A pile of tiny white rocks glistens under a desk lamp. I am all giant fingers and thumbs as I lean in to pick one up. I don't know whether it's my naturally guilty conscience, or the burly security guard who is hovering over my left shoulder, but my heart starts thumping as I peer closer at the stone, which is both delicate and fierce in its beauty.
With a jeweller's loupe clamped to my right eye, I try to move the crystal into sharper focus, but I lack the knack. Phil, a De Beers veteran, is talking about "overlaps" and "macles" and other things I don't catch. "It's like Hebrew, isn't it?" his colleague Debbie says later about the impenetrable language of rough diamonds.
I try a larger stone and this time the magnification brings the yellowish-tinged crystal to life. The hard exterior hides a collection of cracks – a blemish, if you will. "That's a macle," Phil says of the rock. "When the grain twists, it gives a herringbone effect. That dictates the quality." The twists will also make the stone harder to cut: the four-carat wonder I'm holding will end up a mere two carats in some lucky person's piece of jewellery many months from now.
These marvels of nature, formed as far back as three billion years ago, are all apparently "low-end quality", but it's all relative. Phil's task is to sort through the "parcels", which arrived in De Beers' London headquarters in a big shipment from its Snap Lake Diamond mine in north-west Canada. He must group the different types of stones together by distinctions of size, colour, clarity and carat. That's how the buyers like them. But with some 12,000 categories of rough diamonds, it's no mean feat. He has worked for De Beers for nearly three decades – but tells me his time is nearly up.
Tony, who is sitting at a bench by the window, a tray of green-hued stones in front of him, started out buying diamonds in what was then Zaire, 32 years ago. He has travelled the world with De Beers – South Africa, Russia, India, Australia, Canada – but one journey he won't be making with the company is to Botswana, later this year, when anyone who wishes to keep sorting diamonds must emigrate to the African country's capital, Gaborone. This is where De Beers, which is 15 per cent owned by the Botswanan government, is transferring its entire rough-diamond operation, from sorting to selling – something that has happened in London since the 1930s.
Buried deep on the third floor of De Beers' labyrinthine building at 17 Charterhouse Street, the London sorting-room is already winding down. When Tony started, in 1981, he says there were 600 sorters, but when I visit, most of the benches are empty, the weighing scales and specialist microscopes unused. I count 10 people still inspecting the glittering Canadian haul. Some have already settled in the three-bedroom Gaborone houses De Beers has provided for those making the switch, but most have been lost to time, as the process has become automated. "I am sad," Tony admits of the historic decision. "But it's not for me to live there. Everyone had the choice." Phil, who is probably younger than his white hair would suggest, tells me he's going to try "horticulture" instead.
The move is the end of an era not only for De Beers, but also for London, which has all but lost its once-great reputation for diamonds. Hatton Garden, the capital's famed diamond street, just around the corner from De Beers, has long ceased to be a trading centre. It is, according to one old-timer, diamantaire Richard Vainer, "not really much of anything any more. It's more of a symbolic name."
In a highly unusual step, De Beers has granted me access to its trading floor before the doors are locked for good at the end of this year. A strict protocol surrounds our visit, which is A Big Deal. That much is clear when the security guard greets me by my first name when I arrive. This is not a place to which you turn up unannounced. At least, not if you wish to avoid alerting the police at nearby Snow Hill, who Geoff, my minder for the morning, assures me "will arrive within 60 seconds" if necessary.
I lose track of the number of thick, heavy doors that separate the outside world from the glittering gems within, my pass buzzing me in and counting me out again each time. I clutch my notepad and pen as I enter – bags are banned from the trading room. Bang goes my secret plan of being "clumsy".
De Beers has been sending rough diamonds back to London ever since 1889, when Cecil Rhodes struck a deal with 10 diamond sellers in the British capital that they would buy a fixed quantity of stones mined in what is today known as Kimberley, in South Africa's Northern Cape, at an agreed price. This was the origin of what would ultimately turn into a global cartel at the height of De Beers' monopoly. Rhodes, an English-born South African imperialist, had formed the company a year earlier, on merging his mining firm with one owned by rival Barney Barnato.
The company's course was set when one Ernest Oppenheimer, a German diamond-dealer who founded the gold-mining company Anglo American during the First World War, contrived to buy his way on to De Beers's board, becoming its chairman in 1927. Just as diamonds were virtually synonymous with De Beers throughout the 20th century, so the Oppenheimer name has been with De Beers, Ernest passing control of the company to his son Harry, who in turn anointed his son Nicky. But the move to Botswana isn't the only major change for the company: last August, the Oppenheimers parted ways with the firm when Nicky stepped down as chairman following the $5.1bn sale of his family's stake to Anglo American, which is itself now a publicly listed company.
"What's the saying?" asks Richard Vainer, whose father, Milos, a Czech wartime refugee, got into diamonds only because of a chance meeting with Harry Oppenheimer. "It takes one generation to build a company; a second to run it; and the third to destroy it." Today, Vainer runs his late father's business, M Vainer of Grenville Street, one of London's last remaining diamond cutters and polishers.
Clearly, De Beers, which had sales of $6.1bn in 2012, is very much still with us. Even its Charterhouse Street base will stay, albeit to focus on marketing and other corporate matters. But industry insiders note that the future is changing: De Beers, which is today 85 per cent controlled by Anglo American, has seen its dominance dissolve with the growth of the Russian diamond miner Alrosa. These days, its share of the rough-diamond market is around 40 per cent, with the vast bulk of its 28 million carats recovered last year coming from its Botswanan mines.
It is not only the Russians making inroads; there is also the advance of synthetic diamonds. Harry Levy, a gem trader with 50 years of experience who chairs the London Diamond Bourse, thinks these man-made alternatives could one day step in when the mines' supplies are inevitably exhausted. "Eventually there will be a shortage. If nature can't supply them, man will," he adds.
Andrew Bone, De Beers' global head of government and industry relations, who is the only employee we are allowed to identify in our photographs, such is the level of security, provides a helpful pointer to illustrate the scarcity value of diamonds. "I read once that all the gold ore that had been mined in the world, if it was melted down, would fill a cube that would fit under the base of the Eiffel Tower. If we do the same measurement for diamonds, taking all the diamonds in all the diamond jewellery that have been found during the past 4,000 years, they would just about fill a London double-decker bus." It's not quite on a par with De Beers' "A Diamond is Forever" slogan, but it's a striking image.
With demand soaring in China, which is projected to have a 150 million-strong middle-class by 2015, Bone says current reserves are not enough to ensure supply. It sounds a bit like classic De Beers propaganda to ensure prices stay high – like petrol-pump prices, diamond prices rarely fall. But he does have a point.
This partly explains why Botswana is so desperate to milk as much value as it can from the industry while its mines are still studded with rocks. The sparsely populated country, which fortuitously discovered diamonds one year after gaining independence from Britain, in 1967, is a rare African success story thanks to these revenues. The government wants De Beers' move to spark a diamond rush, establishing Gaborone as a rival to the likes of Antwerp, Tel Aviv and Mumbai for cutting and polishing the stones as well as selling them.
Jamie Mordaunt moved his young family to Gaborone in January to work for Hennig, a British diamond-broker. He helps his clients get their hands on the rough stones. "Adding all the associated services [to mining] will be a real step-change for Botswana," he says. But there is a downside. "It will make an economy that's highly dependent on diamonds even more dependent on them. If they don't find some more diamonds in the next decade or so, they could be left high and dry."
There will be some knock-on for the country's tourism industry, as well as advantages for locals from improvements to infrastructure, from wi-fi and roads, to restaurants and hotels. But Mordaunt points out that the numbers arriving in Gaborone for the five-weekly rough-diamond sales – or "sights" – held by De Beers will be small. The firm has around 75 "sightholders", who come mostly from India. The name is slightly misleading, because although the sightholders can inspect the stones when they fly in for the sales, they bid in advance for specific boxes, depending on what types of rocks they are after. And the less trouble they make over what's in their parcels, the better disposed towards them De Beers is – and the more diamonds they stand to be allocated.
"It's to [the sightholders'] advantage to buy from De Beers. It marks you out as one of the world's leading diamantaires," Mordaunt says. One issue that still grabs attention, however, is blood, or conflict, diamonds. This just refuses to die, despite a serious drive by the industry, led by De Beers, to get a grip on the issue. Ten years ago, a joint initiative launched the Kimberley Process Certification Scheme, with aims to trace every single diamond back to its origin, preventing rebels movements in Africa from selling the gems to finance wars against legitimate governments. But Mordaunt warns: "It's a good scheme but not perfect. It involves a lot of governments and a certain amount of politics comes into play." The campaign group Global Witness pulled out of the scheme in 2011, claiming it did not work well enough.
Back in Hatton Garden, I'm trying to see whether anything of the old world still exists, a place brilliantly captured in Rachel Lichtenstein's recent book Diamond Street. Her pages stoke images of homburg-hatted men poring over gems on the pavements in a quasi-village where everyone knew each other. She quotes Dave Harris, an apprentice jeweller in the 1930s: "My main memory of Hatton Garden was seeing deals being conducted on the street. You would see men huddled together in clusters on the pavement, heads together, magnifying glass out, examining some tiny object, usually a rough diamond."
Another passage, the reminiscences of another old jeweller, describes how dealers would go into one of the kosher cafés on nearby Grenville Street, "have a cup of tea, and the tables would be strewn with jewels. It was perfectly safe, there was no trouble whatsoever. If you shook hands and said good luck, that was it, the deal was done. You used to see an old man walking down the street, about 70 or 80 years old. He'd take a little bag from his pocket and have diamonds worth £100,000 in there."
Jewellers set up shop in the area as long ago as the 1830s, drawn by the presence of the gold refiner Johnson Matthey, or Johnson & Cock as it was known then. Later, after De Beers based itself around the corner, the street became something of a diamond magnet. But it took the Second World War for the area really to flourish. "A lot of the Jewish contingent of Europe's diamond polishers and brokers left for Britain. As a result, there was lots of expertise and capital in the UK," says Vainer. Jews, of course, had long been associated with the precious stones: gem-polishing was one of the few trades the medieval guilds permitted them to do, along with money-lending.
I wander from shop to shop, in search of someone to share their stories. Few are willing, reflecting the secrecy that characterises the industry. Geoff, at Madison, barks out: "I wouldn't want to quote anything from our shop in case it gets into the wrong hands." I'm met with a simple, but firm, shake of the head in neighbouring A&S Jewellers.
George Katz, of E Katz, the oldest shop still in business, is less circumspect. "My father opened the shop in 1950. We used to deal just with trade but more people kept coming in wanting to buy as well." Yet it's a Wednesday lunchtime, and the shop is empty. "Fashions have changed. People don't wear broaches any more," he tells me. He's broadly positive, though. "Jewellery isn't something you can buy on the internet," he believes. "It's something you have to see and touch." Which leaves me wondering how umpteen jewellery shopping channels on cable television keep going – but I stay quiet.
He says that De Beers' decamping "won't have any impact" on the London trade at all: "As far as Hatton Garden goes, it has always been irrelevant." Harry Levy adds: "De Beers operated in a bubble. It's like a bonded warehouse. For all intents and purposes, it could have been on Mars."
Barely a handful of people are still cutting and polishing rough diamonds in London. I'm told the industry died out when the VAT regime was changed, forcing dealers to pay up front. They lacked the cash flow, and these days the big centres are in India, Israel and the Middle East. "The Indians," Vainer says, "do everything the Jews used to be good at. They employ family members, on low wages. They are canny, and good with money." Nine in every 10 diamonds are cut in India, mainly in Gujarat, most of them the tiny stones for which De Beers created a market when it invented the concept of the eternity ring.
Vainer employs two of the last diamond polishers in the UK. "We're the last of the dinosaurs dying out," he says. "Most jewellery sold in Hatton Garden isn't made in the UK, but in low-cost countries. Most diamonds aren't owned by the retailers but are on consignment from a foreign company. The street is a bit of a bad joke. There are a few workshops but they're mainly for resizing and repair work."
De Beers' own shop is on Bond Street. The company launched a retail arm in 2001, but it leaves it to the luxury goods giant LVMH to run the outlets.
Although the diamond market is largely illusory – the stones are only worth such a great fortune because the likes of De Beers work so hard to keep the illusion alive – there's something special about being so close to so many in their raw form on the trading floor. There's an innocence about the unpolished glass beads, which is lost once they're shiny and set tight in a ring, or a necklace. That said, I can't help but ask Tara, who will be among those packing her bags for Gaborone, whether they aren't ever "just rocks?"
She pauses, looking wistfully down at her temporary charges. "No. They're all lovely diamonds." She smiles, forgetting she's just told me how repetitive the work can be. "Where else would you be able to sit at work every day and look at millions of pounds of diamonds, and not have to worry about them, or buy them?" Indeed.Reuse content