De Beers

From Wikipedia, the free encyclopedia

The De Beers Group of Companies

Industry

Mining and trading of diamonds

Genre

Businesses

Founded

1888

Founder

Cecil Rhodes

Headquarters

Luxembourg, Luxembourg

Area served

Worldwide

Key people

Mark Cutifani (Chairman)

Bruce Cleaver (CEO)

Products

Diamonds

Services

Diamond marketing and promotion. Community

development.

Revenue

$4.7 Billion (FY 2015)[1]

Owner

Anglo American

Number of

20,000+

employees

Slogan

A Diamond Is Forever

Website

debeersgroup.com

The De Beers Group of Companies has a leading role in the diamond exploration, diamond
mining, diamond retail, diamond trading and industrial diamond manufacturing sectors. The
company is currently active in open-pit, large-scale alluvial, coastal and deep sea mining. [2] The

company operates in 28 countries and mining takes place in Botswana, Namibia, South
Africa and Canada. Until the start of the 21st century, De Beers effectively had total control over
the diamond market as both a monopoly andmonopsony of diamonds.[3] Opposition has since
dismantled the complete monopoly, though De Beers is still a large shareholder and currently
sells approximately 35%[4] of the worlds rough diamond production through its Global Sightholder
Sales and Auction Sales businesses.[5]
The company was founded in 1888 by British businessman Cecil Rhodes, who was financed by
the South African diamond magnateAlfred Beit and the London-based N M Rothschild &
Sons bank.[6] In 1926, Ernest Oppenheimer, a German immigrant to Britain who had earlier
founded mining giant Anglo American plc with American financier J.P. Morgan,[7] was elected to
the board of De Beers.[8]He built and consolidated the company's global monopoly over the
diamond industry until his death in 1957. During this time, he was involved in a number of
controversies, including price fixing, antitrust behaviour and an allegation of not releasing
industrial diamonds for the US war effort during World War II. [9][10]
Contents
[hide]

1History
o

1.1Foundation

1.2Oppenheimer control

1.3Marketing

1.4Diamond monopoly

2Operations
2.1Business structure and brands

3Legal issues
o

3.1Sherman Antitrust Act

3.2South Africa's missing billions

3.3Diamond prices

3.4Industrial diamonds

3.5European Commission

3.6Conflict diamonds and the Kimberley Process

3.7Forceful relocation of indigenous San people in Botswana

4See also

5Notes

6References

7External links

History[edit]
Foundation[edit]

Cecil Rhodes founded De Beers in 1888

Nathan Mayer Rothschild, Baron Rothschild, of theRothschild family, funded the development of De Beers

The name "De Beers" was derived from the two Dutch settlers and brothers Diederik Arnoldus
De Beer (December 25, 1825 - 1878) and Johannes Nicolaas De Beer (December 6, 1830 June 20, 1883), who owned a South African farm named Vooruitzicht (Dutch for "outlook") near
Zandfontein in the Boshof District, Orange Free State. After they discovered diamonds on their
land, the increasing demands of the British government forced them to sell their farm on July 31,
1871 to merchant Alfred Johnson Ebden (1820-1908) for 6,600 GBP. Vooruitzicht would become
the site of the Big Hole and the De Beer Mine, two successful diamond mines. Their name, which
was given to one of the mines, subsequently became associated with the company.[11]
Cecil Rhodes, the founder of De Beers, got his start by renting water pumps to miners during
the diamond rush that started in 1869,[12][13]when an 83.5 carat diamond called the 'Star of South
Africa' was found at Hopetown near the Orange River in South Africa.[13][14][15] He invested the
profits of this operation into buying up claims of small mining operators, with his operations soon
expanding into a separate mining company.[16] He soon secured funding from the Rothschild
family, who would finance his business expansion.[17][18] De Beers Consolidated Mines was formed
in 1888 by the merger of the companies of Barney Barnato and Cecil Rhodes, by which time the
company was the sole owner of all diamond mining operations in the country.[16][19][20] In 1889,
Rhodes negotiated a strategic agreement with the London-based Diamond Syndicate, which

agreed to purchase a fixed quantity of diamonds at an agreed price, thereby regulating output
and maintaining prices.[18][21] The agreement soon proved to be very successful for example
during the trade slump of 18911892, supply was simply curtailed to maintain the price.
[22]
Rhodes was concerned about the break-up of the new monopoly, stating to shareholders in
1896 that the company's "only risk is the sudden discovery of new mines, which human nature
will work recklessly to the detriment of us all".[18]
The Second Boer War proved to be a challenging time for the company. Kimberley was
besieged as soon as war broke out, thereby threatening the company's valuable mines. Rhodes
personally moved into the city at the onset of the siege in order to put political pressure on the
British government to divert military resources towards relieving the siege rather than more
strategic war objectives. Despite being at odds with the military,[23] Rhodes placed the full
resources of the company at the disposal of the defenders, manufacturing shells, defences,
an armoured train and a gun named Long Cecil in the company workshops.[24]

Oppenheimer control[edit]
In 1898, diamonds were discovered on farms near Pretoria, Transvaal. One led to the discovery
of the Premier Mine. The Premier Mine was registered in 1902 and the Cullinan Diamond, the
largest rough diamond ever discovered, was found there in 1905. [25] (The Premier Mine was
renamed the Cullinan Mine in 2003.) However, its owner refused to join the De Beers cartel.
[26]
Instead, the mine started selling to a pair of independent dealers named Bernhard and Ernest
Oppenheimer, thereby weakening the De Beers cartel.[27] Francis Oats, who became chairman of
De Beers in 1908, was dismissive of the threats from the Premier Mine and the finds in German
South-West Africa.[28] However, production soon equalled all of the De Beers mines combined.
Ernest Oppenheimer was appointed the local agent for the powerful London Syndicate, rising to
the position of mayor of Kimberley within 10 years. He understood the core principle that
underpinned De Beers success, stating in 1910 that "common sense tells us that the only way to
increase the value of diamonds is to make them scarce, that is to reduce production". [26]
During World War I, the Premier Mine was finally absorbed into De Beers. When Rhodes died in
1902, De Beers controlled 90% of the world's diamond production. Ernest Oppenheimer took
over the chairmanship of the company in 1929,[29] after buying shares and being appointed to the
board in 1926.[27][30][31] Oppenheimer was very concerned about the discovery of diamonds in 1908
in German South West Africa, fearing that the increased supply would swamp the market and
force prices down.[9][10]
Former CIA chief Admiral Stansfield Turner claimed that De Beers restricted US access to
industrial diamonds needed for the country's war effort during World War II. [32]

Marketing[edit]
De Beers successfully advertised diamonds to manipulate consumer demand. One of the most
effective marketing strategies has been the marketing of diamonds as a symbol of love and
commitment. A young copywriter working for N. W. Ayer & Son, Frances Gerety (19161999)
coined the famous advertising line 'A Diamond is Forever' in 1947. [33] In 2000, Advertising
Age magazine named 'A Diamond Is Forever' the best advertising slogan of the 20th century.[34]
Other successful campaigns include the 'eternity ring' (as a symbol of continuing affection and
appreciation),[35] the 'trilogy ring' (representing the past, present and future of a relationship) and
the 'right hand ring' (bought and worn by women as a symbol of independence). [36]
De Beers is also known for its television advertisements featuring silhouettes of people wearing
diamonds, to the music of Palladio by Karl Jenkins. The campaign, titled 'Shadows and Lights',
first ran in the spring of 1993. The song would later inspire a compilation album, Diamond Music,
released in 1996, which features the Palladio suite. A 2010 commercial for Verizon
Wireless parodied the De Beers spots.[37]

Diamond monopoly[edit]

Russian president Vladimir Putinmeeting with former De Beers chairmanNicky Oppenheimer in South
Africa in 2006

De Beers carried out monopoloid practices throughout the 20th century, whereby it used its
dominant position to manipulate the international diamond market. [16][38] The company used
several methods to exercise this control over the market. Firstly, it convinced independent
producers to join its single channel monopoly. When that didn't work, it flooded the market with
diamonds similar to those of producers who refused to join the cartel. Lastly, it purchased and
stockpiled diamonds produced by other manufacturers in order to control prices by
limiting supply.[39]
In 2000, the De Beers business model changed[39] due to factors such as the decision by
producers in Canada and Australia to distribute diamonds outside the De Beers channel, [16][38] as
well as rising awareness of blood diamonds that forced De Beers to "avoid the risk of bad
publicity" by limiting sales to its own mined products.[40] De Beers' market share of rough
diamonds fell from as high as 90% in the 1980s to 33% in 2013,[41][42] because of a more
fragmented diamond market with more transparency and greater liquidity.[43]
In November 2011, the Oppenheimer family announced its intention to sell the entirety of its 40%
stake in De Beers to Anglo American plcthereby increasing Anglo American's ownership of the
company to 85%.[44] The transaction was worth 3.2 billion (US$5.1 billion) in cash and ended the
Oppenheimer dynasty's 80-year ownership of De Beers.[45][46]

Operations[edit]

The De Beers Snap Lake Mine in Canada

Mining in Botswana takes place through the mining company Debswana,[47] a 50-50 joint venture
with the Government of the Republic of Botswana. In Namibia, it takes place through Namdeb,
[48]
a 50-50 joint venture with the Government of the Republic of Namibia. Mining in South Africa
takes place through De Beers Consolidated Mines (DBCM), [49] 74% owned by DeBeers and 26%
by a broad based black economic empowerment partner, Ponahalo Investments. In 2007, De
Beers began production at the Snap Lake Mine in Northwest Territories, Canada;[50] this is the first
De Beers mine outside Africa and Canada's first completely underground diamond mine,
[51]
however production was suspended when the mine was put on care-and-maintenance in
2015.[52] In 2007, De Beers opened the Victor Mine inOntario, Canada.[53]
Trading of rough diamonds takes place through two channels De Beers Global Sightholder
Sales[54] (GSS) network and De Beers Auction Sales.[55] The GSS network, which sells about 90%
of De Beers diamonds, features wholly owned and joint venture operations in South Africa

(DTCSA), Botswana (DTCB), and Namibia (NDTC). They sort, value and sell 33% (2013) of the
world's rough diamonds by value.[42]
There are two main types of customer for rough diamonds Sightholders and Accredited Buyers.
Sightholders have a term contract. Accredited Buyers (a customer type introduced in 2014-5)
have a more ad hoc arrangement. De Beers also sells about 10% of its rough diamonds through
auction sales. The company pioneered the approach in 2008 when it broke with 44 years of
direct sales to hold the diamond industrys first online international auction sale. It is now the
worlds leader in this kind of auction sale.
De Beers employs about 20,000 people around the globe on five continents, with more than
17,000 employees in Africa. Almost 8,000 people are employed in Botswana, around 6,200 in
South Africa, nearly 2,900 in Namibia, some 1,260 in Canada and about 320 in Group
Exploration.

Business structure and brands[edit]

On 4 November 2011, Anglo American plc and CHL Holdings announced their agreement for
Anglo American to acquire an incremental interest in De Beers, increasing Anglo American's 45%
shareholding in the world's leading diamond company to 85%. De Beers Investments is the
privately held ownership company of De Beers Socit Anonyme (DBSA), and is registered in
Luxembourg. It is made up of two shareholdings: Anglo American plc has an 85% shareholding
and the Government of the Republic of Botswana owns 15% directly. De Beers Socit Anonyme
is the holding company of The De Beers Group of Companies.[56]
The De Beers Group of Companies is involved in many parts of the diamond value chain, from
mining to sales, and is made up of a series of joint ventures and wholly owned operations.
The joint ventures are:

De Beers Diamond Jewellers[57]

Debmarine Namibia

Debswana[58]

DTCB[59]

Namdeb[60]

NDTC

The wholly owned operations are in southern Africa and Canada. Also wholly owned
are Forevermark and Element Six. Element Six is a joint operation with Umicore (Abrasives) and
the wholly owned De Beers business Technologies, UK.
Forevermark[edit]
Forevermark launched in 2008 as one of the two diamond brands from The De Beers Group of
Companies. According to the company website, "Each Forevermark diamond is inscribed with a
promise: that it is beautiful, rare and responsibly sourced." Forevermark diamonds are inscribed
with an icon and unique identification number, albeit invisibly to the naked eye: the Forevermark
inscription is 1/20th of a micron deep (or one five-thousandth the width of a human hair). This
inscription helps keep Forevermark diamonds distinguishable from synthetic diamonds, which
are otherwise identical to mined diamonds, and maintain scarcity: the Forevermark website
boasts that only a tiny percentage of diamonds qualify for the Forevermark brand. [61]
De Beers Diamond Jewellers[edit]
De Beers Diamond Jewellers (DBDJ) was established in 2001 in a joint venture between The De
Beers Group of Companies and LVMH, the French luxury goods company.[61]The first De Beers

boutique opened in 2002 on Londons Old Bond Street as the brands flagship store. Since then,
stores have opened in various cities around the world.

Legal issues[edit]
Sherman Antitrust Act [edit]
During World War II, Ernest Oppenheimer attempted to negotiate a way around the Sherman
Antitrust Act by proposing that De Beers register a US branch of the Diamond Syndicate
Incorporated. In this way, his company could provide the US with the industrial diamonds it
desperately sought for the war effort in return for immunity from prosecution after the war;
however his proposal was rejected by the US Justice Department when it was discovered that
De Beers had no intention of stockpiling any industrial diamonds in the US. [32] In 1945, the Justice
Department finally filed an antitrust case against De Beers, but the case was dismissed as the
company had no presence on US soil.[62]

South Africa's missing billions[edit]

In 2014, the Leverhulme Centre for the Study of Value, based at the University of Manchester,
published a report authored by Sarah Bracking and Khadija Sharife, identifying over $3 billion in
price fixing of South African rough diamond trade, through transfer pricing manipulation from
2005 to 2012. The report found significant evidence of profit shifting through volume and value
manipulation.[63] Sharife simultaneously published an article [64] disclosing the political system that
cultivated revenue leakage, including the donation of De Beers staff to the State Diamond Trader
(SDT). The report, like the article, utilised aggregated data produced by the Kimberley Process
(KP) certificates of import-exports, relying on figures listed by the diamond companies
themselves, in which De Beers was the dominant player. The South African Department of
Mineral Resources (DMR) disclosed that De Beers did not authorise them to publish figures
involving values, sales, pricing and other data, preventing transparency of the industry.

Diamond prices[edit]
From 2001 onwards several lawsuits were filed against De Beers in US State and Federal courts.
These alleged that De Beers unlawfully monopolised the supply of diamonds and conspired to
fix, raise and control diamond prices. Additionally there were allegations of misleading
advertising. While De Beers denied all allegations that it violated the law, in November 2005, it
announced that an agreement had been reached to settle civil class action suits filed against the
company in the United States and, in March 2006, three other civil class action suits were added
to the November agreement. In April 2008, De Beers confirmed that Judge Chesler of the
US Federal District Court in New Jersey had entered an order approving the Settlement,
resulting in a settlement arrangement totalling US$295 million. De Beers does not admit liability.
As part of the settlement, persons who purchased gem diamonds from 1 January 1994 to 31
March 2006, may be eligible for compensation.[65] However, claimants were generally not pleased
with the amounts they received from the settlement. [66]

Industrial diamonds[edit]
In 2004, De Beers pleaded guilty and paid a US$10 million fine to the United States Department
of Justice to settle a 1994 charge that De Beers had colluded with General Electric, which was
acquitted of all charges, to fix the price of industrial diamonds.[67][68]

European Commission[edit]
In February 2006, De Beers entered into legally binding commitments with the European
Commission to cease purchasing rough diamonds from Russian mining company Alrosaas of the
end of 2008.[69] In January 2007, the European Commission announced it had closed the file due
to lack of Community Interest. The commission decision is under appeal before the Court of First
Instance in Luxembourg.[70]

Conflict diamonds and the Kimberley Process[edit]

Main articles: Blood diamond and Kimberley Process Certification Scheme

In 1999, a campaign by Global Witness to highlight the role of diamonds in international conflicts
led to a review by the United Nations. The initial focus of the UN's investigation was on Jonas
Savimbi's UNITA movement in Angola, which was found to have bartered uncut diamonds for
weaponry despite international economic and diplomatic sanctions being in effect through United
Nations Security Council Resolution 1173.[71][72]
In 1999, De Beers Group claimed to have stopped all outside buying of diamonds in order to
guarantee the conflict-free status of their diamonds effective from 26 March 2000.[73][74][75]
In December 2000, following the recommendations of the Fowler Report, the UN adopted the
landmark General Assembly Resolution A/RES/55/56[76] supporting the creation of an
international certification scheme for rough diamonds. By November 2002, negotiations between
governments, the international diamond industry and civil society organisations resulted in the
creation of the Kimberley Process Certification Scheme (KPCS), which sets out the requirements
for controlling rough diamond production and trade and became effective in 2003.
De Beers states that 100% of the diamonds it now sells are conflict-free and that all De Beers
diamonds are purchased in compliance with national law, the Kimberley Process Certification
Scheme[77] and its own Diamond Best Practice Principles.[78] The Kimberley process has helped
restore the reputation of the industry, as well as eliminating sources of excess supply.[79]

Forceful relocation of indigenous San people in Botswana [edit]

In Botswana, a long dispute has existed between the interests of the mining company, De Beers,
and the relocation of the San (Bushman) tribe from the land, in order to exploit diamond
resources - an allegation rejected by De Beers. The San have been facing threats from
government policies since at least 1980, when the diamond resources were discovered. [80] A
campaign is being fought in an attempt to bring an end to what the indigenous rights
organisation, Survival International considers to be a genocide of a tribe that has been living in
those lands for tens of thousands of years.[81][82][83] On the grounds that their hunting and gathering
have become obsolete and their presence is no longer compatible with preserving wildlife
resources, the Gwi and Gana people were persecuted by the government of Botswana in order
to make them leave the central Kalaharireserve. To get rid of them, they had their water
supplies cut off and they have been "taxed, fined, beaten, and tortured". [84] Several international
fashion models, including Iman,Lily Cole and Erin O'Connor, who were previously involved with
advertising for the companies' diamonds, have backed down after realising the consequences
raised by thisscandal, and now support the campaign.[85]
Another view is that, apparently confounded by the intractability of the Botswana government,
Survival trained its guns on Botswanas diamond industry.[citation needed] Survival points to a diamond
prospect in the central Kalahari as the real reason behind the relocations and has identified De
Beers as the main villain in this drama. However, the negotiating team, [clarification needed] the diamond
watchdog Global Witness,[citation needed] and Member of the European Parliament Glenys Kinnock[citation
needed]
have all said that there was no connection between diamonds and the relocations.

De Beers fighting to restore

monopoly; challenges lie ahead
By Nidhi Nath Srinivas, ET Bureau | Mar 24, 2013, 06.29 AM IST

READ MORE ON World Diamond Council | Sunday ET | Mines | Madhya Pradesh | invest | Great
Depression |finance | European Union | Diamond Trading Corporation | Diamond | De Beers | Cecil
Rhodes | Anglo American |Africa

De Beers has survived two World Wars, the

Great Depression, the break-up of the USSR and the end of apartheid in South Africa. The toughest
phase, however, lies ahead

The absorbing story of how the world's largest rough diamond producer lost its
monopoly, the role India - the world's largest market for jewellery - had to play in
that decline, and how the South African giant is fighting back.
May 14, 2012. It's the annual gala dinner of the World Diamond Council at
Vicenza in Italy. At the end of his address to a roomful of diamantaires, Nicky
Oppenheimer, then chairman of De Beers, said: "As I contemplate an imminent
change in my personal circumstances in the next few months, I am often
reminded that only a diamond is forever."
Three months later Anglo American, one of the world's largest mining and
natural resources groups, increased its stake in De Beers to 85% by buying out
the Oppenheimer family's 40% stake in the world's largest rough-diamond
producer for $5.1 billion. The Botswana government holds the rest. The post of
chairman, held by an Oppenheimer for almost 85 years, now belonged to Anglo
American CEO Cynthia Carroll. The Oppenheimers clearly couldn't be forever at
De Beers; and questions are now being asked whether the diamond colossus too
can be as eternal as the much-coveted stone itself.
Since it was founded in 1888, De Beers has survived two World Wars, the Great
Depression, the break-up of the USSR and the end of apartheid in South Africa.
The toughest phase, however, lies ahead.

BETWEEN A ROCK & A HARD PLACE

Till the '80s, De Beers accounted for 90% of all rough diamonds sold by value,
and controlled an empire that extended from the mines of South Africa, Australia,
Canada and Siberia to the sorting rooms of London, Antwerp and Tel Aviv. Today
that share has whittled down to some 35%, courtesy a series of rapid changes in
the world of luxury and mining.
This year will be a watershed one for De Beers. On the heels of the
Oppenheimers exit comes the shift to Botswana. The powerful South African
enterprise is shifting its diamond sorting and sales hub from the fortress-like
headquarters at 17 Charterhouse Street in central London to Gaborone, the
capital of Botswana. According to Carroll, "This is one of the biggest undertakings
in the history of De Beers." Carroll will step down as chairman at the end of the
month, and Mark Cutifani, the new CEO of Anglo American, will take over. The

integration of De Beers into Anglo American became effective from March 1,

2013, while the shift to Gaborone is gathering pace.
These tectonic changes are taking place at a time when there's pressure on sales
in a shrinking market; De Beers' total sales in 2012 decreased 16% to $6.1
billion. Meantime, competitors like Alrosa of Russia, BHP Billiton of Australia and
Anglo-Australian mining group Rio Tinto continue to chisel away at De Beer's
monopoly. Rio Tinto increased sales by 12% in 2012.
While rivals have evolved a distribution system that mimics that of De Beers, the
hitherto virtual monopoly is no longer able to 'punish' its customers for buying
diamonds from other companies. "We embrace the fact that we operate in a
competitive marketplace as we believe we have an exceptionally strong offering
for our customers," says Varda Shine, CEO of Diamond Trading Corporation
(DTC), De Beers' marketing arm. "We understand that our sightholders [or
dealers] will purchase diamonds from other producers and we see this as a
perfectly healthy situation for the industry to be in."
Despite the brave face, the fact is that rivals are chipping away. "More
competition does influence prices and reduce the influence of De Beers... I don't
believe that De Beers will ever truly be on top again," says Martin Rapaport,
founder of Rapaport Diamond Report, the primary source of diamond prices and
market information.

De Beers Diamond Empire

By: Harry Glancy and Montana Kimel

The Diamond Industry

The diamond market is estimated to be worth $30 billion a year. There has been many
controversies surrounding the industry due to the precious worth that the resources holds.
The price has remained relatively constant because the material is used for both recreational
and industrial uses.

De Beers Diamond Company

The company was established in 1880 by the Oppenheimer Family shortly after the discovery
of the first diamonds in South Africa. It had the ability of one of the first companies to open
mines, to start creating a monopoly power over the diamond harvesting throughout Africa.
They also buy diamonds directly from other companies allowing them to hold a huge share of
the supply. The company once held 85%-95% of diamonds worldwide. An interesting aspect of
their company is that they only hold rough diamonds. De Beers sells the rough diamonds to
invited clients of the company. Part of their success was from the public's idea that diamonds
were a rare and precious stone. This was in fact part of the marketing strategies that De Beers
had used for many decades. Allowing them to make their product highly demanded by
consumers.

How De Beers became a Monopoly

LEGAL BARRIERS TO ENTRY

There are no
real legal barriers to directly enter the diamond
industry,
although many regions require firms to pay tariffs on
the resources
the extract. De Beers essentially acts as a cartel
over the
diamond industry, holding stakes in nearly all of the
worlds major
diamond mines and controlling the price of
diamonds in
the market. Because of their enormous power and
control over
the industry, De Beers has fallen victim to claims
suggesting
that the company is hoarding mass quantities of
diamonds and
participating in price fixing. Furthermore, allegation
against De beers restricting diamond access have been turning up over the last century, yet
no actions have ever been taken against this.
De Beers current possesses mines in South Africa, Canada, Namibia and Botswana where
they hold a 50:50 stake in the worlds richest diamond mine. Many diamond producers find
themselves under scrutiny regarding conflict and the means of extraction. De Beers operates
in complete compliance with the nations that it works in and certifies that all of its diamonds
are 100% conflict free (no blood diamonds).

CONTROL OF ESSENTIAL RESOURCES

De Beers has taken control over their essential resource, in this case rough diamonds. They
have control over nearly 60% of the worlds rough uncut diamonds. Most diamonds come at
one point or another from De beers, either directly or indirectly. The company is so large that it
can actually afford to buy up significant portions of other diamonds similar to those of their
competitors and flood markets with them. De beers also has deals with many diamond
producing nations allowing them to purchase and produce their rough uncut stones. Since the
diamond giant is so powerful in the industry it can choose exactly who it sells its product to
and how much they must purchase it for. Because of their control over price and quantity De
Beers is able to operate a successful monopoly.

This map

displays the regions which De beers operates in.

PRICING STRATEGIES
De beers has the power to purchase rough stones from other sources, they can actually
purchase enough to alter the price of competitive diamonds. For example, when De Beers
feels as though another diamond producer is attempting to undercut De Beers and sell for
cheaper, De Beers will buy up huge quantities of other stones, allowing them to fluctuate the
price as they see fit.

The Disappearance of the Monopoly

De Beers have not been able to sustain monopoly power. With efforts from support groups
and activist there has been much controversy over the mining and production of diamonds,

especially as a monopoly. Government action and official standards have been put upon the
industry. For example the Kimberly-Process is now in place which forces the company to have
origin certificates for the diamonds. The Process also allowed for the goods to be tracked.
This helps de-monopolize the company because they could no longer hide the origin of the

stones.
An important player in the fall of
De Beers monopoly was an Israeli billionaire, Lev Leviev. As a real estate and transport tycoon
he began to become passionate about diamonds. This caused him to gain more power in the
diamond business. He had an advantage on De Beers because he was interested in the entire
process, including the retail which De Beers did not have at the time.Leviev then made ties
with Russia and now President Vladimir Putin. This meant that Leviev did not need to go
through De Beers supply and they created more factories. The government welcomed the
newly created jobs which helped boost his power. This type of competition and regulation
greatly effected De Beers economic growth and soon grew to destroy their monopoly power
over the diamond industry.