Misplaced Pages

Revision as of 23:53, 29 January 2005

The De Beers Group is a London and Johannesburg based diamond mining corporation. It has historically held a near total monopoly in the diamond trade. Although recent Israeli interests have captured 20% of the market. De Beers had been under indictment in the United States for many years for antitrust violations. On July 14, 2004, De Beers pled guilty to the charges and paid a $10 million fine. The plea has enabled De Beers to trade directly in the United States diamond market, the largest in the world with year 2000 estimates near $56 billion, after years of acting through intermediaries.

Using its monopoly, De Beers has created an artificial scarcity of diamonds, thus keeping prices high. The modern tradition of diamonds as a part of engagement in many cultures has been largely created by De Beers through an amazingly effective advertising campaign started in 1939. The "A Diamond is Forever" campaign not only convinced the public that the only suitable gift for engagement is a diamond, but also served to limit the market in used diamonds. 1

De Beers distributes diamonds to favored customers (called sightholders) by selecting batches of diamonds themselves and offering them "as is". Following the distressing use of diamond revenues by African revolutionaries engaged in diamond smuggling (blood diamonds), De Beers now sells only diamonds mined from their own mines, most of which are in South Africa and Botswana. Currently, De Beers is involved in a joint venture which is developing a diamond prospect in Canada.

Retail joint venture

In 2001, De Beers launched a joint venture with luxury goods company LVMH in order to establish De Beers as a retail brand. The joint venture, called De Beers LV has a license from De Beers SA to use the De Beers brand name in a retail environment. The venture has since opened two stores, one in London and a second in Tokyo. Following the settling of the United States anti-trust case, De Beers said that it planned to open a store in New York. Before the venture was allowed to begin, the EU competition commission launched an investigation into whether the venture would give De Beers too great a control over the rough diamond market. An initial one month probe determined that a longer investigation was necessary. The commission eventually allowed the joint venture to go ahead in July 2001.

History

De Beers was founded in 1888 by Cecil Rhodes. In the 20th century the major shareholders became the Oppenheimer family. Sir Ernest, his son Harry Oppenheimer and his grandson Nicky Oppenheimer have been chairmen of the company.

The company's name comes from Johannes Nicholas and Dierderik Arnoldus de Beer, two Afrikaner farmers whose farm, on the Orange River, yielded a diamond mine known as the Big Hole.

External links

• De Beers official homepage
• Official homepage of the De Beers/LMVH retail joint venture
• Yahoo! - De Beers Centenary AG Company Profile
• Yahoo! - De Beers Consolidated Mines Limited Company Profile

U.S. court case links

• De Beers settles (17th July 2004) from BBC News
• De Beers plans to settle (10th July 2004) from The Age
• De Beers plans to settle (10th July 2004) from the Washington Times
• The Times (London) 8 Feb 2004 article on recent developments.
• Mail on Sunday (UK) 20 April 2004 article on history of USA indictment.

Categories:Corporate abuse