diamond: The Diamond Cartel
The discoveries of 1870–71 in South Africa led to a great number of prospectors staking out claims and securing the diamonds by open-pit or quarry mining. The damage caused by floods and mudslides, unavoidable when there were so many different claims, was an important factor in the series of amalgamations carried on by Cecil Rhodes and Barnett Barnato. Rhodes brought about the merging of their interests in the De Beers Consolidated Mines, Ltd., which established (1889) an effective monopoly over the diamond industry. Loss of diamonds by theft was reduced through the passage of the so-called I.D.B. (Illicit Diamond Buying) Act, which limited the trade to licensed buyers and imposed penalties for the possession of uncut stones without a license. Thefts were further curtailed by the institution of compounds in which the workers live while employed by the company and which they leave only after being thoroughly searched.
Most of the major diamond producers belong to, or have cooperated with, the De Beers–led marketing cartel, formed to maintain the price of diamonds at a high level. De Beers, under Harry Oppenheimer's leadership (1957–84), maintained its dominant position in the industry by using its numerous worldwide companies to buy up new sources of diamonds and to control distribution of industrial diamonds and production of synthetic ones. In the last decades of the 20th cent., however, De Beers' hold over the unpolished diamond market decreased, and in 2000 the company announced it would end to its policy of controlling diamond prices through hoarding and shift its focus to increasing sales.
The Columbia Electronic Encyclopedia, 6th ed. Copyright © 2012, Columbia University Press. All rights reserved.
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