To the southeast of the teeming herds of wildlife in the Okavango Delta in Botswana, an offshoot of the Lundin mining dynasty is extending its search for the world’s biggest diamonds.
Lucara Diamond Corp is sinking an 800 m shaft to ensure the kimberlite orebodies at its Karowe mine keep producing the 1 000-ct-plus diamonds that set it apart. However, the $550-million investment is potentially less significant than the second prong of the miner’s strategy.
That involves changing the way diamonds are sold, indirectly posing a challenge to industry giant De Beers. The unit of Anglo American, which accounts for most output in top producer Botswana, is locked in a battle with the government over how the spoils of the diamond trade are shared. While Lucara’s operations are dwarfed by De Beers, Botswana is using its sales model as a bargaining chip in negotiations with the No. 1 diamond company.
Lucara sells about a quarter of its stones using a method pioneered by De Beers: cutters view packages of diamonds before bidding on them. But most of its stones — including those over 10.8 ct in size and known in the industry as specials — are sold under an agreement with HB Antwerp. For those, the company receives polished rather than rough prices and the government earns more revenue.
“The model is disruptive,” said Rafael Papsimedov, a co-founder of HB Antwerp. “It’s delivering value, transparency and data. It empowers the miner and the nation to move to the next level.”
That model is complicating the relationship between De Beers and Botswana, as negotiations over an extension of their more than 50-year partnership drag on. Botswanan President Mokgweetsi Masisi in September praised Lucara’s arrangement with HB Antwerp, saying it had “enormous scalable potential.” Earlier this month, he threatened to walk away from a deal with De Beers.
Still, that’s easier said than done. Lucara’s production from Karowe, its only mine, was about 336 000 ct last year, with company revenue of $213-million. By comparison Debswana, the joint venture between Botswana and De Beers, produces about 22 million carats and its 2022 revenue was just under $4.6-billion. The government is said to get 80% of revenue from the joint venture.
Moreover, Debswana’s operations require huge capital investment, which can only be funded by the largest mining companies. Jwaneng, the world’s biggest diamond mine, is undergoing a $1.2-billion expansion and a similar one is planned at Orapa. To extend operations for decades, an underground shaft will need to be dug at Jwaneng at a cost of at least $5-billion.
BIGGEST GEMS
While Lucara can’t compete on scale, its biggest diamonds are hard to match. In 2019, it unearthed the 1 758 ct Sewelo – the world’s No. 2 stone after South Africa’s Cullinan diamond – which was turned into a collection of Louis Vuitton jewelry. Two years later, it found a 1 175 ct diamond and in 2015 the 1 109 ct Lesedi la Rona diamond, a discovery that triggered a 34% jump in Lucara’s shares.
Now the company is using so-called XRT technology to scan mined ore for the presence of large diamonds so they don’t get damaged in the extraction process.
“We are the only diamond mine in the world to have recovered three diamonds in excess of 1 000 ct in size,” Eira Thomas, Lucara’s chief executive officer, said in a presentation at the mine earlier this month. “We believe that our mine accounts for about 25% of the world’s largest diamonds.” 
