Diamond Syndicate Ltd.

one of the oldest and largest international monopolies, built around De Beers Consolidated Mines Ltd.

The British colonial administrator C. Rhodes, very prominent in the seizure of the diamond deposits discovered in South Africa, founded the De Beers Mining Company in 1880. Rhodes organized the mining of the deposits and soon bought other tracts rich in diamonds. Later he concluded agreements with the owners of some of these tracts on merging them into one enterprise. This led to the founding in 1888 of De Beers Consolidated Mines, which included, along with De Beers Mining Company, the big Kimberley Central Mining Company, which was founded by the British banking house Barnato Bros. In carrying out this merger, Rhodes had the financial assistance of the House of Rothschild. In 1892 the Diamond Syndicate, a cartel with a central marketing organization, was set up on the initiative of De Beers Consolidated Mines and with the participation of Barnato Bros. and other firms involved in the diamond industry. From the moment it was founded, the Diamond Syndicate’s policy was to keep the prices on diamonds, especially those used for jewelry, as high as possible under any and all conditions. To this end it restricted the extraction of diamonds and put on the market only amounts that would permit it to dictate diamond prices.

The greater part of the diamonds in the nonsocialist world is mined in Africa. The most valuable jewelry diamonds are mined in south and southwestern Africa. In terms of weight, about 60 percent of all the diamonds are mined in the Congo (Kinshasa). With a few exceptions, these are industrial diamonds, the demand for which is greatly increasing with the development of technology. The only direct user of jewelry diamonds is the diamond-cutting industry, which produces diamonds for ornamentation and hoarding. The extent of the use of diamonds depends on the demand for them on the part of the upper bourgeoisie. Unlike consumers of other goods, the users of diamonds are interested not in lowering their prices but in raising and stabilizing them on a high level. That is why they support the preservation of the Diamond Syndicate.

Along with controlling the mining of diamonds and restricting their sales, an important aspect of the Diamond Syndicate’s activity is the purchase of the largest batches that arrive on the market legally from outsiders and illegally through smuggling. The prices of industrial diamonds are also high, but jewelry diamonds yield the highest profits. The South African mines of the De Beers Company are the biggest suppliers of jewelry diamonds.

The Diamond Syndicate retains its monopoly on the market by absorbing outsiders or by concluding agreements with them, thus concentrating in its hands a great part of the diamonds which it manages to obtain through various devices. By using the Diamond Corporation, which it set up in 1931, the Diamond Syndicate concludes five-year agreements with all participants in the diamond trade for the shipment of certain amounts of diamonds. The Diamond Syndicate sells diamonds to a limited number of large wholesale merchants through a stable network of brokers. These merchants sell diamonds to smaller merchants, who in turn sell them to still smaller merchants. Most diamonds pass through a long series of middlemen until they reach the consumer.

Diamonds are sold mainly in London, in particular at exhibits that the Diamond Syndicate holds once a month. The Diamond Syndicate ships jewelry raw material to the major diamond-cutting centers—in Belgium, the Netherlands, and Israel—in amounts that are much below the productive capacity of the diamond-cutting enterprises. These enterprises have repeatedly and often unsuccessfully asked for larger shipments of diamond raw material. The diamond-cutting industry of the capitalist countries, not counting the countries of Latin America, employs about 30,000 persons, of whom about one-half are in Belgium.

The commodity exchanges, as a rule, set some limits to the domination of the market by the monopolies. Therefore the monopolies try to restrict as much as possible the sphere of action of the exchanges and, if possible, to virtually eliminate them.

The diamond exchanges in Belgium, the Netherlands, Great Britain, France, the USA, and the Republic of South Africa, as well as those affiliated with the World Federation of Diamond Bourses, are in a somewhat special position. These exchanges conduct a trade in diamond raw materials and diamonds. The exchanges receive diamond raw materials primarily from the Diamond Syndicate. A great number of middlemen and merchants operate on these exchanges. Just as the Diamond Syndicate, the bosses of these exchanges are interested in keeping diamond prices high.

Since World War II the Syndicate has consisted of (1) the Diamond Corporation, which heads the whole complex and concludes agreements with diamond producers on purchasing diamonds mined in accordance with quotas established for them; (2) the Diamond Purchasing and Trading Company, a subsidiary that buys diamonds for jewelry; (3) the Industrial Distributors Ltd., which buys industrial diamonds; (4) the Diamond Trading Company, which sells diamonds for jewelry; and (5) the Industrial Distributors (Sales) Ltd., which sells industrial diamonds. The Diamond Syndicate also runs the industrial enterprise Diamond Development Company, which evaluates diamonds for producers upon their request; the evaluation is paid for and supervised by these producers.

The dominant role in the Diamond Syndicate belongs to De Beers Consolidated Mines, which runs the major diamond mines in the Republic of South Africa and the Namib region, where it controls the Consolidated Diamond Mines of South West Africa. The influence of De Beers extends to all the major diamond mines in Africa. In 1964, De Beers absorbed the Marine Diamond Corporation, which was set up for the underwater extraction of high-quality diamonds off the shores of the Namib area.

De Beers is headed by the British financial group Op-penheimer, which also dominates the big concern Anglo-American Corporation of South Africa. This concern holds assets in many gold-mining companies of the Republic of South Africa, in copper-mining companies in Zambia, and in other enterprises. De Beers, jointly with the British chemical trust Imperial Chemical Industries, owns the African Explosions and Chemical Industries, a large chemical enterprise in South Africa.

De Beers derives enormous profits from its dominant position in the diamond market. It is the biggest company in the Republic of South America and employs more than 17,000 workers and employees. According to its records for 1966, the assets of De Beers amounted to $745 million; its treasury capital amounted to $518 million and it had a net profit of $121 million, that is, 23 percent of its capital. The net profit of the diamonds sold was 32 percent of the unit cost, which attests to their high selling prices. The turnover of the Diamond Syndicate has been increasing—$373 million in 1964, $415 million in 1965, and $498 million in 1966—and thus has reached $500 million. Fortune magazine has estimated (Sept. 15, 1967) that the Diamond Syndicate sells more than 80 percent of the diamond output of the capitalist world.

Since the early 1960’s, important changes have taken place in world diamond extraction and in the international diamond trade. Diamond deposits have been discovered and are now being exploited in the Soviet Union. Encouraged by the success of the national liberation movement, some African countries that play an important role in diamond mining have thrown off the colonial yoke and are striving, with a goal of economic independence, to utilize the deposits in their own interests and to independently sell the diamonds mined in the countries. Furthermore, synthetic diamonds are becoming increasingly important on the market of industrial diamonds.

In an attempt to establish its control over the substitutes of natural diamonds as well, De Beers has set up an enterprise for producing coarse diamond dust in the Republic of South Africa as well as the production of synthetic diamonds in Shannon, Ireland. But in this area it encounters the powerful competition of the American monopoly General Electric, which began producing synthetic diamonds in the USA as early as 1957 and which meets about 25 percent of the demand for industrial diamonds in the USA. In view of these new developments, the Diamond Syndicate is encountering difficulties maintaining its control over the diamond market. The table gives some general ideas about the countries that mine and export diamonds.