South Africa Diamonds and Platinum
Sources: The Library of Congress Country Studies; CIA World Factbook
Diamonds and Platinum
South Africa's diamond mining industry dates back to 1867, when diamonds were discovered near Kimberley, now in the Northern Cape. The Kimberley diamond fields, and later discoveries in Gauteng, the Free State, and along the Atlantic coast, emerged as major sources of gem-quality diamonds, securing South Africa's position as the world's leading producer in the mid-twentieth century. (Rough diamonds were produced in larger quantities in Australia, Zaire, Botswana, and Russia.) Through 1991 most of South Africa's diamonds were mined at only five locations, but a sixth mine, Venetia--in the Northern Cape--opened in 1992 and was expected to become a major diamond producer later in the decade.
The De Beers Consolidated Mines Company controlled most diamond mining in South Africa and influenced international trade through a diamond-producers' alliance, or cartel--the Central Selling Organisation. The cartel enabled diamond producers to control the number of gems put on the market and thereby to maintain high prices for gem-quality diamonds. The cartel was able to react to marketing efforts outside its control by temporarily flooding the market, and thereby driving down the price paid for an outsider's product.
Diamond prices fluctuated in the early 1980s, but the industry continued to expand even in the face of international recession and the discovery of the diamond-like cubic zirconia. Dollar prices for diamonds improved in 1985 but dropped again in 1987, requiring De Beers to support the market by withholding diamonds from dealers. Thus, annual production of more than 10 million carats in 1985 and in 1986 dropped to 9.1 million in the late 1980s. Gem and industrial diamond output in 1994 was 10.8 million carats, or roughly 11 percent of world production.
In 1990 the Soviet Union signed and openly acknowledged a contract to sell its diamonds (estimated at a value of about R13 billion over a five-year period) exclusively through De Beers. The action marked the first time in nearly thirty years that the Soviet Union had openly associated itself in commodity dealings with South Africa. Later that year, De Beers announced a loan of R2.63 million to the Soviet Union, against the security of an equivalent amount in diamonds.
Platinum group metals (platinum, palladium, ruthenium, rhodium, iridium, and osmium), which occur together in ore seams and are mined in one operation, were discovered in South Africa in 1924. Most of the estimated 59,000 tons of reserves are in the Bushveld complex of minerals; some concentrations are also found in the Transvaal and the Witwatersrand complexes. Platinum is used in automobile catalytic converters to reduce fuel emissions, as a catalyst in industrial processes, and in making jewelry.
South Africa is the world's leading producer of platinum. Its output of about ninety tons in 1993 accounted for almost 49 percent of world production. South Africa's platinum mines have profited, in particular, from the sale of rhodium, which sold for almost US$6,000 an ounce in the early 1990s, but world market prices fell after that.
Data as of May 1996
NOTE: The information regarding South Africa on this page is re-published from The Library of Congress Country Studies and the CIA World Factbook. No claims are made regarding the accuracy of South Africa Diamonds and Platinum information contained here. All suggestions for corrections of any errors about South Africa Diamonds and Platinum should be addressed to the Library of Congress and the CIA.