Guest article written for AllAboutAlpha.com – the official publication of the Chartered Alternative Investment Analyst (CAIA) Association
Originally posted at: http://allaboutalpha.com/blog/2013/01/27/a-look-at-the-world-diamond-market/
Diamond’s are one of the world’s most precious natural resources. These unique stones are almost as old as the Earth itself, and have become culturally, socially, economically, politically and even scientifically significant. Figures from the World Diamond Council state that each year, around US$13 billion of rough-diamonds are mined (65% of which come from Africa). The diamond value chain (from exploration, to mining, processing and retail) employs over 10 million people around the world, and jewellery sales alone (having grown three-fold in 25 years) are now in excess of US$72 billion per annum.
The diamond industry has always existed in a state of pseudo globalisation. Over a thousand years ago, diamonds were mined in India, before being cut and polished in Arabia and sold to European aristocracy. These are stones which have been adored for their rarity and beauty, while being almost universally accepted as portable, untraceable and efficient stores of value. The diamond ‘industry‘ (at least as we know it today) began 1800′s, when an accidental find of diamonds in South Africa kicked off a mining, exploration and trading boom that led to the existence of one of the most successful and long-lasting cartel’s in economic history- that being the small network of world diamond producers.
The relative opacity and complexity of the diamond market has contributed to a general lack of understanding of its dynamics when, in truth, the modern form of globalisation has introduced competition, transparency and free-market behaviours to this industry.
To learn more about the world diamond market, I spoke to David Prager, Global Head of Corporate Affairs at De Beers Group – a 120 year old firm with revenues of over US$7 billion, and a market share (by value) of over 35% of the world’s rough diamond market. Continue reading