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, as its trade practices led to an indictment for violating antitrust regulations (the case was settled in 2004). The concentration of power only loosens at the retail level, where diamonds are sold by a limited number of distributors, known as sight-holders, 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 Republic of the Congo, Angola and Sierra Leone. There are also commercial deposits being actively mined in the Northwest Territories of Canada, Siberia (mostly in Yakutia territory, for example Mir pipe and Udachnaya pipe), Brazil, and in Northern and Western Australia. Diamond prospectors continue to search the globe for diamond-bearing kimberlite and lamproite pipes.

In some of the more politically unstable central African and west African countries, revolutionary groups have taken control of diamond mines, using proceeds from diamond sales to finance their operations. Diamonds sold through this process are known as conflict diamonds or blood diamonds. In response to public concerns that their diamond purchases were contributing to war and human rights abuses in central Africa and west Africa, the diamond industry and diamond-trading nations introduced the Kimberley Process in 2002, which is aimed at ensuring that conflict diamonds do not become intermixed with the diamonds not controlled by such rebel groups.

The Kimberley Process provides documentation and certification of diamond exports from producing countries to ensure that the proceeds of sale are not being used to fund criminal or revolutionary activities. Although the Kimberly Process has been somewhat successful in limiting the number of conflict diamonds entering the market, conflict diamonds smuggled to market continue to persist to some degree.

Currently, gem production totals nearly 30 million carats (6,000 kg) of cut and polished stones annually, and over 100 million carats (20,000 kg) of diamonds are sold for industrial use each year. In 2003, this constituted total production of nearly US$9 billion in value.