Russian Diamonds (1964)

From the July 1964 issue of the Socialist Standard

For some years Russian diamonds have been sold in the world market through the South African, De Beers diamond organisation.

The Chairman of the De Beers Company, Mr. H. F. Oppenheimer, recently announced that the agreement they signed with the Russians in January, 1960, is not being renewed, but that is only half the story. All the sellers of gem and industrial diamonds have an interest in keeping prices high and stable, and in wanting to protect themselves against a heavy price fall, which might happen if somebody broke away and flooded the market with diamonds at cut prices. So although the contract with the company is ended, there is no likelihood of any Russian attempt to undersell the Central Selling Organization which regulates the market. As Mr. Oppenheimer puts it:—

  . . .  On account of Russian support for the boycotting of trade with S. Africa, our contract to buy Russian diamonds has not been renewed. These changes will not, however, disrupt the centralised marketing organisation in London, which is essential in the interests of all diamond producing countries, whatever the political differences between them may be. (Guardian, 16 May, 1964).

During the past year the diamond market and the price level were threatened from another quarter, the Congo. Owing to the breakdown of governmental control diamonds were being illegally mined and exported and offered at prices below the world levels. This danger to profits now seems to have passed:

  Fortunately, the Congo Government, which risked incurring severe losses, both in taxation receipts and on foreign exchange, is taking energetic steps to restore law and order in the main diamond-producing area with very satisfactory results.

There are no doubt people in the Congo who take a different view about the “satisfactory" nature of these “energetic steps," but as far as De Beers are concerned the whole year was more than satisfactory, total diamond revenue being up by about 30 per cent, at a total of nearly 82 million Rands (about £41 million).

De Beers ran up against other problems with several African governments because it was politically awkward for these governments to allow the locally mined diamonds to be sold through a company registered in South Africa. The solution has been found. All of these diamonds are now bought “by companies registered and managed outside the Republic of South Africa and which are not subsidiaries of De Beers.”

It matters less to De Beers to keep direct control of the subsidiary buying companies than it does to keep up the world price of diamonds, and in 1963/4 they recorded a rise in the price of gem diamonds of about fifteen per cent.

Edgar Hardcastle