Why bigger is better for diamonds

A little-known Canadian company has become frontpage news after unearthing the biggest diamond for more than a century. Lucara Diamond, listed in Stockholm and Toronto, has pulled a 1,111-carat gem-quality stone from its Karowe mine in Botswana. Weighing half a pound, it is bigger than a tangerine. Analysts described the discovery as "super-league status". There is no precedent for such a sale, but if it hits the high-end of Lucara's previous sales per carat, the diamond could easily fetch more than $80m.

The diamond market has followed other commodities sharply lower this year. Mining giant De Beers suffered its worst-ever sale this month, while diamond exports from Botswana, the world's top producer alongside Russia, fell to zero in July, reports the central bank. A clampdown on corruption in China has hit luxury goods demand there, and a stronger dollar has raised prices for European and Asian buyers.

But the market for ultra-big diamonds has held up better. Lucara reported sales figures of $20,625 per carat at a recent auction of plus-sized stones in Botswana's capital, Gaborone. And rival Gem Diamonds sold a 357-carat monster in September for $19m.

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Like fine wine and pricey art, huge diamonds depend on the fortunes of the super-rich, for whom all seems well. Hong Kong property billionaire Joseph Lau forked out £32m ($48m) for a flawless blue diamond in early November. He also paid £19m for a vivid pink diamond. The two-tier market, then, is just a further reflection of the global economic gulf between the top 1% and everyone else.