The diamond industry can be separated into two distinct categories: one dealing with gem-grade diamonds and another for industrial-grade diamonds. While a large trade in both types of diamonds exists, the two markets act in dramatically different ways.
Gemstones and their distribution
Main article: Diamond (gemstone)
A large trade in gem-grade diamonds exists. Unlike other commodities, such as most precious metals, there is a substantial mark-up in the retail sale of gem diamonds.[53] There is a well-established market for resale of polished diamonds (e.g. pawnbroking, auctions, second-hand jewelry stores, diamantaires, bourses, etc.). One hallmark of the trade in gem-quality diamonds is its remarkable concentration: wholesale trade and diamond cutting is limited to just a few locations; In 2003, 92% of the world's diamonds were cut and polished in Surat, India.[54] Other important centers of diamond cutting and trading are Antwerp, where the International Gemological Institute is based, London, New York City, Tel Aviv, and Amsterdam. A single company—De Beers—controls a significant proportion of the trade in diamonds.[55] They are based in Johannesburg, South Africa and London, England. One contributory factor is the geological nature of diamond deposits: several large primary kimberlite-pipe mines each account for significant portions of market share (such as the Jwaneng mine in Botswana, which is a single large pit operated by De Beers that can produce between 12,500,000 carats (2,500 kg) to 15,000,000 carats (3,000 kg) of diamonds per year,[56]) whereas secondary alluvial diamond deposits tend to be fragmented amongst many different operators because they can be dispersed over many hundreds of square kilometers (e.g., alluvial deposits in Brazil).
The production and distribution of diamonds is largely consolidated in the hands of a few key players, and concentrated in traditional diamond trading centers, the most important being Antwerp, where 80% of all rough diamonds, 50% of all cut diamonds and more than 50% of all rough, cut and industrial diamonds combined are handled.[57] This makes Antwerp a de facto "world diamond capital".[58] Another important diamond center is New York City, where almost 80% of the world's diamonds are sold, including auction sales.[57] The DeBeers company, as the world's largest diamond miner holds a dominant position in the industry, and has done so since soon after its founding in 1888 by the British imperialist Cecil Rhodes. De Beers owns or controls a significant portion of the world's rough diamond production facilities (mines) and distribution channels for gem-quality diamonds. The Diamond Trading Company (DTC) is a subsidiary of De Beers and markets rough diamonds from De Beers-operated mines. De Beers and its subsidiaries own mines that produce some 40% of annual world diamond production. For most of the 20th century over 80% of the world's rough diamonds passed through De Beers,[59] but in the period 2001–2009 the figure has decreased to around 45%.[60] De Beers sold off the vast majority of its diamond stockpile in the late 1990s – early 2000s[61] and the remainder largely represents working stock (diamonds that are being sorted before sale).[62] This was well documented in the press[63] but remains little known to the general public.
As a part of reducing its influence, De Beers withdrew from purchasing diamonds on the open market in 1999 and ceased, at the end of 2008, purchasing Russian diamonds mined by the largest Russian diamond company Alrosa.[64] As at January 2011, De Beers states that it only sells diamonds from the following four countries: Botswana, Namibia, South Africa and Canada.[65] Alrosa had to suspend their sales in October 2008 due to the global energy crisis,[66] but the company reported that it had resumed selling rough diamonds on the open market by October 2009.[67] Apart from Alrosa, other important diamond mining companies include BHP Billiton, which is the world's largest mining company;[68] Rio Tinto Group, the owner of Argyle (100%), Diavik (60%), and Murowa (78%) diamond mines;[69] and Petra Diamonds, the owner of several major diamond mines in Africa.
Further down the supply chain, members of The World Federation of Diamond Bourses (WFDB) act as a medium for wholesale diamond exchange, trading both polished and rough diamonds. The WFDB consists of independent diamond bourses in major cutting centers such as Tel Aviv, Antwerp, Johannesburg and other cities across the USA, Europe and Asia.[19] In 2000, the WFDB and The International Diamond Manufacturers Association established the World Diamond Council to prevent the trading of diamonds used to fund war and inhumane acts. WFDB's additional activities include sponsoring the World Diamond Congress every two years, as well as the establishment of the International Diamond Council (IDC) to oversee diamond grading.
Once purchased by Sightholders (which is a trademark term referring to the companies that have a three-year supply contract with DTC), diamonds are cut and polished in preparation for sale as gemstones ('industrial' stones are regarded as a by-product of the gemstone market; they are used for abrasives).[70] The cutting and polishing of rough diamonds is a specialized skill that is concentrated in a limited number of locations worldwide.[70] Traditional diamond cutting centers are Antwerp, Amsterdam, Johannesburg, New York City, and Tel Aviv. Recently, diamond cutting centers have been established in China, India, Thailand, Namibia and Botswana.[70] Cutting centers with lower cost of labor, notably Surat in Gujarat, India, handle a larger number of smaller carat diamonds, while smaller quantities of larger or more valuable diamonds are more likely to be handled in Europe or North America. The recent expansion of this industry in India, employing low cost labor, has allowed smaller diamonds to be prepared as gems in greater quantities than was previously economically feasible.[57]
Diamonds which have been prepared as gemstones are sold on diamond exchanges called bourses. There are 26 registered diamond bourses in the world.[71] Bourses are the final tightly controlled step in the diamond supply chain; wholesalers and even retailers are able to buy relatively small lots of diamonds at the bourses, after which they are prepared for final sale to the consumer. Diamonds can be sold already set in jewelry, or sold unset ("loose"). According to the Rio Tinto Group, in 2002 the diamonds produced and released to the market were valued at US$9 billion as rough diamonds, US$14 billion after being cut and polished, US$28 billion in wholesale diamond jewelry, and US$57 billion in retail sales.[72]
Marketing
The image of diamond as a valuable commodity has been preserved through clever marketing campaigns. In particular, the De Beers diamond advertising campaign is acknowledged as one of the most successful and innovative campaigns in history. N. W. Ayer & Son, the advertising firm retained by De Beers in the mid-20th century, succeeded in reviving the American diamond market and opened up new markets, even in countries where no diamond tradition had existed before. N. W. Ayer's multifaceted marketing campaign included product placement, advertising the diamond itself rather than the De Beers brand, and building associations with celebrities and royalty. This coordinated campaign has lasted decades and continues today; it is perhaps best captured by the slogan "a diamond is forever".[7]
Another example of successful diamond marketing is brown Australian diamonds. Brown-colored diamonds have always constituted a significant part of the diamond production, but were considered worthless for jewelry; they were not even assessed on the diamond color scale, and were predominantly used for industrial purposes. The attitude has changed drastically after the development of Argyle diamond mine in Australia in 1986. As a result of an aggressive marketing campaign, brown diamonds have become acceptable gems.[73][74] The change was mostly due to the numbers: the Argyle mine, with its 35,000,000 carats (7,000 kg) of diamonds per year, makes about one-third of global production of natural diamonds;[75] 80% of Argyle diamonds are brown.[76]
Cutting
Main articles: Diamond cutting and Diamond cut
A large rectangular pink multifaceted gemstone, set in a decorative surround. The decoration includes a row of small clear faceted gemstones around the main gem's perimeter, and clusters of gems forming a crest on one side. The crest comprises a three-pointed crown faced by two unidentifiable animals.
The Darya-I-Nur Diamond—an example of unusual diamond cut and jewelry arrangement
The mined rough diamonds are converted into gems through a multi-step process called "cutting". Diamonds are extremely hard, but also brittle and can be split up by a single blow. Therefore, diamond cutting is traditionally considered as a delicate procedure requiring skills, scientific knowledge, tools and experience. Its final goal is to produce a faceted jewel where the specific angles between the facets would optimize the diamond luster, that is dispersion of white light, whereas the number and area of facets would determine the weight of the final product. The weight reduction upon cutting is significant and can be of the order of 50%.[39] Several possible shapes are considered, but the final decision is often determined not only by scientific, but also practical considerations. For example the diamond might be intended for display or for wear, in a ring or a necklace, singled or surrounded by other gems of certain color and shape.[77]
The most time-consuming part of the cutting is the preliminary analysis of the rough stone. It needs to address a large number of issues, bears much responsibility, and therefore can last years in case of unique diamonds. The following issues are considered:
* The hardness of diamond and its ability to cleave strongly depend on the crystal orientation. Therefore, the crystallographic structure of the diamond to be cut is analyzed using X-ray diffraction in order to choose the optimal cutting directions.
* Most diamonds contain visible non-diamond inclusions and crystal flaws. The cutter has to decide which flaws are to be removed by the cutting and which could be kept.
* The diamond can be split by a single, well calculated blow of a hammer to a pointed tool, which is quick, but risky. Alternatively, it can be cut with a diamond saw, which is a more reliable but tedious procedure.[77][78]
After initial cutting, the diamond is shaped in numerous stages of polishing. Unlike cutting, which is a responsible but quick operation, polishing removes material by gradual erosion and is extremely time consuming. The associated technique is well developed; it is considered as a routine and can be performed by technicians.[79] After polishing, the diamond is reexamined for possible flaws, either remaining or induced by the process. Those flaws are concealed through various diamond enhancement techniques, such as repolishing, crack filling, or clever arrangement of the stone in the jewelry. Remaining non-diamond inclusions are removed through laser drilling and filling of the voids produced.[14]
Industrial uses
A diamond scalpel consisting of a yellow diamond blade attached to a pen-shaped holder
A scalpel with synthetic diamond blade
A polished metal blade embedded with small diamonds
Close-up photograph of an angle grinder blade with tiny diamonds shown embedded in the metal
The market for industrial-grade diamonds operates much differently from its gem-grade counterpart. Industrial diamonds are valued mostly for their hardness and heat conductivity, making many of the gemological characteristics of diamonds, such as clarity and color, irrelevant for most applications. This helps explain why 80% of mined diamonds (equal to about 135,000,000 carats (27,000 kg) annually), unsuitable for use as gemstones, are destined for industrial use. In addition to mined diamonds, synthetic diamonds found industrial applications almost immediately after their invention in the 1950s; another 570,000,000 carats (110,000 kg) of synthetic diamond is produced annually for industrial use. Approximately 90% of diamond grinding grit is currently of synthetic origin.[37]
The boundary between gem-quality diamonds and industrial diamonds is poorly defined and partly depends on market conditions (for example, if demand for polished diamonds is high, some suitable stones will be polished into low-quality or small gemstones rather than being sold for industrial use). Within the category of industrial diamonds, there is a sub-category comprising the lowest-quality, mostly opaque stones, which are known as bort.[80]
Industrial use of diamonds has historically been associated with their hardness; this property makes diamond the ideal material for cutting and grinding tools. As the hardest known naturally occurring material, diamond can be used to polish, cut, or wear away any material, including other diamonds. Common industrial adaptations of this ability include diamond-tipped drill bits and saws, and the use of diamond powder as an abrasive. Less expensive industrial-grade diamonds, known as bort, with more flaws and poorer color than gems, are used for such purposes.[81] Diamond is not suitable for machining ferrous alloys at high speeds, as carbon is soluble in iron at the high temperatures created by high-speed machining, leading to greatly increased wear on diamond tools compared to alternatives.[82]
Specialized applications include use in laboratories as containment for high pressure experiments (see diamond anvil cell), high-performance bearings, and limited use in specialized windows.[80] With the continuing advances being made in the production of synthetic diamonds, future applications are becoming feasible. Garnering much excitement is the possible use of diamond as a semiconductor suitable to build microchips, or the use of diamond as a heat sink[83] in electronics.
