Ass #2 -Evolution of the Diamond Industry

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Questions and Answers

What is the purpose of the Kimberley Process (KP)?

To combat the trade of conflict diamonds. (correct)

To promote diamond sales through auctions.

To certify diamonds for jewelry production.

To provide a platform for online trading of diamonds.

Which country is the largest center for diamond cutting and polishing?

South Africa

Russia

China

India (correct)

What is a diamond exchange commonly referred to as?

Trade block

Bourse (correct)

Auction house

Market

What segment of the diamond industry typically has the highest profit margins?

Upstream and downstream Signup and view all the answers

Which of the following best describes a unique diamond offering like the Argyle Pink Diamond Tender?

A specialized auction for rare diamonds. Signup and view all the answers

What are common sales channels for polished diamonds apart from the primary sales format of long term contracts

Short-term contract and auctions Signup and view all the answers

Which company is cited as an example of complete vertical integration in the diamond industry?

De Beers Signup and view all the answers

What challenge do midstream diamond companies typically face?

Struggling on a thin average margin. Signup and view all the answers

What is the primary sales format in the diamond trade?

Long-term contracts Signup and view all the answers

What are sightholders in the diamond trade?

Groups of buyers authorized to attend sales events called sights Signup and view all the answers

What is the purpose of sorting after diamond extraction?

To divide diamonds into gem and industrial grades, thus creating value Signup and view all the answers

Which of the following is true about industrial quality diamonds?

They are known as 'Bort'. Signup and view all the answers

Which factor is NOT considered in evaluating a buyer's eligibility to become a sightholder?

Historical sales performance Signup and view all the answers

In the diamond trading process, what does a value-adding process primarily accomplish?

It increases the product's value for consumers. Signup and view all the answers

What is the main characteristic of rough sorting in diamond processing?

It is primarily based on weight, shape, clarity, and color. Signup and view all the answers

How long can the exploration and evaluation phase of diamond mining take before actual mining begins?

Years, as it requires careful planning and evaluation. Signup and view all the answers

What was the primary purpose of the establishment of De Beers Consolidated Mines Ltd in 1888?

To stabilize market prices for diamonds. Signup and view all the answers

Which organization succeeded the London Diamond Syndicate?

Central Selling Organisation (CSO) Signup and view all the answers

What is the significance of the slogan 'A diamond is forever' introduced by Mary Frances Gerety?

It established diamonds as a symbol of enduring love. Signup and view all the answers

How did De Beers maintain dominance in the diamond market for six decades?

By purchasing viable mines to control supply. Signup and view all the answers

What prompted the creation of the Central Selling Organisation by Ernest Oppenheimer?

The impact of the Great Depression on diamond prices. Signup and view all the answers

Which process comes after rough sorting and distribution in the diamond's journey from mine to market?

Cutting and polishing Signup and view all the answers

What was one of the effects of rising diamond producers in countries like Russia and Australia on De Beers?

Led to a multichannel market diminishing De Beers' monopoly. Signup and view all the answers

Which segment is NOT part of the diamond's journey from mine to market?

Conflict resolution Signup and view all the answers

What was the initial method used by miners before moving to 'Dry Diggings'?

Artisan mining in riverbeds Signup and view all the answers

What was a result of unstable prices in the diamond market for solitary miners?

Partnerships with financing companies. Signup and view all the answers

What describes a larger organization buying and joining smaller companies?

Consolidation Signup and view all the answers

What trade organization formed in 2015 to expand demand for the diamond industry?

DPA - Diamonds Producers Association Signup and view all the answers

Study Notes

Diamond Industry Evolution

India was the sole diamond source until the 18th century, then discoveries in South Africa surged demand.
Global diamond jewelry sales exceed 72billionannually,withannualroughdiamondproductionexceeding72 billion annually, with annual rough diamond production exceeding 72billionannually,withannualroughdiamondproductionexceeding13 million.
India's Deccan Plateau yielded diamonds from the 13th to 17th centuries, then production waned.
Brazil became a major supplier in the mid-1700s, but was surpassed by South African discoveries.

Modern Diamond Industry

The 1866 discovery of the Eureka diamond ignited a diamond rush in South Africa.
Major discoveries like the Star of Africa (Dudley) diamond in 1869 led to the modern diamond industry.
Miners initially focused on riverbeds, then shifted to "dry diggings" (Bultfontein, Dutoitspan) leading to De Beers and Kimberly mines.
Cecil Rhodes and Barney Barnato consolidated mines, with Rhodes acquiring Kimberley mines and establishing De Beers.
The 1888 establishment of De Beers Consolidated Mines standardized and stabilized market prices.
The London Diamond Syndicate (later the CSO then the DTC) controlled diamond sales.

Great Depression & De Beers

The Great Depression and WWII brought the diamond industry to a halt but there was strong growth as demand increased.
De Beers recognized the need to increase consumer demand and created the slogan "A diamond is forever."
This successfully established diamonds as the major engagement ring stone.
Increased competition from Russia, Australia, and Canada challenged De Beers' monopoly.
Other diamond producers emerged, creating a multi-channel market.

Global Value Chain

The diamond value chain encompasses mining, rough sorting, cutting, polishing, trading, jewelry manufacturing, and retail.
Mining is the most risky and fluctuating segment of the diamond value chain.
The largest companies like Alrosa (Russia) and De Beers dominate rough diamond mining.
Diamond mining is a lengthy process including exploration, evaluation, licensing, and capital investment.
Diamond sorting classifies diamonds as gem or industrial based on quality (weight, shape, clarity, color)
Physical trading is based either on long-term contracts or auctions.

Diamond Trading & Manufacturing

Diamond cutting and polishing centers are primarily located in India, New York, Antwerp, Tel Aviv, Gaborone, Russia, China, South Africa, and Thailand.
Diamond manufacturing is a value-added process, from design to production.
Major jewelry manufacturing hubs include China's Guangdong Province and India's Surat.
Vertical integration (controlling all stages of production) in diamond industry can be complex and expensive.

Consumer Markets

The US remains the world's largest diamond market, followed by China.
Other major markets include India, the Persian Gulf, and Japan.
Secondary markets consist of the resale of used diamonds.
Millennials and Gen Z are becoming increasingly important consumer groups for diamonds.

Diamond Marketing

De Beers' promotion efforts and the slogan "A diamond is forever" were significant in establishing diamonds' demand.
The Diamond Producers Association (now the Natural Diamond Council) was formed in 2015 to promote natural diamonds.
The rise of internet and social media changed marketing channels.
Online sales and direct-to-consumer strategies are becoming increasingly common.

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Description

Explore the fascinating history of the diamond industry from its early origins in India to the discoveries in South Africa that transformed global demand. This quiz highlights key events, major players, and the evolution of diamond mining practices. Test your knowledge of this sparkling sector and its economic impact.