“The price of diamonds is too high”
Diamonds were discovered in 1867 in the Cape and became the “foundation stone” of the economy in South Africa (Browne, 2012, Pg. 29). Cecil Rhodes, among other diggers came to Kimberly in search of diamonds. In 1880 Rhodes formed his company named De Beers Consolidated Mining and in1888 he incorporated a combination of various mining companies into De Beers and controlled the supply of diamonds through its Central Selling Organization (CSO) which acted as an intermediary between the consumer and the producers (Spar, 2006, Pgs197-198), (Browne, 2012, Pg. 34).Through this, a cartel was born and this commenced the world monopoly for the sale of diamonds (Browne, 2012, Pg. 34). Ever since a cartel was put in place the price of diamonds has been too high. This essay is going to discuss why the price of diamonds is too high and will do so by looking at how the cartel sets the price of diamonds and what the price of diamonds would be in the absence of a cartel.
Rhodes had identified two problems within the diamond trade. He realized that if too many diamonds were being turned out it would threaten the stones scarcity and value and demand would fall. The second problem he foresaw was that the miners in South Africa were unable to control their production and wanted to sell all the diamonds that they mined. He realized that the only way he could resolve this problem was to create an organization combining other mining companies whereby De Beers could control the production of diamonds in South Africa (Spar, 2006, 198). In 1902, Rhodes died and soon after Ernest Oppenheimer took control over De Beers and thus begun the legacy of the Oppenheimer family and De Beers (Spar, 2006, 198).
De Beers contains a la...
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...ensive, buyers would have the choice of buying diamonds from another firm. There would be few/ no barriers to entry compared to a monopoly and no firm would have any advantage over the other as prices would be set by the market instead of the CSO (Heakal, 2014, Pg. 1).
Through De Beers creating a perception that diamonds are scarce and worth a lot of money, it has become a common belief that a diamond ring is the only acceptable form of an engagement ring. However, through examining the diamond industry it is clear that diamonds are in fact being charged at a price higher than what they should be and that more diamonds could be supplied if they were in a competitive market. Therefore, it is not completely valid to say that diamond rings are the only acceptable form of an engagement ring because they are not as scarce and valuable as people have perceived them to be.
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”.
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
This relates back to Congo, where violence spurred by ethnic rivalries is due to local groups’ desire to make money by getting into the extractive industries. In another example, Newmont, an American company, mines Ghanaian gold and pays the government part of the profits. Here, Burgis shined the spotlight on an environmental issue: the sodium cyanide spill in Kwamebourkrom that killed aquatic life and posed hazardous living conditions for locals (Burgis, 134). Finally, in the last few chapters, Burgis touched on Cecil John Rhodes’ legacy as the founder of De Beers, blood diamonds, imperialism, and violence carried out by local governments and mining companies in order to protect their interests.
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...
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...
Engagement rings initially served a double purpose. In the days when brides were purchased, these rings were partial payment for the bride in addition to symbolizing the groom's intentions and woman's agreement. Diamonds were first found in Medieval Italy and due to their hardness symbolized enduring love.
Santarossa, B. (2004, January 13). Diamonds: Adding lustre to the Canadian economy. Retrieved November 06, 2017, from https://www.statcan.gc.ca/pub/11-621-m/11-621-m2004008-eng.htm
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.
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.
The third determinant of the diamond – related and supporting industries looks at the industry suppliers and...