What does the De Beers name mean within today’s diamond market?

  • Who is De Beers?
  • How did De Beers establish the prices within the diamond market?
  • What does that mean to the rest of the diamond industry?

The diamond industry was almost entirely controlled by the diamond giant De Beers in the last century, with 80% of all rough diamonds in the world in their possession. They thereby attempted to monitor global demand and therefore also the prices. These days the De Beers share has been reduced to 20%. The current world leader Alrosa has taken over their leading position with 28% of the diamond market. How has the price of the diamond evolved? What role does De Beers still play today?

Who is De Beers?

De Beers ruled the diamond industry for a long time. The company influenced the diamond market by reducing production with lower demands, in order to make the prices increase artificially. They are also largely responsible for the diamond of today’s status and emotional value. They were the ones to come up with the ‘Diamonds are a girl’s best friend’ slogan and also introduced the idea of the diamond engagement with a price tag of two months’ wages.

De Beers is involved with the entire diamond industry. They are active in mining, the sale of rough and cut diamonds to companies and private individuals and in recent years the company has also invested in the synthetic diamond.

How did De Beers establish the prices within the diamond market?

1. How does it work with the diamond mines’ ownership rights?

Most diamond mines have several owners, but are managed by one entity, which also takes responsibility for the sale of the diamond. This distinction is very important, because the pricing potential can only be used with a significant share of the global supply. In addition, the price of the diamond will increase with the number of parties involved in the sales process.

Even though the ownership rights of these mines have been divided 50-50 between De Beers and the country’s government where the mine is located, nearly all diamonds produced are sold via De Beers’ DTC distribution system (Diamond Trading Company).

2. How are diamonds sold?

DTC sells the vast majority of its diamonds to a select group of buyers, via ten organised sales events per year. These are not exactly auctions, as De Beers decides on the sales prices itself, which the buyers are free to take or leave. But the buyers are loyal even without any price flexibility, as the quality and quantity of diamonds cannot be found elsewhere.

What does that mean to the rest of the diamond industry?

De Beers tailors the supply introduced to the market by DTC in line with demand. This allows the company to keep its prices very stable, although possibly with a slight upward trend. Even though De Beers is now no longer the market leader, the company still has an enormous share of the diamond market. That is why their influence on the rest of the industry may no longer be absolute today, but certainly not less visible.

What is the Antwerp diamond industry’s role within the global market? What does that say about my investment in diamonds? Ask BAUNAT DIAMONDS’ diamond experts for advice.

Author: Lynn Van Acoleyen
Source: BAUNAT

With this article, BAUNAT strives to inform you thoroughly about investing in diamonds. No investment can be guaranteed to be without risk or fully according to your expectations. That is why we recommend to research the risks and aspects of investing in diamond properly to ensure that you make the right choice for your portfolio.

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