London Diamond Trading Corporation 

Resolutions dated 1684, which were found in the archives of the Court of Directors of the East India Companies, note that the centralization of the diamond trade in the hands of English merchants had, by that time, become an accomplished fact. Around 1655, the private diamond trade in England had become legalized, and I would arbitrarily select this period as the beginning of London’s uninterrupted reign of dominance in the worldwide distribution of rough diamonds. 

Indeed, the Act of Parliament of 1732, which abolished customs duties on diamonds and other precious stones, opened with a description of England’s paramount position in the trade, and I quote: “Whereas this Kingdom is now become the great mart for diamonds and other precious stones and jewels, from whence most foreign countries are supplied.” 

Historically, the European cutting centers received the rough produced in India, Brazil or Africa, either solely or mostly via London. During World War II, the Belgian government-in-exile made a deal with De Beers promising it that, after the war, the Congo production would continue to come to London, against a De Beers promise of rebuilding the post-war Antwerp trade and industry. 

Also historically, De Beers marketed most of its output (more than 40 percent for as long as I can remember) through Belgium – irrespective of the state of the domestic manufacturing industry. All of this will change now. 

After having served over 350 years as the distribution center for rough diamonds, a few visionary diamond-industry and government leaders have set in motion a process – or were caught in a process – that moves the distribution of rough diamonds back to the producer countries. 

Diamond Trading Corporation: A Picture of Change and Transformation 

At last week’s Mine to Market conference in Mumbai, I graphically illustrated this revolution through three pictures. The first picture shows the construction of the DTC Botswana building in Gaborone, located quite near the airport, which will become operational at the end of this year. It stands adjacent to the new building of Debswana - by value the largest diamond-mining company in the world. 

But, maybe, a far more dramatic picture is the De Beers “big hole.” No, with “big hole” I am not referring to the Kimberley Mine, but rather to the location of Charterhouse Street in London, where, until recently, the sorting of the world’s diamond production and sight aggregation was taking place. The building has been torn down; some of us have already forgotten the connecting bridge between the sides of the road, which has also become history. 

London is voluntarily relinquishing its historical role as part of moving away from a centralized supply-controlled distribution towards a more competitive demand-driven diamond market. The relinquishment is part of a transformation that gives the industry everything it wants and, regretfully, also what it doesn’t want. It represents a mixture of hope, promise and opportunities – alongside considerable pain, redundancies and bankruptcies, which are passing through uncharted territories with unproven strategies. The transformation of an entire industry within a very short time span is an enormous challenge that needs the input – and the benefit of the collective thinking and visions of all stakeholders. 

London ’s voluntary relinquishment of its distribution role represents more than a market strategy. It also heralds the end of the colonial policies that view producer countries merely as exporters of their valuable commodities and denies them the right to self-determination in terms of the uses of their nations’ mineral wealth. The main African producers as well as Russia must make choices and define their own national, economic and social interests. There is no other mineral or precious metal commodity in the world where those who hold the economic controls over production have made such a massive commitment to beneficiation in the producer countries. 

Beneficiation in Africa and What it Means for India 

The historical polices of the diamond distributors have consistently resisted beneficiation in Africa on mostly economic grounds. When pressured, they supported token operations – which were not often very successful. I hope that I speak on behalf of all of us when I say that African governments must be wholeheartedly supported in fulfilling their beneficiation aspirations. It is not a zero-sum game. Nobody will benefit from their failure. We must all help them to succeed. 

In an industry marked by geographic shifts and changes, there is really only one country that seems immune to all of this - and that is India. It is in India where diamond production and trade began. Surat was already a trading center in the 16th century, well before diamonds reached London. India is also probably the only diamond-manufacturing center that will not be impacted by beneficiation in Africa. To the contrary, India and African manufacturing centers will become complementary; they will work together and prove once more that one and one can make more than two. 

India was in diamonds hundreds of years before a single diamond was discovered in Africa. Today, De Beers and other producers are again exploring for diamonds in India. Of the global DTC trade, some 33 percent of sales are made directly to India. Of the 97 global DTC sightholders, 37 are based in India. While Diamdel offices in other trading countries will decline to a merely symbolic presence, if any presence at all, the Indian equivalent (the 50-50 joint venture with government called Hindustan Diamond Company), which currently serves 238 small- and medium-size non-sightholder manufacturing companies, is set to expand. Africa will supply India and the other cutting centers of what is left, i.e. what will not be used for local consumption. 

After 350 years, London, as the home of the historical rough diamond syndicates, will shortly become history. 

Have a nice weekend.