Diamonds are a girl’s best friend and, a multibillion dollar industry but there is a price to be paid for these natural beauties. Corrupt leadership and zero business ethics have led to some terrible things in Africa. In 2013 a civil war broke out in the Central African Republic over diamond resources. Over 3.7 million people have lost their lives since fighting began over diamonds. Rival groups have fought over these treasures in places such as Sierra Leone, Liberia, Angola the Republic of Congo and Conte’ d’Ivoire for over 100 years. Civil War, worker exploitation and environmental degradation are everyday norms in parts of Africa.
Africa is the world leader in diamond production, it accounts for over 65% of the diamond industry. Why is this so important? Because diamonds are one Africa’s most advanced and richest economy contributors. In 2005 alone, over 15,800,000 carats were harvested in Africa. 8.5 billion dollars a year worth of diamonds come from African Countries. In 1867 the first diamond was discovered along the Orange River near Kimberly, South Africa. That’s when the diamond business in Africa all began.
The De Beers Company, the largest Diamond mining company in the world started their mining practices in 1888. They have operations in 28 countries around the globe. Doing business in the diamond industry hasn’t always been easy. The De Beers company was accused of building a monopoly in the industry with tactics such as price fixing, antitrust behavior and manipulating the diamond market. They convinced independent minors to join their business using millions of dollars to persuade them to sell their business to De Beers. They flooded the market with diamonds of equal quality of others but for much cheaper prices. They purchased diamonds they didn’t mine on their own and stock piled them so they wouldn’t be sold to retailers. By the 1990’s, De Beers owned over 90% of the diamond market.
Doing business like this comes at a price. Eventually all monopolies come to an end. In 2000 De Beers had to change. Pressure from Russia, Canada and Australia began to boycott their product. By 2012, De Beers only owned 40% of the diamond market. In 2001 De Beers was sued because of price fixing. They settled in 2005 for a whopping 295 million dollars! While the price fixing settlement was in process, in 2004, another settlement for collusion cost De Beers 10 Million. The corruption cost industry wide license losses to miners in 2013. As you can see, De Beers still owns the largest sales share of the Diamond world but the field is narrowing.
This is a grand story of corruption but the business world can learn from their mistakes. Had regulations been posed on De Beers from the beginning and the diamond business in general, bloodshed and millions of dollars would not have been lost. Are these sparking beauties really worth the cost?
Diamondfacts.org. (n.d.). Retrieved December 10, 2014, from http://www.diamondfacts.org/
Blood Diamonds. (n.d.). Retrieved December 10, 2014, from http://web.stanford.edu/class/e297a/Conflict in Sierra Leone.htm
(n.d.). Retrieved December 10, 2014, from http://www.capetowndiamondmuseum.org/about-diamonds/south-african-diamond-history/&ei=np2HVJ6WBsWZyASyw4D4Aw&usg=AFQjCNE9DOwBaMyXu2wkSsMU8FSViNBtBA&bvm=bv.81449611,d.aWw