London’s diamond trade may not be forever

19 May 2007

Richard Orange says London’s traditional dominance of global dealing in uncut stones is under threat from new players based in India, China and Dubai

In front of Mehta, who is chief executive of Dimexon, a big player in the diamond cutting business, lie two open safe boxes overflowing with close to $20 million worth of uncut stones, sorted by DTC into bags of different sizes, from a few nuggets the size of quails’ eggs to thousands of tiny, lower-quality diamonds, each barely bigger than a grain of sand. This is the ‘London Mix’, in which De Beers’ diamonds, after a basic sort close to its mines in Botswana, Namibia, South Africa and Tanzania, are thoroughly sifted in the back rooms of this building into 12,000 categories based on size and quality, rather than geography. For someone like me, not intimately connected with the diamond trade, to penetrate so deep into this world is rare, especially this week, one of the ten each year when DTC lets buyers examine its wares.

Back in 1890, De Beers’ founder Cecil Rhodes struck an exclusive sales agreement with a group of Hatton Garden dealers to distribute his African diamonds. London had dominated the trade ever since the East India Company secured an effective monopoly over stones from India, which was the world’s only source of diamonds until they were also found in Brazil in 1725. Parliament acknowledged London’s supremacy when it abolished customs duties on diamonds in 1732. The bill read: ‘This Kingdom is now become the great mart for diamonds and other precious stones and jewels, from whence most foreign countries are supplied.’

London is still the global distribution centre for rough diamonds. The great majority of the $6 billion worth of rough diamonds DTC sells each year is channelled through Charterhouse Street; nowhere else has anything like the same share of the rough diamond trade, worth just $13 billion in its entirety but translating into $68 billion for finished diamond jewellery. The corridors are thronged with representatives of DTC’s 93 ‘sightholders’, companies which hold coveted licences to buy directly from the company. They mingle in small groups swapping the latest trade gossip or, accompanied by DTC officials, they ferry black and yellow safe-boxes of diamonds from a counter next to the DTC vault to the rooms where they can scrutinise potential purchases in private. Mehta says he can spend between two hours and two days examining his boxes. ‘When you’re making a $20m purchase,’ he says, ‘you want to have a look at the goods — even though it’s only a formality.’