The word diamond comes from the Greek work “adamas” meaning invincible or unbreakable. The first diamonds were mined in India over 4000 years ago in alluvial deposits along the Krishna, Penner and Godavari rivers. Diamonds were considered in ancient Greece and Rome as tears falling from the Gods. Their rarity, durability and beauty made them popular among medieval royalty.
Often referred to as The Diamond Pipeline, the diagram below shows the key stages within the modern diamond industry from searching for the diamonds on or below the earth’s surface, all the way to diamond jewellery being purchased by the end consumer in a retail store somewhere in the world.
Diamond Exploration takes place in many parts of the world; Africa has long been the main source of rough diamonds, since the first modern diamond rush in South Africa in the 1870s, and remains a key target area for diamond explorers. However exploration takes place in many other parts of the world, from Canada to Australia, from South America to Russia and India.
Diamond Mining occurs when economically viable deposits are discovered and the rough diamonds are extracted from these sources. The diamonds may be mined from open-pit mines, from underground mines, from alluvial deposits (ancient river beds) or even from the ocean floor, such as off the coast of Namibia. Modern diamond mining as we know it began in South Africa in the late 19th century. The top diamond producing countries are Botswana, Russia, Canada, Angola, South Africa, Namibia and more recently Zimbabwe, with the advent of the discovered Marange deposit.
Diamond Sorting and Valuing is the step where diamonds are graded and categorised/valued in preparation for sale; in the formal sector this is done by the producers who seek to maximise value by creating assortments for specialist trade customers to purchase. This activity is principally carried out in African producing countries, Russia or in Antwerp, the world’s main rough trading centre.
Rough Diamond Sales are the sales made by the diamond producers to the trade; the key trading centres for rough diamonds are Antwerp, Botswana, South Africa, Namibia, Dubai and Mumbai. Traditionally diamonds are sold by a variety of methods ranging from regular allocations to an approved set of customers, to a more open tender-based sales system. In recent years, tender sales and auction sales have increased in popularity, especially for the smaller producers.
Rough Trading is the secondary trading that takes place between rough diamond customers of the producers and the secondary trade based in the various cutting centres. This trading is an additional step in the value chain and its primary purpose is to facilitate the distribution of rough to those players who do not have direct access to primary supplies. The key trading centres in the world are Antwerp, Mumbai, Tel Aviv, Dubai and Johannesburg.
Rough Manufacturing / Polishing is the process of transforming rough diamonds into polished diamonds; over the years polishing technology has improved significantly and the resultant polished is now an output of a highly scientific, and in some cases (such as small diamonds) highly automated factory process. India, for the last 20 years the dominant force in diamond polishing with low labour costs and a large available workforce (estimated to be anything up to 800,000 workers), now claims to be responsible for the manufacture of 14 out of every 15 polished diamonds produced. The region of Gujurat, led by the city of Surat, is the unofficial diamond manufacturing hub where many of the diamond processing companies are based. The increasing amount of goods sold in African producer countries “beneficiation”* requirements (accessing downstream value-addition of the product through local polishing rather than immediate exports) has meant that centres such as Gaborone, Windhoek and Johannesburg have strong, protected manufacturing bases. China is growing as a diamond manufacturing centre. Meanwhile the traditional manufacturing centres such as New York, Tel Aviv and Antwerp are focusing on specific niche areas where they can retain a competitive edge, particularly in specialist high-value items.
Polished Trading entails the distribution of polished diamonds to either polished wholesalers or jewellery manufacturers. Mumbai, New York, Hong Kong, Tel Aviv and Antwerp are the main polished trading centres. A significant amount of the polished and jewellery trade (B2B), up to 40%, is estimated to be conducted at the key trade fairs, such as JCK in Las Vegas (June), IIJS in India (August) and the Hong Kong Show (September).
Jewellery Manufacturing is the step in the Pipeline where the diamonds are set into gold, platinum or silver jewellery. The vast majority of diamond jewellery is produced in India, China and the Far East. It is only the top-end pieces that are made in the traditional manufacturing locations such as Italy, New York, etc. Diamond jewellery is sold principally in the same centres as the polished products.
Jewellery Retail is the final step in the diamond pipeline – where the consumer can purchase the diamond jewellery in a retail environment. Here the range of products is vast, from the mass market merchandise sold in lower-end retailers to bespoke jewellery sold in Fifth Avenue or Bond Street.