| Throughout most of history, the vast majority of | | | | be protected, then the price of diamonds would |
| the world’s diamonds came from India. | | | | have to be artificially supported. |
| But, two thirds of the way through the nineteenth | | | | At the start of the twentieth century, De Beers |
| century, that all changed. The Orange River in | | | | became a cartel, made up of Anglo American, JCI |
| South Africa was the scene of an immensely rich | | | | and Barnato Brothers. The cartel bought up other |
| diamond strike. | | | | mining interests, and rapidly strengthened its grip |
| The first diamonds found in South Africa were | | | | on the industry. |
| alluvial. But by 1869, they were appearing far | | | | In the 1930's, Sir Ernest Oppenheimer, the |
| from any river - first in yellow earth, then in hard | | | | chairman of De Beers Group and leader of Anglo |
| blue rock, later called ‘kimberlite’ | | | | American, came up with the idea of "single |
| after the mining town of Kimberley. | | | | channel marketing". This meant "a |
| Miners quickly opened up huge diamond | | | | producers' co-operative including the major |
| ‘pipes’, and used steam shovels to | | | | outside, or non-De Beers producers in accordance |
| excavate the new mines. Successful miners | | | | with the belief that only by limiting the quantity of |
| bought out their struggling neighbours, and a | | | | diamonds put on the market, in accordance with |
| handful of companies took control of production. | | | | the demand, and by selling through one channel, |
| Leading this process of consolidation were two | | | | can the stability of the diamond trade be |
| bitter rivals, English immigrants Cecil Rhodes and | | | | maintained." |
| Barney Barnato. | | | | Not content with controlling about 90% of the |
| In 1888, Rhodes finally prevailed, buying out | | | | world’s diamond production, De Beers now |
| Barnato with a cheque for over five million | | | | also took a stranglehold on the distribution of |
| pounds, the largest ever issued. In doing so, he | | | | diamonds. The new single channel marketing |
| formed De Beers Consolidated Mines Limited. The | | | | structure eventually came to be known as the |
| company was granted an official listing on the | | | | Central Selling Organisation (CSO). |
| Johannesburg Stock Exchange in August 1893. | | | | For many years, De Beers had major problems |
| In the decade following the first African diamond | | | | with the US Justice Department, as anti-trust laws |
| strikes, annual world production increased more | | | | forbid the formation of cartels. But starting in the |
| than tenfold. Suddenly, the market was flooded | | | | 1990s, De Beers has loosened its grip on the |
| with diamonds. It became obvious to Rhodes and | | | | industry, though it remains the dominant player. |
| his shareholders that if their investment was to | | | | |