I am writing in response to an article by Susan Emerling. The article, while broad-ranging and ambitious in its scope, contains many inaccuracies and several misleading comments.

De Beers is certainly undertaking a period of profound change, a process that started well over two years ago. The central theme of the change has been for the company to shift away from its traditional role of market custodian to one of industry leadership. This process, which has generated a good deal of press coverage, has indirectly invited a degree of comment on the way De Beers might have conducted its business in the past.

The article's portrayal of De Beers as a cartel operating solely in its own interests is a misguided one. It is true that De Beers has, in the past, been responsible for marketing up to 80 percent of the world's rough diamond production. The aim of this marketing process was to provide a degree of stability in diamond prices and to avoid the potentially devastating effects of dramatic price fluctuations. This "co-operative" system operated to the benefit of producers, manufacturers and consumers alike. The majority of the diamonds purchased by De Beers come either from partnerships with producer nations, such as Botswana and Namibia, or direct contractual purchasing arrangements as is the case in Russia. De Beers owns mines only in South Africa.

Continue Reading...