 million dollars worth of diamonds and rare gemstones available online with this number growing daily.” ADP also benefits from effective business connections, as Anna said they have direct relationships with many of the largest Argyle trade partners, which helps them source the highest quality stones to meet their clients’ needs.
Kalleh said that at KL Diamonds, they give their customers a vast range of possibilities, especially when it comes to Argyle pinks and champagnes. As a local supplier with one of the most extensive Argyle inventories, they are able to supply without being affected by the disruption and delay of international shipments.
Acquiring a larger pink diamond it similar to “buying a work of art”, the shared similarities are in terms of price, rarity and beauty. “We always educate our customers that buying a rare coloured diamond is a journey, it’s about being presented with a beautifully selected range,” he said. “Our customers enjoy the additional element of surprise during the selection process, and fall in love with ‘the one’, a stone that they absolutely love.”
The fall of Australian Argyle, the rise of Russian Alrosa
When Rio Tinto’s Argyle mine closes at the end of this year after more than 30 years of operation, the Alrosa mine in Yakutia, Russia will supplant them as largest producer of coloured diamonds in the world. When asked for his opinion on what this means for the Australian jewellery industry, Leibish said he doesn’t believe the Alrosa mine can ever compete with the Argyle mine, as the unique colour of the Argyle pink diamond is irreplaceable.
“The jewellery industry will not suffer from the closure of the Argyle mine as the quantity of pink diamonds in the market is marginal,” he said.
“The loss is more emotional, like Hollywood without Marilyn Monroe. “Tomorrow is another day with new products and possibilities.” Brett was sombre in his assessment of the looming closure as a very dark day for Australian jewellers. “Argyle diamonds have brought colour into to what was a very white dominated industry,” he said. However, he was also aligned with Leibish in remaining positive of what the future will hold.
“Australia is a vast land of untapped riches and I am confident the Russians won’t hold this title for very long.” Troy acknowledged the closure of Argyle as the end of an era. “It has absolutely been a source of pride as an Australian small business to know we have the most amazing pink diamonds in the world,” he said.
“I haven’t thought too much about Russia taking over the mantle but it will be interesting to see if any new sources emerge over the next year or two.” Kalleh also acknowledged the Argyle era as a very special moment and felt the legend and affection for pink diamonds will grow over time.
“The diamonds will still be traded on the market and will hold a particular appeal…it will still exist as a product, a brand and a moment in Australia’s history,” he said. “As both jewellers and wholesalers of Argyle pink diamonds, we look forward to being one of many custodians of the special Argyle story.”
Anna shared a similar feeling of gratitude of being part of the Argyle story. “It’s a geological masterpiece, a one-off that won’t be repeated ever again,” she said. She also expressed Kalleh’s hope that the mine’s story will live on and thrive for years to come. “The Argyle Mine may be closing. But the beauty, and the value of Argyle pink diamonds is timeless.”