Ass #2 - Key Terms
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Questions and Answers

What is the primary challenge faced by diamond mining companies?

  • Uncertainty and capital investment (correct)
  • Labor shortages
  • Technological obsolescence
  • Market saturation

    • Which two companies supply the majority of the world’s rough diamonds by value?

  • ALROSA and De Beers (correct)
  • Alrosa and Rio Tinto
  • De Beers and Tiffany & Co.
  • Tiffany & Co. and Cartier

    • What is the purpose of rough sorting in the diamond value chain?

  • To prepare diamonds for polishing
  • To facilitate rough diamond sales (correct)
  • To ensure all diamonds are sold at the same price
  • To increase mining efficiency

    • Which segment of the diamond value chain is characterized by the highest levels of risk?

    <p>Mining</p> Signup and view all the answers

    What emerging trend has significantly impacted polished diamond sales?

    <p>Online trading</p> Signup and view all the answers

    What does the term 'bort' refer to in the diamond industry?

    <p>A form of industrial-grade diamond with inclusions</p> Signup and view all the answers

    What is the primary function of the Diamond Trading Company (DTC)?

    <p>To serve as the marketing and sales arm of De Beers</p> Signup and view all the answers

    Which historical figure is associated with the establishment of De Beers Consolidated Mines Ltd.?

    <p>Cecil Rhodes</p> Signup and view all the answers

    What is meant by 'single-channel marketing' in the diamond value chain?

    <p>A strategy with centralized control over marketing and sales</p> Signup and view all the answers

    What challenge did De Beers face with the emergence of new diamond producers?

    <p>Difficulty in controlling diamond supply</p> Signup and view all the answers

    What is the purpose of the 'sight' event in the diamond trading process?

    <p>To allow long-term customers to buy rough diamonds based on contracts</p> Signup and view all the answers

    What does the term 'downstream' refer to in the diamond value chain?

    <p>The resale market for gems and jewelry</p> Signup and view all the answers

    Which organization functioned as the sales arm of De Beers before the Diamond Trading Company?

    <p>Central Selling Organisation (CSO)</p> Signup and view all the answers

    What is an "auction"?

    <p>A competitive sales process where rough diamonds are sold to the highest bidder.</p> Signup and view all the answers

    What is the definition of Beneficiation ?

    <p>A commitment to reserve a portion of the resources derived from a country for the economic development of that country.</p> Signup and view all the answers

    A Diamond Exchange is.........

    <p>A membership-based entity that provides service and venue to facilitate diamond trading.</p> Signup and view all the answers

    What is a significant benefit of long-term contracts in rough diamond sales?

    <p>They ensure predictability for both sellers and buyers.</p> Signup and view all the answers

    Which process in the diamond value chain is essential for enhancing a diamond’s visual appeal?

    <p>Cutting and polishing</p> Signup and view all the answers

    How has online trading influenced the diamond industry?

    <p>It has emerged as a popular venue for polished diamond sales.</p> Signup and view all the answers

    What key aspect should jewelers recognize to maintain their customer base in the diamond market?

    <p>Adapting to the demands of new consumer generations.</p> Signup and view all the answers

    Which segment of the diamond value chain showcases the highest levels of profitability?

    <p>Both ends of the supply chain</p> Signup and view all the answers

    What was the primary effect of Cecil Rhodes's production control in the diamond industry?

    <p>It stabilized diamond prices in the market.</p> Signup and view all the answers

    Which diamond quality classification is specifically intended for use in jewelry?

    <p>Gem-Quality Diamonds</p> Signup and view all the answers

    What was the role of the Central Selling Organisation (CSO) in the diamond industry?

    <p>It operated as the sales arm for De Beers.</p> Signup and view all the answers

    Which term describes the retail segment of the diamond value chain?

    <p>Downstream</p> Signup and view all the answers

    What major historical event marked the beginning of the diamond rush?

    <p>The discovery of the Star of South Africa</p> Signup and view all the answers

    Which concept refers to a strategy where a company operates across various segments of the value chain?

    <p>Vertical Integration</p> Signup and view all the answers

    What is the significance of the Diamond Trading Company's (DTC) relationship with De Beers?

    <p>It served as the primary marketing and sales arm of De Beers.</p> Signup and view all the answers

    Which statement about the secondary market in diamonds is true?

    <p>It is focused on the resale of gems and jewelry.</p> Signup and view all the answers

    What type of organization is a "Major"?

    <p>Large-scale industry leader specializing in diamond mining.</p> Signup and view all the answers

    The London Diamond Syndicate was formed as a ....

    <p>A group of diamond merchants formed in 1890 to buy and sell rough diamonds.</p> Signup and view all the answers

    What type of mine is a "Dry Dig" ?

    <p>A prospector’s term for diamond deposits away from water.</p> Signup and view all the answers

    Industrial Diamonds are for what purpose ?

    <p>Diamonds designated for industrial use.</p> Signup and view all the answers

    What type of buyer is a Sightholder?

    <p>A buyer admitted by a rough diamond producer as a long-term customer.</p> Signup and view all the answers

    What is the definition of "Upstream"?

    <p>The rough supply portion of the diamond value chain, including mining and rough distribution.</p> Signup and view all the answers

    How do you define Value-Adding Process?

    <p>Activity that adds something to a product that increases its value for consumers.</p> Signup and view all the answers

    How many segments of the diamond value chain are there?

    <p>6</p> Signup and view all the answers

    What forced the integration of the multi-channel ?

    <p>The disintegration of single-channel supply and sales of rough diamonds</p> Signup and view all the answers

    What country was the only diamond source until the early 1800 century ?

    <p>India</p> Signup and view all the answers

    Who was the world's leading diamond producer from the early 1700s to the late 1800s?

    <p>Brazil</p> Signup and view all the answers

    In the new era what platform is the most important marketing platform?

    <p>Social media</p> Signup and view all the answers

    Outside of Social Media, what is another important jewelry retail avenue ?

    <p>Online Sales</p> Signup and view all the answers

    What advances affected the entire diamond supply chain?

    <p>The introduction of new technology</p> Signup and view all the answers

    How did De Beers solidified its single-channel marketing strategy?

    <p>through centralized control of rough diamond supply, buying, marketing, and sales.</p> Signup and view all the answers

    What global campaign established the tradition of the diamond engagement ring worldwide?

    <p>De Beers</p> Signup and view all the answers

    How do Sorters categorize gem-quality diamonds?

    <p>based on weight, shape, clarity, and color.</p> Signup and view all the answers

    What opportunity do rough diamond auctions (tenders) provide ?

    <p>allow all buyers to source directly from the producers.</p> Signup and view all the answers

    Where in the world are most diamonds cut and polished?

    <p>India</p> Signup and view all the answers

    What market is the number jewelry-consuming market in the world, with China coming in second?

    <p>USA</p> Signup and view all the answers

    What market is a good indicator of a diamond’s value?

    <p>The Secondary Market</p> Signup and view all the answers

    Study Notes

    Key Terms

    • Auction: A competitive process where rough diamonds are sold to the highest bidder.
    • Beneficiation: A country's commitment to reserve resources for economic growth.
    • Bort: A form of industrial diamond, often included in crystals, ranging from yellow, gray, to brown.
    • Central Selling Organisation (CSO): An agency that served as De Beers' sales arm.
    • Diamond Exchange: A membership-based entity facilitating diamond trading.
    • Diamond Trading Company (DTC): The marketing and sales arm of De Beers (formerly the CSO).
    • Downstream: The retail portion of the diamond value chain.
    • Dry Diggings: Diamond deposits not located near water.
    • Gem-Quality Diamonds: Diamonds meeting specific criteria for jewelry use.
    • Industrial Diamonds: Diamonds suited for industrial applications.
    • London Diamond Syndicate: A group of diamond merchants formed in 1890 to buy and sell rough diamonds.
    • Major: A large-scale company leading in diamond mining.
    • Secondary Market: The market for reselling gems and jewelry.
    • Sight-Rough: Diamond sales event where long-term customers buy from producers with contracts.
    • Sightholder: Buyer with a contract to purchase rough diamonds from producers.
    • Single-Channel Marketing: Centrally controlled marketing strategy for rough diamonds.
    • Upstream: Segment of the value chain focusing on rough diamond mining and distribution.
    • Value-Adding Process: Activities that enhance a product's value.
    • Vertical Integration: Business strategy involving operation in multiple segments of the value chain.

    Key Concepts

    • India's Diamond History: India was the primary source of diamonds until the 18th century.
    • Brazil's Diamond Production: Brazil was a leading diamond producer from the early 1700s to the late 1800s.
    • Cecil Rhodes and De Beers: Cecil Rhodes established De Beers to control diamond prices; this company was significant for stabilizing pricing and establishing a centralized trading model.
    • Diamond Rush: The diamond rush began with the discovery of the Star of South Africa.
    • De Beers Dominance: De Beers solidified its single-channel marketing and supply control to significantly influence the diamond market.
    • De Beers Global Campaign: De Beers' campaigns established the diamond engagement ring tradition worldwide.
    • Challenges to De Beers' Control: The rise of other producers made it difficult for De Beers to control the diamond supply.
    • Evolution of the Diamond Value Chain: The diamond value chain includes roughly six segments. Difficulty in diamond mining operations and managing investment risk are some of the major obstacles to diamond mining firms today.
    • Rough Diamond Supply: ALROSA and De Beers supply over half of the world's rough diamonds.

    Diamond Sales and Value Addition

    • Rough Sorting Objective: The goal of rough sorting is to facilitate sales.
    • Diamond Categorization: Sorting categorizes diamonds based on factors like weight, shape, clarity, and color.
    • Long-Term Contracts: Long-term diamond sale contracts benefit buyers and sellers; their reliability is a key advantage to the structure.
    • Rough Diamond Auctions: Rough diamond auctions allow buyers direct access to rough diamonds from a producer.
    • Diamond Cutting and Polishing: Cutting and polishing significantly enhance diamond beauty.
    • Diamond Trading and Market: Diamond cutting and polishing are a significant part of the Indian economy. Online sales of polished diamonds are growing.
    • Challenges in Diamond Trading: A limited number of players participate in upstream segments of the industry, impacting resources, risk, and profit potential. Profiteering is often found at the two ends of the supply chain.
    • Technological Advancements: Technology significantly impacts the diamond supply chain, and technological advancements continue to be important in the current market.
    • Market Dynamics: The US and Greater China are the leading diamond consumer markets.
    • Importance of Social and Internet Media: Social media and the internet serve as significant advertising platforms for jewelers.

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    Ass #2 Key Terms & Concepts PDF
    Ass #2 Key Terms & Concepts PDF

    Description

    Test your knowledge of essential terms related to the diamond industry. This quiz covers concepts such as auctions, beneficiation, and the roles of various organizations within the diamond market. Perfect for anyone looking to deepen their understanding of diamond trading.

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