Mining

De Beers

Last edited by lenazun on June 2, 2009 - 12:13pm
Company Snapshot: 

This company is part of Anglo American PLC

De Beers is the world's largest supplier and marketer of diamonds -- effectively only a semi-precious stone since the opening of the diamond mines in southern Africa in the late nineteenth century. They employ sophisticated advertising strategies to create demand for a product with little or no intrinsic value or worth, which cannot easily be resold by the consumer. They employ supply and marketing cartels to ensure pricing at orders of magnitude higher than the actual value of their product.

History
Other Information: 

De Beers operates the most successful monopoly in modern trade. It achieves this success through a complex and deceptive web of companies and cartels. De Beers is miner and buyer of 70-90% of the world's rough diamonds and arbiter of their prices, the latter through control of supply, marketing and advertising. De Beers spends 180 million dollars a year to advertise cut diamonds, although it does not sell them, as part of this highly sophisticated and deceptive monopolistic strategy. De Beers completely controls distribution of diamonds throughout the world, and will not allow clients to sell their diamonds if they undercut prices. De Beers is not allowed to operate in the U.S., because it violates U.S. anti-trust laws, so it hires independant advertisers to promote demand for its products, and sells to independant diamond distributers to act as retailers. But, De Beers ultimately controls all aspects of diamond retail by having complete control over supply to retailers. The retailers will receive no product if they do not cooperate. And one of the rules: retailers cannot repurchase from consumers!