Five Little Known Facts about Africa’s Diamonds
Africa has been the diamond hub for centuries. However, there are some unknown facts about Africa’s diamond that the world should know.
De Beers Diamond Cartel Was Founded by a White Supremacist: De Beers, the company that single-handedly made the diamond industry what it is today, was founded in 1888 by British colonizer Cecil Rhodes. He went to southern Africa when he was 18 years old and eventually took over the diamond mines at Kimberley, South Africa, and other areas.
Being a ruthless capitalist, Rhodes passed laws, levied colonial taxes, and used brutal punishments on Africans to force them to work for near slave wages in diamond mines. African miners were forced to work in extremely dangerous conditions and live away from their families in shanty-like compounds. This trend continues today.
The conflict diamond atrocities that took place in Sierra Leone, Liberia, and other parts of Africa are rooted in Rhodes’ violent quest for acquisition of Africa’s diamonds and natural resources for the benefit of European consumption.
Diamonds Are Not Rare: Contrary to popular opinion, diamonds aren’t rare or even hard to find. They aren’t rare in an economic sense because supply exceeds demand. To maintain the high price of diamonds, De Beers creates an artificial scarcity by stockpiling mined diamonds and selling them in small amounts. There are millions of them locked in vaults in London.
Even though there are other diamond makers in the world, De Beers is able to manipulate the supply of diamonds because they dominate the market and operate essentially as a monopoly. In 2008, the South African diamond company settled for $295 million a class-action antitrust lawsuit about price-fixing in the United States.
The Most Shrewd Advertising Campaign of All Time- A Diamond is Forever: The concept that an engagement ring is an ancient tradition that is deeply embedded in human history in societies around the world is false. The idea of a diamond engagement ring is roughly a century old, and it was invented by the De Beers cartel. In the 1940s De Beers launched a long-running propaganda campaign around the theme “A diamond is forever.”
Over many decades, the company spent hundreds of millions of dollars to market the notion that diamonds signify romance and love. The campaign involved sending diamond lecturers to classrooms to target high school students, placing diamonds in the fingers of Hollywood stars and suggesting stories to newspapers on how diamond rings symbolized romance. Thanks to their long and successful propaganda campaign, men around the world now spend a few months’ salary on diamond engagement rings.
Majority of the World’s Diamonds Come from Africa: Most historians now believe organized trade of diamonds dates back about 1,000 years to India, which possessed the entire world’s known supply until early in the 18th century. Traditionally, diamonds would be transported across Arabia and traded to Jewish merchants, who, in turn, resold the diamonds in major European cities of the time such as Frankfurt and Venice. India’s diamond supply was largely exhausted by the early 18th century, however, moving the diamond trade to Brazil until 1725, and then later to southern Africa in the early 19th century.
Today, the majority of today’s diamonds are sourced from Africa, with an estimated 65% of the world’s diamonds ($8.5 billion a year) coming from African countries. When measured by value, Botswana is the biggest producer of diamonds in the world. Other African countries that produce diamonds have instituted the Kimberley Process (a system implemented in 2003 by the diamond industry and diamond producing countries to prevent conflict diamonds from entering the diamond trade). The countries that are Kimberly Process compliant include: Angola, Central African Republic, Democratic Republic of Congo, Namibia, Tanzania, Sierra Leone, and South Africa.
Diamonds May Actually be a Bad Investment: It’s unlikely a person will be able to sell a diamond ring for more than what he pays for it. The reason is simple: With diamonds, you buy at retail and sell at wholesale, if you can sell it at all. Most people would be lucky to get half of what they paid if they tried to sell a ring the day after they bought it. De Beers’ then-chairman Nicky Oppenheimer may have said it best: “diamonds are intrinsically worthless, except for the deep psychological need they fill.”
It is estimated that the public holds about 500 million carats of gem diamonds – if a significant portion of the public begins selling, then the price of diamond would plummet. To prevent this from happening, the diamond industry spent a huge sum to convince the public that diamonds are “heirloom” properties to be passed down for generations and discourage jewelers from buying diamonds from the public.