De Beers Diamonds & Engagement Rings: Are they expensive?

Sharif Khan
Sharif Khan
Last Updated    EST 
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De Beers Group is a global corporation that deals in diamond exploration, mining, and trading. The London-based company boasts a history spanning over a century and is in over 35 countries. However, most of their mining activities occur in Namibia, South Africa, Botswana, Australia, and Canada.

De Beers is arguably the world’s leading diamond company in terms of technological infrastructure and a labor force of 30,000 people. Though the firm employs people worldwide, more than half of their workforce comes from Africa, ostensibly because most of their mining activities are concentrated on the continent.

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      History and Origin

      De Beers was founded by Cecil Rhodes in 1888 and formed through a merger between Rhodes and Barney Barnato, two of the most celebrated personalities in the diamond industry. The term “De Beers” comes from the names of the two brothers—Johannes Nicolaas De Beer and DiederikArnoldus De Beer—who co-owned the farmland that produced most of the diamonds during this time.

      Before the establishment of De Beers, Cecil Rhodes had already founded the British South Africa Company. The main objective of BSAC was to consolidate the mineral wealth of Mashonaland. The discovery of diamonds, such as the Star of South Africa in 1869, boosted the fortunes of BSAC immensely. Cecil Rhodes would sell such diamonds and plow back the profits to his company. When he founded De Beers around a decade later, Rhodes was already a name to reckon with in the global diamond industry.

      In 1926, De Beers cemented their place as the world’s largest diamond explorer and trader and sought collaborations with enterprising executives from other blue-chip diamond firms. De Beers appointed one Ernest Oppenheimer to their board, and in the same year, the corporation became a global monopoly in diamond production. However, the company’s success under the stewardship of Oppenheimer was not short of controversies. De Beers was censored during his tenure for price-fixing and other forms of high-handedness.

      Important Milestones in the History of the De Beers Group

      1902: Cecil Rhodes dies, leaving behind a company that enjoys over 90% of the global diamond trade. However, a rival mine, Cullinan, is established in the Kimberley.

      Contrary to expectations, the owner of this mine refuses to collaborate with De Beers. Instead, he trades his diamonds with the Oppenheimer brothers, who have become independent.

      1905 to 1907: The Cullinan mine produces the world’s most significant piece of rough diamond, aptly named Cullinan. In 1907, this diamond was cut by the Asscher Brothers and offered to King Edward VII on his birthday.

      1914 to 1918: As the First World War rages, diamond companies seek more alliances and mergers. For the first time, the Cullinan mine falls under the management of De Beers.

      1927: Ernest Oppenheimer is appointed the chair of De Beers. Oppenheimer secures the job due to his membership on the company’s board and the fact that he is already a significant shareholder. He brings in a wealth of experience that helps spur the growth of De Beers. However, Oppenheimer faces frequent accusations of fostering dishonest industry practices.

      The 1930s: The Great Depression heralds the closure of several De Beers diamond mines. As global diamond prices plummet, the company finds it hard to sustain its production activities. Smaller mines are affected the most.

      1947: While other global corporations are still entangled in the aftermath of the Great Depression, De Beers is already picking up the pieces in earnest. Besides diamond production, the firm now also embarks on rigorous marketing campaigns. Primarily, the corporation targets members of the higher social classes. The campaigns are a tremendous success because people now no longer view diamonds only as a measure of wealth but also as a store of sentimental value. The year sees the coining of phrases like “A Diamond is Forever.” The diamond trade became big business once again, thanks to the efforts of De Beers.

      The 1960s through to the 1970s: De Beers tries to penetrate the elusive US diamond market but faces severe challenges. During World War One, Admiral Stansfield Turner, the former CIA chief, had accused the company of restricting the country’s access to industrial diamonds. According to Mr. Turner, those restrictions nearly hampered the US’ military prospects. Resultantly, De Beers is struggling to win the favor of the rather hard-lining American politicians and industrialists. De Beers would penetrate the US and all major diamond markets through persistence and resilience.

      Where Are Their Mines Located

      De Beers’s mines are located in Botswana, namely Jwaneng, Letlhakane, Damtshaa, and Orapa, though Damtshaa is not fully operational. Debswana controls all of these mines. One does not need to be a genius to decipher the etymology behind the name Debswana.

      Namdeb Holdings coordinate mining in Namibia. De Beers operates a 50-50 joint venture with the Namibian government. The government mainly provides physical infrastructures while the company handles the logistics.

      The De Beers Consolidated Mines consolidated the mining activities in South Africa. The two chief mines include the Voorspoed and Venetia. Again, the company operates the sites in a joint venture. De Beers has a 74% stake, while Ponahalo Investments enjoys a 26% shareholding.

      De Beers’ first mining explorations outside Africa happened in Canada in 2008. It was also Canada’s first underground diamond mine. The mines were located at the Snap Lake in the Northern Territories, though in 2015, mining activities ceased at the Snap Lake site. The company moved to Ontario, where they opened their second mine, the Victor Mine. Apart from this mine, De Beers also operates the GahchoKué mine in Canada.

      Reasons behind De Beer’s Success

      Over the 20th century, De Beers deployed different tactics to maintain its dominant position as a global diamond giant. Most notably, the company tried influencing independent producers to join its single distribution channel. However, that did not work as expected. But De Beers decided not to let these setbacks get their better and carefully researched the diamonds produced by most of their rival firms. It then flooded the market with similar diamonds. Therefore, it was hard to distinguish between De Beers’ diamonds and those from competing companies.

      Besides, De Beers purchased and hoarded diamonds manufactured by its competitors. The company then waited for the right time to pounce, unleashing its diamonds as soon as the demand increased. This is how it managed to control diamond prices and stay ahead in the now-competitive industry.

      Professional expertise is another factor that propelled De Beers to their dominant position. Since time immemorial, the firm has been working with skilled merchants. To make it to the executive, one needed hands-on experience in the diamond trade, which explains why the Great Depression did not wholly obliterate the company.

      De Beers took advantage of the Great Depression and bought and stockpiled diamonds when prices were at rock bottom. It later sold them when the prices stabilized, making astronomical profits.

      De Beers is also famous for their exceptional marketing techniques, unlike most diamond manufacturers that promote their merchandise primarily as a store of wealth. De Beers markets their products as a symbol of love, purity, and commitment. Besides—as mentioned earlier—coining the phrase “A Diamond is Forever,” the company is also known for successful campaigns around the eternity ring, also known as the infinity ring, symbolically of timeless love. Another one of their trademark products is the trilogy ring. The ring is a symbol of the past, present, and future. Last is the right-hand ring, a preference among women who believe in independence.

      De Beers’ product advertisements frequently run in print and mass media. Moreover, their gorgeous ring ads are also available on the company’s website.

      It should also be remembered that De Beers takes corporate-social responsibility seriously and believes in empowering the local communities living around their mines worldwide. Through the Anglo-American Socio-Economic Assessment Toolbox, the company profiles the priority needs within a community and initiates projects to meet those needs. Also, they strive to protect and maintain the natural environment, which aligns with the MDGs’ goal of realizing environmentally sustainable production activities.

      In the late 20th century, blood diamonds became a major ethical issue in the diamond industry; De Beers was right at the center of it. Diamond producers in Australia and Canada bypassed the company’s distribution channels and traded their merchandise independently or through other channels. However, it was not long before De Beers seized control of the situation. The company changed its model and ceased seeking partnerships with other diamond producers. In lieu, it chose to sell only its own mined stones. Things have mostly remained that way to date.

      The Company Presently

      De Beers controlled over 80% of the world’s rough diamond trade since its inception in the late 2000s, although that was long before serious distributors came up. Today, the company contributes only 35% of the world’s rough diamonds. But despite this fact, De Beers has continued to practice its ingenious marketing tricks. In 2010, the company became profitable again due to a rise in diamond shopping among US, Indian, and Chinese consumers.

      De Beers Engagement Rings

      De Beers entered the blockchain industry in 2018, becoming the first-ever jewelry company to track its products via blockchain. The company presently holds Forevermark and De Beer Jewellers. Forevermark and De Beer Jewellers are some of the world’s renowned jewelry sellers, selling different kinds of diamonds, from engagement to bridal rings and many of De Beers’ trademark rings. Besides these jewelry shops, De Beers also owns the International Institute of Diamond Grading & Research and the International Institute of Diamond Valuation, not to mention De Beers Ventures and Element Six. However, the company only claims a 60% stake in Element Six, with the rest owned by Umicore.

      Just as diamonds take time to cut and polish, the journey of De Beers toward becoming a reputable diamond merchant was not smooth. The company has experienced its highs and lows in the diamond industry. It has had a monopoly on the market for decades, and though it no longer enjoys that status, De Beers is still a favorite place to shop for diamonds. Visit any of their stores and enjoy buying diamonds from master-class jewelers.