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De Beers S.A.
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- Date:
- 1888 - present
- Ticker:
- AAUKF
- Share price:
- $27.9356 (mkt close, Apr. 09, 2024)
De Beers S.A., South African company that is the world’s largest producer and distributor of diamonds. Through its many subsidiaries and brands, De Beers participates in most facets of the diamond industry, including mining, trading, and retail. In the early 21st century the company marketed 40 percent of the global supply of diamonds, including those used for industrial applications. De Beers also has interests in explosives manufacturing and chemical manufacturing; in gold, coal, and copper mines; and in synthetic diamonds. Headquarters are in Johannesburg, S.Af.
Diamonds were first discovered in southern Africa in the mid-1860s on the farm of Nicolaas and Diederick de Beer, near what is now the city of Kimberley. Two diamond mines dug on the farm, the Kimberley and the De Beers, were at one time the world’s most productive; they are no longer in operation.
In 1871 the English entrepreneur Cecil Rhodes bought a claim to the De Beers mine and, with this as a financial base, eventually bought up most of the diamond mines in southern Africa. In 1888 he incorporated De Beers Consolidated Mines, Ltd. To keep prices high and demand steady, Rhodes also moved to take control of world diamond distribution. By the middle of the 1890s he had formed the Diamond Syndicate, which was the forerunner of the Central Selling Organization (CSO), a more modern group of financial and marketing organizations that came to control much of the world diamond trade. It is now known as the Diamond Trading Company (DTC).
The discovery of large diamond mines near Pretoria and along the coast of German South West Africa (now Namibia) in 1902 and 1908, respectively, severely weakened De Beers’s control of the diamond market. Ernest Oppenheimer, who had founded the Anglo-American Corporation in 1917, moved aggressively into the diamond industry in the 1920s, gaining control of the South West Africa mines and in 1925 creating a new diamond syndicate. He bought a seat on De Beers’s board in 1926 and became chairman three years later. From this position Oppenheimer strengthened the diamond marketing monopoly begun by Rhodes.
In the 1930s, during the Great Depression, the worldwide demand for diamonds significantly declined, forcing De Beers to close several mines. To increase sales the company hired the advertising agency N.W. Ayer and Son, which soon succeeded in getting the American public to associate diamonds with social status and romance. The hugely successful slogan “A diamond is forever” was coined by N.W. Ayer in 1947. Later advertising campaigns successfully linked diamonds with the affluent, comfortable, and safe suburban lifestyle that many Americans aspired to in the 1950s.
Starting in the 1960s, De Beers attempted to increase consumer demand for diamonds by introducing jewelry tailored to special occasions, such as wedding anniversaries (the “eternity ring”) and rites of passage (the “sweet 16 pin”). The diamond “tennis bracelet,” introduced in the 1980s, capitalized on a fad that had begun after tennis star Chris Evert accidentally dropped her bracelet on the court during a tennis match. In 2001 De Beers began marketing the “right-hand ring” for single women, designed as a symbol of independence and self-sufficiency.
In 2005 De Beers Consolidated Mines announced that it would turn over more than 15 percent of the company to Ponahalo Investment Holdings, a black-owned investment group, in compliance with South Africa’s Black Economic Empowerment (BEE) mining charter. In 2007 De Beers began operations in Canada at Snap Lake Mine in the Northwest Territories—the company’s first mine outside Africa. The company opened the Victor Mine in Ontario, Can., in 2008.
Since the late 20th century De Beers has been publicly criticized and sometimes indicted for various alleged criminal acts. During the 1990s the company came under scrutiny for dealing in conflict (or “blood”) diamonds—i.e., diamonds mined in areas controlled by forces opposed to the legitimate government of a country and illegally sold to fund military action against that government. In 1999 De Beers stopped purchasing diamonds from producers outside the CSO to ensure that it no longer traded in conflict diamonds.
In 2004 De Beers entered an agreement with the U.S. Department of Justice in which it pleaded guilty to price fixing and agreed to pay a $10 million fine. Four years later the company paid $295 million to settle several class-action lawsuits charging it with misleading advertising, human rights violations, conspiracy to fix and raise diamond prices, and unlawfully monopolizing the supply of diamonds.