Editor’s Note
The diamond industry is undergoing significant shifts as long-standing leaders face mounting challenges. This report examines the pressures confronting De Beers and its network, highlighting evolving dynamics in the global market.
It is reported that De Beers, which has dominated the diamond industry for over a century, and the syndicate companies led by De Beers, are facing difficulties.
De Beers Group, the world’s largest producer of rough diamonds, controls the “Central Selling Organisation (CSO)”, which handles almost the entire diamond supply chain from mining and processing to sales.
The map below, from Bloomberg, illustrates the CSO’s diamond distribution route. Rough diamonds mined from source countries like South Africa, Namibia, and Canada are cut and polished in India, Israel, and Belgium before being distributed to major markets like the United States and China.
To receive diamond supplies from the CSO, one must become a certified buyer known as a “Sightholder.” Only a handful of companies that pass De Beers’ strict screening can become Sightholders. Once admitted, they gain exclusive access to diamonds, and it was once believed that “becoming a Sightholder virtually guaranteed success in the diamond industry.”
However, in recent years, sales of high-end jewelry have been sluggish, overshadowed by spending on items like shoes, handbags, and resort travel. According to a report by Polished Prices, which conducts market research for the diamond industry, the price of rough diamonds has fallen by 6% since the beginning of 2019.
Affected by this downturn, the financial situation of Sightholders is clearly deteriorating. For instance, Eurostar Diamonds, once the largest buyer of rough diamonds, filed for bankruptcy in April 2019. The number of Sightholders has also decreased by over 100 companies in the past decade.
The situation is similar for De Beers’ parent company, Anglo American PLC. Compared to the same period over the past three years, the company’s sales revenue for the first half of 2019 fell by $500 million (approximately 54 billion yen).
De Beers created the famous catchphrase “A Diamond is Forever,” but that brilliance does not seem to be illuminating the industry’s future.