Travel Reference
In-Depth Information
other diamonds, and for ornamental purposes since they retain lustre when polished. It's estimated that 130 milli-
on carats (or 26,000kg) of diamonds is mined annually, yielding a market value of over US$9 billion.
Diamonds are formed when carbon-bearing materials are exposed to high pressures and temperatures for pro-
longed periods of time. With the exception of synthetically produced diamonds, favourable conditions only occur
beneath the continental crust, starting at depths of about 150km. Once carbon crystallises, a diamond will then
continue to grow in size so long as it is exposed to both sufficiently high temperatures and pressures. However,
size is limited by the fact that diamond-bearing rock is eventually expelled towards the surface through deep-ori-
gin volcanic eruptions. Eventually they are forced to the surface by magma, and are expelled from a volcanic
pipe.
Since the early 20th century the quality of a diamond has been determined by four properties, now commonly
used as basic descriptors of a stone: carat, clarity, colour and cut. The
carat
weight measures the mass of a dia-
mond, with one carat equal to 200mg. Assuming all other properties are equal, the value of a diamond increases
exponentially in relation to carat weight since larger diamonds are rarer.
Clarity
is a measure of internal defects known as inclusions, which are foreign materials or structural imperfec-
tions present in the stone. Higher clarity is associated with value, and it's estimated that only about 20% of all dia-
monds mined have a high enough clarity rating to be sold as gemstones.
Although a perfect diamond is transparent with a total absence of hue, virtually all diamonds have a discernable
colour
due to chemical impurities and structural defects. Depending on the hue and intensity, a diamond's colour
can either detract from or enhance its value (yellow diamonds are discounted, while pink and blue diamonds are
more valuable).
Finally, the
cut
of a diamond describes the quality of workmanship and the angles to which a diamond is cut.
International Trade
The international trade in diamonds as gemstones is unique in comparison to precious metals such as gold and
platinum since diamonds are not traded as a commodity. As a result, the price of diamonds is artificially inflated
by a few key players, and there exists virtually no secondary market. For example, wholesale trade and diamond
cutting was historically limited to a few locations, including New York, Antwerp, London, Tel Aviv and Amster-
dam, though recently centres have been established in China, India and Thailand.
Since its establishment in 1888, De Beers has maintained a virtual monopoly on the world's diamond mines and
distribution channels for gem-quality stones. At one time it was estimated that over 80% of the world's uncut dia-
monds were controlled by the subsidiaries of De Beers, though this percentage has dropped below 50% in more
recent years. However, De Beers continues to take advantage of its market position by establishing strict price
controls, and marketing diamonds directly to preferential consumers (known as sight holders) in world markets.
Once purchased by sight holders, diamonds are then cut and polished to sell as gemstones, though these activit-
ies are limited to the select locations mentioned earlier. Once they have been prepared, diamonds are then sold on
one of 24 diamond exchanges known as bourses. This is the final tightly controlled step in the diamond supply
chain, as retailers are only permitted to buy relatively small amounts of diamonds before preparing them for final
sale to the consumer.
In recent years the diamond industry has come under increasing criticism regarding the buying and selling of
conflict or 'blood' diamonds, those diamonds mined in war zones and sold to finance the ongoing conflict. In re-
sponse to increasing public concern, the Kimberley Process was instituted in 2002, which was aimed at preventing
the trade of conflict diamonds on the international market. The main mechanism by which the Kimberley Process
operates is by documenting and certifying diamond exports from producing countries in order to ensure that pro-
ceeds are not being used to fund criminal or revolutionary activities.
