Diamonds? What are they?
Friday, February 22nd, 2008Gem diamond industry
A large trade in gem-grade diamonds exists. Unlike precious metals such as gold or platinum, gem diamonds do not trade as a commodity: there is a substantial mark-up in the sale of diamonds, and there is not a very active market for resale of diamonds. One hallmark of the trade in gem-quality diamonds is its remarkable concentration: wholesale trade and diamond cutting is limited to a few locations. 92% of diamond pieces cut in 2003 were in Surat, Gujarat, India.[1] Other important centers of diamond cutting and trading are Antwerp, London, New York, Tel Aviv, Amsterdam. A single company-De Beers-controls a significant proportion of the trade in diamonds. They are based in Johannesburg, South Africa and London, England.
The production and distribution of diamonds is largely consolidated in the hands of a few key players, and concentrated in traditional diamond trading centers. The most important being Antwerp, where 80% of all rough diamonds, 50% of all cut diamonds and more than 50% of all rough, cut and industrial diamonds combined are handled.[citation needed] This makes Antwerp the de facto ‘world diamond capital’. New York, however, along with the rest of the United States, is where almost 80% of the world’s diamonds are sold, including at auction. Also, the largest and most unusually shaped rough diamonds end up in New York. The De Beers Company, as the world’s largest diamond miner holds a clearly dominant position in the industry, and has done so since soon after its founding in 1888 by the British imperialist Cecil Rhodes. De Beers owns or controls a significant portion of the world’s rough diamond production facilities (mines) and distribution channels for gem-quality diamonds. The company and its subsidiaries own mines that produce some 40 percent of annual world diamond production. At one time it was thought over 80 percent of the world’s rough diamonds passed through the Diamond Trading Company (DTC, a subsidiary of De Beers) in London, but presently the figure is estimated at less than 50 percent.
