Canada’s Queen of Diamonds is Putting Precious Stones on a Blockchain Platform
Lucara Diamond CEO Eira Thomas aims to disrupt the $14 billion USD diamond industry with a blockchain platform for trading the stones.
Thomas was introduced to the Clara blockchain platform by its Canadian developers, a diamond manufacturing family. Lucara quickly purchased Clara with backing from its main shareholder, Swedish-Canadian billionaire Lukas Lundin.
Lucara Diamond bought Clara for $13.1 million dollars in Lucara shares in February 2018, with Thomas personally investing $3 million.
Ethical tracking and trading for an older industry
Thomas is talking with the world’s largest jewellery manufacturers about selling diamonds directly using the secure blockchain platform.
“We’ve all been selling our diamonds the same way for over hundred years,” said Thomas to the Financial Times. “Technology has now positioned us to change this.”
Describing the industry as “inefficient and entrenched and really right for disruption,” Thomas believes the Clara platform will increase transparency and attract millennial customers who are more concerned about ethical sourcing.
Currently the industry is dominated by Lucara’s competitors De Beers and Alrosa, which account for two-thirds of the market. The diamond industry is currently threatened by millennials who abstain from marriage, marry later, or choose cheaper, laboratory produced alternatives to diamonds.
Diamonds aren’t currently traded publicly, blockchain-based diamond trading platforms aim to address this by providing transparency. Currently the market and pricing is hidden and diamonds are traded through hubs in locations like Antwerp or Hong Kong.
De Beers, for example, holds private events in Botswana where it sells batches of rough diamonds. Buyers pick out the diamonds they want and sell on whatever is left.
According to Thomas, the Clara blockchain platform will enable buyers to purchase individual diamonds and allow immediate tagging of diamonds at origin. Manufacturers can search for an exact stone on a distributed ledger platform, adding confidentiality and security. Theoretically, the system may also lead to increased prices and profits for diamond miners as the middle-actors are cut out using blockchain.
“This is the first time ever that manufacturers will be able to buy the diamonds that they need,” said Thomas “They don’t have unwanted inventory.”
Building a profit funnel with a blockchain platform
While managing the blockchain platform, Lucara aims to profit from the spread, the difference between the buying and selling price of the diamonds on the platform.
Lucara grew out of the Diavik mine in Canada’s Northwest Territories and is not the only diamond company to progress blockchain applications. De Beers has also launched a blockchain-based platform, called Tracr, to track diamonds from their originating mines through to end consumers.
In May 2018, De Beers announced it had successfully tracked 100 high-value diamonds from mine to retail during a pilot of its immutable, secure, blockchain platform. De Beers plans to launch the platform officially later in 2018 to also provide consumers confidence in the ethical origins of its diamonds and improve efficiency.
“The Tracr project team has demonstrated that it can successfully track a diamond through the value chain, providing asset-traceability assurance in a way that was not possible before,” said De Beers CEO Bruce Cleaver.
The diamond mining industry is hundreds of years old in Canada, and is another sector beginning to lever the benefits of blockchain technology to improve both efficiencies and the end product for consumers and investors.
Image Credit: megapixel.net
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