Diamonds have been known to man for a very long time. Over that time, because of their rarity, they have been in demand and greatly treasured. However, that changed with an accidental discovery of alluvial diamonds in 1867 in South Africa.
Massive amounts of diamonds began to be mined, with diamond output increasing tenfold in ten years from 1867. Within a couple of years, more diamonds had been mined than had been discovered in India over the previous 2000 years. The De Beers company was formed in 1888 to control the diamond market now that they were no longer a scarce commodity. For a few decades, diamonds remained in demand, particularly in Europe and England, but sales began to decline after WWI. The Great Depression weakened sales even further around the world.
De Beers spent a lot on marketing, adopting the slogan ‘a diamond is forever’ in 1947. Sales boomed, and remain high today. But diamonds are no longer rare, just superbly marketed and tightly controlled. For decades, De Beers controlled the majority of the diamond market but by 2020, it only controlled around 23% while the Russian company, Alrosa, controlled 27.5%.
Last month, it looked as if the diamond trade would be severely affected by sanctions levelled against Russia due to it unlawful invasion of Ukraine. Alrosa and its CEO had been specifically mentioned in some sanctions. It looked as if this would be a major blow to the Russian economy, however, you won’t be surprised that it’s not as simple as that. Russian rough diamonds are being purchased by India and Dubai and places like Antwerp in Belgium, all large cutting and polishing centres. The finished diamonds are then able to be sent on to countries such as the US as the diamonds have been ‘substantially transformed’. The US is considering tougher sanctions to close this loophole. Australia, Europe and the UK have not yet acted.