Diamond industry continues to grow as market expands
JAKARTA (JP): Diamonds were first discovered around Golconda in India about 800 B.C., but the modern diamond industry began in South Africa in the late 19th century when a man noticed a child playing with a shiny "toy" that turned out to be diamond.
This led to the finding of massive diamond deposits in South Africa that rewrote diamond history.
In l888, Cecil Rhodes took control of the Kimberley diamond mine that became De Beers, which has controlled the world's diamond industry and market since l920.
Today, the top seven diamond producing countries, accounting for more than 80 percent of the world's rough diamond supplies, are Bostwana, Russia, South Africa, Angola, Namibia, Australia and Zaire. Diamonds are also mined in Brazil, Guyana, Venezuela, Guinea, Sierra Leone, Liberia, Ivory Coast, Ghana, the Central African Republic, Tanzania, China, India and Indonesia.
Anthony Oppenheimer, president of the Central Selling Organization (CSO) and a director of De Beers Consolidated, said here recently that no other gem material is managed or marketed like diamonds.
"Since De Beers gained control of the majority of mine supplies in the 1920s and l930s, it has managed the sale of approximately 80 percent of the world's rough diamonds ever since," he said.
Oppenheimer explained that the manufacturing of diamonds is a highly skilled business and has traditionally been in the hands of family businesses, mainly Jewish and Indian, that pass their cutting and trading skills from one generation to the next.
After World War I, De Beers restructured its diamond industry. The company set up the Central Selling Organization (CSO) in London in l960.
Once diamonds are unearthed, they are washed, weighed and sorted for size, color, shape and quantity. Parcels of rough diamonds from all over the world are sent by air to London, where CSO handles all the sales and transactions with the diamond trade. Diamonds are later cut in many countries, but the major cutting centers are in New York, Belgium, Israel, India and South Africa.
"It is not a monopoly. The current diamond trade managed by CSO will benefit all parties concerned -- producers, dealers, cutters, jewelers and consumers," said Oppenheimer.
To be sure, the control is not perfect, he said.
Once in the l970s, Israeli dealers tried to gain influence over the value and access to rough diamonds which resulted in a supply shortage and a huge leap in diamond prices. The Angolan Civil War in l992 also affected the diamond industry, he said. The war led to unprecedented diamond smuggling, he said.
Prior to the establishment of CSO, diamond prices fluctuated in line with recessions, supplies and fads, like some other gemstones do today.
Starting this year, Australian diamond mining company Argyle Mine has decided to quit the CSO and market its output by itself.
Argyle Mine dominated the international diamond market with its pink and colored diamonds. The company sprang onto the scene, producing 29 million carats of diamonds in l986. Since then Argyle Mine has increased production to more than 39 million carats, a third of the world's supply, but only six to seven percent of its value.
"Argyle Mine's decision will not affect the world's diamond industry," said Oppenheimer said.
He said that sales of rough gem diamonds by CSO in l996 reached a record of US$4.834 billion, up 7 percent over the previous year.
Rough diamond sales reflect the continuing demand for diamond jewelry, he said.
"The diamond industry will likely survive as long as people still buy and adore these priceless gems," said Oppenheimer. (raw)