Founded in 1888 in London, the De Beers diamond mining, trading, and manufacturing company has been dominating the market for several decades. Then, the decline of its near-monopoly status came in the early 2000s.
Read on to find out how De Beers influenced the worldwide diamond trade and what caused its recent decline in the market.
Controversies Tied to the De Beer Name
For many decades, De Beers controlled up to 90% of all diamonds mined and sold in the world and has been under accusations of price-fixing and trust behavior. It’s alleged that De Beers manipulated the global supply by releasing limited quantities of mined diamonds, trading only small stones and keeping the prices of diamonds high.
For example, in the 1970s, the average engagement ring used to be 0.50 carats. For the luxury collections, the average size would be around 1.00 carat and the extremely limited series would have stones of 2.00 carats. Nowadays, the average diamond engagement ring is 1.00 carat, the wealthy is 2.00 carats and the super-wealthy 3.00 carats and more.
ring stone size/category
|1970s – De Beer near-monopoly||Today|
|Average||0.50 ct||1.00 ct|
|Luxury (wealthy)||1.00 ct||2.00 ct|
|Extremely limited (super-wealthy)||2.00 ct||3.00 ct (+)|
Other controversies involving the giant diamond-mining company are related to blood diamonds and conflicts with indigenous tribes in Botswana. With an increased preoccupation for ethical trade and environmental sustainability, today’s generations are shifting the paradigm from the De Beers method of dominating the market to something new.
The Decline of the De Beers Empire
So what has changed, you may ask yourself? Why are there bigger diamonds in the market than before?
One of the theories indicates that other important competitors in the mining industry, such as Rio Tinto and BHP Billiton, decided not to join De Beers in their strategies, and went straight to the market to sell their diamonds. This has brought bigger stones on the market and more competitive prices, changing the face of the diamond trade.
In this context, De Beers has been losing ground and got to trade only 25-35% of the diamonds in the world right now. Their legal issues also contributed to their declining reputation and to a bigger gap between them and the new generation of customers.
For example, De Beers paid a court settlement of $295,000,000 USD in 2013 in relation to price-fixing, marking the beginning of the end. The De Beers only controls 25% of the global diamond mining sales nowadays and has been in a decline throughout the years.
Serious Competition from Lab-Grown Diamonds
Lab-grown diamonds, also known as man-made diamonds or lab-created diamonds, are now the latest trend gaining popularity amongst the younger generations. Young adults nowadays still want to mark their most important events by getting a precious engagement ring or a timeless jewelry set but are more reluctant to contribute to unethical trading and environment threatening industries.
Lab-grown diamonds are physically, chemically and optically identical to mined diamonds, but only cost one-third of the price of a mined diamond and are harmless to the environment and to indigenous populations. Australia’s largest lab-grown diamond company, Novita Diamonds, Ada Diamonds and Miadonnaare amongst the new dominant players of the diamond trade, focusing on delivering conflict-free, affordable, eco-friendly, diamonds that are identical to mined ones. Together with other similar companies, they have revolutionized the diamond engagement ring industry in Australia and the world.
The Director of Novita Diamonds says: “The new generation are preferring a lab grown diamond that is identical to a mined diamond in every way but costs a fraction of the price. This allows them to put that money towards a deposit on a house, wedding costs, a new car or a holiday”.
By Staff Reporter