De Beers
A young English boy’s failing health triggered his family to send him to South Africa in hopes that the hot climate would turn his ailing health around. During the late nineteenth century, Cecil John Rhodes, joined his brother in the fields to pick cotton. Rhodes soon moved on to the more lucrative field to pick diamonds. This excursion led Rhodes, whom the infamous "Rhodes Scholar" was named after, to a path that defined and dominated the diamond industry worldwide. He created, through a series of diamond mine purchases, what is known today as De Beers S.A. Established in 1888, De Beers, through Rhodes, rose to a height of controlling 90% of the world’s diamond market. This illustrious giant was shrewd, intelligent, and he clearly understood price elasticity and the power of supply and demand. Moreover, he used the economic forces to his advantage and ultimately created a diamond Cartel. His ingenious move occurred in convincing the sellers (diggers) and buyers that their mutual interests were to keep prices high and steady. As a result, he formed a “Diamond Syndicate” that set prices and a monopoly was formed. De Beers created the perpetual illusion that diamonds were a scarce commodity, which enabled retail prices to remain high.
The century old diamond empire, reached a height of over $4 billion in sales 1998. Eventually, De Beers changed hands to a German, Ernest Oppenheimer, at the turn of the 20th century. De Beers’ most formidable opponent was not another diamond company, but rather the U.S. Justice Department. Constantly faced with Anti-trust regulations, De Beers managed to elude all charges over the course of thirty years, by selling only indirectly to the U.S. All their business went through London first. As De Beers’ supply chain indicates (Exhibit 1), their relationship with U.S. diamond dealers and the U.S. government is unique among international companies as they remain at arms length from the U.S. with the intent to keep the government at bay. That relationship came to a halt when the U.S. Justice finally prevailed and De Beers pleaded guilty to price-fixing. The cartel was fined $10 million1. This, even now, has paved a new opening to “re-enter” the U.S. diamond market. With Nicky Oppenheimer and Gary Ralfe as the new De Beers leaders, this was an opportune time for De Beers to reinvent themselves on the U.
Deep within African mines, elusive diamonds lay enveloped in the Earth’s crust. Possessing much influence, beauty, and tension, nature’s hardest known substance causes parallel occurrences of unity and destruction on opposite sides of the globe. Diamonds, derived from the Greek word "adamas", meaning invincible, are formed deep within the mantle, and are composed entirely from carbon. Moreover, only under tremendous amounts of heat and pressure can diamonds form into their preliminary crystal state. In fact, diamonds are formed approximately 150km- 200km below the surface and at radical temperatures ranging from 900-1300 C°. When these extremes meet, carbon atoms are forced together creating diamond crystals. Yet how do these gems, ranking a ten on Moh’s hardness scale, impact the individual lives of millions of people besides coaxing a squeal out of brides-to-be? These colorless, yellow, brown, green, blue, reddish, pink, grey and black minerals are gorgeous in their cut state, but how are these otherwise dull gems recognized and harvested? Furthermore, how and why is bloodshed and violence caused over diamonds in Africa, the supplier of approximately 65% of the world’s diamonds? (Bertoni) The environmental, social, and economic impact of harvesting, transporting, and processing diamonds is crucial because contrary to popular belief, much blood has been spilled over first-world “bling”.
DeBeers founded in 1880’s became the world’s largest diamond mining and trading company in the world. When DeBeers was established it controlled around 45% of the world’s diamond production and sold over 80% of all diamonds produced. DeBeers used underhand tactics to remove smaller diamond mines and punished those who tried to break away from the DeBeers “empire”.
The founhder of the company, Godfrey Keebler, started with jus a small bakery in Philadelphia, PA in 1853. During the next two generations, local bakeries popped up around the country, including Strietmann, Hekman, Supreme and Bowman. With the introduction of cars and trucks (carrying the Keebler logo), bakery goods could be distributed beyond the neighborhood and regional distribution began.
In Nicky Oppenheimer's speech, he states that diamonds are a valuable luxury desired by many and DeBeers strives to preserve their value. Furthermore, he claimed that it is essential for DeBeers to "be able to clear the market of all rough diamond production". Other companies who deal with this luxury will be motivated by evil greed, so DeBeers has the duty to ensure that these types of companies will not gain power. From the discovery of diamonds in certain countries in Africa, DeBeers has allowed their economies to drastically grow. Oppenheimer also brings up an interesting point when he compares how similar the diamond and oil industries are with their regulations standards, which lessens the negative views on DeBeers' brand, since they
For the past 112 years, De Beers has dominated the diamond industry. Established in April 1880 by Cecil John Rhodes and his partner, Charles Dunell Rudd, De Beers rose to prominence, merging with Barney Barnato’s Kimberley Central Mining company and acquiring more and more mines (Hauser, 2002). The ...
In “ “Blood Diamonds” and Africa’s Armed Conflicts in the Post – Cold War Era, “ Orogun (2004) said that diamonds are referring as “clean stones”. This article explains about the black market is really happening in African. I am using this article to support how the black market of diamond trades is still not regulated, and they defined it as “licit” trade.
Final contribution of de beers to the diamond pipeline is the promotion of diamond jewelry for the industry; through advertising campaigns developed from extensive market research; trade promotional activities and jewelry design competitions
Some of the highest producing diamond mines are countries in Africa. Countries that had some of the highest rate of conflict were Angola, The Democratic Republic of Congo, Sierra Leone, and Liberia. The ...
Said to be a girl's best friend, diamonds are often seen as a symbol of poverty, war, and death for many Africans. Due to the cruel and inhuman manner by which these diamonds are mined and process, the trade of these illicit gems must be stopped. Conflict diamonds or blood diamonds are often associated with war, forced labor, child labor, and smuggling. Paul Orogun wrote an article for in the journal, World Affairs, where he describes some of the brutal conflicts in recent African history. “Blood Diamonds and Africa's Armed Conflicts in the Post—Cold War Era”, in which he talks about the conflicts associated with the illegal diamond trade. Orogun de...
The Coca Cola Company has been "Refreshing the World for 125 years"(Coca Cola). In the 200-plus nations that The Coca Company serves, it is hardly possible to go anywhere and not be able to find a refreshing Coke. Since its creation in 1886 by John S. Pemberton as a "Coca Cola syrup & extract"(Coca Cola), the beverage became in instint favorite and quickly became a national product in the United States. Innovations such as "The Contour Bottle" helped distinguish the Coca Cola beverage from the many other competitors that tried to imitate their success. Working with their bottler manufacturers, The company was able to patent a bottle specifically for their product. "A bottle for Coca‑Cola that was so
Out of all the earth’s major natural resources, diamonds are the most sought after and most mysterious. Throughout history, the virtuosity and resistance of diamonds have caused fighters and lover’s great pain and happiness. For centuries, the value of the diamond commodity became increasingly popular. However, it wasn’t until the mid 1900s, when diamonds permanently made their signature as the world’s most indispensable symbol of love and affection (Howard, Vick 2008). Soon after, diamond rings became the 21st century standard of engagement rings. Without a doubt, everybody in society knows how valuable this commodity is. Nonetheless, what truly makes this commodity more valuable are the stages it goes through from the diamond mines to th...
[5] Diamond Industry Annual Review, De Beers Signs New Angolan Agreement, [internet] Accessed on: 13th November 2005, http://www.pacweb.org/e/images/stories/documents/addendum%20angola%202005-english.pdf
The value of diamonds lies on their physical properties that make them suitable for many applications. Natural diamonds are only of high value if they are scarce in nature. Realizing this, De Beers Consolidated Mines was formed to control the supply of diamonds from mines across the world. The diamond market is influenced by mine production, rough diamond distribution, preparation/cutting, and retail markets. The project will be concentrating on the retail markets for diamonds and other high end jewelry.
One morning, a well-known gentleman went into a bank in London, and was received immediately by Mr. Alexander Holder, head of the bank. He asked for a loan of fifty thousand Pounds. Mr. Holder asked him to present collateral to cover that large sum of money; the man showed him a crown that belongs to the country. Knowing the risk, Mr. Holder agreed to lend the gentleman that large sum of money if he pays it back in a few days. After the gentleman left Mr. Holder decided to keep the crown all the time near by him, so he took the crown to his home in Streatham. There he lived with his only son Arthur and his niece Mary who was an orphan. He told them about his story with the crown of diamonds. When the father was going to sleep, Arthur asked for two hundred pounds. He refused to give him thinking his son was spoiled by his rich friends who had nothing to do except watch horses. Before going to sleep, he went to check that all windows and doors were locked. He saw Mary at a side window at the hall. She closed it quickly, and Holder noticed that she looked anxious. After he went to sleep, he heard some noise that woke him up; he waited until he heard it again coming from his sitting room. He jumped out of his bed and saw his son holding the crown broken from the side and three diamonds were missing. In grief, he accused Arthur of being a thief and a liar. Meanwhile Mary came in and seeing the crown fainted. Arthur asked if he could leave for five minutes but Holder refused and called the police to take his only beloved son to jail. The police searched the house but could not find anything and advised Holder to get the help of Mr. Holmes the famous detective.
The film marker is trying to raise awareness of the illicit conflict diamond trade and reinforcing the Kimberley process1 and showing how it will stem the flow of conflict diamonds. This is successful mainly due to the public outburst after the movie. The great impact of the movie has caused diamond companies like De Beers2 to start a pre-emptive PR (public relationship) campaign, even before the movie was released to inform people that their diamonds are conflict-free.