Chapter 2 Flashcards
1
Q
Which country was only source for diamonds till 18th century?
A
India
2
Q
Name 4 famous diamonds sourced from India?
A
Koh-i-Noor, Great Mogul, Hope, Dresden Green
3
Q
Who wrote about visiting Krishna Valley diamonds mine in the 13 century?
A
Marco Polo
4
Q
Which name was associated with fine quality diamonds?
A
Golconda
5
Q
How long India was the only source for diamonds?
A
Almost 2,500 years, 800-600 BC to 18th century
6
Q
Which country was the world’s leading diamond producer from the 1700’s to late 1800’s?
A
Brazil
7
Q
When were earliest accounts of diamond discoveries in Brazil?
A
In late 16th century.
8
Q
When Brazil’s diamond sources were officially announced?
A
In 1729 after reports from colonial governor caught the attention of European rulers.
9
Q
When Brazil’s diamond production reached its peak?
A
In the mid 1700s, more than 1.5 milion carats of diamonds were reportedly exported to Europe between 1732 and 1771.
10
Q
In which time Brazil was the world’s leading diamond producer?
A
From the early 1700’s to the late 1800’s.
11
Q
What discovery and where attracted prospectors to the area in Africa?
A
Discovery of the Star of South Africa (The Dudley) at Zandfontein in 1869.
12
Q
Prospector’s term for diamond deposits away from water?
A
Dry diggings
13
Q
In which river bank Star of South Africa has being found?
A
Vaal River
14
Q
How much weighted Star of Africa?
A
83.50 ct
15
Q
How many diggers came to dig for diamonds after finding Star of South Africa?
A
Around 10,000
16
Q
How much Schalk van Niekerk payed to shepherd for the Dudley?
A
1 horse, 10 oxen, and 500 sheep (~150 pounds)
17
Q
How much Niekerk got for diamond?
A
11,200 £ which is now ~56,000 $.
18
Q
Why miners moved to dry diggings?
A
In riverbed they had to stand for hours in the water and risk a flooded claim.
19
Q
How many miners worked in Kimberley area?
A
30,000 miners, 3600 tents over 42 acres area.
20
Q
How long Kimberley mine was in operation?
A
Between March 31, 1871 to August 4, 1914.
21
Q
How deep in Kimberley mine pit become?
A
240 meter deep, it’s named today “Big Hole”
22
Q
Why miners began to form partnerships and small companies?
A
Soft surface layer ran out, miners found hard rock which required more capital investments and and advanced equipment.
23
Q
Who stood out and became competitors?
A
Cecil Rhodes and Barney Barnato.
24
Q
By when Rhode’s company held all claims in De Beers mine?
A
By 1887
25
Who took control of all claims in the De Beers and Kimberley mines?
Cecil Rhodes
26
Who was dominant shareholder in in Kimberley mine?
Barney Barnato
27
What was idea of Rhodes to stabilize prices of diamonds?
He developed concept of controlling of production.
28
Why Rhodes named his company De Beers Consolidated Mines Ltd.?
After the owners of a farm where one of the first diamond rushes took place.
29
When Rhodes est. his company?
On March 12, 1888.
30
What is London Diamond Syndicate?
A group of diamond merchants formed in 1890 to buy and sell rough diamonds.
31
What is CSO?
Central Selling Organization an agency that functioned as the sales arm of De Beers.
32
What is DTC?
The marketing and sales arm of De Beers (the CSO was its predecessor).
33
How centrally controlled marketing strategy for rough diamonds was called?
Single-channel marketing.
34
What happened in 1890 in London?
A group of London diamond merchants united to form an organization known as the London Diamond Syndicate, which contracted to buy and sell all the output of major diamond producers, including De Beers
35
Who assumed chairmanship in the De Beers when Great Depression hit in 1929?
Ernst Oppenheimer.
36
What De Beers did to solidify its marketing strategy?
Through centralized control of rough diamond supply, buying, marketing, and sales.
37
What led to the DeBeers's dominance of of the diamond industry?
The combination of the single-channel market and advertising campaign.
38
What was belief of Ernst Oppenheimer?
He held belief that that stability of the trade could be maintained only by selling diamonds through a single channel and limiting the number of diamonds on the market.
39
What was the tactic during great depression of DeBeers?
Minimizing own mining output and maximize buying production from others, until diamond price and demand recovered.
40
How long CSO was dominant body sales channel?
For nearly six decades.
41
What did DeBeers to boost diamonds demand after the II War?
Hired a Philadelphia advertising agency, N.W. Ayer & Son.
42
What slogan and by whom has being created in 1947?
"A diamond is forever" by Mary Frances Gerety
43
What established by DeBeers campaing?
Tradition of the diamond engagement ring worldwide.
44
What happened after DeBeers began its global campaign?
Diamond became the number one engagement ring stone worldwide
45
When long reign of DeBeers started to sway?
In the mid 1990s because of rising producers from Russia, private min.comp. in Australia and Canada.
46
What made for De Beers difficult to control diamond supply?
Rise of important new producers.
47
Which producer played critical role in transforming industry after 1950s?
Russia
48
In 1970s which place took Russia in production of diamonds?
3rd
49
What coincide with single-channel disintegration in 1990s?
Collapse of Soviet Union
50
What company and when was established by Russian Federation when De Beers lost ability to control the market?
ALROSA, 1990s
51
When and where in Australia rich diamond deposit was dicoveried?
In Western Australia in 1979
52
Benefication
A commitment to reserve a portion of resources derrived from a country for the economic development of that country.
53
Which government became partner with De Beers?
Botswana government formed with DeBeers "Debswana" in 1969.
54
What happened after disintegration of single-channel supply and sales of rough?
Industry transformed to multi-channel.
55
When CSO became DTC?
In 2000.
56
How many segments has diamond value chain?
Six segments
57
DVC Segment 1
Mining
58
DVC Segment 2
Rough sorting and distribution
59
DVC Segment 3
cutting and polishing
60
DVC Segment 4
faceted diamond trading
61
DVC Segment 6
retail sales
62
DVC Segment 5
jewelry manufacturing
63
Define upstream section of diamond value chain?
Rough diamond mining and rough distribution diamond value chain
64
Define downstream section of diamond value chain?
Retail portion of the diamond value chain.
65
Which value chain segment is the most risk and unpredictable?
Mining
66
Name 3 major diamond source countries?
Russia, Africa and Canada.
67
Which year is historic high for diamond production?
2008
68
What is the name for large scale industry leader specializing in diamond mining?
Major
69
Which two companies supply more than half of the world's rough diamond by value?
Alrosa & De Beers.
70
How many deposits ALROSA operates in Russia?
More than 20 deposits
71
In which mining regions in Russia ALROSA operates?
Republic of Sakha (Yakutia) and Arhangelsk
72
Where De Beers operates?
Botswana, Canada, Namibia and South Africa
73
What requires diamond mining?
Heavy duty equipment and the removal of a large amount of earth.
74
How mining begins?
With exploration, which consists of multiple phases of prospecting and evaluation.
75
Name three major steps in mining?
Ore extraction, ore processing, and stone extraction.
76
Name two big challenges in diamond mining companies?
Uncertainty and capital investment.
77
What is objective of rough sorting?
To facilitate rough diamond sales.
78
What determines the income of mining companies?
Income depends on the amount of diamonds extracted and the market price of rough diamonds.
79
What is the first value-adding process on the journey of diamonds?
Rough sorting
80
Name activity that adds something to a product that increases its value for consumers.
VALUE-ADDING PROCESS
81
How are called diamonds that meet certain criteria to be used as gems in jewelry market?
Gem-quality diamonds.
82
How are called diamonds designated to industrial use?
Industrial diamonds./Bort/
83
What is called bort in trade?
Industrial grade diamond usually occurs very included and single crystals in yellows, grays, and browns.
84
What sorters do?
Sorters categorizes gem-quality diamonds based on weight, shape, clarity, and color.
85
When majors step in to invest, purchase or form joint ventures?
Once prospecting shows promise.
86
How is called a form of industrial-grade diamond that usually occurs as very included single crystals in a range of yellows, grays and browns?
Bort
87
What is the first step in sorting diamonds?
Separating gem-quality diamonds from industrial diamonds, known as bort.
88
How do sorters group gem-quality diamonds?
Principally on weight, shape, clarity & color. These roughly match those applied to finished diamonds.
89
In how many categories rough diamonds can be sorted?
12 to 16 thousand, depending on the producer.
90
Where rough is sorted?
At the mining sites or designated sorting centers.
91
Where to DeBeers relocated it's sorting facility from London?
Gaborone, Botswana (one of the world's largest diamond-producing countries by value).
92
Name 5 major rough sorting centers in the world?
Gaborone, Antwerp, Mumbai, Moscow & Toronto.
93
What is the name for diamond auctions?
Tenders
94
What rough diamond auction (tenders) provides for buyers?
An opportunity to source directly from the producers.
95
What is the name for long-term customer?
Sightholder
96
What factors producers evaluate when selecting sightholder?
Financial strength, market presence, manufacturing capacity, operational efficiency, and legal compliance.
97
What is auction?
A competitive sales process where rough diamonds are sold to the highest bidder.
98
What is average contract duration between producer and sightholder?
18 months to 3 years.
99
What is another sales channel for rough diamonds, besides long-term contracts/sights?
Auctions/Tenders
100
Some auctions are operated as complementary to?
Sights
101
How majors are selling really unique stones?
Through special tenders/auctions.
102
What are types of tenders/auctions?
Blind and live.
103
What is example of special tender?
Argyle Pink Diamonds tender, held annually for almost 40 years. Offering of extraordinary pink, red, violet diamonds that are less than 0,1 percent of mine's production.
104
Why auctions are valuable for major producers?
They are a way to see real-time market prices and trends. Tenders allow to test potential sight holders.
105
Why tenders are valuable for buyers?
Auctions allow to avoid long-term commitment and to source special goods for selective clients.
106
What is rough diamond spot sales?
Short-term contracts, they have smallest share of the rough market compared to the other formats.
107
When Kimberley initiative began?
In May 2000
108
What is Kimberley Process?
Global initiative to combat the trade of "conflict diamonds".
109
When UN-sanctioned Kimberley Process Certification Scheme (KPCS) took effect?
In 2003
110
How much of global rough diamond production KP members account for?
99,8 percent
111
Which 2 processes are critical to unveil a diamond's beauty?
Cutting and polishing.
112
What is the second value-adding process on the journey of diamonds?
Cutting and polishing
113
Where was first known cutting center in the history?
Southern India
114
Name 4 first diamond cutting centers in 14th century Europe?
Venice, Amsterdam, Antwerp & London.
115
When Israel became established cutting center?
1930s
116
When India developed its modern cutting industry?
In 1960s and 1970s
117
How much rough is cut in India?
90%
118
What factors allowed India to reclaim as the leader of diamond cutting?
Competitive labor cost, advanced technology and entrepreneurship.
119
Where is large-scale cluster of cutting and polishing factories in India?
In Surat.
120
Name global polished diamond trading hubs?
New York, Antwerp, Tel Aviv, Mumbai, Dubai, Hong Kong
121
Name the largest diamond exchange in the world?
Mumbai's Bharat Diamond Bourse.
122
Diamond exchange definition?
A membership based entity that provides service and venue to facilitate diamond trading.
123
What channels are in place of polished diamonds sales?
Auctions, long and short-term contract sales.
124
Which type of polished diamonds sales occurs most?
Short terms and one time contracts.
125
How much diamond bourses are around the world?
About 30
126
What and why has emerged as popular venue for polished diamond sales?
Online trading due to technological advances in online presentation of polished diamonds.
127
How the large cutting companies sell the majority of their inventory?
Online trading platforms.
128
Why large cutting companies sell inventory online?
Online exchange saves energy and travel expenses.
129
What kind of process is a jewelry manufacturing?
Value adding process (another increase of value for the consumer)
130
Name segments of jewelry manufacturing process?
Design & manufacturing.
131
What many diamond cutting companies make?
They make own jewelry.
132
Where biggest wholesale manufacturers centers are located?
Guangdong Province China & Surat, India.
133
Where retailers buy their stock?
In jewelry factories.
134
Where from design comes from for big chain retailers?
It comes from retailer or in-house designers.
135
How many pieces of commercial quality jewelry are sold?
Hundreds of thousands.
136
What is required in factory to produce high-end customized jewelry?
More resources, than production of commercial quality jewelry.
137
What limits number of players in upstream segment of diamond value chain?
The risk and resources required.
138
Why it's extremely difficult to enter diamond mining, sorting and rough sales segments?
Capital, resources and expertise.
139
How can you describe with one word diamond jewelry retail?
It's Multifaceted.
140
How much players are in exploration and mining and which segment is it?
Less then 100, UPSTREAM
141
How much players are in Rough diamond sales and which segment is it?
Less then 100, UPSTREAM
142
How much players are in Cutting and Polishing and which segment is it?
More then 1000, MIDSTREAM
143
How much players are in Polished Diamonds Sales and which segment is it?
More then 1000, MIDSTREAM
144
How much players are in Jewelry Manufacturing and which segment is it?
More then 10,000, DOWNSTREAM
145
How much players are in Retail Sales and which segment is it?
More then 250,000, DOWNSTREAM
146
What makes easier becoming retailer nowadays?
Internet and social media have made it easier.
147
Where are made highest profits?
On two ends of the supply chain.
148
Explain vertical integration.
A business strategy of operating in more than one segment of the value chain. (partially or completely)
149
Which segment is dominated by public companies?
Mining.
150
Which segment is dominated by private companies?
Cutting and polishing.
151
Which segment is mixture of public and private companies?
Jewelry retailers.
152
Which company is an example of vertical integration?
De Beers
153
Which company is an example of partial vertical integration /no mining and rough sales/?
Chow Tai Fook one of the largest jewelry retailer.
154
How big margin midstream companies usually have?
1 to 3%
155
What is consolidation, and in which segments does it occur?
Consolidation is a merging and acquisition of many smaller businesses into larger ones, it occurs in upstream and midstream markets.
156
What risks do smaller mining companies take?
Risk of exploration.
157
When small mining companies are acquired by major?
Once project demonstrates promise.
158
Which segment of the diamond value chain consolidation just begun to develop?
In the Midstream - cutting and polishing sector, specially in Surat.
159
What impacted entire supply chain in XX century?
Technological advances.
160
Which technology improved of more rough in mining sector than before?
X-ray technology
161
What was enhanced because of advancements in manufacturing automation?
Rough planing, cutting, and polishing.
162
How technology helps retailers?
To better present the diamonds and enhance the consumer experience (f.ex. software allowing shopper to see diamonds larger-than-life sizes).
163
How can technology increase transparency in the industry?
For example using of blockchain, technology resistant to modification, to track stones through the value chain.
164
What is a key to diamond industry growth?
Securing and expanding consumer demand.
165
What is ultimate driver of diamond industry growth?
Consumer demand
166
What are new era diamond industry elements?
New consumer generations, advanced technologies, and more diversified markets.
167
Where nearly half sales of Tiffany take place?
Americas
168
Who is the number one jewelry-consuming market?
USA
169
What was greater China's global diamond demand in 2016?
It was 16%
170
What Chinese consumers often purchase for wedding in opposition to Western couples?
One set of wedding rings instead of both engagement and wedding rings.
171
What are the shares of the diamond market by India, Persian Gulf, and Japan?
5-7% (similar)
172
What is secondary diamond market?
The secondary market consists of resale of previously owned diamonds and diamond jewelry. (recycled diamonds)
173
What secondary diamond market includes?
Auctions, antique stores, estate sales, and the like.
174
What will be the largest diamond reserves of the future, when natural diamonds resources diminish?
Secondary diamond market.
175
What add social value to the resale diamond market?
Stones (jewelry) have traceable history this add social value to the products.
176
Which market is good indicator of diamond's value?
The secondary market
177
What is critical for jewelers to secure and expand the customer base?
Recognizing the demands of new consumer generations.
178
What
179
Which generation was closely associated with diamond’s symbolism of committed lifelong love?
Baby Boomers
180
What several majors did in 2015?
ALROSA, De Beers, Dominion Diamond Mines, Gem Diamonds, Lucara Diamond Corp., RZM Murowa, Petra Diamonds, and Rio Tinto - formed the Diamond Producers Association (DPA)
181
What Diamond Producers Association has initiated in near the end of 2016?
Campaigns targeting consumer trends, such as women purchasing jewelry for themselves. And generic campaign "Real is Rare: Real is Diamond".
182
What did Diamond Producers Association in 2020?
DPA changed name to Natural Diamond Council (NDC) and launched the first editorial site dedicated to natural diamonds.
183
What is important advertising platform in the new era?
Social media
184
What are important jewelry retail avenues today?
Internet and social media.
185
What become new measure of how well a campaign message reaches the audience?
Engagement rates
186
For whom was designed media campaign "Real is Rare: Real is a Diamond."?
The media campaign was designed to target consumers in ages 21 to 34 /millennials and the older Generation Z/
187
What was the budget for "Real is Rare" campaign?
$40 million
188
How much media impressions generated "Real is Rare" by DPA?
1,5 billion over 12 months.
189
Which segment of Diamond Value Chain is most fragmented?
Jewelry retail.
190
What are traditional sales channels for jewelry retails?
Dept. stores, branded chain stores, individual brick-and-mortar jewelry stores, discount sellers, catalog sellers, and tv.
191
What are new sales channels for jewelry retails?
Internet and social media.
192
What allowed to increase online sales of jewelry?
Consistent standards of diamond grading.
193
Why many consumers still prefer physical stores?
Because they can consult with jewelry professionals and touch the jewelry before buying.
194
What is the newest sales channel for retail?
Social media - millennials and Gen Z live on social media.
195
Who was the only diamond source until the early 18 century?
India
196
Who was the world's leading diamond producer from the early 1700s to late 1800s?
Brazil
197
When diamond rush began in Africa?
With discovery of the Star of the South Africa.
198
When Cecil Rhodes established De Beers Consolidated Ltd.?
In late 1800's.
199
What Cecil Rhodes used to stabilize diamond prices?
Production control
200
What is benefit of long-term contracts?
It's benefit for seller and buyer due to their predictability.
201
Where the majority of world's diamond production is cut?
In India
202
Definition of secondary market?
The gem and jewelry resale market.
203
How is called rough diamond sales event where long-term customers buy from producers based on contracts?
Sight
204
How is called a buyer admitted by rough diamond producer as a long-term customer?
Sightholder
205
What is definition of value-adding process?
Activity that adds something to a product that increases its value for consumers.
