Diamonds: MET::eMBA Diamond Industry

MET::eMBA DIAMOND INDUSTRY
DIAMONDS
Diamonds have been a source of fascination for centuries. They are the hardest, most
imperishable, and the brilliant of all precious stones. Diamond is a mineral a naturally
crystalline substance the transparent form of pure carbon. It is indomitable, the hardest
surface known. This ‘King of Gems’ symbolizes purity and strength. Diamond is for
engagement and the 75th wedding anniversary, for a commitment to never ending love. The
word “diamond” comes from the Greek word adamas, meaning “unconquerable”.
The formation of these exotic diamonds began very early in the earth’s history. After
being formed in the interiors of the earth, the diamonds were shot to the surface by
extraordinary volcanoes. A diamond is likely the oldest thing you will ever own, probably 3
billion years in age, fully two thirds the age of the Earth.
Out of every batch of 10 diamonds made in the world, 7.5 are made in India. It shows
that India has established itself as the world's largest diamond processing center. In India, the
diamond processing units are mainly located in Gujarat, particularly in Surat, Navsari and
some parts of Saurashtra & north Gujarat region. About 80% of country's diamond
processing work is being done in Gujarat, out of which more than 50% is conducted at Surat
only. The diamond processing industry in India, thus, is quite unique as it is developed at one
location in an industrial cluster. ‘Surat city is known as diamond city of India.
The Industry comprises of about 2000 units of cutting & polishing out of which about
one third are located in Surat. IT employs about 15 lakh people directly and provides
employment opportunities to more than 25 lakh people. Their wage bill comes to Rs. 1500
crore per annum. An investment of Rs. 5 crore in this sector creates an employment for 1000
people. The industry is, thus, a major employer.
The processing capacity of each unit ranges from 4 to 400 carats, while production capacity
depends on the type, shape and size of the diamond; it also depends on the skill of the
workers. There are about 7000 different types of diamonds. The processing is done through
ingeniously manufactured and manually operated machines.
HISTORY OF DIAMONDS
It is believed that the history of diamonds originates in India. Several thousands of years ago,
before there was any definite indication that diamonds were rare or valuable enough to kill
for, the ancient scriptures in India have described them as one of the nine stones of the
Navratna, that are linked to the nine planets. The puranas also describe means of testing the
worth of various precious stones.
From myths about valleys of diamonds protected by snakes, to the production of millions of
carats in rough diamonds each year, the history of diamonds is one of mystical power, beauty
and commercial expertise. The stages in the history of diamonds are as follows:-
 EARLY HISTORY
The first recorded history of the diamond dates back some 3,000 years to India, where it
is likely that diamonds were first valued for their ability to refract light. In those days, the
diamond was used in two ways-for decorative purposes, and as a talisman to ward off
evil or provide protection in battle.
 DARK AGES
The diamond was also used for some time as medical aid. One anecdote, written during
the Dark Ages by St Hildegarde, relates how a diamond held in the hand while making a
sign of the cross would heal wounds and cure illnesses. Diamonds were also ingested in
hope of curing sickness.
 MIDDLE AGES
During the Middle Ages more attention was paid to the worth of diamonds, rather than
the mystical powers surrounding them. The popularity of diamonds surged during the
Middle Ages, with the discovery of many large and famous stones in India, such as the
Kohinoor and the Blue Hope. Today India maintains the foremost diamond polishing
industry in the world.
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 RECENT TIMES
During the mid-nineteenth century, diamonds were also being discovered in eastern
Australia. However, it was not until late 1970's, after seven years of earnest searching,
that Australia's alleged potential as a diamond producer was validated. On October 2nd
1979, geologists found the Argyle pipe near Lake Argyle: the richest diamond deposit in
the world. Since then, Argyle has become the world's largest volume producer of
diamonds, and alone is responsible for producing over a third of the world's diamonds
every year.
Diagram of old diamond cuts showing the evolution from the most primitive (point
cut) to the most advanced pre-Tolkowsky cut (old European).
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DIAMOND INDUSTRY
The diamond industry can be broadly separated into two basically 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.
Diamond Industry
Gem Diamond Industry Industrial Diamond Industry
GEM DIAMOND INDUSTRY:
A large trade in gem-grade diamonds exists. Unlike precious metals such as gold or
platinum, gem diamonds do not trade as a commodity: there is a substantial mark-up in the
sale of diamonds, and there is not a very active market for resale of diamonds. One hallmark
of the trade in gem-quality diamonds is its remarkable concentration: wholesale trade and
diamond cutting is limited to a few locations (most importantly New York, Antwerp,
London, Tel Aviv, Amsterdam and Surat), and a single company—De Beers—controls a
significant proportion of the trade in diamonds. They are based in Johannesburg, South
Africa and London, England.
INDUSTRIAL DIAMOND INDUSTRY:
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 diamond, including clarity and color,
mostly irrelevant. This helps explain why 80% of mined diamonds (equal to about 100
million carats or 20,000 kg annually), unsuitable for use as gemstones and known as bort, are
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destined for industrial use. In addition to mined diamonds, synthetic diamonds found
industrial applications almost immediately after their invention in the 1950s; another 400
million carats (80,000 kg) of synthetic diamonds are produced annually for industrial use—
nearly four times the mass of natural diamonds mined over the same period.
The dominant industrial use of diamond is in cutting, drilling, grinding, and polishing. Most
uses of diamonds in these technologies do not require large diamonds; in fact, most diamonds
that are gem-quality except for their small size, can find an industrial use. Diamonds are
embedded in drill tips or saw blades, or ground into a powder for use in grinding and
polishing applications. Specialized applications include use in laboratories as containment for
high pressure experiments, high-performance bearings, and limited use in specialized
windows.
DIAMOND SUPPLY CHAIN:
The diamond supply chain is controlled by a limited number of powerful businesses, and is
also highly concentrated in a small number of locations around the world. In fact, the amount
of power which De Beers has consolidated historically prevented it from direct trade with the
United States,. The concentration of power only loosens at the retail level, where diamonds
are sold by a limited number of distributors, known as sightholders, to jewelers around the
world.
SOURCES:
Historically diamonds were known to be found only in alluvial deposits in southern India;
India led the world in diamond production from the time of their discovery in approximately
the 9th century BCE to the mid-18th century CE, but the commercial potential of these
sources has been exhausted. The first non-Indian diamond source was found in Brazil in
1725. Today, most commercially viable diamond deposits are in Africa, notably in South
Africa, Namibia, Botswana, the Democratic Republic of Congo, Angola, Tanzania and Sierra
Leone.
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MINING:
Only a very small fraction of the diamond ore consists of actual diamonds. The ore is
crushed, during which care has to be taken in order to prevent larger diamonds from being
destroyed in this process and subsequently the particles are sorted by density. Nowadays, the
diamonds are located in the diamond-rich density fraction with the help of X-ray
fluorescence, after which the final sorting steps are done by hand. Before the use of X-rays
became commonplace, the separation was done with grease belts; diamonds have a stronger
tendency to stick to grease than the other minerals in the ore.
DISTRIBUTION:
The Diamond Trading Company, or DTC, is a subsidiary of De Beers and markets rough
diamonds produced both by De Beers mines and other mines from which it purchases rough
diamond production. DTC performs sophisticated sorting of rough diamonds into over
16,000 categories, and then sells bulk lots of rough diamonds to a limited number of
sightholders a few times a year.
Once purchased by sightholders, diamonds are cut and polished in preparation for sale as
gemstones. Diamonds which have been prepared as gemstones are sold on diamond
exchanges called bourses. There are 24 registered diamond bourses. This is 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 as is increasingly popular,
sold unset ("loose").
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COMPOSITION
Diamond is carbon in its most concentrated form. Except for trace impurities like boron
and nitrogen, diamond is composed solely of carbon, the chemical element that is
fundamental to all life.
But diamond is distinctly different from its close cousins the common mineral graphite
and lonsdaleite, both of which are also composed of carbon. Why is diamond the hardest
surface known while graphite is exceedingly soft? Why is diamond transparent while
graphite is opaque and metallic black? What is it that makes diamond so unique?
The key to these questions lie in a diamonds particular arrangement of carbon atoms or
its crystal structure-the feature that defines any minerals fundamental properties. A
crystal is a solid body formed from the bonding of atomic elements or compounds in a
repeating arrangement.
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CUT
Though India was known to have diamond mines many centuries ago - the fabulous
Kohinoor is an Indian diamond - it has virtually no mines today. However, India has
continued to maintain its tradition of diamond cutting and thousands of people are
involved in this skilled occupation.
The cut of a diamond refers to its proportions. Of the 4C’s the cut is the aspect most directly
influenced by man. The other 3 are dictated by nature.
India has a large labor force and this has made the country the biggest diamond cutting
center for small roughs. Indeed, were it not for Indian workers, many of these small
diamonds would be put to industrial use rather than jewelry.
Diamond cutting and polishing workshop in Bombay.
A diamond in its natural, uncut state is described as a "rough

diamond". Its natural appearance so resembles a glass pebble that
most people would pass it by without a second glance. It is the skill
of the diamond cutter that unlocks the brilliance for which diamonds
are renowned.
An uncut diamond
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If two identical diamonds are placed side by side and one is less brilliant and fiery than the
other, the fault lies in the cutting. Such a stone cannot demand as high a price as a well-cut
diamond.
Quite often the cut of a diamond is confused with its shape. Diamonds are cut into various
shapes depending upon the original form. Whatever the shape, a well cut diamond is better
able to reflect light.
A diamond’s ability to reflect light determines its display of fire and brilliance. Diamonds are
usually cut with 58 facets, or separate flat surfaces. These facets follow a mathematical
formula and are placed at precise angles in relation to each other. This relationship is
designed to maximize the amount of light reflected through the diamond and to increase its
beauty.
TYPES OF CUTS:
 Well Cut: When a diamond is cut to proper proportions, light is reflected from one
facet to another and then dispersed through the top of the stone. Within the well cut
standards are the sub-categories of Ideal, Excellent &Very good.
 Deep Cut: Then the cut of a diamond is too deep some light escapes through the
opposite side of the pavilion.
 Shallow Cut: When the cut of a diamond is too shallow, light escapes through the
pavilion before it can be reflected.
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How Do I Know If a Diamond Is Well Cut?
A well cut diamond is the secret to a beautiful and brilliant diamond. Like beauty itself, the
true meaning if “well cut” is often found in the eye of the beholder. While you may prefer a
particular set of proportions, someone else might prefer slightly different proportions.
Personal preference even among experts will always be an issue in defining the best cut.
SHAPES RELATIVE SIZES

Carat Sizes
Round Emerald Marquise Pear
0.50
0.75
1.00
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KINDS OF DIAMONDS
Ideal: This range is very strict and combines the best in brilliance and fire. Technically, the
head of the class.
Excellent: This range is also of great beauty yet slightly more flexible regarding percentages.
Many experts prefer the appearance of this range to ideal.
Very Good: This range is balanced between precise proportions and price considerations.
Viewed by many as the best overall value in beauty and price.
Think of Ideal, Excellent and Very good as rings in a bull’s eye. These classifications for cut
represent an acceptable range for that category. The ranges narrow as you move toward Ideal
at the center. Ideal has the narrowest range, with excellent slightly larger and Very Good the
largest. All three of these categories fall within the “well cut” classification. In many cases
the visual differences from one classification to the next are so small they may be
indiscernible to the naked eye.
The cut, or proportions, of a diamond is measured in percentages relative to the diameter of

its girdle. The girdle diameter of each diamond is always considered 100%.
Example: The girdle of a diamond measures 10 millimeters (100%) the table measures 5.6
millimeters. The total depth measurement is 6.1 millimeters. The diamond would be
described as having a table of 56% and a depth of 61%. The table and the depth are the key
to determining good proportions.
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COLOR
Our standard conception of diamond is as a colorless stone. The best color is no color.
Diamonds allow light to be reflected and dispersed as a rainbow of color. Diamonds are
graded into categories defined by letters from D to Z. The color range from exceptional
whites (categories D, E and F) to tinted colors (categories M to Z). The best way to pinpoint
a diamond's true color is to place it next to another diamond that has previously been graded.
It is often surprising to learn that diamonds also occur by rare accidents of nature in shades of
pink, blue, green, amber, or even red. These rarely occurring colors are referred to as fancies
and are evaluated by a different set of color standards. Fancy colored diamonds are the most
expensive because of their extreme rarity. Some fancy colors can cost hundreds of thousands
of dollars for diamonds of one carat or less! The yellow color in diamonds comes from trace
amounts of nitrogen. One part in a million will cause a yellow tint to appear in the K color
diamond. As a rule, the more yellow the stone, the less value it has. There's a good reason for
this. The yellower the stone, the less sharp and sparkly it appears. A whiter stone lets greater
amounts of light pass through it, making it sparkle and shine. Chemically-pure, a perfect
crystal of diamond is colorless, but adds a little nitrogen and yellow appears. Add boron
instead and a blue diamond results. Colored diamonds are hot, both in the market place and
in science.
Color Grading Scale
DEF G H I J K L M-Z Z+
Colorless Near Colorless Faint Yellow Light Yellow Fancy Yellow
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CLARITY
Almost all diamonds contain very tiny natural birthmarks known as inclusions. To determine
diamonds clarity, an expert views it under 10 power magnifications. In addition to internal
inclusions, surface irregularities are referred to as blemishes. These two categories of
imperfections-inclusions (internal) and blemishes (external) - make up clarity. The fewer the
imperfections, the rarer and more valuable the diamond. Many inclusions are not discernable
to the naked eye and require magnification to become apparent.
Contrary to the popular belief, higher clarity does not always mean more beautiful. If the
inclusions are not visible to the naked eye, a higher clarity does not really improve the
appearance of a diamond but rather the rarity and price. A higher clarity is more desirable
and valuable.
Like color, clarity is also categorized using international grading. Clarity is graded using a
very precise and complex method of evaluating the size, location, and visibility of inclusions.
Alongside is the technical clarity scale with a description of each term.
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Diamonds are clarity graded face up (looking at the top of the diamond), not from the side or
bottom of the diamond. We have the most problem with clarity where the inclusions are not
visible with the eye from the top of the diamond but are visible from the side. When viewing
a diamond from the side, the middle third of the diamond is generally very transparent.
If an inclusion is in this part of the diamond and happens to be

turned broadside to your view, it can be much more visible than
when viewed from the top where there are many facets to hide
its appearance. If the diamond is going to be visible from the
side in the setting, make sure your diamond is clean to the eye
from the top and the side, regardless of what clarity grade it has.
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CARAT WEIGHT
A carat is the unit of measure used to determine the weight of a diamond. The term "carat" is
derived from the original method of using carob tree seeds to weigh diamonds. One seed
from this tree was equivalent to one carat.
The actual weight of one carat is now established at 0.2 grams. To assist in accurately
describing the weight of diamonds each carat is divided into 100 points. Diamonds of less
than one carat in weight are known as "pointers". For example, a 0.15-carat diamond would
be called a "15 pointer".
Diamonds are usually weighed prior to setting for more accurate measurements. Diamonds
are priced per carat, according to their size and quality. Although the carat weight of a
diamond is indicative of its size, it is not necessarily indicative of a diamond's quality.
Therefore, where two diamonds have the same carat weight, the one of better quality will
command a higher price per carat
How rarity affects size?
The rarity of a diamond is greatly affected by its size. The rarity of a 1.00-carat diamond is
much greater than twice that of a .50 carat. Although it only weighs twice as much, the 1.00
carat is statistically much more difficult (rare) to mine than the .50 carat. For an easy
comparison of price and size, see the table alongside. Prices are approximate and based upon
D Color, internally flawless, excellent cut.
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CLEANING
Although it is not one of the four Cs, cleanliness affects a diamond's beauty as much as any
of the four Cs. A clean diamond is more brilliant and fiery than the same diamond when it is
"dirty." Dirt or grease on the top of a diamond reduces its luster. Water, dirt, or grease on the
bottom of a diamond interferes with the diamond's brilliance and fire. Even a thin film
absorbs some light that could have been reflected to the person looking at the diamond.
Colored dye or smudges can affect the perceived color of a diamond. Historically, some
jewelers' stones were misgraded because of smudges on the girdle, or dye on the culet.
Current practice is to thoroughly clean a diamond before grading its color.
Cleanliness does not affect the diamond's market value, as any competent jeweler will clean
the diamond before offering it for sale. However, cleanliness might reflect a diamond's
sentimental value: some jewelers have noted a correlation between ring cleanliness and
marriage quality
A beautiful diamond is one that successfully maximizes the following beauty factors:
Brilliance - The total amount of white light, both external and internal, returned from the
diamond to the eye of the observer.
Scintillation - Reflections and flashes of white light from the diamond's surface as the
diamond, observer or light source moves.
Dispersion - The dispersion of white light into its component spectral colors.
Light Return Geometry - The "kaleidoscope" effect or spatial pattern of the diamond,
which is pleasing to the eye due to degrees of symmetry.
Perceived Symmetry - The symmetry as seen by the eye, whereby all facets are well
proportioned.
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CERTIFICATION
Before purchasing a diamond, you should expect to review a copy of its certificate, as this is
your only guarantee of the quality and value of that diamond.
What's in a Certificate?
A diamond certificate, also called a diamond grading report, diamond dossier or diamond
quality report, is a report created by a gemologist, or gemologists, who have scrutinized the
diamond and placed it under a microscope to analyze its dimensions, clarity, cut, color,
finish, symmetry, and other characteristics.
The most important step in choosing a diamond is reviewing the diamond certificate, referred
to by diamond grading labs as a grading report. A grading report documents the
characteristics of a diamond, like the four Cs. Before purchasing a diamond, review a copy of
its grading report, as this is your guarantee of quality for that diamond. Learn more about the
diamond grading report
SHAPES
Diamonds are cut in many different and

exciting shapes. The shape of a diamond is
often confused with its cut. Shape refers to
the basic form of the diamond: oval or pear shaped, for instance. Cut or proportions, on the
other hand, refer to the ability of each of these shapes to reflect light. A round diamond, for
example, could have a good cut or a poor cut depending upon its proportions. When it comes
to shape, it is simply a matter of personal taste. The right shape for you is really the one
whose appearance you prefer. Shape can be a statement of whom you are; like other areas of
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fashion, shape can reflect your individuality. The most popular shapes are displayed here, but
many new and interesting shapes are being developed every year.
TYPES OF DIAMONDS
 SYNTHETIC DIAMONDS
Synthetic diamonds are artificial diamonds that have been created in a laboratory. By
varying the heat and pressure during formation, adding foreign elements, and
irradiating the finished crystals, synthetic diamonds can be made to imitate
natural colored stones. There is currently a wide spectrum of synthetic colored
diamonds available.
The main difference between naturally-formed diamonds and synthetic

diamonds is that synthetic diamonds usually have higher concentrations of impurities, such
as nitrogen, and remnants of metal catalyst.
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 TREATED DIAMONDS
Treated diamonds are natural diamonds that started out with an unappealing or slightly off
color. By exposing these less desirable stones to the same high-
tech alchemy used to create synthetic colored diamonds, the
apparent color and appearance of these diamonds can be
significantly improved. Recently we have seen treated diamonds
with vibrant yellowish green, red and blue colors enter the market.
 NATURAL FANCY COLOUR DIAMONDS
Natural fancy color diamonds are significantly more valuable and rarer than comparable
treated or synthetic stones. Although treated and synthetic diamonds can be
beautiful in their own right, the origin of their color should be fully disclosed
by the seller. They should also cost significantly less than natural diamonds.
Ethical practice and the law require that synthetic gemstones and treatments be
fully disclosed to consumers. Unfortunately, this does not always happen. As
always, be careful!
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Strengths:
 One million craftsmen associated with it. their skills can be harnessed for designing
and making modern jewellery
 Abundance of cheap and skilled labor in India.
 Excellent marketing network spread across the world.
 Supportive government industrial/ exim policy.
Weaknesses:
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 High domestic interest rates compared to elsewhere

 Small firms lacking technological/ export information expertise.
 Low productivity compared to labor in china, Thailand and Sri Lanka.
 As the major raw material requirements need to be imported, companies normally
stock huge quantities of inventory resulting high inventory carrying costs.
Opportunities:
 New markets in Europe & Latin America

 Growing demand in south Asian & Far East countries.
 Removal gold control act.
Threats:
 China, Sri Lanka and Thailand's entry in small diamond segment

 Infrastructural bottlenecks, frequent changes in exim policies, irregular supply of
gold.
 Over dependence on single-channel supply chain. Decisions of De Beers and Argyle's
terms for renewing their supply contract.
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For over 115 years DeBeers Diamond Trading Company has been synonymous with
diamonds and has practically monopolized the diamond industry. The company leads the
world in diamond exploration, mining, recovery, sorting, valuation and marketing. They
force out any and all competition by ruthlessly controlling the diamond supply. They have
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access to all the trade-ways, use cheap labor, and they are not afraid of making a few under
the table threats if it means scaring somebody out of trying to take a piece of their pie.
Through its selling arm, the Diamond Trading Company (DTC) based in London, De Beers
markets some two thirds of global supply, and has conducted a renowned diamond
advertising and promotion campaign for over half a century. The company is currently
committed to exploring ways to exploit the value of its brand.
BACKGROUND
The long history of De Beers began back in 1859 when the first reports surfaced of diamonds
being found in the Kimberley region of South Africa’s Northern Cape. The rush to this area
increased when the 83.5 carat “Star of Africa” was discovered in 18691.
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One of the people drawn to this area was a 17 year-old Englishman, Cecil Rhodes. Rhodes
came to South Africa in a time when permits for diamond mining were restricted to
individual claims with caps on how many claims one person could own. Rhodes initial foray
into business was to buy an ice-making machine and sell ice to the miners working under the
hot South African sun. With the profits Rhodes began to buy up mining rights.
In 1871 the brothers Johannes Nicholas and Diederik Arnoldus de Beer sold their farm which
they had bought in 1860 for £50, to Dunell Ebden & Co for £6,300. This farm was to be the
site of both the De Beers mine and the famous Kimberley mine. Rhodes acquired the farm in
the late 1870’s.
The breakthrough for Rhodes came in 1876 when all restrictions on the number of claims
that could be owned by an individual were dropped, and the chaos of 3,600 individual claims
was reduced to 98 syndicated holdings by 1880. Of the original 3,600, Rhodes was reported
to own one third by the time the restrictions were lifted.
However, much of the rich mining area around Kimberley was owned by Barney Barnato
another Englishman who had come to South Africa after a failed career as a vaudeville
comedian. Both Rhodes and Barnato set out to dominate the diamond industry by trying to
buy up all the shares that came onto the market. Their struggle for control of the only other
independent company, 'The French Company' (Compagnie Francais des Mines de Diamant
du Cap), was acute, until Barnato merged all his diamond interests in the Kimberley Central
Diamond Mining Company and became the owner of the French company. Rhodes, through
the backing of the Rothschilds managed to buy one-fifth of the company. Both parties
ramped up production from their interests to destructive levels until, in 1888, Barnato
capitulated and agreed to merge the Barnato Diamond Mining Company with Rhodes’
interests to form De Beers Consolidated Mines Ltd.
Rhodes continued to acquire diamond mines throughout southern Africa and used much of
the profits to develop a political career. By 1889 he had become the head administrator of the
British South Africa Company, which was charged with controlling what is now known as
Zimbabwe and Zambia, and also with developing new territory north of these regions. As a
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consequence of having control of these countries, Rhodes also controlled much of the global
diamond supply.
After Rhodes death in 1902, De Beers continued to dominate the mining and supply of rough
diamonds. However South Africa was also a large supplier of the world’s gold. As a result, a
new company, Anglo-American Corporation was created to exploit the gold mining potential
of the Rand region. Anglo-American began to buy shares in the De Beers Company which
had become a public company in 1893. By 1926 the company was the largest single
shareholder in De Beers and its chairman, Sir Ernest Oppenheimer was elected to the board
of De Beers.
DE BEERS – PRIVATELY OWNED COMPANY

De Beers has been dishing out its share of shocks to the diamond industry over the past six
years. In 2001, it hit the industry with another. After 113 years, the world’s leader in
diamonds became a privately owned company. It was a momentous move.
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As Nicky Oppenheimer said,

“There were – beyond all financial considerations – two powerful and dominant motives.
One was the conviction that De Beers should be liberated from the inherent short-termism of
the stock market, thus enabling it to take the long view and tailor its decisions more closely
to the needs of the diamond industry. Another was the need to reinforce and enhance De
Beers’ great singular strength that sets it apart from other mining groups- its total and
exclusive dedication to one product. This extraordinary focus has been, I believe, the reason
for its expertise and leadership in all aspects of diamond mining, research and marketing.
This single minded, almost obsessive, dedication is mirrored by those, like myself, whose
fate and fortune is now inextricably bound to the De Beers Group of companies and to the
product we mine and sell”.
The De Beers structure
De Beers is now owned by a consortium known as DB Investments (DBI) consisting of:

Anglo American Corporation (45%), Debswana, a company jointly owned by the
Government of the Republic of Botswana and De Beers (10%) and Central Holdings Ltd, an
Oppenheimer family company (45%). Nicky Oppenheimer continues as the Chairman and
Gary Ralfe as the Managing Director.
DBI is then broken down into two separate groups: De Beers Consolidated Mines Limited,
which comprises of all the South African interests of De Beers, and De Beers Centenary AG
which comprises of all the non-South African elements of De Beers and also deals with
purchases from other producers.
THE BIRTH OF A TAGLINE
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Ernest’s son, Harry, who was on the board of the company, opted to visit the US to
investigate the possibility of creating a pilot consumer advertising campaign. Until now
diamonds had been the sole privilege of the rich and Harry wanted to investigate the
possibility of creating a mass market appeal. Despite opposition from other directors who felt
that advertising diamonds would somehow cheapen them, Harry went to the US in 1939.
After meeting with many of the top advertising

agencies, Harry engaged with N.W Ayer who had
the novel concept of researching why people bought
diamonds. Until then De Beers had considered that
‘high fashion’ was the key reason for the purchase
of diamonds. To this end, in 1934, the company
engaged Chanel to design diamond jewelry; a move
that flopped.
NW Ayer’s research concluded that fashion was not
the key reason for a diamond purchase but rather it
was because they were a symbol of love. The
original campaign developed by Ayer was centered
on this concept and has been the same ever since. As
can be seen in the picture on the right side.
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However it was not until 1947 that a young copywriter called Frances Gerety working for
NW Ayer penned the famous tagline “A Diamond is Forever”.
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BUSINESS STRUCTURE
De Beers Investments is the privately held, ownership company of De Beers Societe

Anonyme (DBSA), and is registered in Luxembourg. It is made up of three shareholdings:
Anglo American plc has a 45% shareholding, Central Holdings (the Oppenheimer family)
has a 40% shareholding, and the Government of the Republic of Botswana owns 15%
directly. De Beers Societe Anonyme (DBSA) is the management company of the De Beers
group.
Changes to De Beers' business model
The tranformation of the company, from the late nineties to present, is becoming more
widely known. Sometimes referred to as a monopolist, De Beers at one time sold anywhere
from 60-80% of the world's diamonds.
This was done through a single channel marketing structure that was favored by most in the
diamond industry and producer countries for creating structure and stability, and maintaining
consumer confidence in gem diamonds. Currently De Beers sorts, values and sells
approximately 40% of the world's rough diamonds by value, but as a result of company
transformation, is now more profitable than when it maintained a greater market share.
A range of factors contributed to the need for change in the De Beers model. In the 1990s it
became increasingly evident that De Beers’ industry custodianship and supply-controlled
model was no longer viable. De Beers was also unable to conduct business in several
jurisdictions where it had interests or a corporate presence due to their dominance in the
diamond industry. In addition, more producers from varied locations such as Russia, Canada,
and Australia chose to distribute diamonds outside of the De Beers framework.
Also, diamond jewellery markets had fallen in comparison to other luxury goods. The
behaviour of consumers had changed and the diamond industry, being in a world unto
themselves, had been slow to respond to market dynamics.
To address this, on behalf of its own interests and that of the industry as a whole, De Beers
conducted a strategic review with Bain & Company, consequently changing its business
30
model from a supply-controlled industry to that which was driven by demand. De Beers also
implemented their Supplier of Choice sales strategy.
The diamond industry of today is markedly different to that of a decade ago, and is a
complex and constantly evolving geo-political phenomenon.
Current major players in the diamond industry are the African producer countries, i.e. the
Government of the Republic of Botswana, the Government of the Republic of Namibia, De
Beers, Rio Tinto, BHP Billiton, Lev Leviev, Harry Winston, and Alrosa.
31
MINING
The De Beers Company, as the world's largest diamond miner holds a clearly 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 company and its subsidiaries own mines that produce some 40 percent of
annual world diamond production. At one time it was thought over 80 percent of the world's
rough diamonds passed through the Diamond Trading Company (DTC, a subsidiary of De
Beers) in London, but presently the figure is estimated at less than 50 percent.
De Beers is active in every category of industrial diamond mining: open-pit, underground,

large-scale alluvial, coastal and deep sea. Mining takes place in Botswana, Namibia, South
Africa, Tanzania and Canada
Mining in Botswana takes place through the mining company Debswana, a 50-50 joint
venture with the Government of the Republic of Botswana. In Namibia it takes place through
Namdeb, a 50-50 joint venture with the Government of the Republic of Namibia. Mining in
South Africa takes place through De Beers Consolidated Mines (DBCM), 74% owned by
DeBeers and 26% by a broad based black economic empowerment partner, Ponahalo
Investments. In Tanzania it occurs through a partnership with the government of Tanzania,
75% owned by De Beers, 25% by the government. In 2007 De Beers began production at the
Snap Lake Mine in Northwest Territories, Canada; this is the first De Beers mine outside of
Africa. In July 2008 De Beers opened the Victor Mine in Ontario, Canada.
Trading of rough diamonds takes place through the Diamond Trading Company through
wholly-owned and joint venture operations in South Africa (DTCSA), Botswana (DTCB),
Namibia (NDTC) and the United Kingdom (DTC). The various DTCs within the Family of
Companies sort, value and sell approximately 40% of the world’s rough diamonds by
value.The Family of Companies employs about 20,000 people around the world on five
continents, with 17,000 employees in Africa. Over 7000 people are employes Botswana, over
7100 in South Africa, 3800 in Namibia, 700 in Canada and over 800 in Group Exploration.
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BRANDS
In the opinion of DTC, India has emerged as a developed market where consumers are
influenced look for multiple brands and may choose one brand over the other based on cost,
design and value offered. In tune with this market trend DTC is currently offering four
different brands Sangini, Nakshatra, Asmi and Arisia to cover all categories of buyers. DTC
has been playing a major role in educating the Indian consumers about the quality evaluation
of diamonds, the importance of certification and also making diamonds seem an affordable
luxury.
NAKSHATRA
Launched in 2000 Nakshatra reached the iconic stage in just three years. The Nakshatra
collection has unique floral designs with multiple diamonds encircling a single large
diamond to signify the constellation effect. Special Packaging and its own guarantee
certificate promising the purity and sparkle of Diamond. It is available in three collections:
Nakshatra collection, Eternity Collection & Solitaire Collection. It has emerged, as one of
India’s leading brand in Diamond Jewellery Segment.
GILI
Its primary brand value is “Genuine diamond and gold jewellery at affordable prices”. The
first jewellery brand that brought diamond jewellery within the reach of masses.
ASMI
Asmi in Sanskrit means, “I am”. Every action of a woman is a passionate exposition of the
intensity and drive with which she lives her life. The Asmi Diamond Jewellery Collection is
carefully crafted to beautifully compliment and complete her.
SANGINI
It is positioned as a brand that glorifies women in a relationship. Sangini diamond jewellery
is characterized by a bezel set centre stone being slightly larger than the others in the same
piece signifying the focal position of the woman in the man’s life.
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D’DAMAS
It is a generic brand that combines international quality with Indian values. D’damas is about
“Luxury and Aspirations,” “Innovativeness,” “Assurance” “Dynamism.” D’damas has been
recognized and awarded as a Jewellery Masterbrand. Under D’damas are numerous brands
that have made a mark on the Indian milieu like Forevermark Solitaire, Damas Solitaire,
Glitterati, Collection G, Gold Expressions, Vivaaha, Ballerina, Bollywood Gold,
Inspirations.
DESIRE
Desire Lifestyle is a diversified product range that addresses the lifestyle needs to reflect the
style and upcoming trends among the masses.
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SWOT ANALYSIS
Strengths
1) De Beers owns over 40% of the rough diamond Industry.De Beers controls about 70
percent of the world's rough diamond supplies, which are sold to 120 manufacturers and
dealers at periodic sales known as "sights."
2) De Beers offers diamond dealers a package of value added services, which draws in
attention of the dealers apart from the other suppliers. It includes marketing, training,
business planning, and market research. Because of this, De Beers has a strong research
and development division and the powerful use of the Forevermark logo and the phrase
“A Diamond Is Forever.” This is one of the ways De Beers succeeds in reaching its
customers.
3) Able to influence prices when selling to manufacturers as it has an excellent marketing

network spread across the world.
4) High quality De Beers prides itself on ensuring that every diamond in De Beers Diamond
Jewelry is conflict and child labour free.
5) Owns over 50% of the US diamond market share.
Weakness
1) As the major raw material requirements need to be imported, companies normally stock
huge quantities of inventory resulting high inventory carrying costs.
35
2) Some of the Small firms under DeBeers lack technological/ export information expertise
and that’s why even the production costs increase.
3) Association with conflict diamonds- De Beers is aware of the problem of conflict
diamonds and has taken measures to guarantee that no conflict diamonds enter its supply
chain or its jewellery.
4) The HIV/AIDS epidemic in Africa strongly affects the De Beers workers, and thus, the
performance of De Beers. The epidemic can slow down the production line, which calls
for additional workers. Currently, HIV has affected over 3,100 De Beers’ employees and
the turnover in workers is constantly increasing. De Beers predicted that there is an
approximate 3.4% increase in workers being affected by HIV every year. In order to
protect against such risks, employers are trained and encouraged to follow universal
precautions to prevent accidental HIV exposure in the workplace. This is one of the
greatest challenges that De Beers currently faces in improving their lost-time-injury
frequency rate.
5) Problem that De Beers faces presently is the association of diamonds and funding
conflicts in Africa. This issue was brought to the attention to a big portion of the
population due to the recent release of the movie, Blood Diamond. We think that
customers could be deterred from purchasing diamonds due to this issue, and this in turn
could lead to a significant decrease in De Beers’ diamond sales.
Opportunities
1) New available markets explorations in Europe, Middle East and Australia. With the rise
of Eastern Europe and their economies growing at high rates, Europe could be a very
lucrative market. Australia and the Middle East are both relatively high income markets
and if De Beers diamond jewelry is properly marketed within these regions, we feel the
sales could tremendously increase.
2) Can increase brand recognition by marketing De Beers. There is a growing demand in South
Asian and far East countries.
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Threats
1) Increase entry of competition - De Beers had a near monopoly with about 90% market
share of Indian rough diamond business. The share came down to 60% three years back
and to around 42% last year.
2) Association with conflict diamonds: Conflict diamonds are rough, uncut diamonds used
by rebel movements or their allies to finance armed conflict aimed at undermining
legitimate governments. In 1998 the Non-government Organisation (NGO) Global
Witness brought to the world’s attention the fact that rebel groups were funding their war
against the legitimate government in this way. The De Beers Group has been working
with governments through the United Nations and other international organizations to
ensure that future conflicts cannot be funded in this way. De Beers is aware of the
problem of conflict diamonds and has taken measures to guarantee that no conflict
diamonds enter its supply chain or its jewelry.
3) De Beers’ market share is likely to go down further as the firm has lost its control over
many mines globally and contracts with most of the wholesale traders are going to end by
this year.
4) De Beers faces threats from Synthetic/Cultural Diamonds. Synthetic Diamonds are

possibly the biggest threat that De Beers has ever faced. After years of careful research
and experimentation, scientists have finally discovered how to create Synthetic
Diamonds, which are man-made diamonds that are indistinguishable from natural
diamonds. Companies have been manufacturing industrial Synthetic Diamonds for years,
but they have only recently discovered how to create Synthetic Diamonds of the same
quality and value of natural diamonds that are used in jewelry.
37
STP
Segment
The Indian woman is particularly enamoured by the dazzle and and sparkle of diamonds. She
likes to adorn these on every other occasion, with marriage ceremonies finding a special
place.
Like all men, the company is aiming to win the hearts of women i.e. the market segment they
are aiming at is Woman.
Target
The target audience of De Beers changes according to its marketing strategies. Its targets
have been the following:
1. Would be Brides - By promoting diamond as a fundamental part of an engagement.
2. Unmarried Women - As a symbol of Independence through their campaign ‘Right
Hand Ring’
3. Couples - Anniversary gifts through their campaign ‘Eternity Ring’
4. Highly fashion conscious individuals - By offering them the highest quality diamonds
because we hire employees who care about the stories that each diamond has to tell.
Position
De Beers positioned its diamonds as:

1. Not as a product but as a ‘Symbol’
2. ‘Timeless and Everlasting’
3. ‘Valuable and the right thing to buy for a Women’
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4. ‘Women’s Best Friend’

5. ‘A Diamond is Forever’
MARKETING MIX
1) Product:
De Beers are in rough diamonds and cut diamonds. De Beers product category can be better
explained with the help of De Beers 4 C’s chart.
Rough Diamonds
DeBeers has its own sales and marketing arm. This is a company called the Diamond
Trading Company (the DTC). DeBeers sells almost half of the worlds rough diamonds
through this marketing arm.
This is almost half of the world rough diamond (rough diamond are those from the mine and
before they are polished for sale to jewelry manufacturers and diamond dealers around the
world).
However this include diamonds produced by the Russian company, Alrosa, which DeBeers
has an agreement.
The rough diamonds sold by DeBeers through their arm, DTC, are purchased by the world’s
leading diamantaires known as Sightholders. Sightholders buy tailored assortments or
"parcels" of rough diamonds from a blended “mix” of diamonds from the various mines.
These clients are chosen following assessment against a set of objective selection criteria
according to their ability to add value to diamonds as well as their audited adherence to the
DTC’s Diamond Best Practice Principles, which cover business ethics, the Kimberley
Process Certification Scheme and the industry’s System of Warranties, labour standards,
health and safety as well as environment. De Beers have actively promoted diamonds as
being symbolic of eternity and love, and therefore the ideal jewel for an engagement or
wedding ring. Their famously successful advertising campaigns have included such measures
as, showing diamonds as wedding gifts in popular romance films, publishing stories in
39
magazines and newspapers which would emphasize the romantic value of diamonds and
associate them with celebrities, employing fashion designers and other trendsetters to
promote the trend on radio and, later, television and even enlisting the British Royal Family
to directly promote diamonds.
40
Cut Chart Color Chart
Clarity Chart Carat Chart
41
2) Place:
De Beers is active in every category of industrial diamond mining: open-pit, underground,

large-scale alluvial, coastal and deep sea. Mining takes place in Botswana, Namibia, South
Africa, Tanzania and Canada.
Mining in Botswana takes place through the mining company Debswana, a 50-50 joint
venture with the Government of the Republic of Botswana. In Namibia it takes place through
Namdeb, a 50-50 joint venture with the Government of the Republic of Namibia. Mining in
South Africa takes place through De Beers Consolidated Mines (DBCM), 74% owned by
DeBeers and 26% by a broad based black economic empowerment partner, Ponahalo
Investments. In Tanzania it occurs through a partnership with the government of Tanzania,
75% owned by De Beers, 25% by the government. In 2007 De Beers began production at the
Snap Lake Mine in Northwest Territories, Canada; this is the first De Beers mine outside of
Africa. In July 2008 De Beers opened the Victor Mine in Ontario, Canada.
The Diavik Diamond Mine
Trading of rough diamonds takes place through the Diamond Trading Company through
wholly-owned and joint venture operations in South Africa (DTCSA), Botswana (DTCB),
42
Namibia (NDTC) and the United Kingdom (DTC). The various DTCs within the Family of
Companies sort, value and sell approximately 40% of the world’s rough diamonds by value.
The Family of Companies employs about 20,000 people around the world on five continents,
with 17,000 employees in Africa. Over 7000 people are employes Botswana, over 7100 in
South Africa, 3800 in Namibia, 700 in Canada and over 800 in Group Exploration.
The Family of Companies
The De Beers Family of Companies is involved in most parts of the diamond value chain.
Companies are as follows:
 De Beers Canada
 De Beers Consolidated Mines
 De Beers Diamond Jewellers
 Debswana
 Diamdel
 Diamond Trading Company
 Diamond Trading Company Botswana
 Diamond Trading Company South Africa
 Element Six
 Namdeb
 Namibia Diamond Trading Company
 Williamson Diamonds
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De Beers Diamond Jewellers
De Beers retail store on Rodeo Drive in Beverly Hills, California
In 2001, De Beers entered into a retail joint venture with French luxury goods company
Louis Vuitton Moet Hennessy (LVMH) to establish an independently managed De Beers
diamond jewellery company.
The joint venture, called De Beers Diamond Jewellers Ltd sells diamond jewellery. The first
De Beers store opened on Old Bond Street in London and there are now De Beers retail
stores in the following locations:
 London at Bond Street, Royal Exchange and Harrods

 New York City at Fifth Avenue
 Beverly Hills at Rodeo Drive
 Las Vegas at The Forum Shops
 Houston at The Galleria
 McLean, Virginia at Tysons Galleria
 Dallas at NorthPark Center
 Paris at Le Printemps
 Moscow in Russia
 Kiev in Ukraine
 Japan - Tokyo, Osaka, Hakata, Yokohama, Kyoto, Kobe
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 Taiwan in Taipei
 Korea in Seoul
 Hong Kong
 Waikiki
 Dubai at Mall of the Emirates, International Financial Center, and Wafi City
 San Francisco in Union Square
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3) Price:
De Beers sets the price of its boxes in advance and determines the quality and quantity each
sightholder receives. Price and quantity are nonnegotiable.The sudden emergence of all these
producers meant that De Beers, in an effort to keep prices high, was forced both to hold back
a large portion of its diamonds and to purchase much of the excess supply of its new
competitors--often at inflated prices.For decades, the majority of the world’s diamond trade
was controlled by De Beers. It used its market power to keep the prices high.
One can't blame the DTC for the constant change in the market prices of diamonds.They are
no longer the 80-per-cent-plus dominant force they once were in the market. A lot of things
happen because they really have no control over them. Over the last three years, ever since
the DTC implemented the SOC initiative, most DTC rough would easily fetch a 10 per cent
premium, so non-sightholders were paying substantially higher prices for rough. Today, the
field is more level. The non-DTC rough is cheaper, and that makes it more interesting for
non-sightholders. Some Angolan goods were between 5- and 7 per cent cheaper than DTC
goods. Of course, there is no consistency of supply, but you can now actually make money
on those goods.
Thus,with a view to maintain its profitability De Beers has to charge customers a higher rate
for the rough diamonds.
Those who cut small diamonds have the biggest problems in profitability as rough prices
have increased and there is considerable buyer resistance to higher polished prices. The
worst-hit categories are the weak colour and clarity goods in the 1- to 7-pointer size range.
The manufacturers have no answer - technical or strategy-wise - to this and the overall result
has been a general migration towards processing larger sizes - which leads to increased
competition in those categories. It must be noted here that the ultra small sizes are doing
extremely well with buyers willing to pay spot cash for goods
As the diamond business is in rough times all over the world,De Beers has lost its market
share and worked hard upon setting up its foot again in the market with the continuous
variation in its pricing policy.
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4) Promotion:
(Please refer Advertising Campaign on Page No. 53 )
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MARKET SITUATION
There are two major trends occurring in the diamond industry that will affect De Beers. First,
there is a shift towards online shopping, and secondly, women are becoming self-purchasers.
Consumers are becoming increasingly comfortable spending large amounts of money online.
In the past, people have liked to know and trust their diamond salesman and buy their jewelry
with a personal experience in a jewelry store. But now, we are able to purchase so much
online, why not buy diamonds online as well? According to BlueNile.com, the largest online
jewelry retailer, the average price spent on a diamond engagement ring from their site was
$5600 in 2004. The national average in the United States at that time was $2300. This is a
major difference indicating that not only are people willing to purchase diamonds online, but
they are willing to spend more money when buying online. De Beers.com has averaged over
200,000 people on their site per month over the course of the past year, an increase from
previous years. They report that most of these visitors are within their target demographic:
women, ages 18-34. These women visit the site to design engagement or “right hand rings”
and email their designs to friends. This is good for De Beers because not only are these
women unknowingly advertising De Beers to their friends, it also makes consumers think of
De Beers retailers, a relatively new venture for De Beers.
The second trend in the diamond industry is that women are becoming self-purchasers.
Perhaps the combination of women’s rise in the workplace and the “Right Hand Ring”
campaign by De Beers, women are empowered and encouraged to buy jewelry to celebrate
among themselves. This shift is great for the industry because self-purchasing women are
another segment to target diamonds towards, which can only lead to more sales.
48
DE BEERS SALES - DTC
DeBeers has its own sales and marketing arm. This is a company called the Diamond
Trading Company (the DTC). DeBeers sells almost half of the world’s rough diamonds
through this marketing arm.
This is almost half of the world rough diamond (rough diamonds are those from the mine and
before they are polished for sale to jewelry manufacturers and diamond dealers around the
world).
However this includes diamonds produced by the Russian company, Alrosa, which DeBeers
has an agreement. That agreement is due to expire at the end of 2009, unless of course it is
renewed. If it is not then Alrosa will become a direct competitor to DeBeers.
The rough diamonds sold by DeBeers through their arm, DTC, are purchased by the world’s
leading diamantaires known as Sightholders. Sightholders buy tailored assortments or
"parcels" of rough diamonds from a blended mix of diamonds from the various mines. These
clients are chosen following assessment against a set of objective selection criteria according
to their ability to add value to diamonds as well as their audited adherence to the DTC’s
Diamond Best Practice Principles, which cover business ethics, the Kimberley Process
Certification Scheme and the industry’s System of Warranties, labour standards, health and
safety as well as environment.
49
DE BEERS MARKETING
The Industry’s First Marketer

In order to stimulate demand for diamonds De Beers positioned itself as the marketer for the
whole industry. Starting from its engagement with NW Ayer in the late 1930’s the company
has continual developed and refined its marketing effort to a more refined audience.
Following NW Ayer’s research focusing on the ‘symbol of love’ De Beers’ strategies
included;
1. writing (or re-writing) scenes for Hollywood movies that injected diamonds into
romantic relationships between men and women
2. giving diamonds to movie stars to use as symbols of indestructible love
3. placing celebrity stories and photographs in magazines and newspapers to reinforce
the link between diamonds and romance
4. using fashion designers to talk on radio programs about the “trend towards diamonds”
5. commissioning artists like Picasso, Dali, and Dufy to paint pictures for
advertisements, conveying the idea that diamonds were unique works of art
Following these initial campaigns demand for diamonds increased by 55% and 80% of
engagements in the United States were consecrated by diamonds. NW Ayer recalled that the
campaign marked “a new form of advertising which has been widely imitated ever since.
There was no direct sale to be made. There was no brand name to be impressed on the public
mind. There was simply an idea — the eternal emotional value surrounding the diamond”
In 1963 the company engaged J. Walter Thompson a leading global agency to assist in the
development of the marketing and advertising plans. These agencies worked with the DTC to
understand the buying rationale for diamonds and to create campaigns based on these
rationales coupled with the projected availability of diamonds at the time.
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MARKETING STRATEGIES
Diamonds are one of the biggest scams ever perpetrated on the American public. They're
incredibly common -- if there were a real free market for diamonds, they would be worth a
few dollars each. But virtually every diamond in the world is sold by ONE company -- De
Beers. It's not just a monopoly -- it's the monopoly to end all monopolies. Because they
control just about every diamond mine in the world, they keep production very low, helping
to keep prices high. That's part of why diamonds are so expensive.
But wait -- what about the symbols of love part? In 1938, De Beers hired one of the largest
American ad agencies to convince the American public that diamonds are symbol of love
and commitment. This was one of the most effective marketing strategies carried out by De
Beers. They've been tremendously successful. How did they do it? A few ways: First they
went after newly developing Hollywood -- they convinced starlets to wear diamonds and
screenwriters to use them as symbols of love. Fashion designers were hired to talk about
the "trend towards diamonds".
In 3 years, diamond sales increased 55%. But that wasn't enough -- they needed total market
domination. They invented a new color, "diamond blue”.
By 1960, they had convinced an entire generation that a diamond was a fundamental part of
an engagement or wedding. It was a necessity -- there was no excuse for not having one. If
a man could not afford one, he was pressured to wait until he could before proposing.
When the Soviets made a deal to sell all their diamonds to De Beers, De Beers had a
problem. Diamonds from the Siberian mines were very small, and De Beers had spent
decades teaching Americans that larger was better. Their response: they began pushing
photos of smaller rings. An entire campaign was designed to teach people that small
diamonds were just as symbolic of true love as larger ones. They also began a campaign
to convince Americans that diamonds weren't just for engagement -- any important
occasion warranted a diamond.
51
So then De Beers came up against a new problem. "Diamonds are forever" is right -- De
Beers produces new diamonds every year, but the old ones don't wear out -- so what happens
if people try to sell their diamonds? That could destroy their profit margins! Solution:
Americans were convinced that diamonds are important to hold on to. Even if you inherit a
diamond, it cannot be sold -- that would violate the memory! Today, very few jewelry stores
will even buy "used" diamonds, and potential sellers are restricted to pawn shops and other
such places where they get a tiny percentage of the stone's market value. Result: diamonds
are a terrible investment because they cannot be resold, but no one perceives them this way.
52
ADVERTISING CAMPAIGN
Marketing research garnered by the DTC over the past sixty years indicates that the decision
to purchase a diamond is not often made spontaneously. More specifically, the lead time on
most diamond purchases is 9-18 months. The key factor in this decision is to provide
consumers with a strong rationale for purchasing diamond
jewelry. To The attract consumers to its luxury brand, “Cel DTC advertising
campaigns “Oc have focused on two key areas: ebr
casi atin
on g
Pur Wo
cha me
se” n”
The ‘Occasion Purchase’ –

This campaign has been aimed at the male target market.
Traditional occasions such as engagements have long been rationales for diamond purchases.
Ironically this has resulted in a dearth of larger carat diamonds and a glut of smaller stones.
This has led the DTC to develop the ‘three stone anniversary ring’, using the tag line
“For your past, present and future”.
‘Past, Present and Future’ Advertisement
53
The DTC has performed significant marketing research around this purchase. For example,
the Company has performed specific sample testing to track the trends in anniversary
announcements and to project their impact on the diamond business.
Celebrating Women – This campaign has been aimed at both men and women. Firstly, the
‘Celebrate Her’ campaign has focused on men buying jewelry to celebrate their partners
and. The print campaign is humorous with distribution in upscale men’s magazines.
‘Celebrate Her’ Advertising
Secondly, a campaign focused on empowering women to buy themselves jewelry has been
developed. The idea that a ‘right-hand’ ring should be bought to celebrate a major
achievement not only creates a new rationale for the purchase but also expands the target
54
market to include single or divorced women who have traditionally not been a focus of the
advertising.
‘Left Hand Ring’ Advertising
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
55
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”. The purpose of this slogan is to prevent the
creation of a secondary market by dissuading women from selling the diamonds they have
received and by discouraging them from buying diamonds which other women have owned.
The consequence of this is that retailers can sell diamonds at a high price without
competition from a secondary market, and it allows De Beers to maintain control of the
diamond trade at wholesale level.
A young copywriter, Frances Gerety coined the famous advertising line "A Diamond is
Forever" in 1947, allegedly while she was dreaming.
Other successful campaigns started by De Beers include the “eternity ring” (as a symbol of
continuing affection and appreciation), the “trilogy ring” (representing the past, present and
future of a relationship) and the “right hand ring” (bought and worn by women as a symbol
of independence).
De Beers is also known for its television advertisements featuring silhouettes of people
wearing diamonds, to the music of Palladio by Karl Jenkins.
In 2001, De Beers entered into a retail joint venture with French luxury goods company
Louis Vuitton Moet Hennessy (LVMH) to establish an independently managed De Beers
diamond jewellery company.
De Beers has introduced Forevermark diamonds to markets in China, Hong Kong, India and
Japan. "Forevermark diamonds are natural, untreated, responsibly sourced, and cut and
polished by a specially selected diamantaire." Forevermark diamonds have an icon and
identification number inscribed on the table facet of the diamond. The inscription is 1/500 of
the depth of a human hair and applied using De Beers technology developed in Maidenhead,
United Kingdom, and Antwerp, Belgium.
56
Their famously successful advertising campaigns have included such measures as, showing
diamonds as wedding gifts in popular romance films, publishing stories in magazines
and newspapers which would emphasize the romantic value of diamonds and associate
them with celebrities, employing fashion designers and other trendsetters to promote the
trend on radio and, later, television and even enlisting the British Royal Family to
directly promote diamonds. They have also done advertising campaign by sponsoring the
2007 Formula 1 car for Scuderia Ferrari Marlboro. This campaign was described by De
Beers' PR agency N.W. Ayer & Son as "a new form of advertising which has been widely
imitated ever since" with "no brand name to be impressed on the public mind. There was
simply an idea—the eternal emotional value surrounding the diamond." Indeed, the campaign
succeeded in reviving the American diamond market, which had been weakened by
"competitive luxuries", and in opening new markets where none had existed before. In Japan,
for example, diamonds were successfully promoted as a western symbol of status, which
coincided with Japan's cultural opening after World War II. Japan is today the second largest
market for retail diamonds.
Iman, the face of De Beers, wearing the ‘Millennium Star’ at the Cannes Film Festival in May 2002
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BRAND AMBASSADOR
Grand Media campaigns involving starlets such as former

Ms. World and Bollywood heroine Ms Aishwarya Rai
Bachan has resulted in double digit growth of 25% for
DTC’s branded diamonds in India.
The ‘Solitaire’ collection also features diamonds that carry
the De Beers Forever Mark, thus giving the jewellery
several layers of branding. The De Beers initiated Nakshatra
brand, with its floral patterns reminiscent of constellations
and the power of nature manifest in the universe, uses
Bachchan’s daughter-in-law Aishwarya Rai, a high-profile
actress in her own right, sometimes referred to as ‘the most
beautiful woman in the world’ as its brand ambassador.
In addition, the company also created a division, the Diamond Information Center (DIC) that
handles the placement of diamond jewelry with celebrities at high exposure events such as
the Oscars, Fashion Week and the Grand Prix series.
Acting as the marketer for the whole industry has been extremely successful for De Beers.
While market share for rough diamond sales has dropped from 80% to 60% the company still
has the power to garner significant returns from its industry advertising efforts.
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DTC ON THE INTERNET
As a support channel to the marketing efforts of the DTC the company has invested heavily
in the development of an Internet presence for the promotion of diamonds in the US. Market
research has found that in the luxury market, the Internet plays a major part in the purchasing
decision, as can be seen in the graph below.
50
40
30
20
10
0
Articles/Reviews
Programs/Commer
Internet/Website
Newspaper Ads
Magazine Ads
cials
TV
The company has developed www.adiamondisforever.com as the initial site for the
promotion of diamonds and diamond jewelry. The site is used in promotional literature both
by the DTC and by sightholders of De Beers. The site clarifies issues such as the “Four C’s”
and the different types of diamond design that are available. It is more informational in
nature than other manufacturer’s sites and takes a ‘non-biased’ view of the diamond
experience. In addition the DTC is prohibited from direct selling on its website.
59
A design gallery is available that allows the customer to design online engagement and
anniversary rings. The Design Gallery was developed as a means of showcasing
manufacturer designs. Research had shown that the more designs a woman sees, the more
likely she is to accelerate/start the diamond purchase process. It is set up like a high-level
catalogue, the Design Gallery is a Manufacturer subsidized (i.e. they pay a fee to participate)
searchable catalogue. The site highlights jewelry design by a number of different designers
but does not promote the De Beers stores, which is not permitted under the joint venture
agreement. Initial indications are that the website has been extremely successful with traffic
growing at around 15% per year.
The number of affluent households going online is growing. This is a major reason for the
push from De Beers to establish a persuasive, enjoyable diamond experience online. There
remains the potential for the LVMH joint venture to develop an online store for the purchase
of its jewelry. This would open De Beers to a wider market beyond the cities in which it
locates a retail store. However there is the possibility that this may affect the value of the
brand equity of a luxury item like De Beers.
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STRATEGIES TO RE-GAIN POSITION IN

MARKET
As market share has fallen at De Beers the company has sought outside help to turn things
around. In April 1999 the company engaged Bain & Co to undertake a review of its strategy.
The result was a significant volte face by the diamond company. While the company would
continue in the short term to promote diamonds through its DTC advertising efforts, four
major long term changes were announced under the umbrella of a new ‘Supplier of Choice’
strategy.
Traditionally De Beers had operated with murky contract arrangements where transactions
were often concluded with mere oral agreements or other backroom deals. As a result the
whole diamond industry had developed a reputation for price-fixing and other shady
agreements. It would be important for De Beers to clear up these perceptions if it was to take
part in a new, competitive diamond market. The first tenet of the new strategy was the
formalizing of a written contract process between De Beers and its sightholders.
Secondly, the whole diamond industry in recent years had suffered from the problem of
‘conflict diamonds’. These were diamonds that were smuggled out of war-torn areas of
Africa with the proceeds of the sale often going to support guerrilla armies and dictatorships
in areas such as Sierra Leone and Angola. This new strategy introduced ‘best practices’
which forbid the purchase of such diamonds. Any sightholder found purchasing such supply
would be shut out from the De Beers stock. Similarly De Beers would no longer step in to be
the buyer of last resort for diamonds. Traditionally De Beers had mopped up any excess
supply in the market that threatened to lower prices. Much of this excess supply came from
these war-torn areas which De Beers had purchased to protect its position. The company was
now refusing to do this and was prepared to cut production at its own mines to compensate
for this increase in supply.
The third major tenet was the sale of the De Beers brand name. The rights to the brand were
placed with a company, De Beers LV, which is a joint venture with LVMH, the luxury
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goods company. This detachment of the brand name from the day-to-day business of selling
rough diamonds was seen as an attempt to re-position De Beers as a luxury brand that may be
extended beyond diamonds. Undoubtedly the US represented a significant proportion of this
luxury goods market which was a key factor in De Beers wishing to enter and grow this
market.
The aim of the joint venture was to focus on creating retail stores in major cities around the
world. These stores would not only promote diamond jewelry bearing the De Beers name but
would also extend the brand into other fashion items such as handbags, silks and other
accessories.
The final piece of the strategy was perhaps the most dramatic. De Beers was no longer happy
to be the marketer of the whole industry. Rather than focusing on controlling supply and
‘price-fixing’ the company wanted to increase demand for diamonds. Only those
diamantaires that spent significantly to promote and distribute diamonds would be permitted
to be sightholders. The DTC would provide marketing assistance and consultancy to these
sightholders in an effort to spread the cost of promoting diamonds around the world.
The key rationale for the change in channel strategy was the drive to increase diamonds as a
portion of luxury goods purchases.
62
DE BEERS COMPETITORS
De Beers has four major competitors: Alrosa, BHP Billiton, Rio Tinto, and Aber. De Beers
has about 50% of the market share of the industry’s rough diamonds, Alrosa has roughly
20%, and BHP Billiton, Rio Tinto, and Aber each have less than 10%.
BHP Billiton, Rio Tinto and Aber are not primarily diamond mining businesses. They mine
other minerals and materials such as coal, iron, and copper, and generally only mine
diamonds because they already have the resources and tools set up for diamond mining from
their other mining interests. There is little additional cost to them to mine diamonds in
addition to what they already mine. Aber is a rather large competitor of De Beers because
they have a large ownership in Canada’s mines. Aber has deals set up with retailers such
as Tiffany’s and Harry Winston to supply them exclusively. This is a significant opportunity
that De Beers is missing out on. Alrosa is really the only competition that comes close to
De Beers in terms of market share and sales. They mine about 20% of the world’s
diamonds, and in 2006 had sales of $2.5 billion. This was 10% growth for Alrosa, whereas
De Beers lost 1% in sales with $6.15 billion. Alrosa mines 100% of Russia’s diamonds. They
have a distribution agreement with De Beers selling some of their diamonds to the Diamond
Trading Company. However, Alrosa recently announced that they are going to gradually stop
selling to the Diamond Trading Company. They are planning on following a similar business
plan to that of De Beers by marketing and selling their own brand of polished diamonds, as
well as selling rough diamonds. This will certainly be detrimental to De Beers because it will
result in more rough diamonds on the market. De Beers currently has much control over the
rough diamond market, because they buy up other mining company’s rough diamonds and
then sell over 40% of the world’s rough diamonds to manufacturers and other diamond
suppliers. Now Alrosa will be able to do this as well, and with 20% of the market share, they
are a significant threat.
Companies such as BHP Billiton’s Aurias Diamonds attempted selling their product directly to
the end consumer via their dot.com business. Although this dramatic attempt at shortening the
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diamond pipeline was not as successful as they had hoped, they have shaken up the traditional
ways of thinking about the pipeline. They are waiting to see what effect the De Beers push for
increased branding and instigation of thir Forevermark will have on them. They have established
the Branding Services Platform through which they are pressing on with their own product and
branding development. As a consequence, they have also recently released the Canadamark to
increase consumer confidence in their product. However, September 2003 say BHP Billiton close
their Australian office. From the first week of October they will operate the Aurias brand from
their Vancouver office. For now they are saying they will keep the brand alive but how
logistically this will work is still unknown. Apparently low return for capital outlay and return on
stock holdings are the rumored causes.
RioTinto has formed a separate division known as Rio Tinto Diamonds to look after all their
diamond mines and their rough clients. They will also continue with their successful Argyle
Diamonds Polished Sales Division based in Perth (who look after their valuable pink production).
Their relationship with Indian diamond cutters is thriving and currently 90 per cent of their rough
is exported to India. Diamond Manufacture in India is growing and they now account for over 70
per cent by weight and 35 per cent by wholesale value of the worlds polished diamond market,
compared to the mere 6 per cent that they manufactured in 1966. As India is able to cut small,
low quality near-gems at a very economical rate they have almost cornered this end of the
market.
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RISK ANALYSIS AND THEIR CONTROLS
With the influx of a growing market, there is a possibility that new competitors may drive the
market price down. However, with De Beers’ standing as the market leader with over 40% of
the rough diamond market, De Beers will successfully be able to combat the competition. De
Beers propose to increase advertisements so that they can retain customers through brand
loyalty and brand awareness. They want to make their consumers brand conscious when
purchasing diamonds.
With the introduction of synthetic diamonds, these man-made novelties may gain popularity
and eat away at the De Beers’ market share. To control this situation, De Beers will soon
increase the media coverage on “real” diamonds, using comparative advertisement. De Beers
want to increase the “real” diamond image and adversely affect the synthetic diamonds
through it. Also, they will continue to research consumer mindsets through surveys and
interviews. Through this, they hope to strategically win over the customers who are swayed
towards the synthetic diamonds.
There is also a possibility that the market that they have foreseen as untapped potential may
not be as profitable as expected. To ensure that it is profitable, De Beers will be monitoring
sales in the exploration regions. Also, if these markets are not profitable, they propose to
search for more opportunities and markets elsewhere.
Lastly, diamond costs are volatile and always have been. Although this is a risk, since the
diamond prices are set by the free market, De Beers cannot do anything to affect the price.
However, De Beers has successfully engaged this problem using contractual agreements that
lock consumers in a binding agreement to continue to purchase De Beers diamonds
regardless of price. Therefore, De Beers should continue to handle the situation as they
currently are leveraging their status as the market leader.
65
CORPORATE SOCIAL RESPONSIBILITY
CONTRIBUTION TOWARDS CHILD LABOUR
India processes small diamonds, using traditional labour-intensive methods. About 1.5
million people are employed in the diamond industry, mostly in the unorganized sector.
With a few exceptions, workplaces in these industries are normally congested, poorly lit and
poorly ventilated.
Children are also working under similar conditions. In the Surat area, one out of ten workers
in the diamond polishing industry is a child. The 1996 survey carried out under the National
Child Labor Policy Project showed that in this area; up to 40 per cent of the wage earners in a
family are children. In addition to the children who live at home and are sent to work, there is
also a group of children in Surat who live within the workshop itself and work from a very
early age.
Interviews with workers in the diamond industry in Surat who send their own children to
work revealed that these were the workers who were not artisans and who were at the bottom
of the ladder both economically and socially. Their own work was very irregular and
dependent on the power supply to the industry: no electricity, no work. They prefer that their
children work in the diamond industry and perhaps acquire the skills of an artisan rather than
go to school, because they have no faith that education from the school system will help their
children find regular jobs.
However, it is mostly workers from the lowest rungs of the ladder in the diamond industry
who send their children to work at an early age. Children of artisans, like diamond polishers,
normally go to school for several years before starting their apprenticeship, and children of
workshop owners and traders never work as children, even though they normally enter the
diamond trade after completing their education.
There are no reliable statistics on the number of children employed in this industry. Official
and unofficial estimates vary between 10,000 and 20,000.
66
Children in the gem polishing industry are engaged ostensibly as apprentices, but in fact
provide cheap labor. The learning process takes five to seven years. During the first two
years the child does not receive any wage except for occasional remuneration and works for
ten hours a day. By engaging a child the ustad (master) contractor saves around Rs. 150- 200
a month at this time. After two years the child is paid Rs. 50 a month, when he actually does
work worth Rs. 250-300 a month, at the very least. Once the child has spent three or four
years and has started learning to make more facets, he or she is worth at least Rs. 300 to 400,
but is paid Rs. 100 a month. By the time the child is 14 or 15 years old and has acquired the
skill of gem polishing, he would be earning Rs. 150-200 a month whereas an adult would get
Rs. 500-600 for the same job. This is the juncture at which the contractor retains the services
of the child in order to reap maximum benefit.
To all evidence, cheap or free labor seems to be the main reason why employers in the
diamond and gemstone industry in India prefer to use children. In this respect the diamond
and gemstone industry is different from other industries in India.
In the course of the workshop, efforts were made to develop strategies which trade unions
could employ in a concerted effort to eliminate child labor from the diamond and gemstone
industry in India. Three major avenues were found:
First, the trade union movement is under a clear moral obligation to bring to light and
denounce child labor in the industry in question. Public awareness campaigns, especially in
countries where there is a large market for diamonds, had to be in the vanguard. These
campaigns must be skillfully conducted and always complemented by other initiatives. Their
aim should be to encourage employers to negotiate an agreement to eliminate child labor, to
campaign for governments to take action, and to motivate consumers to support positive
action.
Second, the diamond industry is one, which is very tightly controlled from the top, since the
distribution of rough diamonds for processing remains in the hands of a small group. This
control can also be used to reduce child labor in the industry.
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FUTURE PLANS
There are several marketing strategies that De Beers are planning to implement. In order to
increase awareness, revenue, and brand recognition, they have came up with the following
action plan.
De Beers are planning to advertise in Europe, Australia, the Middle East, and of course in
the United States. Lastly, because people do not yet know the difference between cultural
and synthetic diamonds, they are going to increase awareness regarding the difference
between these two after establishing solid brand recognition for them.
Before the new plan is implemented, there will be a constant research and development. This
endeavor will start promptly and last throughout the duration of their implementation
process. Their research and development team will continuously be looking for new ways to
improve and come up with new and better ways to market toward the consumers. Because
this implementation is done continuously throughout the year, it will consume much of the
cost from their limited budget. They are expecting about $350 million dollars for research
and development; however, this also includes the cost of exploration, which is not a new
cost.
De Beers are planning to come up with new advertising campaign the "Every diamond has a
story. What's yours?” modified version of "A Diamond Is Forever” campaign, as soon as
possible. One of the biggest problems that De Beers faced in the past was the lack of brand
recognition. Although De Beers owns 50% of diamond sales in the U.S. and 40% of diamond
productions in the world, not many people have heard of "De Beers" as a leading diamond
company. In order to amend this; they need to quickly put out their name boldly into the
market. Through the “story" advertising campaign, they are planning to give people the
insight about a De Beers diamond’s heritage, and bring back the memories people had of "A
Diamond Is Forever" campaign, which was a great success in the past.
The faster De Beers implement this advertising campaign, the better result they can expect
for them. They are planning to start this campaign early in their action plan. This campaign
will dedicate its advertising for 6 months as they believe that six months of intense and
constant advertising on TV and Magazine Ads should familiarize customers with De Beers’
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diamonds, and bring back the memories they had with the "A Diamond Is Forever"
campaign.
De Beers also believe that coming up with the new commercials on TV and in magazines are
an extremely effective ways to reach the public, specifically their target market. They will be
putting on "Every diamond has a story. What's yours?" commercials on air for six months
duration and create appealing ads on most popular magazines like GQ, Vogue,
Cosmopolitan, BusinessWeek, People, InStyle, and etc. This advertising campaign should
cost about $50 million dollars. Furthermore, these are not the only advertising methods they
will be implementing.
In order to create high brand knowledge about De Beers Diamond Company, they are
planning to concentrate on four main regions. De Beers are strictly looking into brand
knowledge in the U.S., Europe, the Middle East, and Australia. They are planning to
implement this with a longer brand knowledge in the U.S. because they believe that De Beers
needs to spend a longer time in the US, focusing on disassociating from conflict diamonds. In
Europe, Australia, the Middle East, or in the United States, De Beers are going to increase
brand knowledge through celebrity endorsements, fashion shows, and cultural shows. The
estimated cost is about $70 million dollars and through this, they are expecting people to be
aware of De Beer's diamonds and its brand recognition through these different advertising
campaigns.
Implementation of the comparative advertising will begin soon while De Beers is still in the
brand knowledge and advertising stage. Comparative advertising with synthetic diamonds
also falls under the cost of advertising campaign mentioned above. As mentioned previously,
De Beers is expecting cultural shows to have a strong impact on De Beers’ consumers and
keep the interest of the current De Beers’ customers.
De Beers believe that implementing all of these new marketing strategies in their action plan
will show De Beers as a well known diamond company. They hope to go about this action
plan to change De Beers and to show awareness of De Beers as being the greatest diamond
company
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70
INTRODUCTION
Rio Tinto Diamonds was established in Antwerp, Belgium in June 2002 and employs
approximately 50 people including a representative office in Mumbai, India. It was
established to provide a sales and marketing service to Argyle, Diavik Diamond Mines Inc.
Rio Tinto Diamonds operates as wholesaler of rough diamonds. Its activities are based on
three key principles:
• Deliver to our customers a reliable supply of consistent assortments;

• Manage our supply to protect customers’ investment; and
• Support our products in the market
Rio Tinto is a world leader in finding, mining and processing mineral resources. In order to
deliver superior returns to shareholders over many years Rio Tinto takes a long term
view when developing its mining operations. As such it sets high environmental, safety and
community standards with a commitment to making lasting contributions to local
communities.
The Rio Tinto group employs approximately 36,000 people worldwide. In addition to
diamonds the group has world class interests in iron ore, copper, aluminium, industrial
minerals and energy products. Diamonds are an important and growing product group for
Rio Tinto. Currently, the company produces about 25% of the world’s rough diamonds by
volume through its 100% control of the Argyle mine which last year produced 32.6 million
carats.
By 2004,when the Diavik Diamond Mine is in full production, Rio Tinto will be positioned
as a major gem diamond producer, whilst maintaining its position as one of the largest
overall diamond producers globally.
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BUSINESS STRUCTURE
Rio Tinto – B2B Process
In 2006, Rio Tinto Diamonds launched its business-to-business customer

recognition programme: the Select Diamantaire Customer Mark. The
Select Diamantaire is a Mark of formal recognition for our customers to
use in their marketing and communication efforts. The Select Diamantaire
Mark recognises and promotes our customers' status as exclusive providers
of diamonds from one or more of our three mines - Argyle, Diavik or Murowa. Select
Diamantaires have direct access to a consistent supply of rough diamonds representing the
full range of production in terms of size, colour and quality.
The Select Diamantaire Programme celebrates and promotes the distinctive skills of Rio
Tinto Diamonds' core customers, each of whom are selected for their specific experience and
expertise in the trading, cutting and polishing of diamonds. Rio Tinto Diamonds' objective is
to work with Select Diamantaires in ways that recognise the specialty of their business
model, their position in the value chain, their capabilities, geographic reach and customer
base.
Rio Tinto Diamonds currently has 25 Select Diamantaires who associate formally with a
network of businesses that consistently present trade customers with polished diamonds and
diamond jewellery. In 2007, the Select Diamantaire status was extended to this wider
network of providers, who are recognised as "Associate Select Diamantaires". Over 100
Associates directly linked to Rio Tinto Diamonds' Select Diamantaires are now able to use
the Select Diamantaire Mark in their business marketing and communication.
Our Select Diamantaire Programme includes personalised marketing materials, regular
information newsletters and a dedicated website providing comprehensive profiling of Select
Diamantaires' businesses along with all marketing initiatives and events.
"Rio Tinto's Select Diamantaire is a well-executed programme with clear and strict
processes to ensure that the Mark adheres to the highest standards and retains maximum
value for its customers. The Mark, along with rough diamond tracking and proof of Country
of Origin, ensures jewellery retailers that they are dealing with vendors of high integrity."
Amadena LLC/ Trans American Jewelry Co Inc
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TYPES OF DIAMONDS
Natural colour diamonds

Rio Tinto Diamonds is the world's leading provider of natural colour
diamonds. The Argyle diamond mine in Australia is the world's largest
source of natural colour diamonds, producing a variety of colours from
champagne and cognac to the mine's signature stones, the famous Argyle
pink diamonds.
In 2003, Rio Tinto Diamonds became a founding member of the Natural Color Diamond
Association (NCDIA), an international trade organisation established to raise industry and
consumer awareness, understanding and acceptance of natural colour diamonds, which
include champagne, cognac and pink diamonds.
Champagne diamonds
The United States, the world's largest diamond jewellery market, has demonstrated a large
appetite for champagne diamonds. More and more manufacturers and retailers are using
champagne diamonds as part of their standard offerings.
Market research indicates that the retail consumer finds natural colour champagne and
cognac diamonds an appealing alternative to more traditional white diamonds. This is
particularly true of experienced diamond consumers who wish to try something new.
Champagne diamonds are associated with status, good taste, romance and the finest things in
life; they are typically purchased for fashion, rather than for investment, by financially
independent, style-conscious women. Rio Tinto Diamonds continues to drive the demand for
champagne and cognac diamonds, particularly in the United States, focusing on establishing
a number of dedicated retail programmes for the product.
In addition to the major US market, champagne diamonds are also gaining prominence in the
domestic Indian market. From the platform of our representative office in Mumbai, we are
undertaking considerable research with our customers in creating occasions for champagne
diamond purchasing in India.
73
A dedicated website for champagne diamonds has also been developed.
Pink diamonds
Pink Diamonds, produced at our Argyle Mine in Western Australia, are highly coveted as the
world's most sought after gems. The Argyle Mine produces more than 90 per cent of the
world's pink diamonds, which are sold in a broad range of colours and sizes. The best stones,
the Argyle Signature Stones, are reserved for the annual Pink Diamond Tender.
Rio Tinto recognises the unique position its pink diamonds occupy in the market. We have
developed a number of scenarios designed to leverage this unique position and provide for
growth opportunities for us and our customers.
Argyle Signature Stones

Beginning in 1984, the more exceptional polished pink diamonds from each year's
production, the Argyle Signature Stones, have been sold individually at special auctions
known as "tenders". Participation in these events is by invitation to the world's leading
diamantaires and diamond jewellers.
The Argyle Signature Stones have an average size of 1 carat. Around 60 carats in total are
sold at the Pink Diamond Tender each year. Prices achieved are typically in excess of
US$100,000 per carat. To put the true rarity of these special "pink" diamonds into
perspective, of every million carats of rough diamonds produced at the mine, a mere one
carat is suitable for sale in one of these tenders. Since 1985, more than 750 stones have been
offered for sale at the tender at a total weight of almost 600 carats.
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ROLE OF RIO TINTO DIAMONDS INDIA
Rio Tinto Diamonds Indian office in Mumbai plays an important role in its marketing
strategy. It consults regularly with Indian based customers to share information and
understand their issues and concerns.
The office manages product promotion in India and is a key contributor to the market
intelligence network. Rio Tinto Diamonds Mumbai office is also responsible for the planning
and implementation of the IADC initiative in the US. The IADC has helped the Indian
diamond jewellery industry establish a strong and growing presence in the most competitive
market in the world.
In addition it provides technical assistance to the customer base aimed at improving

downstream efficiency and margins. This has included developing improved cutting
techniques, publishing a technical bulletin, providing training assistance and presentations
and seminars at the Indian Jewellery Show. In August 2003 Rio Tinto Diamonds India
launched the Rio Tinto Diamonds Business Excellence Model(BEM). This model,
specifically for the Indian diamond and jewellery industry, is structured around health and
safety, quality and environmental and social responsibility. It offers a set of management
tools to enable organisations to manage their business risks and improve their performance.
BEM certification will drive safety, product assurance, quality management and
continuous improvement in the diamond and jewellery manufacturing industries and retail
trade.
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MARKET DEVELOPMENT AND PROMOTION
Rio Tinto Diamonds continues to build on its strategic alliance with the Indian diamond
industry. The Indo Argyle Diamond Council (IADC) was launched in 1994 and aims to
increase the competitive advantage of Indian diamond jewellery manufacturers in the US
market. The focus of the current IADC programme is on the top 40 US retailers.
The programme comprises the following major elements:
• Retail market entry strategies;
• Product development, pricing and follow-through to sales;
• Differentiation of member product offerings;
• Management of buyer communication;
• Staff training;
• Representation at the JCK show in Orlando and Las Vegas; and
• Exclusive Viewing Shows for product exhibitions to targeted retailers.
Additional marketing programmes are aimed at stimulating demand for champagne and
cognac diamonds, important elements of the Argyle profile.
With the market entry phase for Diavik production completed in 2002 and 2003, marketing
attention going forward will be focused on leveraging the Canadian origin of the product. Rio
Tinto Diamonds supports industry efforts to stimulate the consumer market and believes that
Canadian origin diamonds are an exciting new product offering for the consumer and may
generate additional demand.
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MARKETING MIX
1) Product
Rio Tinto Diamonds markets the rough diamond production from Argyle and its 60% share
from the Diavik Diamond Mine as separate product streams. As a result, the national identity
of the product is maintained and can be used by customers interested in promoting country of
origin.
The Argyle and Diavik productions are complementary and allow
Rio Tinto Diamonds to supply rough diamonds across all
categories. The Diavik ore bodies have a significant proportion of
their value in gemstones with good clarity and colour in larger
sizes.
The Argyle production is predominantly one of small, coloured,

affordable diamonds. In between there exists an overlap which
makes existing Argyle customers well placed to manufacture and distribute Diavik product.
In Rio Tinto’s product profile the outlook for top end goods remains strong with increasing
reports of scarcity.
Demand for affordable diamonds has continued and the Indian diamond industry continues to
grow as markets such as Japan have traded down in quality. A number of new customers
were taken on for the Diavik product, mainly for the better quality large goods where there
was significant value relative to the Argyle profile. In product segments where the Argyle
and Diavik production overlap, existing customers were given opportunities for growth.
Included in the new customers for the Diavik product was a group of manufacturers based in
the Northwest Territories of Canada, most of whom are planning to take advantage of market
interest in goods mined and manufactured in Canada. All Rio Tinto Diamonds sales take
place on a willing buyer willing seller basis, including those to customers in the Northwest
Territories. Currently around 10% of the total value of Diavik production is being sold to the
Northwest Territories cutters, who are limited in what type of rough diamonds they can use
77
by the economics of cutting in Canada. The Northwest Territories manufacturers’ share of

+2cts better end white goods is higher at around 25% of value.
2) Price
Whilst supply/demand fundamentals indicate rough price pressures due to the build up of
inventory in the pipeline, this was not the case in the second half of 2002 and throughout
2003.
Rough prices since 2003 have remained strong and have continually outperformed polished
prices. Rough supply has generally been higher than required to meet retail consumption of
diamonds, resulting in an increase in polished inventories in the cutting centres.
Looking ahead, the rough diamond market is anticipated to remain strong for some time.
Although production is forecast to increase, there will be substantially less sales out of
producer inventories in the years to come. If industry marketing efforts prove to be a success
and new markets perform as hoped, the outlook for the industry as a whole is positive
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3) Place
Diavik Diamond Mine

The Diavik Diamond Mine is an unincorporated joint venture between Diavik Diamond
Mines Inc. (DDMI) (60%) and Aber Diamond Mines Ltd. (ADML) (40%). DDMI is
headquartered in Yellowknife, Northwest Territories, Canada and is a wholly owned
subsidiary of Rio Tinto plc of London, England. ADML is a wholly owned subsidiary of
Aber Diamond Corporation (formerly Aber Resources Ltd) a publicly listed company based
in Toronto, Canada. The two joint venture participants retain the right to market
independently their respective share of the diamonds to be produced from the Diavik
Diamond Mine. DDMI is the manager of the project
Argyle Diamonds
Argyle’s production in 2002 was 32.6 million carats, approximately twenty percent of the
world’s annual production. The current high rate of waste mining, consisting of a series of
cut backs to expose new ore, will continue well into 2004. At the conclusion of the final
cutback, the waste mining rate will reduce to a level that supports the ongoing mining of 10
million tonnes of diamondiferous ore per year. This is planned to continue until 2007,
resulting in an average production rate of around 30 million carats p.a.
Merlin
The Merlin Diamond Project comprised a small-scale diamond mining and processing
operation in the Northern Territory of Australia. The Merlin Diamond Project, 100% owned
by Rio Tinto Limited was part of the purchase of Ashton Mining Limited in November 2000.
Argyle Diamonds (100% owned by Rio Tinto Limited) was the operator. As at the end of
May 2003, Rio Tinto closed the Merlin Diamond Project as it was considered not of the scale
required for Rio Tinto’s diamond mining strategy.
Murowa
Rio Tinto has a majority interest in the Murowa diamond project in Zimbabwe. There are
still a number of requirements that need to be addressed before bringing the mine into
79
operation. If plans proceed to schedule Murowa will commence production in 2004 with a
limited initial output but with the possibility of future expansion.
80
4) Promotion
The Indo Argyle Diamond Council (IADC) was launched in 1994 and aims to increase the
competitive advantage of Indian diamond jewellery manufacturers in the US market. The
following programs were initiated by the company:-
•Representation at the JCK show in Orlando and Las Vegas; and
• Exclusive Viewing Shows for product exhibitions to targeted retailers.
The world's largest supplier of champagne diamonds, said that although it is not a new
phenomenon, champagne diamonds are gaining cachet with high
profile jewelry designers and diamond jewelry retailers around the
world. Thus RIO TINTO has launched its new collection of
champagne diamonds and is promoting the jewellery made out of
them.
A new trade organization was recently created to promote natural

color diamonds called the Natural Color Diamond Association NCDIA, Belgium, it boasts an
international membership of rough diamond producers, diamond and jewelry manufacturers,
and retailers.
Following the success of its champagne diamond dresses at last year's Academy Awards, the
Natural Color Diamond Association (NCDIA) is launching a campaign for this year's Oscars
to focus attention once more on colored diamonds.
Last year, the stunning $2.5 million dress worn on the red carpet at the Oscar ceremony by
Entertainment Tonight presenter Maria Menounos
81
CORPORATE SOCIAL RESPONSIBILITY
All of Rio Tinto's diamond operations are committed to making a positive contribution
towards sustainable development. Rio Tinto's stewardship interest is focussed on the
exploration, production and sales of rough diamonds.
Wherever it does business, Rio Tinto commits to provide a legacy of stronger, healthier and
environmentally secure communities. Where possible it seeks to influence the standard of
operation of its customers and its customers' customers.
The Argyle diamond mine
The Argyle mine in the remote east Kimberley region of Western Australia operates in a
region of significant economic and social disadvantage. One of our key focuses at Argyle is
to help build a stronger and more robust east Kimberley economy that is not dependent upon
the mine's operation.
The Diavik diamond mine
The establishment of the Diavik mine in Canada and its ongoing operation provide positive
sustainable development examples, from engineering feats to establish its infrastructure in a
harsh and frozen climate, to the development of considerable employment, training and
capacity-building opportunities for local communities.
The Murowa diamond mine
Consultation and community engagement have been important factors in the Murowa
operation from the outset, as Rio Tinto Diamonds recognises the impact of the mine on the
local community
In 2006, Rio Tinto Diamonds established a Centre of Technical Excellence which comprises
of a small team of experienced specialists who support more advanced evaluation projects
and promote and share best practice in the Rio Tinto Group.
The most advanced exploration project undertaken by Rio Tinto Diamonds to date is at
Bunder in the Indian state of Madhya Pradesh, where Rio Tinto has discovered a cluster of
eight diamondiferous kimberlites
82
CONCLUSION
“In a materialistic world, gem diamonds are, after all, of no practical use. They are not used
in the making of things or the breaking of things; they don’t make cars go faster or planes fly
higher. They are not used in the production of anything – except happiness. And therein lies
their secret: they don’t feed our bodies, but they do feed something in our soul. And, because
of this, we have come to understand that, while they may not be necessary to our physical
survival, they are essential to our emotional well being. A thing of beauty in its own right,
the perfect marriage of the art of man and the art of nature, the diamond is also an enduring
symbol of all that is best in us and our aspirations: purity, love and commitment”. Said Nicky
Oppenheimer, Chairman of De Beers.
83
84

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MET::eMBA DIAMOND INDUSTRY

Gem Diamond Industry Industrial Diamond Industry

GEM DIAMOND INDUSTRY:

INDUSTRIAL DIAMOND INDUSTRY:

DIAMOND SUPPLY CHAIN:

Diamond cutting and polishing workshop in Bombay.

A diamond in its natural, uncut state is described as a "rough

How Do I Know If a Diamond Is Well Cut?

SHAPES RELATIVE SIZES

The cut, or proportions, of a diamond is measured in percentages relative to the diameter of

Color Grading Scale

Alongside is the technical clarity scale with a description of each term.

If an inclusion is in this part of the diamond and happens to be

How rarity affects size?

Diamonds are cut in many different and

The main difference between naturally-formed diamonds and synthetic

 NATURAL FANCY COLOUR DIAMONDS

 High domestic interest rates compared to elsewhere

 New markets in Europe & Latin America

 China, Sri Lanka and Thailand's entry in small diamond segment

DE BEERS – PRIVATELY OWNED COMPANY

As Nicky Oppenheimer said,

The De Beers structure

De Beers is now owned by a consortium known as DB Investments (DBI) consisting of:

THE BIRTH OF A TAGLINE

After meeting with many of the top advertising

De Beers Investments is the privately held, ownership company of De Beers Societe

Changes to De Beers' business model

De Beers is active in every category of industrial diamond mining: open-pit, underground,

3) Able to influence prices when selling to manufacturers as it has an excellent marketing

5) Owns over 50% of the US diamond market share.

4) De Beers faces threats from Synthetic/Cultural Diamonds. Synthetic Diamonds are

De Beers positioned its diamonds as:

4. ‘Women’s Best Friend’

Cut Chart Color Chart

Clarity Chart Carat Chart

De Beers is active in every category of industrial diamond mining: open-pit, underground,

The Diavik Diamond Mine

The Family of Companies

De Beers Diamond Jewellers

De Beers retail store on Rodeo Drive in Beverly Hills, California

 London at Bond Street, Royal Exchange and Harrods

(Please refer Advertising Campaign on Page No. 53 )

DE BEERS SALES - DTC

The Industry’s First Marketer

The ‘Occasion Purchase’ –

‘Past, Present and Future’ Advertisement

‘Left Hand Ring’ Advertising

Grand Media campaigns involving starlets such as former

DTC ON THE INTERNET

STRATEGIES TO RE-GAIN POSITION IN

RISK ANALYSIS AND THEIR CONTROLS

CORPORATE SOCIAL RESPONSIBILITY

CONTRIBUTION TOWARDS CHILD LABOUR

• Deliver to our customers a reliable supply of consistent assortments;

Rio Tinto – B2B Process

In 2006, Rio Tinto Diamonds launched its business-to-business customer

Natural colour diamonds

A dedicated website for champagne diamonds has also been developed.

Argyle Signature Stones

ROLE OF RIO TINTO DIAMONDS INDIA

In addition it provides technical assistance to the customer base aimed at improving