golconda-mine

Does De Beers really control the diamond price?

Every time I post on the gemmy form of carbon, some commentators state that the value of diamonds and the entire distribution market for them is controlled by one company. While the latter might have been true until the late 1980’s, this is not the case today, and I feel it’s time for a bit of a plunge into the history of the diamond trade. As for the former, it’s a pipedream. Like other wonders of nature, gem diamonds are rare, as are rubies and sapphires, even though corundum is fairly plentiful in non gem qualities.

Before the discoveries in South Africa late in the 19th century, gem diamonds only came from two main sources (with a third minor one in Borneo): The traditional mines around Golconda in southern India (mined since time immemorial, and found in antique Roman rings and medieval jewellery) and the ‘recent’ discoveries made by the Portuguese in Brazil in the 1600’s. At first the new discoveries were a minor influence, but as more kimberlite pipes and placer deposits (reworked deposits from eroded pipes) were found throughout southern Africa, the supply increased and the quality grading grew ever more fanciful (rising to AAAAAA for diamonds of the 'purest water’).

De Beers formed as the various African mines (previously divided into individual claims) were gradually consolidated by a cast of unusual characters, some with insane imperial ambitions (such as Cecil Rhodes…as in Rhodes scholarships and Rhodesia) and others eccentrics who were in it for the game and the money (such as Barney Barnato, who started off in the London East End rag trade and was a born showman).

Keep reading