In 1880, the Kimberley diamond fields were in chaos. More than a dozen competing mining companies were producing diamonds at such volume that prices had fallen by approximately 90 percent from their 1869 peak. The mines were also physically converging, underground, the competing claims were intersecting in dangerous and unworkable ways. Cecil Rhodes, who had begun as a claim holder at the De Beers mine in 1871 at age 18, understood that the industry's only salvation was consolidation. By 1888, through a combination of financial engineering, political manoeuvring, and the financial backing of Rothschild & Sons in London, he had merged the competing Kimberley mines into De Beers Consolidated Mines, a single company with control over the world's dominant diamond source. : Kanfer, S. (1993), The Last Empire: De Beers, Diamonds and the World, Hodder & Stoughton, London, pp. 28–45; De Beers Group historical records

Cecil Rhodes and the formation of De Beers (1880–1902)

Cecil Rhodes arrived in Kimberley in 1871 with his brother Herbert to farm cotton and ended up buying a diamond claim. By the age of 28 he had founded De Beers Mining Company (1880) and by 38 had consolidated it with the competing Kimberley Central Diamond Mining Company, controlled by Barney Barnato, to form De Beers Consolidated Mines in 1888. The consolidation was financed partly by NM Rothschild & Sons in London, who provided the capital for the final buyout (Kanfer, 1993, op. cit., pp. 28–55; De Beers Group historical records, debeersgroup.com).

From the beginning, Rhodes's strategy was not just mine ownership but supply control. De Beers sold rough diamonds not to individual cutters directly but through a syndicate of merchants who agreed to purchase a set allocation at fixed prices, the forerunner of the Central Selling Organisation. This system, controlling not just production but the release of diamonds to the market, was the mechanism that kept prices stable despite South Africa's extraordinary production capacity (Roberts, B., 1976, The Diamond Magnates, Hamish Hamilton, London; Kanfer, 1993, op. cit.).

Ernest Oppenheimer and the Central Selling Organisation

After Rhodes's death in 1902, De Beers went through a period of internal restructuring. Ernest Oppenheimer, a German-born diamond merchant who had moved to Kimberley as a young man and subsequently founded the Anglo American Corporation, acquired a controlling interest in De Beers in 1927 and became its chairman. Under Oppenheimer, the supply control system was formalised into the Central Selling Organisation (CSO), also known as the Diamond Trading Company (DTC), based in London at 17 Charterhouse Street (Kanfer, 1993, op. cit., pp. 150–170; De Beers Group historical records, debeersgroup.com).

The CSO, later renamed the Diamond Trading Company, operated as the single buyer and seller of rough diamonds from all De Beers-controlled mines and, through contractual arrangements, from independent producers including the Soviet Union, Botswana's Debswana, and others. At its peak in the 1980s, the DTC handled approximately 80–90 percent of all rough diamond sales globally. "Sightholders", a select group of diamond manufacturers and dealers, received periodic allocations ("sights") of rough diamonds at prices set by De Beers. The sight system is still in operation today, though with fallen sharply market share (De Beers Group, "The Sightholder System," debeersgroup.com; World Diamond Council documentation).

The Diamond Is Forever campaign (1947)

De Beers's market control was complemented by the most successful commodity marketing campaign in history: the "A Diamond Is Forever" campaign created by advertising agency N.W. Ayer & Son for De Beers in 1947. The campaign, addressed primarily at the American market, succeeded in establishing the diamond engagement ring as a social norm and transforming diamonds from a luxury of the aristocracy into a mass-market commodity with emotional significance. The slogan "A Diamond Is Forever" was named the advertising slogan of the 20th century by Advertising Age magazine in 1999. The full story is told in the Diamond Is Forever history.

The unravelling of the monopoly (1990s–2000s)

De Beers's market dominance began to unravel in the 1990s. Several factors converged: the collapse of the Soviet Union brought large quantities of Russian rough diamonds to market outside De Beers's control; Australian producer Argyle (Rio Tinto) withdrew from the CSO in 1996; Canadian mines opened without De Beers control; and the US Department of Justice pursued antitrust concerns about De Beers's market practices. By 2000, De Beers announced it was abandoning its "stockpiler of last resort" strategy, the practice of buying and holding rough diamonds to prevent market oversupply, in favour of becoming a supplier of choice rather than a monopoly controller (De Beers Group press releases 2000–2001; Kanfer, 1993, op. cit. [context for 1990s developments]; industry analyses 1996–2002).

De Beers's market share of rough diamond sales fell from approximately 80–90 percent in the 1980s to approximately 30–35 percent by the mid-2020s, as independent mining companies, government-owned producers (Debswana, ALROSA before 2022 G7 sanctions), and new mine discoveries in Canada, Russia, and Australia diversified the supply base (De Beers Group Annual Reports; World Diamond Council data).

Primary sources

De Beers Group historical records and Annual Reports. debeersgroup.com. [Founding 1888 (Rhodes + Rothschild financing), Oppenheimer acquisition (1927), DTC/CSO system documentation, sightholder system, market share evolution, 2000 strategic pivot.]

Kanfer, S. (1993). The Last Empire: De Beers, Diamonds and the World. Hodder & Stoughton, London. [complete corporate history. Rhodes formation (pp. 28–55), Oppenheimer era (pp. 150–170), CSO mechanics, "Diamond Is Forever" campaign context, 90% price collapse 1869–1880.]

Roberts, B. (1976). The Diamond Magnates. Hamish Hamilton, London. [Kimberley consolidation; Barnato-Rhodes competition; supply control system origins.]