Introduction To Conflict Diamonds

Conflict diamonds or blood diamonds are diamonds mined in areas controlled by forces that use the diamonds to finance rebel movements, civil wars, and other conflicts (particularly in Africa).

Worldwide diamond trade is a $60 billion a year industry. 60% of the world’s rough diamonds are from Africa which creates a situation with great potential for money to fall into the wrong hands.

To start at the beginning…

Throughout history diamonds have been a social icon of wealth and importance. Only the very rich could afford them. Diamond discoveries were rare and were mostly found in riverbeds. The true source of diamonds was unknown until the 19th century. In1869 an 83.5 karat diamond was found in South Africa and a monumental diamond rush followed. Shortly after in 1973 the mining town of Kimberly was established and the source of diamonds was discovered. Diamonds are formed underground and are carried to the surface during volcanic eruptions in chutes called Kimberlite pipes, named after the town. Soon afterwards large scale production at Kimberly became possible.

One man by the name of Cecil Rhodes was smart enough to foresee the future of diamond mining. In the beginning, the diamond industry was very disorganized and consisted of small companies and individuals staking claims in diamond rich areas. Rhodes began buying up competitors and started an empire. In 1888 Rhodes founded De Beers Consolidated Mines and by this time he controlled 90% of the World’s production of diamonds. Rhodes’s business strategy was to regulate the supply of diamonds with the demand to ensure the price stays high. This strategy meant that De Beers needed to own every diamond produced despite where or how they were mined and how they came onto the market.