industry mining and trading of diamonds genre businesses founded 1888 founder cecil rhodes headquarters luxembourg luxembourg area served worldwide key people mark cutifani chairman bruce cleaver ceo products diamonds services diamond marketing and promotion . community development . revenue 4.7 billion fy 2015 1 owner anglo american number of employees 20 000 website debeersgroup.com the de beers group of companies has a leading role in the diamond exploration diamond mining diamond retail diamond trading and industrial diamond manufacturing sectors . the company is currently active in open pit large scale alluvial coastal and deep sea mining . 2 the company operates in 28 countries and mining takes place in botswana namibia south africa and canada . until the start of the 21st century de beers effectively had total control over the diamond market as both a monopoly and monopsony of diamonds . 3 opposition has since dismantled the complete monopoly though de beers is still a large shareholder and currently sells approximately 35 % 4 of the world s rough diamond production through its global sightholder sales and auction sales businesses . 5 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 . 6 in 1926 ernest oppenheimer a german immigrant to britain who had earlier founded mining giant anglo american plc with american financier j.p. morgan 7 was elected to the board of de beers . 8 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 antitrust behaviour and an allegation of not releasing industrial diamonds for the us war effort during world war ii . 9 10 contents 1 history 1.1 foundation 1.2 oppenheimer control 1.3 marketing 1.4 diamond monopoly 2 operations 2.1 business structure and brands 2.1.1 forevermark 2.1.2 de beers diamond jewellers 3 legal issues 3.1 sherman antitrust act 3.2 south africa s missing billions 3.3 diamond prices 3.4 industrial diamonds 3.5 european commission 3.6 conflict diamonds and the kimberley process 3.7 forceful relocation of indigenous san people in botswana 4 see also 5 notes 6 references 7 external links history edit foundation edit cecil rhodes founded de beers in 1888 nathan mayer rothschild baron rothschild of the rothschild family funded the development of de beers the name de beers was derived from the two dutch settlers and brothers diederik arnoldus de beer december 25 1825 1878 and johannes nicolaas de beer december 6 1830 june 20 1883 who owned a south african farm named vooruitzicht dutch for outlook near zandfontein in the boshof district orange free state . after they discovered diamonds on their land the increasing demands of the british government forced them to sell their farm on july 31 1871 to merchant alfred johnson ebden 1820 1908 for 6 600 gbp . vooruitzicht would become the site of the big hole and the de beer mine two successful diamond mines . their name which was given to one of the mines subsequently became associated with the company . 11 cecil rhodes the founder of de beers got his start by renting water pumps to miners during the diamond rush that started in 1869 12 13 when an 83.5 carat diamond called the star of south africa was found at hopetown near the orange river in south africa . 13 14 15 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 . 16 he soon secured funding from the rothschild family who would finance his business expansion . 17 18 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 . 16 19 20 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 . 18 21 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 . 22 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 . 18 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 23 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 . 24 oppenheimer control edit in 1898 diamonds were discovered on farms near pretoria transvaal . one led to the discovery of the premier mine . the premier mine was registered in 1902 and the cullinan diamond the largest rough diamond ever discovered was found there in 1905 . 25 the premier mine was renamed the cullinan mine in 2003 . however its owner refused to join the de beers cartel . 26 instead the mine started selling to a pair of independent dealers named bernhard and ernest oppenheimer thereby weakening the de beers cartel . 27 francis oats who became chairman of de beers in 1908 was dismissive of the threats from the premier mine and the finds in german south west africa . 28 however production soon equalled all of the de beers mines combined . ernest oppenheimer was appointed the local agent for the powerful london syndicate rising to the position of mayor of kimberley within 10 years . he understood the core principle that underpinned de beers success stating in 1910 that common sense tells us that the only way to increase the value of diamonds is to make them scarce that is to reduce production . 26 during world war i the premier mine was finally absorbed into de beers . when rhodes died in 1902 de beers controlled 90 % of the world s diamond production . ernest oppenheimer took over the chairmanship of the company in 1929 29 after buying shares and being appointed to the board in 1926 . 27 30 31 oppenheimer was very concerned about the discovery of diamonds in 1908 in german south west africa fearing that the increased supply would swamp the market and force prices down . 9 10 former cia chief admiral stansfield turner claimed that de beers restricted us access to industrial diamonds needed for the country s war effort during world war ii . 32 marketing edit de beers successfully advertised diamonds to manipulate consumer demand . one of the most effective marketing strategies has been the marketing of diamonds as a symbol of love and commitment . a young copywriter working for n. w. ayer & son frances gerety 1916 1999 coined the famous advertising line a diamond is forever in 1947 . 33 in 2000 advertising age magazine named a diamond is forever the best advertising slogan of the 20th century . 34 other successful campaigns include the eternity ring as a symbol of continuing affection and appreciation 35 the trilogy ring representing the past present and future of a relationship and the right hand ring bought and worn by women as a symbol of independence . 36 de beers is also known for its television advertisements featuring silhouettes of people wearing diamonds to the music of palladio by karl jenkins . the campaign titled shadows and lights first ran in the spring of 1993 . the song would later inspire a compilation album diamond music released in 1996 which features the palladio suite . a 2010 commercial for verizon wireless parodied the de beers spots . 37 diamond monopoly edit russian president vladimir putin meeting with former de beers chairman nicky oppenheimer in south africa in 2006 de beers carried out monopoloid practices throughout the 20th century whereby it used its dominant position to manipulate the international diamond market . 16 38 the company used several methods to exercise this control over the market . firstly it convinced independent producers to join its single channel monopoly . when that didn t work it flooded the market with diamonds similar to those of producers who refused to join the cartel . lastly it purchased and stockpiled diamonds produced by other manufacturers in order to control prices by limiting supply . 39 in 2000 the de beers business model changed 39 due to factors such as the decision by producers in canada and australia to distribute diamonds outside the de beers channel 16 38 as well as rising awareness of blood diamonds that forced de beers to avoid the risk of bad publicity by limiting sales to its own mined products . 40 de beers market share of rough diamonds fell from as high as 90 % in the 1980s to 33 % in 2013 41 42 because of a more fragmented diamond market with more transparency and greater liquidity . 43 in november 2011 the oppenheimer family announced its intention to sell the entirety of its 40 % stake in de beers to anglo american plc thereby increasing anglo american s ownership of the company to 85 % . 44 the transaction was worth 3.2 billion us 5.1 billion in cash and ended the oppenheimer dynasty s 80 year ownership of de beers . 45 46 operations edit the de beers snap lake mine in canada mining in botswana takes place through the mining company debswana 47 a 50 50 joint venture with the government of the republic of botswana . in namibia it takes place through namdeb 48 a 50 50 joint venture with the government of the republic of namibia . mining in south africa takes place through de beers consolidated mines dbcm 49 74 % owned by debeers and 26 % by a broad based black economic empowerment partner ponahalo investments . in 2007 de beers began production at the snap lake mine in northwest territories canada ; 50 this is the first de beers mine outside africa and canada s first completely underground diamond mine 51 however production was suspended when the mine was put on care and maintenance in 2015 . 52 in 2007 de beers opened the victor mine in ontario canada . 53 trading of rough diamonds takes place through two channels de beers global sightholder sales 54 gss network and de beers auction sales . 55 the gss network which sells about 90 % of de beers diamonds features wholly owned and joint venture operations in south africa dtcsa botswana dtcb and namibia ndtc . they sort value and sell 33 % 2013 of the world s rough diamonds by value . 42 there are two main types of customer for rough diamonds sightholders and accredited buyers . sightholders have a term contract . accredited buyers a customer type introduced in 2014 5 have a more ad hoc arrangement . de beers also sells about 10 % of its rough diamonds through auction sales . the company pioneered the approach in 2008 when it broke with 44 years of direct sales to hold the diamond industry s first online international auction sale . it is now the world s leader in this kind of auction sale . de beers employs about 20 000