The Diamond Industry by Eytan Black

Background Information - The Industry & How It Works

eytanblack — 2023-12-20 14:28:15 UTC

The diamond industry refers to the global exportation of diamonds. There are several components of the industry; including mining, processing, and marketing (Photius). Contrary to treasured metals such as gold and silver, diamonds don’t have set prices and sellers often inflate product value (Photius ). Furthermore, diamonds are a scarce commodity, and a diminutive amount of locations exclusively handle the global trading of them (Photius ). Diamonds are typically found beneath the earth’s surface, which motivates miners to recover these priceless gems. Once the diamonds are retrieved, the process of sorting and grading transpires. Diamonds are separated into independent groups based on their size, quality, and other distinguishable characteristics (Photius ). On account of the diamond's emergence from the soil, the gemstones are rough and unpolished. Accordingly, upon the division, the diamonds are then cut and polished. Skilled craftsmen transform and cut these unpolished rocks into stunning and attractive diamonds showcased in jewelry (Shimansky). Following the cutting and polishing, the diamonds are then sold to wholesalers in small quantities. The wholesalers essentially act as middlemen between the cutters and the retailers (Diamond Facts). The final stage in the selling process of diamonds is retailing. The diamonds then go to stores, where people can buy the beautiful and fully polished diamonds (Diamond Facts).

Background Information - Location & Existence

eytanblack — 2023-12-20 17:35:00 UTC

Antwerp, Belgium, often regarded as ‘the diamond capital of the world’ is a historically significant place for diamond trading and cutting (Bel Diamond). The city has held prominence in the diamond industry for centuries and is renowned for its proficient diamond cutters. Antwerp has its own diamond district/diamond quarter, spanning an area of one square mile (Bel Diamond). The district consists of 380 workshops, providing aid to over 1,500 diamond-cutting & polishing companies. A large percentage of the world's diamonds pass through Antwerp, and the city is a distinguished global trading hub. Antwerp has rich roots in the diamond industry, as the city deals with all aspects of the industry and has been doing so for the past century. Antwerp continues to be the largest diamond center in the world, with a turnover of 64 billion U.S.D per year (Bel Diamond). The diamond industry as a whole has a lavish history, dating back to the 4th Century BC when the first diamond was discovered in India (Brilliance). As the years passed, diamonds became increasingly popular, characterized by their rarity, strength, and brilliance. Today, the diamond serves as a symbol of wealth and luxury, and the global market size has grown to $100.4 billion U.S.D worldwide (Allied Market Research).

Economic Impact

eytanblack — 2023-12-20 18:05:46 UTC

The diamond industry is valued at a staggering $100.4 billion and only shows signs of increasing, climbing at a CAGR (compound annual growth rate) of 4.5% per year (Allied Market Research). If trends continue, the diamond industry’s value could rise to $155.5 billion U.S.D by 2032 (Allied Market Research). The country of Canada puts a large emphasis on diamond mining, investing more than $10 billion U.S.D into 4 separate mines (All Diamond ). In 2022, the mines produced a combined total of 17.73 million carats, showing a steady increase from years prior u =(Statista). Today, Canada is ranked as one of the world's top five mining countries, yet ranks only 12th among the global leaders in diamond exportation (Statista). In regards to how much money the industry brings to Canada, while the exact figure is unknown, estimates can be made that Canada produces north of 150 million dollars of profit per year (All Diamond). In 2022, Canada exported 1.84 Billion U.S. worth of diamonds, while making 10% royalty (Statista). Additionally, the diamond industry further contributes to Canada’s economic growth, creating job opportunities. The diamond mines are located in northern Canada, in areas such as Yellowknife and the Northern Territories (Government of Canada). The industry employs 4,150 Canadian citizens who would otherwise struggle to find jobs in such remote areas (De Beers in Canada).

Issues

eytanblack — 2023-12-20 18:07:08 UTC

The diamond industry has faced 2 prevailing ongoing issues tinting its history. The problems with the industry are complex and multifaceted; varying from a controlled monopoly and inevitable oligopoly to detrimental environmental impacts. Since its establishment in 1888, De Beers Jewellery controlled the diamond industry up until the 21st century (De Beers CA; Better Than Diamond). At its peak in the 80s, De Beers controlled 90% of the market share, it subsequently dropped to 60% in the 90s, and has fallen to 29% in the present day (Better Than Diamond; Statista). De Beers’ dominance over the diamond industry proved to be immensely consequential, as the company freely marked up price points while facing zero repercussions. In the 1900s, De Beers Jewellery was essentially the only source of diamonds to the public on a global scale, and buyers were compelled to spend excessive amounts on diamonds. While this issue has been corrected, the problem regarding an oligopoly isn’t something that can be reworked. In today's day and age, the diamond industry is characterized by an oligopoly market structure; meaning there are a small number of sellers dominating the market, rather than just one (Diamond Investing). On account of this, there is minimal competition within the industry, and the major companies still hold pricing power and control global diamond production (Diamond Investing). Another persisting issue with the diamond industry is its destructive environmental impact. The exploitation of diamond mines has caused irreversible damage to the environment (Environmental Impacts of Mined Diamonds). Diamond mining involves heavy machinery and chemicals in the extraction process. As a result, the diamond mines have negatively impacted surrounding water resources, wildlife, air quality, and soil quality, and actively contribute to climate change (Environmental Impacts of Mined Diamonds). Furthermore, severe diamond mining poses risks such as deforestation and soil erosion (Diamond Commodity Chain).

Solutions to Environmental Damage

eytanblack — 2023-12-21 15:29:32 UTC

The environmental impacts of diamond mines are something every mine is condemnable of. Strategies can be implemented to make mining as a whole more environmentally sustainable, and the diamond industry is already adopting more renewable strategies. Firstly, by lowering the impact of mining techniques such as open-pit and underground mining, and using alternative techniques that present less environmental impact, mining can become more environmentally friendly (Mining Events). Open-pit mining is the most common approach, and the process is used worldwide. The system operates by creating a large hole in the ground and extracting the diamonds. This process poses great harm to the natural world. Other mining methods such as ‘in situ’ and bioleaching significantly diminish the environmental impacts of mining (AEI Mining). Moreover, while in the long term, the most effective way to reduce mining environmental impacts is to switch to more sustainable methods, in the short term, techniques can also be applied to decrease the effects of open-pit mining (Mining Events). Switching to eco-friendly equipment and rehabilitating mining sites are 2 strategies that can make open-pit mining more environmentally sustainable (Mining Events). Many diamond mining companies are already making the switch to electric equipment, which significantly lowers the industry's carbon footprint (Mining Events). In any case, mining companies are aware of their environmental impact and commonly elect to ignore it. Open-pit mining can cause significant disruption to the environment, making the area uninhabitable for new vegetation, and leaving it vulnerable to soil erosion (Mining Events). In recent years, mining companies have begun to invest in restoration projects, ensuring their mines do not wipe out all wildlife in the area (Mining Events) Mining companies are starting to take responsibility and compensate for the environmental harm done. We as humans are responsible for spreading awareness of this issue and enlightening others on the distressing matter. Mining companies will then feel compelled to greatly change their ways and make needed modifications (WWF).

Personal Reflection - Are The Solutions Effective?

eytanblack — 2023-12-21 16:21:15 UTC

In my opinion, while all these solutions show great promise, I find some to be immensely effective and others to be quite a reach. Firstly, the mining methods ‘in situ’ and bioleaching are both innovative and environmentally sound, however, the systems need more time to develop and become more efficient, (as open-pit mining operates at a much faster rate). Given this circumstance, I believe that this proposed solution can be viable in the future, however for now I view it as ineffective. Contrarily, using electric equipment is a simple yet effective solution to carbon emissions, as it significantly reduces the diamond industry’s carbon footprint. Additionally, the restoration and rehabilitation process is thoroughly effective, as it enables life in the environment and an opportunity to rebuild the ecosystem. This is significant, as the process of mining typically involves wiping out its surrounding ecosystem, and now the rehabilitation process restores it. For that reason, I find this to be the most distinguished and effective solution.

Bibliography

eytanblack — 2023-12-21 16:37:22 UTC

Diamonds A to Z - The diamond industry. (n.d.). https://photius.com/diamonds/the_diamond_industry.html

Diamond Cutting & Polishing | Shimansky. (n.d.). SHIMANSKY.CO.ZA. https://www.shimansky.co.za/pages/discover-about-diamonds-cutting-and-polishing

Vandenborre, L. (2021, May 13). Why is Antwerp the diamond capital of the world? Beldiamond. https://www.beldiamond.com/blogs/news/why-is-antwerp-the-diamond-capital-of-the-world

History of Diamonds, Where do diamonds come from. (n.d.). Brilliance.com.

https://www.brilliance.com/education/diamonds/history Diamond Market Size, Share, Trends | Growth Analysis [2030]. (n.d.).

Allied Market Research, https://www.alliedmarketresearch.com/. (n.d.).

Diamond Market share , Size , Growth , Demand , statistics 2032. Allied Market Research. https://www.alliedmarketresearch.com/diamond-market-A74564

Diamond, A. (2022, July 13). World Diamond Industry: Canada. All Diamond. https://www.ehudlaniado.com/home/index.php/news/entry/world-diamond-industry-canada

Statista. (2023, October 30). Export value of diamonds from Canada 2019-2022. https://www.statista.com/statistics/1349916/canada-diamond-export-value/

Canada, N. R. (2021, February 22). Diamond facts. https://natural-resources.canada.ca/our-natural-resources/minerals-mining/minerals-metals-facts/diamond-facts/20513

De Beers Jewellers. (n.d.). De Beers Jewellers | Home of Diamonds since 1888 | De Beers CA. https://www.debeers.ca/en-ca/home

Are mined diamond prices artificially controlled? Does DeBeers still have a monopoly? (n.d.). https://betterthandiamond.com/pages/Are-mined-diamond-prices-artificially-controlled%3F--Does-DeBeers-still-have-a-monopoly%3F.html

Statista. (2023, December 19). Market share of the leading diamond producers worldwide 2022. https://www.statista.com/statistics/585450/market-share-of-diamond-supply-worldwide-by-producer/

McLeod, C. (2022, March 9). Rough diamond industry: monopoly, oligopoly or neither? INN. https://investingnews.com/daily/resource-investing/gem-investing/diamond-investing/rough-diamond-industry-monopoly-oligopoly-or-neither/

Impacts | Diamond Commodity chain. (n.d.). https://u.osu.edu/diamondscarlsoncaggiano/impacts/

Open-Pit Mining Definition. (2019, February 18).

Canarelli, M. (2023, December 5). An overview of green mining | Aggregates Equipment, Inc. AEI Screens. https://aeiscreens.com/news/green-mining-guide/

Mining impacts affect up to 1/3 of global forest ecosystems, and tippe. (n.d.). https://wwf.panda.org/wwf_news/?8455466/Mining-impacts-affect-up-to-13-of-global-forest-ecosystems-and-tipped-to-rise-with-increased-demand-for-metals

Sarkadi, L. (2019, April 17). Diavik Diamond Mine wants to dump mine waste into its pits. CBC. https://www.cbc.ca/news/canada/north/diavik-new-environmental-assessment-1.5100907

Abulu, L. (2023, February 4). Canada mining push puts major carbon sink and Indigenous lands in the crosshairs. Mongabay Environmental News. https://news.mongabay.com/2022/06/canada-mining-push-puts-major-carbon-sink-and-indigenous-lands-in-the-crosshairs/

Graph/Chart Illustrating Diamond Industry Market Structure

eytanblack — 2023-12-21 19:44:10 UTC

An Oligopoly is evident, with few companies dominating the industry.

Map of Canada locating the Diavik Diamond Mine

eytanblack — 2023-12-21 22:35:54 UTC

(go to next slide to see specific area affected by issue)

The Diavik Diamond Mine

eytanblack — 2023-12-21 22:48:02 UTC

This is a map of the Diavik Mine Site. Initially, it was imagined that the mine would fill its pits with freshwater, and reconnect them to Lac de Gras (upon completion). However, unfortunately, these pits are now contaminated with Kimberlite and pose a significant risk to fish habitats if the pits are broken through. The Map highlights the negative impacts of diamond mines on the environment.

Remains of Diamond Mine

eytanblack — 2023-12-21 23:06:02 UTC

This image showcases a diamond mine no longer in use. The photo is significant as the extreme barrenness of the remaining gaping hole underlines the reality that diamond mines destroy ecosystems. Even after the diamond mine was no longer in use, it had damaged the land to such an extent, that it was unfit for any new ecosystem to develop.

Hudson Bay Lowlands (Peatland)

eytanblack — 2023-12-21 23:34:24 UTC

The Hudson Bay lowlands are rich with peatlands and moss (shown here) and store billions of tonnes of carbon (Mongabay). The massive mining project "Ring of Fire" on this spot will degrade the peatland ecosystem and risk a massive release of carbon emissions into the environment (Mongabay).

De Beers Diamond Mine In Hudson Bay Lowlands

eytanblack — 2023-12-21 23:39:34 UTC

This image shows the devastation caused to the Hudson Bay Lowlands by the De Beers Diamond Mine which has since closed. (Mongabay). As can be seen, the peatlands ecosystem has totally vanished from this site.