DIAMONDS VALUATION AND TRADE

Diamonds are valued and traded based on various factors such as their size, color, clarity, and cut. The value of a diamond is determined by assessing these factors and assigning a price based on the current market demand and supply. Diamonds are also traded based on their weight, which is measured in carats.

The process of valuing and trading diamonds begins with the mining of rough diamonds. Once mined, the diamonds are cleaned, sorted, and prepared for sale. Diamond mining companies may have their own sales systems, and some mines may sell diamonds by auction or have a contract with a dealer. The four largest diamond mining companies, De Beers, Alrosa, BHP Billion, and Rio Tinto, all trade their own production.

The best-known sales system has been that operated by De Beers for many years. Today, De Beers’ Diamond Trading Companies sell diamonds to carefully selected clients called sightholders. De Beers has recently withdrawn from its role as a sales cartel and its self-appointed role as ‘custodian of the industry. Other major mining companies have set up their own trading systems, selling by tender in Antwerp, the world’s largest rough diamond marketplace.

In some countries, state-owned organizations control the sale of diamonds to protect foreign currency earnings, prevent smuggling and money-laundering, and develop the industry. For example, in Angola, the state-owned Sociedade de Comercializacao de Diamantes (SODIAM) is the official seller of most of the country’s diamond output. In South Africa, mines must sell 10% of their stones to the new State Diamond ‘Trader for cutting in South Africa.

In recent years, producing countries are also looking to become cutting countries to end the separation between production, processing, and consumption that many see as a remnant of colonialism. This shift could lead to a change in the global diamond trading landscape, as more countries seek to add value to their diamond production by processing them locally.

Overall, the diamond industry is complex, and the value of diamonds is determined by various factors, including market demand and supply, size, color, clarity, and cut. The trade of diamonds is also influenced by various organizations, including state-owned organizations, mining companies, and trading centers.