The diamonds are not rare
Up to XIX century, diamonds were rare: only a few kilos per year were found in a few riverbeds in the world. Leaving aesthetic considerations aside, according to the law of supply and demand, their expensive price was somehow justified.
According to the Gemological Institute of America (GIA: a non-profit organisation), since the discovery of the South African mines in 1870, the situation has changed: the production of these mines increased from 1 million carats (200 kg) per year in 1870 to more than 176 million carats (35.2 tonnes) per year in 2005. Although these figures don’t take into account the quality of the extracted material, the number should give an idea of how scarce diamonds are. The amount of diamonds produced since antiquity up to 2005 is estimated around 4.5 billion carats, i.e. about 900 tonnes. Only the seven South-African DeBeers mines that were discovered in the XIX century and that were closed before 2005 have produced 163.6 million carats (around 33 tonnes), i.e. 3.7% of what has been ever produced. But there is more: the first three most productive mines in 2005 (Mbuji Maye in the Democratic Republic of Congo, Udachnaya in Russia and Argyle in Australia) had already produced 1.74 billion carats (348 tonnes) since the start of their exploitation, i.e. 38.7% of what was ever produced, with an expected future exploitation life of more than 10 years. The GIA concludes that 20% of all the diamonds ever extracted has been produced between 2000 and 2005.
But they are not cheap!
It is definitely clear that diamonds are not rare on the planet and there is definitely an inconsistency between their price and the amount of supply. As a comparison, in 2005, the world global emerald production in 2005 was 5,400 kg and the world global ruby production was 10,000 kg; these need to be compared to the 35.2 tonnes of extracted diamonds in 2005, as reported earlier. Yet, diamonds are more expensive than emeralds or rubies: why?
According to an article on The Atlantic from Edward J. Epstein published in 1982, this is the result of an accurate campaign from DeBeers. This also confirmed in another article on Business Insider (Australian edition) from Eric Goldschein published in 2011. In a nutshell, on top of creating the monopole of supply by taking care of all aspects of the diamonds trading business, DeBeers took care of creating the demand for diamonds through decades in several campaigns: if we now think that an engagement ring needs to have a diamond, we owe this to DeBeers! Progressively in 2001 and in 2011, though, the Oppenheimer family – who owned DeBeers since 1920 – has been selling everything to Anglo American, for a final settlement for the remaining 40% of the DeBeers group of $5.1 billions. In cash.
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