Lucara pushes Karowe underground expansion despite diamond market slump

Canada-based Lucara Diamond Corp is pressing ahead with the underground expansion of its flagship Karowe Mine in Botswana, despite a challenging global diamond market marked by weakening demand and increasing competition from lab-grown alternatives. The company’s decision follows the release of an updated feasibility study that reaffirms the project’s long-term economic strength and strategic importance. While near-term market conditions remain subdued, Lucara is positioning Karowe to continue delivering exceptional value well into the next decade.

The underground expansion is designed to unlock deeper portions of the AK6 kimberlite, with a particular focus on the South Lobe, which has consistently delivered the mine’s highest-value diamonds. According to the revised mine plan, the underground operation is expected to recover approximately 4.5 million carats over a 10-year mine life. Open-pit mining is scheduled to conclude before June, after which the operation will transition to processing existing surface stockpiles. Underground development will continue in parallel, with production expected to ramp up gradually toward full commercial output from 2028.

From a technical and operational standpoint, the project has been engineered for a mining and processing capacity of around 2.85 million tonnes per year. This scale is intended to ensure operational efficiency while maintaining the selective mining approach required to preserve diamond value. Pre-production capital expenditure for the underground expansion is estimated at $779 million, of which approximately $436 million has already been invested. Lucara expects the remaining capital to be funded primarily through operating cash flow, supplemented if necessary by equity or debt financing, reflecting management’s confidence in the asset’s cash-generating ability.

Financially, the updated feasibility study highlights robust returns despite conservative pricing assumptions. The underground project carries an after-tax net present value of about $432 million and is projected to generate more than $1.3 billion in net income through 2038. These figures underscore why Karowe continues to rank among the world’s highest-margin diamond mines, even in a softer market environment. The mine’s economics are further strengthened by its consistent recovery of large, high-quality stones that command premium prices.

Karowe’s reputation has been built on an extraordinary legacy of exceptional diamonds, including the 1,758-carat Sewelô and several other stones exceeding 1,000 carats. These recoveries have reinforced confidence that the deeper sections of the orebody still hold significant potential for rare, high-value gems. Lucara’s investment in underground mining is therefore not only about extending mine life, but also about preserving access to the unique geological characteristics that have defined Karowe’s global standing.

Looking ahead, the continuation of Karowe through underground mining is likely to have positive implications for Botswana’s mining sector and broader economy. Sustained production supports employment, government revenues, and downstream economic activity, while reinforcing the country’s position as a leading global diamond producer. At a time when parts of the diamond industry face structural change, Lucara’s long-term commitment to Karowe signals confidence in natural diamonds and highlights how well-managed, high-quality African assets can remain competitive and economically resilient.

Mini-Glossary

• Feasibility study: A detailed technical and financial analysis used to determine whether a mining project is economically viable.
• Kimberlite: A type of volcanic rock that often contains diamonds and is the primary source of mined diamonds.
• Net present value (NPV): A financial metric that estimates the profitability of a project by discounting future cash flows to their present value.
• Pre-production capital: The upfront investment required to build and prepare a mine before commercial production begins.
• Stockpiles: Ore that has already been mined and stored for future processing.

Editor: Vural Burç ÇAKIR