by Lilian Okado

Created on: April 01, 2008

Today, the world's diamond trade is a multi-billion dollar cartel industry espoused by many but controlled by a few. Toping that list of internationally renowned diamond mining and trading companies that have controlled the flow of diamonds around the world for decades, is De Beers. Founded on 13 March 1888 by Cecil John Rhodes, De Beers has come to be both hated and revered by many all the while becoming synonymous with diamonds. Hated perhaps, because of its astute ability to fix prices, control supply and limit its competition and revered, for its longtime and widespread success at this.

The "De Beers" name was derived from that of the two Afrikaner brother's, Johannes Nicholas de Beers and Diederik Arnoldus De Beers, who in 1870 were the first to stumble upon diamonds on their farm near the Orange river, in South Africa and who later decided to sell it upon foreseeing difficulty handling the increased surge of "hungry" diamond seekers on their farm.
Within no time diamonds were beginning to flood the markets. Pressure began to mount on the likes of Cecil Rhodes and other British investors, to consolidate their interests in such a way as to have sufficient power and ultimate command over production whilst perpetuating an illusion of scarcity of diamonds. In time this led to the birth of the De Beers Consolidated Mines, Ltd. and to its consequent listing on the Johannesburg Stock Exchange.

Known as the ruler of diamond trade, De Beers' overall impact (both bad and good) on the world's trade is quite historically significant to say the least. Through its Controlled Selling Organization (CSO), De Beers handles roughly up to 70% of the world's diamonds. It buys most of the world's rough uncut diamonds from the diamond producing nations of Botswana, Namibia, South Africa, and Zaire, among others, as well as the remaining rough diamonds throughout the world from sources outside of its recognized network of diamond producing nations. It then sells these rough diamonds to major diamond cutting firms which are the only companies authorized to buy rough diamonds directly from De Beers. In this way De Beers has remained successful at its attempt to control pricing, as its selling prices to the said firms are set and non negotiable.

Furthermore, in 2002 De Beers introduced its program dubbed the "Supplier of Choice" program which has been cutting down on the numbers of diamond cutting firms that are officially allowed and recognized, to buy its rough diamonds. What this

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