The Diamond World

The Diamond World

The Diamond World

Diamond is an allotrope of carbon and it is the hardest natural substance in the world. The hardness is usually determined by ability to resist scratching with grade 1 being the softest and grade 10 being the hardest. On this scale, it is graded as having a hardness of 10 (Read, 49-50). Its industrial use as major cutting and polishing tool is determined by its qualities of hardness and high thermal conductivity. Diamonds are the most popular gemstones due to their excellent mechanical and optical characteristics coupled with effective and efficient marketing. Currently, around 130 million carats worth approximately US $9 billion are mined annually (Yarnell, 2631).

Most of the world diamond originates from Africa especially in the Central and South Africa. Other areas in the world where diamond diamonds have been found include Russia, Brazil, Canada and Australian (USGS, 2010). One significant element of diamond trade is its remarkable concentration. There are very few centers in the world for diamond cutting. Most of the diamond are cut and polished in Surat, India though there are other centers in then world where this also takes place (Adiga, 2004). These centers are Antwerp, London, Amsterdam, Tel Aviv, and New York.

De Beers is a company located in Johannesburg and London and it controlled most of the diamonds in the world in the 20th Century. It controlled 80% of the world's diamond production (Mankiw, 305). The world diamond trade can be said to be a monopolized trade with the production and distribution being controlled by a few key players. Its concentration still remains in the traditional centers like Antwerp in Belgium and this is the world diamond capital whereby 80% of all rough diamonds are handled (Tichotsky, 254). DeBeers has been controlling the world trade since 1888 when it was founded by Cecil Rhodes, a British imperialist. It controls or owns a large percentage of the world's mines, and distribution channels. The Diamond Trading Company (DTC) which markets rough diamonds is a subsidiary company of De Beers. It markets rough diamonds which originate from mines operated by DE Beers. DTC main purpose is to stabilize world diamond prices when the world economic situation is hard and raise the prices when the demand is high or when there is inflation. In 2009, De Beers was overtaken by Alrosa, a Russian diamond mining company as the world's largest producer of rough diamonds. This was a historic achievement as De Beers has been the world leader in diamond world for a very long time. In 2009, Alrosa produced 34 million carats while De Beers produced 24.6 million carats of rough diamonds. This achievement by Alrosa can be said to be historic because it happened in a world economy faced with recession and economic slump. The production by de beers in 2009 was half of its total production in 2008. Alrosa managed to maintain its production levels and also it was able to preserve jobs. The overtaking of De Beers was welcomed by diamond dealers in Surat because it meant their reduced dependence on De Beers. Even though, De Beers still leads in rough sales, value wise. This is because in the same year,(2009) the total rough diamond sales of De Beers was worth 3.24 billion dollars while the total sale made by Alrosa was valued at 2.21 billion dollars.

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