The De Beers Diamond Consortium is a South African-British corporation that specializes in diamond mining, diamond exploitation, diamond retail, diamond trading and industrial diamond manufacturing sectors. The company is active in open-pit, large-scale alluvial and coastal mining. It operates in 35 countries and mining takes place in Botswana, Namibia, South Africa, Canada and Australia.
From its inception in 1888 until the start of the 21st century, De Beers controlled 80% to 85% of rough diamond distribution and was considered a monopoly. As of 2000, the company's control of the world diamond supply decreased to 63%.
The company was founded in 1888 by British businessman Cecil Rhodes, who was financed by the South African diamond magnate Alfred Beit and the London-based N M Rothschild & Sons bank. In 1926, Ernest Oppenheimer, a German immigrant to Britain and later South Africa who had earlier founded mining company Anglo American with American financier J. P. Morgan, was elected to the board of De Beers. He built and consolidated the company's global monopoly over the diamond industry until his death in 1957. During this time, he was involved in a number of controversies, including price fixing and trust behaviour, and was accused of not releasing industrial diamonds for the U.S. war effort during World War II.
In 2011, Anglo American took control of De Beers after buying the Oppenheimers' family stake of 40% for US$5.1 billion (£3.2 billion) and increasing its stake to 85%, ending the 80-year Oppenheimer control of the company.
History
Foundation
The name 'De Beers' was derived from the two Dutch settlers, brothers Diederik Arnoldus de Beer (1825–1878) and Johannes Nicolaas de Beer (1830–1883), who owned a South African farm named Vooruitzicht (Dutch for "prospect" or "outlook") near Zandfontein in the Boshof District of Orange Free State. After they discovered diamonds on their land, the increasing demands of the British government forced them to sell their farm on 31 July 1871 to merchant Alfred Johnson Ebden (1820–1908) for £6,600. Vooruitzicht would become the site of the Big Hole and the De Beers mine, two successful diamond mines. Their name, which was given to one of the mines, subsequently became associated with the company.
Cecil Rhodes, the founder of the British South Africa Company, got his start by renting water pumps to miners during the diamond rush that started in 1869, when an 83.5 carat diamond called the 'Star of South Africa' was found at Hopetown near the Orange River in South Africa. He invested the profits of this operation into buying up claims of small mining operators, with his operations soon expanding into a separate mining company. He soon secured funding from the Rothschild family, who would finance his business expansion. De Beers Consolidated Mines was formed in 1888 by the merger of the companies of Barney Barnato and Cecil Rhodes, by which time the company was the sole owner of all diamond mining operations in the country. In 1889, Rhodes negotiated a strategic agreement with the London-based Diamond Syndicate, which agreed to purchase a fixed quantity of diamonds at an agreed price, thereby regulating output and maintaining prices. The agreement soon proved to be very successful – for example, during the trade slump of 1891–1892, supply was simply curtailed to maintain the price. Rhodes was concerned about the break-up of the new monopoly, stating to shareholders in 1896 that the company's "only risk is the sudden discovery of new mines, which human nature will work recklessly to the detriment of us all".
The Second Boer War proved to be a challenging time for the company. Kimberley was besieged as soon as war broke out, thereby threatening the company's valuable mines. Rhodes personally moved into the city at the onset of the siege in order to put political pressure on the British government to divert military resources towards relieving the siege rather than more strategic war objectives. Despite being at odds with the military, Rhodes placed the full resources of the company at the disposal of the defenders, manufacturing shells, defences, an armoured train and a gun named Long Cecil in the company workshops.