The next stop in our series of diamond production journals is a quick overview of the players in the game – that is to say, the companies involved in finding the earth’s diamond mines, overseeing the mining, and sometimes taking responsibility for the overall production and sale of the final jewelry. Like much of the rest of the diamond industry, the companies involved are unique from any other type of businesses in the world. The first thing that sets them apart is their rarity.
A Very Large Game with Very Few Players
Diamonds are a billion dollar industry. Because of the worldwide demand for diamonds and the sheer number of jewelry stores who sell them, one might imagine that there are hundreds of companies searching for the stones, extracting them from the earth, and manufacturing pieces of jewelry. However, shockingly, this is far from the case. When one finds an article about the top diamond companies in the world, there are typically between four and ten that are highlighted – not hundreds or thousands, as one might anticipate with something like clothing or software.
What makes a diamond company so rare, then? As one might imagine, there are many factors. The first is simply the rarity of the commodity they produce. Diamond pieces are not like clothing, where if one runs out of cotton to produce garments, one can simply plant and harvest more. The kimberlite stones from which diamonds are extracted had their origins in explosions that took places millions of years ago; there will be no “new” diamonds in our lifetime. There are fewer than fifty diamond mines in the world, and that lack of access to diamonds certainly limits the amount of companies who can have a hand in the diamond mining process.
Another reason diamond companies are so rare is because of the control that existing companies exercise over the diamond market. The original star company was, of course, De Beers.
The De Beers Diamond Company
For about a century, De Beers was the beginning and the end of the diamond world. They hit the scene right as the diamond “rush” of the mid to late 1800s gained its footing. This “rush” certainly changed the game – prior to that point, diamonds were essentially a commodity exclusive to monarchs. However, when diamonds were found in South Africa, the supply increased such that they weren’t entirely out of reach for the common man. However, this presented a new dilemma – how to keep interest (and therefore demand) up even as supply went up. The solution, for De Beers, was to assume control over the marketplace by “creat[ing] distribution arms through ‘The Diamond Syndicate,’ including ‘The Diamond Trading Company’ in London and ‘The Syndicate’ in Isreal,” according to a Business Insider article regarding De Beers diamond history. To put it more simply, De Beers made it such that they could mastermind supply and demand independently of the supply itself.
The icing on the cake was some good marketing, and in 1947, De Beers made public the tagline “A Diamond is Forever” – a slogan that is known to this day, even to those who may not be familiar with the name De Beers.
The De Beers empire continued thus for decades to come – its dominance was unquestioned, and if any company did go strong enough to bring it into question, De Beers stepped in and used their immense wealth to ensure that their position on top was maintained. However, no empire is eternal. Within the last few years, countries outside of De Beers control have stepped up and protested the status quo. Though De Beers is still “in the black,” so to speak, other companies are rising up, and perhaps the strongest among them is…
ALROSA Diamond Company in Russia
Unlike De Beers, which has been in existence for well over a century, ALROSA is relatively new. It was founded in 1987 and is headquartered in Russia. Despite its age, it has wasted no time catching up to the diamond giant, and is even now beginning to push them from their precarious position at the top of the diamond world.
According to MINING.com, ALROSA is the world’s top diamond producer by output in carats – and by their own projection, they show no signs of slowing down. A timeline on their own website, alrosa.ru, reports that in 2016, they have begun development on a new deposit: Zarya pipe (from the Russian for “red sky glow”). Zarya is a kimberlite pipe that will be mined using an open-pit strategy.
The big question is: what does this mean for De Beers? Well, according to ALROSA’s own president, Sergey Vybornov (as quoted in an April 2009 article in Rapaport Magazine) ALROSA is quite possibly on its way to becoming the world’s number one mining company in the gem mining sector. The aforementioned MINING.com article reports similarly that ALROSA is foreseeing better times for the diamond market, and demand may well outpace supply by 2019.
Other Diamond Companies
Though all eyes are currently on the competition between ALROSA and De Beers, several other companies continue to hold their own and contribute in their own way to the world diamond supply. Rio Tinto Diamonds, a British-Australian company, is active on five continents and has revenue in the billions. The Dominion Diamond Corporation, operating out of Canada, is also a notable player – though their revenues are only in the millions for the time being.
Regardless of how things have played out for the last century, it is evident that now, more than ever, the diamond market is changing. There is no longer the monopoly there was before, and smaller companies are getting their piece of the pie. Only time – and the desires of consumers – will determine the direction the diamond market takes.