Early Diamond Exploration and Discovery

Early South African Mining

There are many tales of people accidentally stumbling across diamonds in South Africa, but for the most part they are just that - tales.  The real story lies with the search for diamond deposits in the late 1800s and how the discoveries affected the diamond industry.  Diamond exploration cost rose as mining moved further and further underground.  In order to offset the huge costs, new mining techniques were developed and advances were made in cutting and polishing.

The Star of South Africa

Though there are other reported discoveries, the first to be authenticated was back in 1866 when a 21.25 ct. rough diamond (the "Eureka") was found in Kimberley, South Africa.  Then came the discovery of the rough 83.50 ct. "Star of South Africa" in 1869.  This sparked the diamond rush in the early 1870s.  Since that time other famous diamonds have been found that  make these magnificent gems look tiny in comparison.

Kimberley Mine today

Early diamond mining was located along the rivers until the chance discoveries of diamond deposits on dry land in areas that would later become the De Beers and Kimberley mines.  Initially diamonds were discovered near the surface, but eventually the mining moved deeper underground.  Many of the early miners gave up or sold their claims as the mining became more dangerous and costly.

Cecil Rhodes

An English native, Cecil Rhodes owned all of the diamond mines in Kimberley by 1888.  Mr. Rhodes incorporated his interest into the De Beers Consolidated Mining Company and by 1900 they controlled about 90% of the worlds rough diamonds.  By the late twentieth century diamond mining had spread throughout the African continent.

Independent mines were popping up all over Africa - some deposits were found in places there was no reason to even dig.  De Beers developed a new strategy not to try to buy the mines, but to purchase the rough diamond from their mines.

Ernest Oppenheimer

Headed by its new chairman, Ernest Oppenheimer, De Beers began buying the interest of defunct mining companies during the depression and eventually controlled all of the diamond production that was not controlled by the government.  In an effort to balance the supply and demand, De Beers closed its mines to sell off the stockpiles of diamonds in its holdings.  Under Oppenheimer's tenure De Beers developed DiCorp which purchased the diamonds, CSO - which sorted and valued the diamonds and the DTC which sold the diamonds.  De Beers' single-channel marketing approach revolutionalized industrial diamond trade.

Argyle Mine in Australia

By the 1990s diamond mining had spread worldwide with discoveries in Russia, Australia and Canada.  These discoveries, along with political changes and a growing global market have affected the diamond market.  This brought many changes in the industry and changes in the De Beers strategy.  Though diamonds continue to flow through De Beers they also flow through other channels today in countries like Russia, Australia and India.

Coming up in the next blog:   How are diamonds formed?  How do they get to the surface?