Holding a $25 million stone makes even veteran cutters nervous

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.

We looked back at the history of diamonds. The cushion is considered the nicest shape for a blue stone. The Hope is a cushion shape, and it really was a perfect model. It became an inspiration for us. We came up with a 13 ct. cushion shape or a 12 ct. cushion shape. We made a model of a 13 ct. cushion shape, but we didn’t like the proportions and we didn’t trust the facet proportions would reflect the light back. It might also end up VS purity.

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 14 ct. stone that got $3 million a carat.

In the end, we built 12 different models. We used machines to estimate proportions and weight, but technology can never replace the human eye. All the computer models will give you the approximate size, the approximate purity. They can give you guidance, but with a stone like the Blue Moon, you cannot rely on what the computer tells you. Computers mainly just confirm if your assumptions are correct.

After five months of debating and evaluating all the possibilities, we came to our decision. The 12 ct. cushion shape gave us the optimal model, the optimal purity, the ultimate color.

What it was like to 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. In a way, the stone was a test case for us. Was everything that we learned in the past correct?

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.

In the end, everything went quite smoothly. We had no physical or technical hiccups. 

The sale. 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.

A story like the Blue Moon is a great story to tell the general public. We need to educate consumers on the value of diamonds. There are a lot more people who are willing to spend $50 million to $100 million on art than on this kind of diamond.   

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.

(Photo courtesy of Cora International)

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