#and keep in mind its also being alleged alot of that money likely came from his patreon donaters

[thetimelordbatgirl]

If you ever feel bad about money decisions, at least be reassured by the fact that your not the youtuber who went bankrupt and could no longer make his youtube videos because he decided to spend $50,000 on commissioning an animation of his Youtuber self being SA'd by Charlie from Hazbin Hotel.

[earthstory]

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).

De Beers developed into the biggest centre of expertise in diamonds, their origins, geology, and mining in the world, with an integrated vertical structure that went from mine to gem cutter. This included prospecting, assessing (with a strict grading system), extracting (in the complex engineering environment of deep carrot shaped pipes), separating the wheat from the chaff and moving the produce down the distribution chain via its sightholders (who were chosen on the basis of being able to come up with enough money 10 times a year to make it worth De Beer's while selling to them). These then passed on down the chain the rough that they didn't cut themselves.

De Beers first made synthetic stones and stand at the forefront of detection methods used in gem labs today. They also pioneered research into treatments, and supported the GIA cut diamond grading system when it was introduced (with the best colour as D rather than AAAAAA). When you buy a certified stone, it is backed up by their technology, and their expertise has helped develop the systems used, giving confidence to buyers wolrdwide.

As further discoveries were made, its expertise allowed it to take a part in or be invited into many concessions worldwide. Everyone thought that they would get best value added that way. Even the Communist Soviets (who had made their own discoveries in Siberia and the far north) joined the De Beers distribution system for most of the cold war. De Beers marketed diamonds worldwide, but not in the sense most people seem to believe. Their supply monopoly was never perfect, many sources remained outside their control, and their buyers were stationed worldwide hoovering up as much production as they could, but never close to all of it.

The new African sources allowed gems to be accessible to the masses in a way never before possible in history. Thus the tradition of the engagement ring spread down through the middle classes along with slogans 'is she worth a month's salary', a social custom that the clever marketing spread worldwide, including new places like China and Japan. In a similar manner, the development of heat treatment for corundums by the Thais in the 1980's made rubies and sapphires accessible outside the circle of the super rich for the first time. So yes, like any good company, they strove to grow demand for their product, with a high degree of commercial success. They based this success on mankind's eternal love of bright shiny crystals, whether coloured or clear, that many of you presumably share, (or the pretty crystals I post wouldn't get any likes).

And then came Argyle in the early 80's, the biggest diamond mine on Earth (in the Kimberleys of West Australia) and the main source of the extremely rare pink, purple and red stones. For several decades its production was the highest in the world by far, at 10 million+ carats yearly. Unfortunately most of their production was yellow or brown, then viewed as industrial quality by the DB system.

After many arguments about how to market them, Rio Tinto pulled out of the system and started its own campaign, revealing their stones to be beautiful (and they are) 'champagne' and 'cognac' diamonds. They built direct links with the growing cutting industry in India, whose low labour costs allowed their small stones to be faceted in bulk, and started their own distribution line. The Russians followed suit, and ALROSA (the state diamond corporation) began their own direct auctions and sales in Ramat Gan (Israel) and Antwerp.

As the system was already beginning to fragment, a maverick Canadian geologist (whose extraordinary story I have told elsewhere at https://tmblr.co/Zyv2Js246Z0Pm) single handedly discovered a game changer that would mostly remain outside the existing system: Ekati, which was followed by many more finds in the Canadian Arctic (that DB and others had explored fruitlessly in the 20th century). The gems here are high quality, and without some of the unfortunate associated politics of African stones. The Canadians have developed a mine to finger tracing system, and marketed their diamonds very well.

Other countries who saw this also wanted to maximise the value received for their stones, and began to demand renegotiations or award concessions to smaller independent companies, where the balance of power in the contract would be more to their favour. DB had mixed stones from all over into boxes of varied qualities, claiming the money they earned was in the tweezer used for sorting, that theoretically allowed the manufacturers to specialise in the goods they could cut for highest profit. Now parcels with distinct provenances are common and each country (with the exception of Namibia and Botswana which remain the linchpins of what remains of the DB system) or mine markets its own goods.

The 'cartel', faced with the loss of its monopoly (always relative remember, Mobutu's fief of Zaire for example sold plenty on the side) and with majority rule in its South African home finally realised, proceeded to restructure both its holdings and its system. They gradually divested the old mines in South Africa to smaller companies, exchanged cross shareholdings with its main sources (Botswana and Namibia), left its London HQ and sorting operation for Gaborone and reinvented itself as a 'supplier of choice' with its sightholders. They also started to market high end cut gems and jewellery in their own chain of stores worldwide.

In further complex manoeuvres, it took itself private as part of a restructuring of the Anglo American gold company, which enjoyed a cross shareholdings with DB and the Oppenheimer family. Tracing what all this manoeuvring means is still tricky, as it is too recent to really evaluate the consequences.

The main current problem in the diamond trade is in part a consequence of this strategy, since the prices of rough are ever increasing and those of polished goods remain more or less level. Many smaller cutters are going out of business, and the number of middlemen in the trade is going down, as both the mining companies and nations work to realise the maximum value possible for their own production ( by for example keeping a share in an important stone when sold to the cutter) and start new cutting centres to maximise locally added value (and jobs). Inevitably this means taking the extra money from elsewhere in the distribution chain, since the price of polished goods remains stable or down.

As for the second allegation, that diamonds are as common as peanuts, I'll ask you all, when did you find one last in your back garden? They may be less rare than top end unheated rubies, tsavorites and red beryl, but mining production still sees a carat per million tons of shlep as pretty good. That's alot of earth to shift for a carat, especially if you bear in mind that most production still falls into the industrial category, champagne and cognac notwithstanding. And as for fancy coloured diamonds like the Hope blue, they are super rare. 

As ever in these matters, things are more complex than anyone attempting a simplification (this post included) can describe for a public. The gem trade has always been secretive, about sources and clients, sales and purchases, prices paid and charged. Add in the need for operational security with small high value goods subject to robbery and the murky end of international politics, then you have a situation in which, as ever in interesting historical matters: those who truly know remain silent, those who speak, speculate.....

Loz

Image credit: De Beers