Editor’s Note
This article examines the swift decline of De Beers’ once-unassailable monopoly, contrasting the geological eons required to form a diamond with the relatively rapid unraveling of a corporate empire built on them. It serves as a potent reminder that even the most entrenched market positions are not immune to change.
It takes between one and three billion years to form a natural diamond, more than 100 kilometers beneath the Earth’s surface, and then wait for it to be brought up by tectonic movements. It took far less time to undermine a monopoly once believed to be as eternal as its advertisements—that of De Beers, the famous South African conglomerate.
The most spectacular lesson from the failed takeover bid by the Anglo-Australian mining giant BHP for its South African rival Anglo American is that for miners worldwide, copper is now worth far more than diamonds. When presenting its acquisition offer on April 25, BHP was quick to clarify it would not keep De Beers. To counter the attack, Anglo American launched a vast restructuring plan that includes selling its most famous brand at the worst possible time.
What happened for such a powerhouse, which controlled nearly 80% of the global diamond trade in the 1980s—an investment considered as safe as gold—to now be auctioned off by its owners? As often, it’s the convergence of rising competition, poor market conditions, and a technological disruption.
De Beers was founded in 1888 by British adventurer Cecil Rhodes, who managed to gain control of all South African mines, representing 90% of global production. The company secured a near-monopoly on dealings with diamond cutters and regulated prices by varying its output. Competition arrived late, notably from Russia with the Alrosa group. De Beers’ market share fell to below 40% by the turn of the millennium. Price fluctuations became more violent, especially in 2022 and 2023 with soaring inflation.
But the real disruption is happening now, with lab-grown diamonds. Long marginal and reserved for industrial uses, they are increasingly finding their way onto the fingers of brides-to-be worldwide, with prices initially 20% lower, then 50% lower, or even more. Even De Beers has started selling them as a promotional product.