Gemstones (diamonds)

Gemstones Diamonds

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 jewellery 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. 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 diamonds 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), whereas secondary alluvial diamonds deposits tend to be fragmented amongst many different operators because they can be dispersed over many hundreds of square kilometres (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. 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. The De Beers company, as the world's largest diamonds 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 diamonds 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, but presently the figure is estimated at around 40 percent. De Beers sold off the vast majority its diamonds stockpile in the late 1990s - early 2000s and the remainder largely represents working stock (diamonds that are being sorted before sale). This was well-documented in the press but remains little-known to the general public.

The De Beers diamond advertising campaign is acknowledged as one of the most successful and innovative campaigns in history. N. W. Ayer & Son, the advertising firm retained by De Beers in the mid-20th century, succeeded in reviving the American diamond market and opened up new markets, even in countries where no diamond tradition had existed before. N.W. Ayer's multifaceted marketing campaign included product placement, advertising the diamond itself rather than the De Beers brand, and building associations with celebrities and royalty. This coordinated campaign has lasted decades and continues today; it is perhaps best captured by the slogan "a diamond is forever".

Further down the supply chain, members of The World Federation of Diamond Bourses (WFDB) act as a medium for wholesale diamond exchange, trading both polished and rough diamonds. The WFDB consists of independent diamond bourses in major cutting centres such as Tel Aviv, Antwerp, Johannesburg and other cities across the USA, Europe and Asia.

In 2000, the WFDB and The International Diamond Manufacturers Association established the World Diamond Council to prevent the trading of diamonds used to fund war and inhumane acts.

WFDB's additional activities also include sponsoring the World Diamond Congress every two years, as well as the establishment of the International Diamond Council (IDC) to oversee diamond grading.

Industrial grade

The market for industrial-grade diamonds operates much differently from its gem-grade counterpart. Industrial diamonds are valued mostly for their hardness and heat conductivity, making many of the gemological characteristics of diamonds, such as clarity and color, irrelevant for most applications. This helps explain why 80% of mined diamonds (equal to about 100 million carats or 20,000 kg annually), unsuitable for use as gemstones, are destined for industrial use. In addition to mined diamonds, synthetic diamonds found industrial applications almost immediately after their invention in the 1950s; another 3 billion carats (600 metric tons)[citation needed] of synthetic diamond is produced annually for industrial use. Approximately 90% of diamond grinding grit is currently of synthetic origin.

The dominant industrial use of diamond is in cutting, drilling, grinding, and polishing. Most uses of diamonds in these technologies do not require large diamonds; in fact, most diamonds that are gem-quality except for their small size, can find an industrial use. diamonds are embedded in drill tips or saw blades, or ground into a powder for use in grinding and polishing applications. Specialized applications include use in laboratories as containment for high pressure experiments (see diamond anvil cell), high-performance bearings, and limited use in specialized windows.

With the continuing advances being made in the production of synthetic diamonds, future applications are beginning to become feasible. Garnering much excitement is the possible use of diamond as a semiconductor suitable to build microchips from, or the use of diamonds as a heat sink in electronics.

The boundary between gem-quality diamonds and industrial diamonds is poorly-defined and partly depends on market conditions (for example, if demand for polished diamonds is high, some suitable stones will be polished into low-quality or small gemstones rather than being sold for industrial use). Within the category of industrial diamonds, there is a sub-category comprising the lowest-quality, mostly opaque stones, which are known as bort or 'boart'.