Diamonds have both consumer jewelery uses and industrial / manufacturing uses. They are the hardest known substance,
measuring 10 on the Moh Hardness Scale.
Diamonds occur both naturally in rock formations (volcanic pipe) and can also be produced synthetically. Gemstone quality diamonds are
from mines and are not produced synthetically. However, industrial diamonds are produced from mines and synthetically.
The largest producing nations of rough, uncut diamonds (both gemstone quality and industrial) in the world are (by
value of production / percentage of world revenue 2008 / $12.7 billion):
Zimbabwe also has a substantial diamond producing field located in the eastern part of the country at Marange. The nation
has applied for approval under the Kimberly Process to allow for the export of diamonds. However, critics of the nation
complain that in 2008 the area was siezed by the armed forces, local miners were killed, and is administered by an agency that is
connected to the ZANU-PF political party, and that the nation should not be allowed
to export diamonds. Since 2009, the World Federation of Diamond Bourses has recommended that its members do not
purchase / trade in diamonds from the Marange field. Media reports indicate that diamonds are already illegally being smuggled out of the country.
The diamond industry has changed in the past several years.
Most of the production used to be controlled by De Beers (approximately 60% of total world production,
which is located in South Africa, through either direct ownership, partnerships or contract production.
De Beers is owned by the Oppenheimer family consortium (45%), Anglo American Plc. (United Kingdom) (45%), and by
Debswana (10%) a joint-venture between the nation of Botswana and De Beers affiliates.
De Beers had been under indictment for cartel practices for many years in the United States. The situation resulted
in the company being able to promote diamond sales in generic terms, however the company and its employees
were prohibited from operating within the United States. In July 2004, the company finally settled price fixing
allegations in the industrial diamond market by pleading guilty in federal court and paid a fine, and now maintians
an office in New York.
Several large operators have also emerged to compete directly with De Beers, which includes the the other large
diamond mine / production companies such as ALROSA Co. (Russian government owned diamond mining company), Rio Tinto and
BHP Billiton (Australia), Ekati (Canada; owned by BHP Billiton) and MIBA (Congo). ALROSA sells its own output directly
(the European Union required that De Beers no longer purchase diamonds from ALROSA in order to increase competition) into the international
market (approximately 63% of output) and the 37% balance into the Russian domestic market. It was reported in mid-2009
that ALROSA would also exclusively supply rough stones to approximately 15 members of the Antwerp World Diamond Center.
Several African nations now require that the rough diamonds mined within their jurisdiction be sorted locally,
and a portion would be sold locally. Similarly, cutting and polishing operations have been set up in Africa thus there
has been a shift to more value added activities rather than just supplying rough stones (cutting an polishing increases
the value of the rough stone, as much as 50%).
The world's largest producing mine by volume is the Argyle
mine in Australia (small, inexpensive stones).
The largest diamond cutting nation is India and the largest cutting and
polishing company is the Lev Leviev Group.
Whereas diamonds mined from areas of civil war hostilities within Africa have been reduced from entering the market there is still
illegal mining and smuggling taking place.
The retail market has also changed: sales by retailers online through the Internet has increased substantially as opposed to
face-to-face exchanges. The proliferation of online sites allows consumers to comparison shop. Conversely, the online
transactions provide detailed sales data regarding location, size and cut to suppliers.
There is actually a substantial amount of diamonds produced each year and a substantial
stockpile already above ground. However, because of the management of diamond supplies by De Beers in the past only a limited amount
of rough diamonds were released to select polishers / manufacturers (sightholders) in any given year. This created a false condition of scarcity, which is
not verified by limited and/or second hand indications of past volume produced by mines. However, all producers actually
benefit from the high price of diamonds that was the result of the De Beers distribution mechanism. Thus, there was some
tolerance of the system by the other producers.
As indicated above, there is now a trend among producing nations to set up cutting and polishing operations within their own border and use their
own local stones rather than pass rough stones onto the control of De Beers. For instance, the Leviev Group has set up an
operation in Namibia although the stones are actually mined in a joint operation with De Beers (Namdeb).
The largest retail market for diamond gemstone jewelery is the United States (approximately 50% of total sales
in the world annually), followed by Japan, Europe and Asia.
The United States does produce diamonds, however it is primarily synthetic grit and powder for industrial usage. The United states is the largest
market in the world for industrial diamonds used primarily in computer chip production, construction, machinery manufacturing, mining services (drilling), stone cutting/polishing,
and transportation systems (infrastructure and vehicles).
The trade for rough, mined diamonds is centered Antwerp, Relgium (over 80% of volume), followed by
New York, Tel Aviv and Mumbai. Lower quality diamonds are cut in polished in India and Thailand, while higher quality
diamond cutting is carried out in Israel and Belgium, and the larger / high quality diamonds are cut and
polished in New York.
There is controversy surrounding diamonds coming into the market from areas in Africa experiencing civil strife.
These diamonds known as Conflict Diamonds are sold by various groups that are in control of diamond producing mines in
several African nations. The funds received from these diamond sales are used to purchase weapons, ammunitiion and
supplies by groups engaged in open warfare. The concern is part humanitarian with regard to the suffering of the
local populace and part professional with regard to the number of unregulated diamonds flooding the market. The
Kimberly Process is an attempt by producers, wholesalers and retailers to control the process of these conflict diamonds
coming into the market. In July 2004, Congo - Brazzaville was censured for failing to provide record source (provenance)
of the source of diamonds delivered for export.
Four C's - Cut, Carat, Clarity, Color
Cut and polished natural gemstone diamonds used in the jewelery trade are measured and evaluated based on the
well-known 4Cs
Carat. Carat is a measurement of the weight of the diamond. One carat equals 0.2 grams or 200 milligrams.
A carat is also divided into 100 points, thus 50 points equals .50 carats equals 100 milligrams. Carat measurement
is important because larger diamonds are found less frequently in nature.
Clarity. Clarity is the determination of inclusions in the diamond. When diamonds are formed naturally in
rock formations under pressure, mineral elements or fractures may form be within the diamond and been seen under
a microscope or loupe. The International Gemological Institute provides a clarity classification system based
on the Gemological Institute of America (GIA) guidelines:
I.F.
Internally Flawless
V.V.S.1
Very Very Slightly Included
V.V.S.2
V.S.1
Very Slightly Included
V.S.2
S.I.1
Slightly Included
S.I.2
P.1 - I.1
Imperfect
P.2 - I.2
Imperfect
P.3 - I.3
Imperfect
Source: IGI
Color. Color refers to the difference between a colorless (blue-white) diamond and its transition to a yellow
color. The IGI (based on the Gemological Institute of America / GIA guidelines), CIBJO (World Jewelery Confederation) and the IDC each have their own color classification system:
IGI
CIBJO
IDC
Colorless
D
BlancExceptionnel
Exceptional White +
E
Exceptional White
F
Extra Blanc
Rare White +
Near Colorless
G
Rare White
H
Blanc
White
I
Blanc Nuancé
Slightly Tinted White
J
Faint Yellow
K
Blanc Légèrement Teinté
Tinted White
L
M
Very Light Yellow
N
Teinté
Tinted
O
P
Q
R
Light Yellow
S
T
U
V
W
X
Source: GIA / IGI
Additional colors also appear in diamonds and are referred to as fancy diamonds. These colors range (from
the most rare to the least rare): Red, green, purple, violet, orange, blue, and pink.
In November 2011, a record price was set for a yellow diamond: the 110.3 carat Sun-Drop diamond was sold at
auction by Sothebys for 11.2 million Swiss francs / $14.4 million (the diamond was mined in South Africa in 2010).
In 2010, a record price was set for a pink diamond: the 24.78 carat Graf Pink diamond was sold at
auction by Sothebys for $46 million (it is also the most expensive diamond ever sold at auction).
Cut. Cut refers to the quality of the gemstone design, detail of the cutting, shaping and the
quality of the polishing, although a shape must be selected for the rough diamond. Diamonds are mounted and laser scanned to map the most suitable cut for a rough diamond.
The rough diamond needs to cut and shaped to obtain the maximum depth (height), proportionate girdle diameter (width),
girdle thickness (the mid-point between a diamond from which it tapers upwards to the crown and downwards to the pavilion),
the crown height and crown angle, the pavillion depth and the pavillion angle, and the table size (the top flat
facet). The level of expertise utilized in the design, cut and polish of a rough diamond results in the gemstone's ability
to reflect (external), refract (internal) and disperse light.
Popular shapes include:
Baguette
Emerald (rectangular or square)
Heart
Marquise (elongated curved sides with pointed ends)
Oval
Pear (elongated curved sides with rounded top and pointed bottom)
Princess (square)
Round
Trillion
The unofficial "fifth C" does not relate to the physical diamond, rather it relates to Confidence in the source and
grading of the diamond.
The price of a retail diamond increases from the mine as passes through various phases until it reaches a retail
outlet. These phases include rough brokering, cutting and polishing, wholesale, jewelery manufacturing and then jewelery
retail.
Diamond Market Resources
Amsterdam Diamond Exchange (Vereniging Beurs voor den Diamanthandel) www.diamantbeurs.org/
