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De Beers is a London and Johannesburg based diamond mining corporation. It has historically held a near total monopoly in the diamond trade. However, recently Israeli interests have captured 20% of the market. De Beers had been for many years under indictment in the United States for antitrust violations. On Wednesday 14th July 2004, De Beers pled guilty to the charges and paid a $10m fine. The plea enables to De Beers to trade in the United States diamond market directly, after years of acting through intermediaries. The US diamond market is the largest in the world, with sales in the region of $500m per annum.
The De Beers cartel has used its monopoly to create 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 'Diamonds are 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.
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. They are currently involved in a joint venture which is developing a diamond prospect in Canada.
History
De Beers was founded in 1888 by Cecil Rhodes. In the 20th century the major shareholders became the Oppenheimer family.
External links
=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.