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How de beers became a diamond company
How de beers became a diamond company
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“The price of diamonds is too high”
The international diamond cartel and more prominently De Beers, has used its dominant power and manipulation to create an illusion that has existed in the diamond market since the company was established in the 1880’s. The illusion of diamonds being rare and scarce led consumers to believe that their value would last forever and eliminated the option of resale in their eyes. This illusion is also what caused consumers to accept the prices of diamonds, a price that is inevitably too high.
The modern diamond industry was launched in 1867 by the accidental discovery of diamonds in South Africa. This was an industry that would soon be taken over by an Englishman, Cecil Rhodes, who arrived in Kimberly Mine in 1874. Rhodes purchased claims in the mines, and in 1880 he established De Beers Mining Company to administer his holdings. For centuries diamonds had been luxury goods that were essentially for royalty, as the scarcity of the stone is what had given it it’s value, but a sudden increase in diamond production meant that the stone would be widespread. This would inevitably cause the demand for diamonds to fall, as their association with luxury and romance would diminish. Rhodes decided the only way to maintain the illusion of scarcity was to restrict supply and keep the prices high.
In 1873 an agreement between Rhodes and the local distributers was signed stating that they would buy diamonds exclusively from Rhodes and only sell them in agreed upon quantities at agreed upon prices, forming the Diamond Syndicate. This led to De Beers becoming a Monopoly in the diamond industry, and a dominant price setter. The Monopolistic industry meant that there was only one firm, De Beers, which p...
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...o below efficient levels. A deadweight loss to society is usually caused by inefficient production, however in the case of De Beers it is not the production that is inefficient, but rather they decide to restrict supply and stockpile, only offering a limited supply to society. This can be shown graphically by the following diagram:
This means that in the absence of a cartel, the equilibrium, where supply is equal to demand, would be at a higher quantity supplied and a lower price. This is what the diamond cartel is trying to avoid and what would happen if they flooded the market and made diamonds widely available to the masses. This means that through the restriction of supply, the diamond cartel is setting prices above what they should be, in attempt to maintain the idea that diamonds should be considered precious and should be sentimental gifts.
As one of the greatest European empire builders of all time, Cecil Rhodes was a huge supporter of imperialism, sharply contrasting Hobson. He founded the De Beers Mining Company in South Africa and gained tremendous profits from his foreign enterprise. Ambitiously seeking to earn even more profits, Rhodes expanded his claims to various diamond mines around the world, eventually owning about 90% of the world’s production of diamonds. Even though he became one of the richest men in the world, Rhodes’ main ambition was not actually to obtain massive wealth; his true wish was “to render [him]self useful to [his] country” (Rhodes 4). His ambition to expand his diamond company by acquiring new mining territory and his wish to serve his country eventually ...
The power of a government-created monopoly over the market depends on the existence of close substitute products. If people view emeralds, rubies and sapphires as quite worthy substitutes diamonds over the market power of a relatively limited. In this case, any attempt to achieve increase of diamond prices will lead to the fact that consumers will switch to the acquisition of other precious stones. But if people believe that these stones are considerably inferior diamonds, the company is able to significantly affect the market price of the latter.
Analysis Introduction This project belongs in the engineering-efficiency category; therefore, it has to fit at least 3 of 4 performance hurdles, which are 1. Impact on EPS; 2.Payback; 3.Discounted cash flow and 4. Internal rate of return. In this article, some of those involved explained and described their opinions; however, professional knowledge may have been lacking.
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
The CFDC will continue to campaign and inform people on how to make sure that their purchase is conflict free and to gain support from the diamond trade in educating consumers. With the help of these organizations and many others, it will help save the lives of millions from violence or death. Works Cited The Conflict-Free Diamond Council. 2004.
It’s hard to imagine that a mineral could be fueling wars and funding corrupt governments. This mineral can be smuggled undetected across countries in a coat pocket, then be sold for vast amounts of money. This mineral is used in power tools, parts of x-ray machines, and microchips but mostly jewelry. Once considered the ultimate symbol of love, the diamond has a darker story. "Blood" diamonds or "conflict" diamonds are those mined, polished, or traded in areas of the world where the rule of law does not exist. They often originate in war-torn countries like Liberia, Sierra Leone, Angola, and Côte d'Ivoire were rebels use these gems to fund genocide or other questionable objectives. Even with a system known as the Kimberly process which tracks diamonds to prevent trade of these illicit gems, infractions continue as the process is seriously flawed. The continuation of the blood diamond trade is inhuman, and unethical, and in order to cease this illicit trade further action to redefine a conflict diamond, as well as reform to the diamond certification prosess is nessasary.
You’re browsing along various websites searching for a new piece of jewelry to add to your collection. Suddenly - you see it. The piece that screams your name. It’s an elaborate piece with large cut diamonds and you just know those can’t be real. But they look so real, so you check out the price.
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”.
I believe that the entry in the market of crystals is difficult because the firms that are already operating here, they are well known and successful and they have set the “competition game” too high. The source of this can easily be the price and the advertising which due to our findings show satisfying results in profits.
For the past sixty-seven years, the citizens of India have embraced their country’s independence all the while seeking to regain their past. Prior to this renewed sense of freedom, India had belonged to the British Empire. From 1858 to 1947, the British government claimed India and its inhabitants as a colonial possession. Before the British Empire laid claim to the vastness of India, the British East India Company helped to oversee the transfer of the Kohinoor Diamond from the Sikh Empire to their motherland in 1851.
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
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.
[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 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.
...n the companies will have to decrease the price otherwise the product will not be sold at higher prices and the revenue would not be as large as companies would like to.