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Essay on DeBeers Monopoly
In a Nutshell
The history of De Beers falls into three broad stages. In its early years, when the company produced over 90% of the world's diamonds, it was able to control the production and hence the supply of diamonds almost at will. Then, from the beginning of the 20th century, when rival producers began to challenge its pre-eminence, De Beers used its still-dominant position to co-ordinate and regulate the supply of diamonds in pursuit of price stability and consumer confidence. Finally, in the closing years of the last century, the globalising economy rendered De Beers' role of industry “custodian” inappropriate and expensive. In response De Beers set about crafting a new strategy for the 21st century: a suite of innovative programmes and alliances designed to reinvigorate the industry and to grow demand for diamond jewellery.
The international diamond cartel, the most successful cartel in history, far more successful than the demonized OPEC, is at last falling on hard times. For more than a century, the powerful DeBeers Consolidated Mines, a South African corporation controlled by the Rothschild Bank in London, has managed to organize the cartel, restricting the supply of diamonds on the market and raising the price far above what would have been market levels.
t is not simply that DeBeers mines much of the world's diamonds; DeBeers has persuaded the world's diamond miners to market virtually all their diamonds through DeBeer's Central Selling Organization (CSO), which then grades, distributes, and sells all the rough diamonds to cutters and dealers further down on the road toward the consumer.
Even an unchallenged cartel, of course, does not totally control its price or its market; even it is at the mercy of consumer demand. One of the reasons that diamond prices and profits are slumping is the current world recession. World demand....
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