The De Beers Group, the dominant agent in the diamond mining, industrial diamond manufacturing and diamond trading sectors, has a significant mining presence in Botswana, Namibia and South Africa. Africa’s recent history is characterised by the West’s inexorable exploitation of African natural resources, resulting in a continent plagued by corruption, violence and slow development. Through committing to the ‘Living up to Diamonds’ initiative, De Beers aims to create lasting contribution to the communities in which the family of companies operate in (ENP Newswire, 14 June 2011). In a continent notorious for placing profits and monetary returns over human development, the De Beers management of Botswana’s diamonds goes against the trend of exploitation, and has effectively turned “national resources to shared national wealth” (De Beers, 2007). De Beer’s presence in Botswana has highlighted the positive impact of corporate social responsibility and admirable business ethics – a feat that is even more impressive when considering that the social practices undertaken by De Beers has also enabled it to increase its profitability.
In countries such as Nigeria, Sierra Leone, or Zambia, governments often lack the ability to gain absolute control over territories (NY Times, 10 July 2010, A23). The result of the ensuing turmoil, and disputes over resources means that countries with a wealth of natural resources are unable to directly benefit from exports. In eastern Congo, “$1 billion in gold is … extracted and exported annually”, however, “revenues for the national Treasury [in 2009] were a mere $37, 000” (NY Times, 10 July 2010, A23). The enormous disparity between Congo’s stock of natural wealth and actual returns reflect the poor bu...
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Although, there have been several recent reforms that have been implemented to target openness to international trade, as well as provide stronger enforcement of contracts. Recent reforms clearly demonstrate the substantial progress Sierra Leone has made following the conclusion of the civil war. However, the small African country must overcome the daunting task of enhancing integrity in the management of its natural resources. Once these precious minerals were discovered and recognized to be of significant value, people were making more and more radical, unjust decisions to gain success. Therefore, the management of this specific natural resource rapidly diminished, in most instances into the hands of the rich and powerful such as the De Beers Group of Companies. The diamond industry has successfully manipulated supply and demand as demand for diamonds is simply a marketing invention, given diamonds aren’t as rare as they are made out to be. Moreover, De Beers has carefully restricted the supply, keeping the price of a diamond high. Refer to Appendix, Figure. 2 displaying the effect of an increase in demand and decrease in supply on equilibrium price and
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In the year 1888, a body was formed known as De Beers Consolidated mines in South Africa by suppliers in order to secure a high market for diamond prices. Initially, diamond cartel successfully controlled the supply worldwide and regulation done at mine output and purchase of the exclusive right to mining nations across Africa. At the onset of the 20th century, De Beers dominated around 90 percent trade for diamond internationally which proved a monopoly as the diamond industry was mostly taken over by a single firm. An association was structured as other distributors and diamond miners were afraid that the value of diamonds will decrease.
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