De Beers

De Beers and the various companies within the De Beers Family of Companies engage in exploration for diamonds, diamond mining, diamond trading and industrial diamond manufacture.

De Beers is active in every category of industrial diamond mining: open-pit, underground, large-scale alluvial, coastal and deep sea. Mining takes place in Botswana, Namibia, South Africa and Canada.

Company history

Cecil Rhodes, the founder of De Beers, got his start by renting water pumps to miners during the diamond rush that started in 1867 at Kimberley, South Africa. He invested the profits of this operation into buying up claims of small mining operators, with his operations soon expanding into a separate mining company. De Beers Consolidated Mines was formed in 1888 by the merger of the companies of Barney Barnato and Cecil Rhodes, by which time the company was the sole owner of all diamond mining operations in the country. In 1889, Rhodes negotiated a strategic agreement with the London-based Diamond Syndicate, which agreed to purchase a fixed quantity of diamonds at an agreed price, thereby regulating output and maintaining prices. The agreement soon proved to be very successful - for example during the trade slump of 1891-1892, supply was simply curtailed to maintain the price. Rhodes was concerned about the break up of the new monopoly, stating to shareholders in 1896 that:
“ Our only risk is the sudden discovery of new mines, which human nature will work recklessly to the detriment of us all. ”

In 1902, a competitive mine named the Cullinan Mine was discovered, however its owner refused to join the De Beers cartel. Instead, the mine started selling to a pair of independent dealers named Bernard and Ernest Oppenheimer. Production soon equalled all of the De Beers mines combined, as well as yielding the largest diamond ever discovered—the Cullinan Diamond. Ernest Oppenheimer was appointed the local agent for the powerful London Syndicate, rising to the position of mayor of Kimberley within 10 years. He understood the core principle that underpinned De Beer's success, stating in 1910 that:
“ Common sense tells us that the only way to increase the value of diamonds is to make them scarce, that is to reduce production ”

In World War I, the Cullinan Mine was finally absorbed into De Beers.

Oppenheimer was very concerned about the discovery of diamonds in 1908 in German South West Africa, fearing that the increased supply would swamp the market and force prices down.