A SUMMARY

Global History of Diamond Production

If it were not for the salting of many ancient riverbeds with loose diamond, this precious gem would not have been discovered till the late 19th century. Diamond mining began around 2,500 years ago when miners in South Africa stumbled upon the first of the earth’s diamond reserves. These reserves are essentially extinct volcanoes lined with diamond-embedded rock. Prior to that discovery, somewhere between 800 and 400 BC, most of the world’s diamonds were to be found in India. Having established that, the diamond, as we know it today was not completely rendered till man learned to cut it. This took place close to the 15th century as India’s diamond mines had become exhausted.

The journeying and exploration of the New World was heavily motivated by the certain repository of mineral wealth. Thus, around 1730, the New World became famous for diamonds, pearls and emeralds. The influx of Brazilian diamonds surprisingly decreased the value of the diamond. By 1740, there was a distinct two-tier market for diamonds. Tier One was a distinct forerunner of the De Beers cartel and consisted of Dutch syndicates that bought rough direct from the Brazilian mines through a concession granted by the Portuguese crown. Hence the rough market was under separate, monopolistic, shock-absorbing control in Amsterdam. Tier Two consisted of a rapidly proliferating network of cutters, dealers and jewelers who were competing for goods to cut and sell to the courts of Europe and to an emerging market of wealthy businessmen. With the rough trade in Dutch hands, it is no accident that Amsterdam became the world’s leading cutting center—eclipsing Antwerp until it re-emerged a century later. New World diamonds were the underpinning of the new world of diamonds.

Till 1870 every diamond ever found had come from a secondary source such as a riverbed or area of weathered rock containing diamonds. South Africa was about to establish itself as the pioneer of diamond production. The first primary deposit was found on Jagersfontein farm in the Orange Free State. Within a month, a second reserve was found near what was to become the town of Kimberly in the Cape Colony. Two more mammoth finds followed in 1871. Suddenly, the world was filled with diamonds from kimberlite pipes. South Africa was now on the edge of producing more stones in a decade than had been found in the preceding 2,000 years. Between 1870 and 1880, annual production skyrocketed from 100,000 to 3 million carats. Despite the fact that there had been mushrooming demand for diamonds throughout the 19th century, there was simply no way to absorb such excess. Not only would South Africa rewrite the rules for diamond mining, it would rewrite the rules for diamond marketing. From this point on, the diamond story became as much about revolutions in capitalism as it is revolutions in geology. Overnight, a coveted rarity had become a commodity requiring centralized control of supply if prices were to be stabilized and confidence in this gem maintained.

In 1974 Stalin sent a team of geologists into Siberia in search for diamonds as a means of earning a much-needed foreign exchange. If it were not for the diamond, the Soviet Union would not have been able to rebuild its devastated industrial infrastructure. More importantly it could not have prepared itself for the coming Cold War with the United States. Thus diamonds in this situation had become an industrialist’s savior. However, when noteworthy diamond deposits were found in Yakutia in 1953, they were of exceptional beauty. Russia would now join the likes of GE, De Beers and later China as a major producer of man-made diamonds suitable for industry.