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GIA Graduate Gemologist - GEM 230 > Assignment 2 - Evolution of the Diamond Industry > Flashcards

Assignment 2 - Evolution of the Diamond Industry Flashcards

1
Q

What were the first important South African diamond discoveries?

A

Abundant South African diamond sources appeared in the late 1800s, just as diamond demand broadened. The diamond rush began with the discovery of the Star of South Africa in 1869.

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2
Q

What were the conditions like in the early mining towns?

A

Early South African diamond fields contained hundreds of small, individually owned and operated claims.

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2
Q

How did Cecil Rhodes gain control and establish De Beers?

A

Cecile Rhodes wanted to stabilize diamond prices by controlling production. He established De Beers Consolidated Mines Ltd. in 1888.

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3
Q

A direct, centrally controlled marketing route for rough diamonds

A

Single-channel marketing

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4
Q

An agency designed to purchase, sort, evaluate, and sell rough diamonds

A

Central Selling Organisation (CSO)

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5
Q

An independent diamond prospector

A

Digger

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6
Q

A prospector’s term for diamond deposits away from water

A

Dry diggings

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7
Q

A group of diamond merchants that united in 1890 to buy and sell rough diamonds

A

London Diamond Syndicate

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8
Q

How did De Beers gain influence over the diamond market?

A

By working with the London Diamond Syndicate on the demand side and by buying diamond rough from other producers to control supply.

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8
Q

How did De Beers maintain its operations during the Depression and World War II ?

A

During the Depression De Beers acquired bankrupt mines.

During World War II the demand for industrial diamond rough increased.

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9
Q

How did the concept of single-channel marketing contribute to De Beer’s growth?

A

CSO controlled the sale of diamond rough, while DIC was responsible for public relation and DPS for promotional activities.

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10
Q

What kind of ownership arrangements did De Beers make with major mines worldwide?

A

De Beers had full or partial control of many mines, and bought rough from others through purchasing contracts.

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11
Q

What route did diamonds take from the mine to the wholesaler?

A

The diamonds followed the so called “diamond pipeline”:
- The mines sold the rough to the CS
- The CSO sorted rough into categories based on size, shape, clarity and color
- From there it went to CSO stockpile or to the cutting centers.

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12
Q

How did the CSO’s wholesale system operate?

A

At a “sight” the CSO presented a customized selection of diamonds to each sightholder for acceptance.

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13
Q

How did political changes affect the modern diamond industry?

A

The early twenty-first century brought dynamic changes to the global diamond market.

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14
Q

The path diamond followed from the mine to the consumer

A

Diamond Pipeline

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15
Q

Trading event where selected clients buy rough diamonds.

A

Sight

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16
Q

A diamond manufacturer or dealer invited by De Beers to buy rough diamonds

A

Sightholder

17
Q

A rough diamond over 10.80 cts, sold separately to a sightholder who specialises in larger stones.

A

Special

18
Q

What is an upstream segment of the diamond value chain?

A

Mining & Sales

19
Q

What led to De Beers’s control of the diamond trade?

A
20
Q

What describes large-scale mining companies that lead the industry?

A

Majors

21
Q

Where does the physical trade of rough for long-term contracts take place?

A

Sights

22
Q

Where were the first diamonds discovered?

A

India

23
Q

When was the first diamond rush in South Africa.

A

1870s after the discovery of the Star of Africa.

24
Q

Which source countries dominated the early history of the industry

A

India (Golconda) and Brazil

24
Q

How did diamond become the number one engagement ring?

A

By De Beers’ global campaign.

24
Q

How did the concept of single-channel marketing form?

A

Through centralized control of rough diamond supply, buying, marketing and sales.

25
Q

What are the different segments of the global diamond value chain

A
  • Mining
  • Sorting & Distribution
  • Cutting & Polishing
  • Manufacturing & Trading
26
Q

Who are the major players in each value chain segment?

A

Mining: ALROSA & De Beers

27
Q

How do value chain economics work?

A

Upstream segments (Mining) has the highest risk and rewards –> few players

Downstream: lower risks, more players.

28
Q

Activity that adds something to a product that increases its value for consumers.

A

Value-adding process

29
Q

Diamonds that meet certain criteria to be used as gems in the jewellery market

A

Gem-quality diamonds

30
Q

Diamonds designated for industrial use

A

Industrial diamonds

31
Q

A form of industrial-grade diamond that usually occurs as very included single crystals in a range of yellows, grays and browns

A

Bort

32
Q

A membership-based entity that provides service and venue to facilitate diamond trading

A

Diamond Exchange

33
Q

Which markets drive demand for diamond jewelry

A

US, China

34
Q

Who are the new consumers of diamond jewelry?

A

New Generations

35
Q

What do jewelers need to do in the new era of marketing

A

Using new channels like Social Media and Internet.

36
Q

What are the sales channells for diamond jewelry?

A

Retail & Online

37
Q

What best describes the diamond value chain?
A. Chain of branded jewelry
B. Series of segments and practices
C. Multiple rough diamond suppliers
D. All involved in the industry

A

B. Series of segments and practices

38
Q

Where did the diamond industry first start?

A

India

39
Q

What distinguishes the concept of a single-channel marketing strategy?
A. Vertical integration
B. Local management
C. Secondary market
D. Central control

A

D. Central control

40
Q

What is the main sales method for rough diamonds?

A

Long-term contracts

GIA Graduate Gemologist - GEM 230 (20 decks)

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