Are Diamonds Forever?

Throughout the wide-reaching conversation, what stood out most was Bruce’s pride at the industry’s uniqueness, firstly due to its potential to shape the future given De Beers’ market share - accounting for 30% of the world’s rough diamond sale - and secondly, because of its ability to remind consumers of the greatest moments of their lives every day. After all, “Diamonds Are Forever”.

This incredible sentiment explains Bruce’s concern about the rise of synthetic diamonds (produced unlimitedly in a laboratory), particularly the attempt to sell them as a direct competitor to the natural (compressed over billions of years). While he confesses that handling the impact of this technological development on De Beers was the scariest thing he has ever done, Bruce emphasises how the firm took the opportunity to successfully launch their own synthetic diamonds with Lightbox Jewellery. Where there were risks of legitimising a potentially unworthy market by entering too early or appearing irrelevant by being too late, De Beers were fortunate enough to enter the synthetic diamond market at just the right time. They also work with technology, rather than against it, by building extraordinary synthetic detection machines to ensure a separation between the luxury natural market, and the fashionable synthetic one.

Bruce then offers excellent insights into the role of diamonds not only in satisfying consumers’ deep emotional needs, but also as an investment class. He argues that the long- term use of diamonds as stores of financial value begs the question of ‘Who will evaluate diamonds in a way which can be trusted, given that, unlike gold (which is evaluated online in a matter of clicks), they are unique in cut, colour, clarity, and caratage?’ Bruce explains that although this future development presents an intriguing challenge, De Beers will probably not be its market-maker to maintain their focus on primary diamond production.

Bruce expresses his confidence for the future of diamond prices, which have remained stable over the last 20-30 years, rising broadly by1-3% above inflation each year.

He discusses the positive combination of the stable trend of global supply, which he believes has peaked and is now gradually declining with the growth in demand. The De Beers brand is predominantly behind that growth. Clarifying that demand for diamonds can certainly be influenced and has indeed been stimulated in America by Harry Oppenheimer in the 1930s, Bruce conveys it brilliantly as a shortcut to trust. In his experience, that trust is built through stories of connection to the source of the diamond, sustainability, and shared values between the customer and the business - stories which no other firm can tell.

Through projects such as creating the sophisticated and ambitious blockchain Tracr and protecting the natural world in partnership with National Geographic (which is, incidentally, the single most recognised brand on social media!), De Beers, a consumer-facing business, connects particularly with the values of Generation Z and millennials, the two largest groups of diamond consumers.

Moreover, Bruce spoke about the implications of geo-political forces for the diamond market and thereby De Beers. He expresses concerns about potential American sanctions prohibiting the import of Russian diamonds, which are largely sold by Alrosa, the second biggest player in the diamond world, following the invasion ofUkraine in March 2022. Bruce explains that this conflict accelerated the need to deliver De Beers’ blockchain which has made the provenance of its diamonds much more accessible.

At the same time, what consumers have been able to learn more deeply about is the firm’s relationship with Botswana, described as “the most successful public-private partnership ever” by its President, Dr. Mokgweetsi Eric Keabetswe Masisi.

Overall, our episode with Bruce Cleaver illuminates the unique diamond market and substantiates the position of De Beers at its forefront, committed to being ahead of the inevitable fascinating change that comes with the industry.

Ekaterina Veter, June 2023