DE BEERS.

Prepared By:
KINSHOO SHAH
  De Beers Family of Companies are in the diamond, diamond
mining, diamond trading and industrial diamond manufacturing
sectors.
 It is by far the largest company in all these categories.

 De Beers is active in every category of industrial diamond mining:

open-pit, underground, large-scale alluvial, coastal and deep sea.
 Mining takes place in Botswana, Namibia, South
Africa and Canada.

Source: http://en.wikipedia.org/wiki/De_Beers
What is De Beers?
not retailer
not manufacturer

BUT

miner and buyer of 70% of the world's

rough diamonds

arbiter of the prices

ROUGH DIAMONDS
CUT DIAMONDS
JEWELRY
FACTS ABOUT DE BEERS

 Most successful monopoly of modern trade

 Other commodity prices (e.g. gold, silver) fluctuate greatly in

response to economic conditions

 Diamonds’ prices are constantly rising

 By 1890, De Beers controlled 95% of the world’s diamond production

ORIGIN

 1869
 First diamond mines in the colonies of southern Africa
 Drastically increased the number of stones available

 1870
Many diamond hunters bought mines
CECIL RHODES

Bought the rights to two mines

on the farm of :

 Nicolas

and

 Diedrick De Beer

in the Cape Colony (now South

Africa).
DIAMOND HUNTERS REALIZED
THAT SCARCITY INCREASES
DIAMOND PRICES.

Had no other alternative than to merge their interests into a

single entity:

 control the mines’ production

 keep the scarcity illusion

Before the 19th century: Nowadays:

 Diamonds were exceptionally Many diamond mines:

rare  Republic of South
Africa
 Small quantities in India and  Sub-Saharan
Brazil countries
 Siberia
 No diamond mines were  Australia
discovered
 Canada
 DE BEERS IS A TYPICAL
EXAMPLE OF MONOPOLY!!!

 It is almost the sole seller of

diamonds
 Sells a commodity with no close substitutes
(created this illusion by advertising)

 It restricts output and it responds to changes in market

demand
Cartels are immoral because they overcharge the buying
public by artificially propping up prices.

Source: http://www.ewtn.com/library/business/antdebrs.htm
ANTWERP WORLD DIAMOND CENTRE
• The fact that Antwerp functions as a major diamond
trade and production centre worldwide, is reflected in
the cultural diversity of the Antwerp community.
• Quality label ‘cut in Antwerp’

• More than 80% of the world consumption of rough,

polished and industrial diamonds passes through
Antwerp.

 Contribution to total Belgian export 7% 

 Share in World rough supply 80% 
 Share in world polished supply 50% 
 Share in world supply of natural industrial diamonds 40%
 Overall share in global diamond trade 60%

• 6 out of 10 of their most important non-European

Union trading partners: USA, Israel, India,
Switzerland, Hong Kong and China.
http://www.certified-gems.com/Antwerp_diamond_market.htm
 “De Beers:
A diamond is forever…”
 De Beers:
A monopoly is forever?
 END OF MONOPOLY..
 Firstly, it convinced independent producers to join its
single channel monopoly, it flooded the market with diamonds similar to
those of producers who refused to join the cartel, and lastly, it purchased
and stockpiled diamonds produced by other manufacturers in order to
control prices through supply.
 However, the De Beers model changed in 2000, due to factors such as the
decision by producers in Russia, Canada and Australia, to distribute
diamonds outside of the De Beers channel, thus effectively ending the
monopoly.
 The diamond industry of the early 21st century is markedly different from
that of the twentieth, and is a complex and constantly evolving geo-
political phenomenon.
 Current major players in the diamond industry are the African producers
Debswana and Namdeb, De Beers, Rio Tinto, BHP Billiton, Lev
Leviev,Harry Winston, and Alrosa.
 NAKSHATRA FLAGSHIP

 Nakshatra (Constellation) revitalised

floral jewellery

 Launched October 2000

 Sales over $100m in 3 years. No. 1 brand

in India

 Awarded status
 SURAT, THE 'DIAMOND
CITY OF INDIA'

 Much of India's diamond trade is controlled by a handful of wealthy

families, many with the common surnames of Jhavari, Mehta, and
Shah.
 The De Beers controlled Diamond Trading Company (DTC) has
demonstrated Gujarat's power in the diamond-cutting arena by
increasing its take of the DTC's 125 lucrative 'sightholder' contracts
to nearly 50 in 2005.
 Surat itself is expected to process $18 billion worth of the glittering
gems this financial year

http://gemmanews.wordpress.com/2010/10/18/india-determined-to-keep-upper-hand-in-diamond-cutting-and-polishing/
 DIAMOND BUSINESS IN INDIA
 It is estimated that India cuts, polishes, and exports over one-
billion dollars worth of gems per year.
 Gitanjali Gems is India's largest manufacturer of diamonds, with
cutting facilities in Surat's 'Special Economic Zone' and in
Borivali, Mumbai.
 All are facilitated through the Hindustan Diamond Company Ltd.
(HDC), and De Beers India.
 According to the Times of India, as of April 1, 2006, the Gujarat
state government has exempted Surat's diamond-cutting industry
from state-imposed VAT (Value Added Tax) taxes.
 From a mere $8 billion worth of exports in 1999-2000, the Indian
gems and jewellery industry has captured about 80% of the
global polished diamond share.

http://www.allaboutgemstones.com/history_gem_cutting_gujarat.html
Analysts have forecast CAGR of 14.7% during 2010-2012 for the
gems and jewelry industry in India.

https://www.religareonline.com/Featuredstorydetails.aspx
 INDIA CATCHING UP DIAMOND BUSINESS..
 India accounts for approximately 60% of the global polished diamonds in
value terms,
 80% in karatage and 90% in pieces.
 Govt. initiatives- interest rebates,
 establishment of SEZs
 extension of credit periods and
 export duty benefits available to the sector.

 The Indian gems and jewellery sector is forecast to grow over USD 26
billion by 2012, driven by availability of huge base of skilled labour and
improving lifestyle.
  India boasts of one of the lowest per carat diamond cutting and polishing
costs (at around USD 10) thereby leading to comparatively low cost
jewellery, and hence amplifying the overall consumption.
CHILD SLAVE LABOR

 Estimates of the numbers of working children in India vary

between 20 million and up to100 million.  (May 2005)
 Approximations of child workers in the gem industry in Jaipur
range from 7,000 to 13,000.
 Workplace conditions are commonly bad.
 They are congested, poorly lit and ventilated, and over half of
the industry's workforce suffers from work-related ailments
such as kidney dysfunction, lung disease, stomach problems,
wheezing, pains in their joints and eyesores. 

http://ihscslnews.org/view_article.php?id=61
 SUSTAINABILITY

 Diamond business is not glittery.

 De Beers is the price maker & controls the supply of diamonds.

 De Beers publishes an annual "Report to Stakeholders" which is

coordinated by Maplecroft Consultants in the United Kingdom.
 The report covers De Beers approach, economics, ethics,
employees, communities, environment, and a range of case
studies, initiatives and related web sites.
 The first report was published in 2006.

  It was reviewed by Ethical Corporation magazine as "transparent

but not entirely reader friendly."