Founded in 1888 by Cecil Rhodes, De Beers is a privately owned and operated company registered under the name De Beers Investments with headquarters in Johannesburg, South Africa. It is an umbrella organization with various sub-companies under the main group. The management company of the group is known as De Beers Societe Anonyme (DBSA).
Mining of diamonds
As far as diamond mining is concerned, De Beers is involved in every category be it open-pit, underground, large-scale alluvial, coastal and deep sea. Mining is done in Botswana, Namibia, South Africa, Tanzania and Canada. In Botswana, Namibia and Tanzania, De Beers works in tandem with the government through a joint venture.
The mining activity in Canada’s Northwest Territories only began in 2007, the first such venture of De Beers outside of Africa. This year 2008, the company will start its diamond exploration at the Victor Mine in Ontario, Canada.
Diamond Trading
De Beers engages in the sorting, buying and selling of about 40 percent of the world’s rough diamonds through its Diamond Trading Company (DTC). Trading takes place in South Africa, Botswana, Namibia and the United Kingdom.
The DTC is the sales and distribution arm of the De Beers Group. It sells loose diamonds taken from the company’s very own mining operations in South Africa and Canada and through its partnerships with the governments of Namibia, Botswana and Tanzania.
From the source, the rough diamonds are then sorted by technicians in London, Kimerley, Widhoek and Gaborone into about 12,000 various categories for the so-called DTC sightholders. The stones are sorted based on size, shape, quality and color.
The DTC is also involved in the development of diamond technology and operates a research and development facility as well in the United Kingdom.
In addition to this, De Beers’ marketing arm based in London called the Central Selling Organization (CSO) buys the diamonds produced by the company’s 13 mines in Botswana, Namibia, Tanzania and South Africa. In 1999 alone, the diamond production accounted for 44 percent of the world’s yearly output valued at $6.8 billion.
The CSO receives all diamonds and then combines and separates them into 14,000 categories. The next step that follows is when the company’s 500 sorters divide the stones into lots known as boxes.
Sightholders
Every five weeks, De Beers holds a “sight” which involves the distribution of the boxes to its 125 partners or sightholders. The diamond company sets the price of the boxes and decides the quality and quantity that would go to the sightholders. These sightholders can no longer negotiate the price and quantity set to them.
Some 79 sightholder companies purchase rough diamonds from the DTC and its affiliate offices. Normally, sightholders go to London, Kimberley, Gaborone and Windhoek 10 times every year for their sight. After receiving their stones, the sightholders return to their factories where they cut and polish them into beautiful and shining gems. Once polished, they then sell the diamonds to their wholesale and retail customers worldwide.
While involved in diamond trading, sightholders are required to follow the Best Practices Principles (BPPs) of the De Beers Group. The BPPs aim to set standards of conduct in the areas of business, social and environmental responsibilities. They make sure that the main company as well as its sightholders and other third parties involved conduct business based on ethical, legal, professional, social and environmental standards.
One important standard that sightholders need to adhere to is the Kimberley Process. The Kimberley Process Certification Scheme (KPCS), which took effect in 2003, was a result of a joint agreement between governments, the global diamond industry and civil society organizations to protect the production and trade of diamonds. It ensures that the stones sold by De Beers are conflict-free, certified by the KPCS and they comply with the company’s best practice principles. Conflict-free means that De Beers’ diamonds are not used to support rebel groups.
Marketing strategy
The success of De Beers is due largely to its aggressive marketing campaign. One of its highly successful and very effective strategies was marketing diamonds as a symbol of love and commitment. The company’s renowned advertising line “Diamond is Forever” coined in 1947 by copywriter Frances Gerety has been forever etched in the minds of people. In fact, the line was named best advertising slogan of the 20th century by Advertising Age magazine in the year 2000.
Other marketing campaigns launched by De Beers that draw a lot of international attention were its eternity ring symbolizing love and appreciation, trilogy ring symbolizing a relationship’s past, present and future and the right hand ring depicting independence in women. De Beers also now promotes its Forevermark diamonds which are natural, untreated, cut and polished by a special diamantaire. These stones feature an icon and identification number inscribed on the diamond’s table facet.
The company actually has a consumer-marketing department which spends around $5 million each year for marketing campaigns and research purposes. The department monitors different types of information such as buying habits, patterns and the number of engagements that take place around the world.
Retail Venture
De Beers now manages an independent diamond jewellery company in partnership with Louis Vuitton Moet Hennessy (LVMH), a French company manufacturing luxury goods such as bags, shoes and luggage. De Beers Diamond Jewellers Ltd was launched in 2001and sells diamond jewellery. The very first De Beers store is on Old Bond Street in London while two others are on in the Royal Exchange and Harrods. The other branches spread in different parts of the globe are in New York City, Beverly Hills, Las Vegas, Houston, Dallas, Waikiki, San Francisco and Virginia in the U.S., Paris, Moscow and Kiev in the European Union, Japan, Taiwan, Korea and Hong Kong in Asia and Dubai in the Middle East. The De Beers retail store has six outlets in Japan and three in Dubai.
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