Gemstones

A large trade in gem-grade diamonds exists. Unlike precious metals such as gold or platinum, gem diamonds do not trade as a commodity: there is a substantial mark-up in the retail sale of diamonds. Contrary to popular belief, there is a well-established market for resale of polished diamonds (e.g. pawnbroking, auctions, second-hand jewelry stores, diamantaires, bourses, etc.). One hallmark of the trade in gem-quality diamonds is its remarkable concentration: wholesale trade and diamond cutting is limited to just a few locations. 92% of diamond pieces cut in 2003 were in Surat, Gujarat, India.[40] Other important centers of diamond cutting and trading are Antwerp, where the International Gemological Institute is based, London, New York, Tel Aviv, and Amsterdam. A single company—De Beers—controls a significant proportion of the trade in diamonds. They are based in Johannesburg, South Africa and London, England. One contributory factor is the geological nature of diamond deposits: several large primary kimberlite-pipe mines each account for significant portions of market share (such as the Jwaneng mine in Botswana, which is a single large pit operated by De Beers that can produce between 12.5 to 15 million carats of diamonds per year[41]), whereas secondary alluvial diamond deposits tend to be fragmented amongst many different operators because they can be dispersed over many hundreds of square kilometers (e.g., alluvial deposits in Brazil).

The production and distribution of diamonds is largely consolidated in the hands of a few key players, and concentrated in traditional diamond trading centers. The most important being Antwerp, where 80% of all rough diamonds, 50% of all cut diamonds and more than 50% of all rough, cut and industrial diamonds combined are handled.[42] This makes Antwerp the de facto 'world diamond capital'. New York, however, along with the rest of the United States, is where almost 80% of the world's diamonds are sold, including auction sales. Also, the largest and most unusually shaped rough diamonds end up in New York.[42] The De Beers company, as the world's largest diamond miner holds a clearly dominant position in the industry, and has done so since soon after its founding in 1888 by the British imperialist Cecil Rhodes. De Beers owns or controls a significant portion of the world's rough diamond production facilities (mines) and distribution channels for gem-quality diamonds. The company and its subsidiaries own mines that produce some 40 percent of annual world diamond production. At one time it was thought over 80 percent of the world's rough diamonds passed through the Diamond Trading Company (DTC, a subsidiary of De Beers) in London,[43] but presently the figure is estimated at around 40 percent.[44] De Beers sold off the vast majority its diamond stockpile in the late 1990s - early 2000s[45] and the remainder largely represents working stock (diamonds that are being sorted before sale).[46] This was well documented in the press[47] but remains little known to the general public.