This week, Lucara Diamond Corp announced the acquisition of Clara Diamond Solutions - a secure digital platform that uses blockchain technology to match rough diamond production to specific polished diamond whilst tracking diamonds across the entire supply chain. The aim is to improve transparency and to provide a greater level of assurance to consumers about the origin of their diamonds.
“ Lucara is looking to shake up the opaque system of buying and selling diamonds in an attempt to boost transparency in the industry. Clara will not only modernise the entire sales process but expects to unlock additional value for all participants in the diamond value chain. The acquisition supports Lucara’s reputation as an industry leader in the adoption of new technology and they hope to gain a strong first mover advantage as result of the move. ”
Today, the diamond supply chain can be described as static, inefficient and inflexible. Participants in the chain use an entrenched system that hasn’t changed in over 100 years. This makes it ripe for disruption and change is inevitable.
Last month, the world’s biggest diamond producer, De Beers, announced they had launched a pilot scheme using blockchain technology with a small number of participants, with the initiative attempting to underpin confidence in diamonds and the diamond industry.
By creating a virtual ledger of diamond sales, the technology seeks to ensure that all registered diamonds are neither conflict free (so called ‘blood diamonds’ used to finance war and terror) nor are they synthetics that are passed off as real ones. With the acquisition of Clara, Lucara appears to be one step ahead of its competitors in this undertaking.
Clara is a commercially scalable, digital platform that applies computing algorithms to match rough diamond production to specific polished manufacturing demand on a stone by stone basis. The blockchain technology improves the dollars per carat ($/ct) for producers whilst making inventory and financing more efficient for manufacturing. Manufacturers are currently all set up differently and specialise in a shape, cut or quality. Producers have to create ‘parcels’ of diverse diamonds in order to sell them all, thus during tendors, manufacturers have to bid for parcels that may not suit or meet their requirements and crucially may not generate a profit for them. Clara allows for matching stone production with polished orders requirements in real time, thus unlocking the best value for every stone.
For Lucara, the benefits are 3-fold - Clara provides an affordable, yet highly valuable near-term growth platform for the company, it expands Lucara’s customer base by engaging new participants in the supply chain and it also provides stable, continuous cash flow that is not tied to the fixed sales tendor cycles.
Lucara has an opportunity to lead a change in the diamond industry gaining a strong first mover advantage with the establishment of the first true blockchain in the space. Providing authencity and traceability to consumers throughout the supply chain stands to benefit all participants and should allow diamonds to shake off its opaque reputation towards a brighter, more sparkling future.
This marketing document has been issued by Bank Syz Ltd. It is not intended for distribution to, publication, provision or use by individuals or legal entities that are citizens of or reside in a state, country or jurisdiction in which applicable laws and regulations prohibit its distribution, publication, provision or use. It is not directed to any person or entity to whom it would be illegal to send such marketing material. This document is intended for informational purposes only and should not be construed as an offer, solicitation or recommendation for the subscription, purchase, sale or safekeeping of any security or financial instrument or for the engagement in any other transaction, as the provision of any investment advice or service, or as a contractual document. Nothing in this document constitutes an investment, legal, tax or accounting advice or a representation that any investment or strategy is suitable or appropriate for an investor's particular and individual circumstances, nor does it constitute a personalized investment advice for any investor. This document reflects the information, opinions and comments of Bank Syz Ltd. as of the date of its publication, which are subject to change without notice. The opinions and comments of the authors in this document reflect their current views and may not coincide with those of other Syz Group entities or third parties, which may have reached different conclusions. The market valuations, terms and calculations contained herein are estimates only. The information provided comes from sources deemed reliable, but Bank Syz Ltd. does not guarantee its completeness, accuracy, reliability and actuality. Past performance gives no indication of nor guarantees current or future results. Bank Syz Ltd. accepts no liability for any loss arising from the use of this document. (6)