Samuels talks with JCK about starting out, his memories of industry icons like Harry Winston and M.B. Zale, and his views of the jewelry business’ future:

How did you get started in the gem trade?

My brother had gone into the diamond business. Then when it was my turn to do something, I learned diamond cutting. I specialized in emerald cuts. [Cutter] Lazare Kaplan had developed the oval. He never patented it, so I started making it, too. People laughed at it. They called it the shmoval.

I was an okay cutter, but I didn’t really enjoy sitting at the bench. What I enjoyed was taking a rough diamond and creating a beautiful item. But I didn’t enjoy the work itself.

So when did you leave cutting?

By the 1950s, I started buying on my own. I’d buy from dealers who were bringing back rough from Belgium. After 10 years of struggling here in the States, I said, “I have to make a trip to Belgium. Why give these guys a profit?” For a while, I went to Antwerp almost every other week.

My forte was knowing where the diamond came from. I could look at a diamond and tell you if it was from Sierra Leone, Angola, or the Congo. I knew that certain goods would turn better color. I could see the nature of the material.

How did you begin to specialize in big diamonds?

We were one of the first in New York to trade in them, besides Harry Winston. One of the first big stones I bought was a 98-carat rough diamond. I paid $300,000 for it. That was a huge amount of money. After I bought it, I panicked. I called Gerald Rothschild, of I. Hennig. I knew Harry Winston would go to the [De Beers] sights in London, and said, “Gerald, you have to do me a favor. I need to talk to Harry Winston. Can you tell me what flight he’s on?”

He told me Winston always flew TWA. So I phoned TWA. In those days, you were able to call up and say you’d like to sit next to someone. They said, “Mr. Winston is sitting in first class.” Back then, I didn’t know what first class felt like. So I paid what was then a lot of money for me to sit in first class.

I got on the plane, and as I’m putting up my luggage, Winston said, “Marvin, what are you doing here?” I had him for eight and a half hours. He was in the window seat, and I was in the aisle seat. I said, “I just bought a 98-carat stone, and I can make a 50-carat emerald cut.” He said, “Listen to me. You’ll never sell it.” I went into a panic.

He said, “See if you can make two diamonds out of it.” I made one stone: a 47-carat emerald cut. No one wanted to buy it. At that time Christie’s was holding its first jewelry auctions. I went to Hans Nadelhoffer, the head of Christie’s Geneva, and he told me he’ll take it. He auctioned it off for $440,000. In the end I made a nice profit.

At what point did you become a De Beers sightholder?

In 1967. It took about 10 years. De Beers in those days couldn’t come to America, so it was challenging for them, because they didn’t know much about U.S. companies.

De Beers back then was a well-oiled machine. They knew when you made money, they knew when you lost it. If you went through a year where business was bad, they’d let you earn back what you lost.

You dealt with a lot of giants in the industry. What are some of your memories?

The diamond people in those days were powerhouses. I remember I once finished a blue stone, a 22-carat emerald. [Van Cleef heir] Claude Arpels came up to the office, and he went from room to room. I said, “What are you doing?” He said, “I’m looking for incandescent light. Colored diamonds are worn in a ballroom. In a ballroom, you have incandescent lighting.” I finally found an incandescent lamp, and he put the diamond under it. He said, “Not for me. It doesn’t look good in this light.” And he was right.

Morris Zale was another legend I had the privilege of not only knowing but being his partner. I will never forget when he gave me a tour of his facility in Texas, and I asked him, “M.B., how many people work here?” He looked me right in the eye and, deadpan, said, “About half.”

I had the good fortune to subsequently partner with Zale Corporation and with Louis Glick on what I consider to be one of my crowing achievements—the purchase of an 890-carat rough stone, which we cut to the 407.48-carat fancy color flawless Incomparable.

What do you see as the future of the business?

Today I’m not so sure I would be able to accomplish what I did. I was in the business before the color machine, before computers. I could buy big diamonds and know what you would get from them. I used my brain, because that was all I had.

The trust we used to have is gone. I used to be able to call up Robert Mouawad and tell him, “I have a big stone,” and he’d say, “I’ll join you if you want.” Because he trusted me.

I always found the business a lot of fun. It was challenging, of course, but it was fun. And I miss it.

(Photos courtesy of Premier Gem)

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From the Blog

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From the Podcast    

The Jewelry District, Episode 99: Guest Jeffery Bolling

Have a great weekend!

– Email: rbates – at – jckonline.com.

– Twitter: @robbatesjck

– Connect on LinkedIn

 (Photo: Getty Images)  

If De Beers bent a knee during that deal, this time feels like the company was almost brought to its knees.

Though the two sides have hailed their new 10-year sales agreement—which includes a 25-year extension of De Beers’ mining licenses—as “transformational” and a “win-win,” not everyone believes De Beers won much here, except for removing a troublesome issue from its plate. Botswana’s diamond mines are highly profitable and will likely remain so going forward. However, analysts at RMB Morgan Stanley told Reuters that De Beers could lose as much as $200 million, or 15% of its earnings, from the deal. (De Beers CEO Al Cook responded that the analysts “misinterpreted” the arrangement.)

The agreement in principle was signed on June 30, right before the current one expired, with some details yet to be announced and others still to be finalized. It followed what local journalist Mbo Mguni called Botswana’s “most open debate [ever] on the country and the industry’s principal economic covenant.”

Headlines have mostly centered on Botswana winning the ability to sell 50% of its diamond production through state-owned Okavango Diamond Company (ODC) by the contract’s 10th year. That will be “indeed transformational,” former De Beers Botswana CEO Sheila Khama wrote in Mining Weekly, as “Botswana enters the big league of rough diamond marketing.”

At a press conference broadcast live Thursday on Facebook, minister of mines and energy Lefoko Moagi said that ODC—which currently tenders its goods—plans to set up a sight system, with regular customers buying regular allocations, similar to De Beers. A “noncompete” included in the last contract—which prevented ODC and De Beers from selling to the same customers—has been scrapped, though Moagi said Botswana plans to cultivate its own sales roster.

Moagi also provided a lot of new details on new De Beers contract. One is that De Beers and Botswana will partner on certain “exceptional” diamonds. “We will jointly find who is the best person to polish that stone,” Moagi said. “It won’t be chosen by De Beers alone, so we can both take accountability.”

De Beers will also establish entrepreneurship programs and educational institutions to train Batswana (people of Botswana) in skills like marketing and jewelry creating, and will collaborate with Botswana on a “world-class international jewelry manufacturing facility” that will employ 250 people.

If De Beers doesn’t meet certain beneficiation targets, it will “not be allowed to sell,” Moagi said. “Look at Surat, look at Antwerp, look at Tel Aviv. They take rough, they make it polished, they make [it into] jewelry. And they make a killing. We can’t be sitting on rough. That’s the value chain development. That’s the beneficiation.”

Under the new pact, De Beers will move some IT support and parts of the De Beers Institute of Diamonds grading lab (including its inscription services) to Gaborone. (See clarification below.) Moagi also said De Beers and Botswana will form an entity that will search for new diamond deposits, both in Botswana and abroad. The sales split will depend on each partner’s investment, Moagi said, adding that Botswana may also explore on its own.

There are also plans, according to Moagi, for a “Botswana diamonds provenance initiative” as well as a joint “natural diamond defense” to counter the threat of lab-grown diamonds, which could be separate from the Natural Diamond Council.

“We will together put money into marketing spend so that we market our natural diamonds and we tell the Botswana story,” said Moagi. “We have to make sure that we develop our marketing skills as Batswana, and it is not driven by De Beers alone.”

(Though if you want to tell a positive “Botswana story,” headlines like “Is Botswana Getting a Raw Deal From De Beers Diamonds?” don’t help.)

While these initiatives risk increasing Botswana’s much-lamented “diamond dependency” (the gems currently account for about 50% of government revenue), the two parties are also creating a Diamonds for Development fund meant to diversify the country’s economy. Moagi explained that the fund intends to invest in initiatives like solar power and tourism and build Botswana’s “knowledge economy.” It will be seeded by $75 million from De Beers, which could kick in as much as $750 million over the next decade.

The ownership structure of the fund has yet to be revealed, but De Beers spokesperson David Johnson said it will “be fully transferred to the [government of the Republic of Botswana] on the 75th anniversary of the discovery of diamonds in Botswana in 2042.”

Still, Khama wrote, the fund “begs the question of how a private company steeped in diamonds [can succeed] in diversifying Botswana’s economy where one administration after another has struggled to diversify Botswana’s economy for five decades.”

The new contract includes a possible five-year extension. However, the industry shouldn’t be surprised if the fireworks restart a decade from now.

“This is an evolving partnership,” said Moagi. “Who knows? Perhaps after the next negotiations, [Botswana] will take 100% of our diamonds, and De Beers will just do mining.”

Questions remain about another diamond deal that Botswana president Mokgweetsi Masisi announced this year, with HB Antwerp. In March, Masisi said his country was taking a 24% ownership stake in the 3-year-old company, which also won the right to buy choice goods from ODC. HB executives have said their deal with ODC will be an “exact replica” of their setup with Lucara, where both sides share revenue from the final piece of polished.

As was pointed out on Twitter, if ODC sells to HB, and Botswana owns 24% of HB,  Botswana will essentially be selling to itself. (The country also owns 15% of De Beers, the company mining the goods.) However, details on the HB deal remain elusive, with Moagi telling Botswana’s parliament this week that he couldn’t provide any as “there is no signed agreement [and] no final commercial terms to state.”

De Beers, on the other hand, has a deal. At a July 2 signing ceremony, Cook—who’s served as CEO for less than five months—struck an appropriately humble note, noting that De Beers did not have a “right” to Botswana’s goods. (The video of the signing includes a glimpse of former De Beers exec Stephen Lussier in the background. Lussier, who once handled government relations and has continued to consult for the company following his retirement in January, was said to be part of the team that helped land the deal.)

The signing ended with applause and a hug, but afterward neither side seemed all that happy. This was an unusually contentious negotiation, so a lot of hard feelings have surfaced over what has generally been viewed as a successful and enduring partnership. The animosity doesn’t seem to have gone away. Post-signing, President Masisi told reporters that his country got a “raw deal” in the past.

As has been stated many times, Botswana and De Beers need each other: The country has the diamonds, but only De Beers and parent company Anglo American have the resources and desire to get them out of the ground.

Even so, it doesn’t feel like their current connection is particularly warm or friendly. That could matter, in an industry where trust and relationships do.

This article has been clarified to note that not all of De Beers’ Institute of Diamonds will move to Botswana.

(Photo from the Republic of Botswana’s Facebook page)

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From the Podcast    

The Jewelry District, Episode 99: Guest Jeffery Bolling

Have a great weekend!

– Email: rbates – at – jckonline.com.

– Twitter: @robbatesjck

– Connect on LinkedIn

 (Photo: Getty Images)   

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Have a great weekend!

– Email: rbates – at – jckonline.com.

– Twitter: @robbatesjck

– Connect on LinkedIn

 (Photo: Getty Images)  

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From the Podcast

The Jewelry District, Episode 98: JCK Las Vegas Report, Lab-Grown Reset, Tracing Diamonds

Have a great weekend!

– Email: rbates – at – jckonline.com.

– Twitter: @robbatesjck

– Connect on LinkedIn

 (Photo: Getty Images)  

Unlike the carefully choreographed 2018 Lightbox launch, De Beers never made an announcement or issued a press release in advance. The engagement rings just appeared on the Lightbox homepage. I found out about it on LinkedIn. Sightholders felt blindsided.

De Beers did eventually provide an explanation for what it called a three-month “test,” with marketing limited to three primary markets (New York City, Dallas, and Atlanta):

We know that many of the LGD DER [diamond engagement ring] sales taking place are to consumers who have been “converted” in store to LGD, and often with misleading or insufficient information.

We believe this creates a risk to consumer confidence in both natural diamonds and LGDs, so we are testing DERs with Lightbox to better understand the LGD DER space and to provide those specifically wanting LGD DERs to access them from Lightbox with its commitment to clear information and accessible prices.

De Beers executives have told me privately that Lightbox hasn’t veered from its original strategy—it wants to disrupt the lab-grown engagement ring sector with a more competitively priced product.

But if De Beers’ goal is to lower prices for lab-grown engagement rings, it hasn’t checked the market lately. A 1 ct. “Finest” Lightbox diamond (D-F color, VVS clarity, excellent cut) sells for $1,500 (loose). You can buy a 1.05 ct. F VVS1 Ideal cut at Ritani for $707.

This test also has Lightbox diverging from its linear price structure. While a Finest diamond sells for $1,500 per carat, a 1 ct. Finest engagement ring in an 18k gold mounting goes for $2,500, which means the mounting presumably costs $1,000. Yet a 2 ct. Finest engagement ring costs $5,000, so it appears the mounting’s cost has doubled along with the diamond’s weight. (Lightbox tells JCK: “We have not held to a fixed price for this test. We are using this period to better understand consumer reaction to different propositions.”)

It’s unclear if Lightbox will have any effect on the market, considering it produces only about 200,000 carats a year. Lab-grown production will hit 15 million carats in 2023, according to analyst Paul Zimnisky.

As you may have guessed, I find the official line hard to swallow—especially since, when I asked Lightbox CEO Antoine Borde about the brand selling engagement rings, he said:

It’s a matter of listening to the consumer. We have a lot of consumers who ask, “When are you going to sell engagement rings?”… We are focused on listening to our consumers, because at the end of the day it’s important to answer to their demands.

Borde’s response is clear and simple. Lightbox is selling engagement rings because consumers want them. That will make us money. The end.

Essentially, De Beers is acting like J.C. Penney or Signet or any other retailer: It’s following the market. This wouldn’t be a big deal if it wasn’t De Beers.

But it is. And symbolically this looks terrible. What kind of message does it send, especially to jewelers who are on the fence about lab-grown (and some still are, especially overseas)? Yes, companies like De Beers should occasionally take risks, but there’s a reason big ships move slower than small ones. If they make a mistake, they create a lot more damage.

When Chow Tai Fook tested synthetic jewelry, it did so under a different name. The minute that was discovered, the test was pulled.

De Beers, on the other hand, has set itself up for comments like this, from an anchor at  CBS News Minneapolis:

The head of De Beers said a couple of years ago that diamonds when they are lab-grown don’t have the emotional attachment that you have from mined diamonds.… Somehow, De Beers did a little turnaround when they created this new company.… They are saying, “We can grow diamonds, and they’re half the price, and now we think it’s just as good.”

De Beers may not have uttered those actual words, but there has been a turnaround, and this new Lightbox offering speaks for itself.

And it’s all happening as De Beers is renegotiating its most important contract, with Botswana. (The deadline is less than two weeks away.) Some in Botswana have harbored misgivings about Lightbox, as it makes it seem De Beers doesn’t need mined gemstones. Lightbox’s entry into the bridal market compounds that.

It is possible we are witnessing a corporate culture clash. De Beers has been described to me as “siloed,” with different divisions of the company not always coordinating with one another.

Element Six, the De Beers subsidiary that oversees Lightbox, is a tech business. It wants to sell its products, and is not tied in with the “diamond dream.” It has a new CEO. As do Lightbox, De Beers, and Anglo American, De Beers’ majority shareholder. The board at Anglo must notice that the margins on lab-growns far outstrip those of naturals.

There has long been a divide between those who want to use Lightbox to “protect” naturals and those who view it as a standard lab-grown business that can stand on its own. Several stalwarts of the “old guard”—the believers in natural diamonds, De Beers’ signature product—have left.

This is not the first time Element Six’s priorities didn’t line up with its parent’s. It sold diamonds to Pandora seemingly without considering how Pandora would market them. The result was…not good.

De Beers is an organization undergoing a lot of change, and it’s worth asking where Lightbox fits into the larger scheme of things.

Melissa Crivillaro, Lightbox’s chief marketing officer, wrote on LinkedIn that the brand “operates as an independently managed subsidiary of the De Beers Group.” When I interviewed Borde, he told me Lightbox didn’t feel any restrictions being owned by a diamond miner.

I was originally skeptical of that. I believe it more now.

In the past year, natural diamonds have lost market share while lab-grown prices have plummeted. Both issues are causing agita in their respective sectors. Yet De Beers is arguably better off paying attention to the former and ignoring the latter, which is proceeding according to the laws of economics.

When asked what sparked the latest drastic price drop, most growers point not to Lightbox (they almost always say the brand gave their sector a boost) but to a high-profile company dumping goods in Dubai.

Some lab-grown sellers now say they plan to move away from bridal, as it has become too competitive, and toward fashion. And even though man-made product has better margins, many retailers can’t sustain their businesses on $1,000 and $2,000 engagement rings. The market is evolving the way the natural industry wants it to. De Beers may be on the verge of a semi-victory, yet this feels like it’s waving the white flag.

If De Beers sees a future for natural diamonds, it needs to stop the gamesmanship and put more money into promoting its product. One of the issues the lab-grown sector has had is that it’s been focused on splitting the existing pie rather than growing it. That has hurt the diamond business overall. And now De Beers—if we take it at its word—wants to split the pie even further.

Whether Lightbox’s move into engagement rings is a strategic gambit or a true line extension, it risks hurting the business that’s sustained De Beers for over a century. But short-term thinking has long been the story of lab-grown diamonds—and the diamond industry in general.

De Beers has met the enemy, and it is them.

Top: A 2 ct. Finest engagement ring from Lightbox (photos courtesy of Lightbox Jewelry)

The Beltsville, Md.–based company has been the subject of much market chatter lately, though it’s largely stayed silent. Company spokespeople, as well as the principals of financiers Huron Capital and Tree Line Capital Partners, didn’t respond to queries from JCK. WD’s social media accounts—including those for its brand, Latitude Diamonds—have stopped posting.

A company employee did text one customer that WD is pivoting toward technical applications for diamonds, which it sees as having “the most impact on the world and financial return for our investors.” It will continue to do “special things” for gem customers, the message said.

Still, its gem business apparently remains active: One retailer tells JCK he ordered diamonds from the company last week and “everything went like normal.”

WD Lab Grown did raise eyebrows when it didn’t exhibit at JCK Las Vegas in June. The company joined the Plumb Club in 2022 and was supposed to exhibit at this year’s pavilion. But it dropped out before the event, leading the Plumb Club Association to sue for breach of contract in New York State court. (At press time, WD had not filed a response to the suit.)

Several employees left WD in March, according to posts on LinkedIn. In May, Tom Hitselberger, its chief financial officer for the past two years, left for Treliant, a consulting firm. The Plumb Club lawsuit lists his replacement as Mel Hansen.

Like many lab-grown companies, WD has had to deal with the general downtrend in lab-grown gem prices and an increasingly crowded field that has seen most diamond growing migrate to India and China. (Lusix, the highly touted Israeli producer, was also a no-show in Las Vegas this year.)

In 2020, WD sued six other lab-grown companies for alleging violating its patents. While it settled with some of those companies, it lost its case against Fenix Diamonds—and at press time, appeals in that case were still wrapping up.

In December, Mike Grunza, an operating partner of Huron Capital, took over as WD chief executive from Sue Rechner, who had served as CEO since 2019.

The company—which goes by the corporate name M7D—was founded as Washington Diamond Corp. in 2008 and used technology developed by the Carnegie Institution of Washington. It was purchased by Huron Capital in 2019. In 2021, it acquired a Chicago-based tech-oriented diamond grower, J2 Materials.

Top: The Plumb Club Pavilion at the JCK Show in Las Vegas (photo courtesy of the Plumb Club)

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Have a great weekend!

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At the recent JCK show in Las Vegas, Brad Brooks-Rubin, special adviser on sanctions to the U.S. State Department (and a veteran of the Responsible Jewellery Council and GIA), and Skander Nasra, diplomatic adviser to the prime minister of Belgium, met with diamond industry members and groups to discuss ratcheting up restrictions on Russian diamonds. (Current U.S. rules allow the import of Russian-mined gems if polished elsewhere.)

While a lot is up in the air, sources who have talked with government officials expect the following:

– All G7 and European Union countries will prohibit the import of gems mined in Russia, even if cut and polished overseas.

– The new rules will likely kick in Jan. 1, 2024. While the industry is happy the sanctions won’t interfere with the holiday season, it’s nervous the effective date is only six months away.

– At first, the regulations may be limited to diamonds 1 ct. and larger. The minimum weight could progressively decrease as time goes on, possibly at six-month intervals.

– Customs will require importers to declare their diamonds aren’t from Russia, but will not ask for other info about the diamond’s origin.

The biggest unknown is what documentation—if any—importers will need to back up declarations of non-Russia origin. Most hope Customs will accept paperwork from any of the current industry tracking systems—such as Sarine’s Diamond Journey, De Beers’ Tracr, Everledger, and the U.S. Jewelry Council’s Diamond Source Warranty Protocol. A Kimberley Process certificate might suffice, provided it shows non-Russian origin and can be traced back to the original rough.

Questions remain about how artisanal miners and “cottage” cutters in India will participate in this new system, as they often lack access to tech-based tools, and about “grandfathered” goods that might have no provenance or were purchased from Russia prior its invasion of Ukraine. And, while this may not be an industry concern, checking every diamond import could place a heavy burden on Customs agents, who already have plenty of responsibility.

“We are hearing a lot of anxiety about the practical steps needed,” says Tiffany Stevens, president, CEO, and general counsel of Jewelers Vigilance Committee. “This is a complex issue. The State Department is taking this step-by-step because they want to do this right. There will be multiple pathways, some of which already exist, hopefully for a pretty wide scope of the industry.”

To date, the industry has not exactly provided a united front. American groups and companies—particularly bigger names that already have sourcing protocols in place—say they support the government’s aims. Antwerp initially opposed all sanctions, arguing the goods would just go to Dubai; it now insists that only a “science-based” origin solution (like Spacecode) would work. But most consider such technology a long shot, and lately the Belgian government has indicated it will move forward with sanctions, whether Antwerp likes it or not.

In India and the United Arab Emirates—two countries that have yet to condemn the Russian invasion—transactions with Russian miner Alrosa remain legal. That’s not likely to change anytime soon, and Indian officials have made dire predictions about possible job losses for cutters if the market for Russian rough dries up. (In January, India’s KGK set up a factory in Russia’s neighbor Armenia, possibly in an attempt to secure supply.) Dubai, eager to shed its image as a haven for Russian oligarchs, has said it’s open to segregating Russian goods.

With D-day approaching, World Diamond Council president Feriel Zerouki says the trade needs to unite behind a single proposal. “We hope to get the entire industry together so we can find a solution that’s practical and implementable,” says Zerouki, who is also De Beers’ senior vice president for corporate affairs. The sometimes fractious WDC is “nearly 100% there,” she adds.

Assuming a new framework is agreed to, all the G7 nations, as well as members of the European Union, will have to change their policies, since none currently bans Russian polished. In the United States, this will likely require either new legislation or a modification of the existing executive order banning Russian diamonds.

With all this lurking in the background, both De Beers and Rapaport Corp. announced new or expanded provenance programs at the JCK show.

De Beers has opened its Tracr platform, which uses blockchain to map a diamond’s origin, to the entire industry. GIA, e-tailer Brilliant Earth, and grading lab GSI have already signed up.

Tracr had been in development for years, but “the invasion of Ukraine changed everything,” says De Beers chief brand officer David Prager. “What was once an interesting project for De Beers all of a sudden became essential for the industry. We have really worked to drive Tracr’s scalability.”

He says Tracr is not just about mitigating risk, “but is a real opportunity to connect people with their diamond source.”

Tracr will only carry goods from Responsible Jewellery Council (RJC)–certified mines. That excludes Russian miner Alrosa, which left RJC in 2022. De Beers sees it as akin to an iPhone, a platform on which other apps, including its new Origin suite of services, can be built.

Rapaport announced that diamonds sourced from Botswana’s Okavango Diamond Company that have GIA diamond origin reports will receive a Green Star designation on the RapNet listing service. The company also is asking people to not list Russian diamonds on RapNet.

Clearly, the diamond industry is about to undergo a major change. In 2000, when the trade agreed to form the Kimberley Process, it made a conscious decision to separate diamonds into two streams: non-conflict (inside the KP) and conflict (outside).

Now, in addition to embracing tracking and tracing, the diamond world seems to be moving toward two more streams: one without Russian diamonds (inside the G7) and one with (everywhere else).

Of course, no system will be perfect, and the G7 doesn’t have the same reach as the Kimberley Process—which encompasses almost every diamond center or producer on Earth. Yet the United States remains the biggest market, so the trade will have a hard time ignoring what’s going on.

“If I were a commercial actor,” says Stevens. “I would be developing a hard wall between Russian and non-Russian goods. Because this is coming.”

(Credit: iStock/benstevens)