FadeTheButcher
07-19-2004, 08:38 AM
Good read.
http://www.economist.com/printedition/PrinterFriendly.cfm?Story_ID=2921462
An Israeli tycoon is helping to force De Beers to surrender its control of the world's diamond market
HOW much turmoil can the diamond industry sustain without shattering? On July 13th in an Ohio court De Beers, the world's largest producer of rough stones, finally pleaded guilty to charges of price-fixing of industrial diamonds and agreed to pay a $10m fine, thereby ending a 60-year-long impasse. De Beers executives are at last free to visit and work directly in the largest diamond market, America.
A few days earlier, on July 9th, the first case of successful industry self-regulation against trade in so-called “conflict diamonds” took place when Congo-Brazzaville was punished for failing to prove the source of its diamond exports. And on June 28th Lev Leviev, an arch-rival of De Beers, opened Africa's biggest diamond-polishing factory in Namibia.
Behind all these events lies sweeping change in an industry that sells $60-billion-worth of jewellery alone each year. For generations it has been run by De Beers as a cartel. The South African firm dominated the digging and trading of diamonds for most of the 20th century. Yet the system for distributing stones established decades ago by De Beers is curious and anomalous—no other such market exists, nor would anything similar be tolerated in a serious industry.
De Beers runs most of the diamond mines in South Africa, Namibia and Botswana that long produced the bulk of world supply of the best gemstones. It brings all of its rough stones to a clearing house in London and sorts them into thousands of grades, judged by colour, size, shape and value. For decades, if anyone had rough diamonds to sell on the side, De Beers bought these too, adding them to the mix. A huge stockpile helped it to maintain high prices while it successfully peddled the myth that supply was scarce. . .
http://www.economist.com/printedition/PrinterFriendly.cfm?Story_ID=2921462
An Israeli tycoon is helping to force De Beers to surrender its control of the world's diamond market
HOW much turmoil can the diamond industry sustain without shattering? On July 13th in an Ohio court De Beers, the world's largest producer of rough stones, finally pleaded guilty to charges of price-fixing of industrial diamonds and agreed to pay a $10m fine, thereby ending a 60-year-long impasse. De Beers executives are at last free to visit and work directly in the largest diamond market, America.
A few days earlier, on July 9th, the first case of successful industry self-regulation against trade in so-called “conflict diamonds” took place when Congo-Brazzaville was punished for failing to prove the source of its diamond exports. And on June 28th Lev Leviev, an arch-rival of De Beers, opened Africa's biggest diamond-polishing factory in Namibia.
Behind all these events lies sweeping change in an industry that sells $60-billion-worth of jewellery alone each year. For generations it has been run by De Beers as a cartel. The South African firm dominated the digging and trading of diamonds for most of the 20th century. Yet the system for distributing stones established decades ago by De Beers is curious and anomalous—no other such market exists, nor would anything similar be tolerated in a serious industry.
De Beers runs most of the diamond mines in South Africa, Namibia and Botswana that long produced the bulk of world supply of the best gemstones. It brings all of its rough stones to a clearing house in London and sorts them into thousands of grades, judged by colour, size, shape and value. For decades, if anyone had rough diamonds to sell on the side, De Beers bought these too, adding them to the mix. A huge stockpile helped it to maintain high prices while it successfully peddled the myth that supply was scarce. . .